Retrieving Projects from Bad Performance

(Gridlock at Development Center)

Dr. Shridhar Lolla
CVMark Consulting
lolla@cvmark.com
Unedited Draft
2nd Jul 2010
Bangalore, , INDIA

(Based on interactions with organizations whose business model is ‘project based’.

These are small startups as well as large organizations.)

Key words: projects, project management, due date performance, performance improvement, dealing
with uncertainties, probabilistic environment, product development, R&D, made to engineer, Theory of
Constraints, startups, entrepreneurship, business rules, business fundamentals, built to last, capacity
building, entrepreneurial behavior, value system, culture, behavior, business model.

Definition: Prime Rule (n)= Non negotiable rules

Prime Rule #300: A Projects must be planned and implemented by incorporating its
probabilistic nature.

Projects are expected to be like adventure, successful completion of which not only gives
tremendous fulfillment to its participants but also significant return on investment.
However, for participants in over 70% of the projects, it has been frustrating experience
that throws their normal life out of balance… and the dream of accomplishing an
adventurous journey turns into mirage. The reason lies in the lack of understanding the
very nature of the ‘project’ business and the difficulty for organizations in the way they
work . While projects are ‘probabilistic’ in nature, organizations tend to apply
‘deterministic’ rules in planning as well as in execution.

This caselet is included in CVMARK’s ‘respecting the business’ series, since it brings
out the fundamental nature of project and thereby, exhorts to follow rules favorable in
achieving success in ‘projects’. The difference between organizations who respect these
rules and those who do not, is huge (e.g. due date performance of over 90% and less than
40%, respectively)

This is the first caselet related to ‘project based’ business model and it is a part of
CVMark’s research on dealing with uncertainties.
________________________________________________________________________

Copyright © 2010, CVMark Consulting, All rights reserved. 1

{Start}

2 weeks back I got a call from Anthony. He has been chosen to start an initiative PROP-
UP, to improve the overall project management performance. This initiatives came as a
result of review of his development center, by the top 5 global R&D managers last year.
They found significant gap in the effectiveness of the way the projects are being
managed.

Anthony was working for my group 5 years back, when I had left the center to work on a
startup company. Things changed a lot since then. # of scientists increased from 80 to
800, # of projects increased from 15 odd to over 100 and responsibility for managing
several products worldwide increased manifold. This center, is a global R&D center for
the a fortune 100 engineering giant, with a specialization in software related products.
When I had left, a systematic project management practice had just then begun and
preparation were on for CMMI-level3.

This center is quite different compared to the regular software development companies in
India, in a way that it has a high percentage of people, who come from real time
industrial system background and have a high perspective of customers.

Large # of projects and people, obviously means that it is a space of multi-projects, that
has its own complications. And obviously, there are symptoms that started hinting the
management to search for areas of improvements. Anthony came to know from others
about my involvement in TOC (theory of constraint and its application ‘critical chain’ for
projects) and about some of the presentations that I have been making on dramatically
improving project performance. He wanted me to have a look at issues faced by his
center and help them moving in the right direction to identify the real problems.

I therefore visited the center today to listen to Anthony.

Anthony again emphasized that this is an initiative from top management, has total buy in
from the center’s head and that a corporate announcement has already been made about
PROP-UP and most importantly, a team of 4 senior managers has been formed to spear
head the initiative.

I was conscious that this is a big initiative and therefore, a huge expectations from
management. An initiative that is big, means that the goals would be big and such
initiative by nature, would mean big change, not only in processes and tools but also in
the behavior of people. Bigger the change (bigger the goal)… means bigger the resistance
to change. I, therefore, cautioned Anthony, to go one step at a time in a measured way. It
is very important that for such a long journey, he gets wins as early as possible so that it
is possible to win support and create momentum… otherwise the task of mobilizing 800
people behind this change will be a Herculean task.

Copyright © 2010, CVMark Consulting, All rights reserved. 2

My first question was, therefore, what the problem is and how big it is. I did not get
appropriate answer to this. Project performance is not satisfactory, was not the right
answer. I therefore told Anthony, that he needs to have a measurement, which can be
targeted to improvement through PROP-UP. It will then make sense for everybody to
effect the right inputs and evaluate performance of PROP-UP.

His colleagues told me that they have two measurements on which the center is
measured, 1. Project Due Date Performance(DDP) and 2. Cost. This looked quite weird
to me. The reason being, firstly, that normally, an organization must have only one
goal. Having two goals means confusion and conflicts galore, leading to misalignment
down the rank. Secondly, the two goals are not mutually exclusively. That is, cost is a
dependent quantity on DDP and hence, if DDP is kept under control, cost will
automatically come under control. Thirdly, ‘cost’ is normally not goal of an organization
(even if it is a cost center) and is normally, not given as ‘performance target’ to
managers. Why? Because, cost is a parameter, if given as a target, managers start chasing
it relentlessly, such that they are more often than not, detrimental to main purpose of the
organization, which I believe is not ‘cost reduction’. Most importantly, focus on cost
reduction would often lead to poor DDP.

Since, the center deals in projects, it can be called as a project based organization. Each
project has a definite scope to be delivered within a cost and time. The truth is that a
number of projects are abandoned incomplete. And a large number of projects are late by
huge margins compared to their first promised deadline.

The normal tendency in project based organization, is to cut down scope of the project, in
order to deliver it on time. Project managers are worried too much on cost of the project
and are involved in intense haggling with the sponsors about extra fee, when the projects
need to be extended. Thus, projects are actually dominated by scope and cost factors.
When these two factors are some how adjusted, the negotiation hinges on the time. In a
majority of the projects, despite all good intentions and compromising on scope & cost,
the due date is extended too far, for the reasons that are not in the hands of either parties.
Thus, when the project is delivered, the project team looks at the last agreed due date of
the project and comes out with a performance parameter like following:

Metrics Delivered What it actually means ?

Scope 100% Scope as readjusted and agreed (a few weeks
before project was delivered), and in most cases
it significantly deviate from originally agreed
one.
Cost 100% The extra cost compared to originally estimated
one was readily borne by the client.
Time DDP=97% 97% within the ‘last agreed’ date with the client.
In most of the cases, the last agreed data is over
50% off the first agreed date.

Copyright © 2010, CVMark Consulting, All rights reserved. 3

In fact, when I asked Anthony and his team, about the DDP, they said above 90%. I had
got the same answer, when I went on a call to meet the engineering team of a German
Automotive component company, a few months back. Then I had asked them their
definition of DDP. And it turned out that it is the performance of the project compared to
the “last agreed date” and not ‘the first agreed’ date.

His colleagues then said, “but that is how every body measures”. My answer was, “of
course, their results are also the same”. The questions then is “So if the DDP is 97%, then
what are you complaining about?” Is not this an extremely good performance? You and
your customer must be very happy. But you also say that your customers are not very
happy. And that they are becoming unhappier day by day. It can not happen that your
measurement shows one thing (that make you happy) and your customers say the other
(your customer are unhappy). May be that you need to see the way you measure your
success; which is not success for the customers. Which means that your goals are not
aligned with those of the customers.

It is very evident that the organization needs to correct its measurement and see where it
is on that today. Having done that the organization then needs to set an achievable target
and initiate improvements that will improve its performance and take it closer to its goal.
Without correcting the measurement, having a performance level at 97% on a wrong
scale will not allow the organization to target significant improvement. The idea is that
performance will improve, if we know the right parameter to measure and the inputs that
directly influence these parameters.

The question then is in identifying what prevents the organization from achieving a high
DDP (from the first committed due date).

At the center, people are measured on DDP not only of the project, but also of the tasks.
Project managers spend 100s of hours in reviewing each project and each tasks day in
day out. They are often over paranoid about the uncertainties and work much beyond 8
hrs schedule, with an intention to getting into details on shortest of tasks. Despite this, a
large number of projects miss deadlines. People are good, and they spend more than
scheduled time without complaint, but it is not often a pleasant experience to complete a
project. People overstretch themselves, imbalance their work and family life, but get
frustrated working on projects. There is no doubt about the intelligence, talent and
domain knowledge level of people. The company has a reputation of a sort of hiring
people with unquestionable technical background; in the language of their competitors,
its resource talent is awesome.

Copyright © 2010, CVMark Consulting, All rights reserved. 4

Management has good intention and people are good. If the DDP of the project is poor,
despite everybody’s best effort, the problem could be found on one or both of the
following:

1. The assumptions made by the team are wrong

2. The implementation is wrong.

The problem has to lie in any or both of the above. It therefore, leads me to probe these
two. But wait a moment !

Are not we talking about a generic problem that is there in all project organizations? (e.g.
the German Automotive’s embedded system R&D center, the Big Pharma’s Innovation
Center… and of course, India’s leading software product development company. Not to
forget the anemic conditions a majority of startup service companies fall into due to
over 100% delays in their DDPs). Yes, we are talking about generic problems that inflict
project based organizations. And there are organizations who have come out of these
problems. And their DDP (wrt the first committed due date) is above 90%. But
organizations are different…. How can we apply the same thing here…?

Well let’s understand following:

Problems are of two types, which can prevent the organization (whether it is a profit
center or a cost center) from achieving its goals. In another way, there are two ways
organization can improve its performance.
1. By providing technical solutions
2. By improving logistical issues

What it meant in the context of the R&D center. There are technical problems that are
linked to software knowledge, code, testing, hardware, power technology, energy, data
bases, servers, robotics, drives etc. these problems can be solved by technical knowledge
research and actions; and there would be success, failures, slippages, breakdowns that are
of technical nature. And when an organization is built a majority of its skills are of
technical in nature.

But since, we are talking about an organization that is a system, and creating a synergy
between people of different skills and teams, it has its own ‘logistical’ issues. While you
create a product or a code, moved between people, delivered, it has to wait for decision
and actions, it needs to be planned and schedule, it needs to be verified and approved….
Sequenced and timed….managed. In order for the already available technical
contribution to make a business contribution, it must pass through ‘logistical problems’
efficiently and effectively. Recent studies by leading researchers reveal that ‘things are
more complex than ever’, ‘employees know much more than they can deliver’ and
‘organizations expects them to deliver to the level of their knowledge’. This is clearly a
management problem ! The better the organization provides management tools, the better
will be the delivery from their talented staff. A majority of the problems faced by project
organizations is of this nature.

Copyright © 2010, CVMark Consulting, All rights reserved. 5

While technical problems are quite different between domains, logistical problems have a
large similarities. Hence, business problems that appear in one domain often reflect in
others and often routine as well as innovative solutions from one domains are adopted in
other domains.

This is something that managers need to be increasingly aware of , as they grow. The
bottom line is that considering scientific competency of the center beyond doubt, there
could be a large possibility that project management competency need to be upgraded. It
is like having a good vehicle but a bad road. So repairing road makes much more sense
than improving all the vehicles.

….

But we are still talking about poor performance of the organization in terms of DDP. It
therefore behooves the organization to have a clear perspective of ‘project environment’
before it identifies what to improve.

Worldwide projects are given due dates and people are asked to stick to project due date
as well as task dues date. The project is handled and people are given targets in a
‘deterministic’ way. The fact is that project environment is ‘probabilistic’ in nature and
not deterministic. Anthony teams kept screaming about the uncertainty they have in all
projects, saying that their projects are different and that they have no way to meet the
dates. They claim that all the planning process is farce, since they do not know which
logistical unknowns (and sometime technical unknowns) t will suddenly crop up. Bugs
are found late, just when you have started a new task some other task pops up as priority,
you plan a meeting and something new crops up, server crashes, dlls are missed, people
fall ill, floods occur, flights cancel, Bangalore bandh takes place etc. They say that there
is no way, they can do anything about it. Yes they say that it is a ‘probabilistic
environment’. We give target date to everything, just because that is the way every body
does it in the industry. Of course, they get the similar results. Every project suffers from
uncertainty, every body keeps fighting 24x7 to complete the project, but get frustrated at
the end. No body is happy (the least is the customer). Some autocratic people are happy
that teams are working more than scheduled 8 hrs and they do not ask for extra money.
(there is another aspect, since there are uncertainties, sometime certain things are also
overlooked and missed)

Then I had to tell Anthony that if the project is probabilistic in nature then the planning
has to ‘take care’ of probabilistic nature of the project. And there are techniques that he
could use. But I cautioned that , implementing the technique without having buy in of
people will not be good.

What it means ‘to take care of probabilistic nature of the project’?

Today when projects are planned, they are broken into tasks and then they are sequenced.
After this, the resources are assigned. The resources are then asked to give time

Copyright © 2010, CVMark Consulting, All rights reserved. 6

‘ESTIMATION’ of their tasks. The time estimations are plugged into the project’s
critical path and it is thus scheduled.

The issue here is that ‘ESTIMATIONS’ are ‘ESTIMATIONS’. By definition and design,
they are NOT accurate figures. Hence, the due date is never ‘deterministic’, but people
are ‘MADE TO COMMIT’ to these estimations that are not accurate. Hence, most of the
projects are grossly erroneous at the planning stage itself. (it is a different case that
people are driven crazy like herds of cattle to meet the due date and they succumb to
pressure and work 24x7 instead of planned 8 hrs a day shift)

So, in order to deal with this, it is important that project managers are made learn to
separate out the uncertainties from the overall estimate and deal with them separately,
than dealing with estimates at each task stage. This is important, since at the task level,
people must focus on task and be less worried about the decision making related to
logistics. Actually, this is not new to finance world, where, while making budget, finance
managers are asked to aggressively price each item, but account for uncertainty
separately.

Actually, by taking actions at planning stage itself , in most cased project cycle time can
be cut by 10-25%, while a remarkable and measurable improvement in due date
performance is obtained.

TOC gives a way to deal with project uncertainty at planning stage. However, it may not
be possible for the project manager to do this, unless there is an understanding,
acceptance and behavioral change in the organization.. Most importantly, the
organization must be looking out for an ambitious improvement in its performance. TOC
is not for everybody !!!

Anthony, seemed to have suddenly found the spark. I then took him to issues beyond
planning and explained him how uncertainties are handled in implementation stage. But I
reminded him that TOC has the power to give dramatic improvement and such
improvement can not happen unless there is a strong ‘buy in’ from people and they are
ready for a massive cultural change.

I was not feeling well after my hectic travel schedule, and moved out of the center.
Anthony promised to send presentation of his learning from discussion, so that he could
systematically present strategy for his group to the center’s director. We had a feeling
that perhaps we run a pilot.

Copyright © 2010, CVMark Consulting, All rights reserved. 7

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