Can Good Project Management Save a Troubled Company?

While there’s no way we can truly answer this in an article like this because there are just too many variables, we can certainly look at this concept in general terms.  Can good project management save a troubled organization?

Best practices for the stable organization

It goes without saying that implementing sound project management principles based upon the industry’s best PM practices along with an injection of good project management experience will likely get your company off on the right foot.  A setup like this will help an organization do a good job of managing projects, providing consistent project outcomes to customers, retain good project professionals, and maintain higher levels of customer satisfaction.  And that’s great for the organization that is not yet in trouble.  For the stable organization, setting up a good, repeatable PM practice is likely a good use of some targeted dollars.

Will it work for the troubled company?

But what about a troubled organization?  Can an organization that is already experiencing severe financial drain due to poor customer performance and is near the end of its rope find any hope in implementing project management best practices?  Or is it just a waste of dollars or at least not the right injection of money where it is most needed?

I think the answer is somewhere in between yes and no.  Good project management breeds good customer service and usually increased customer satisfaction.  It’s never the wrong time to try to serve your customer better.  It’s never the wrong time to work hard to increase your overall customer satisfaction levels.

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The Challenge of Project Communication

We’ve all heard the clichés about communication. But putting the ideas into practice is often a lot harder than applying the theories. This is even truer for project management than for departmental management.

For the purposes of this article, I’m looking at department managers who take on the role of project managers for one-off projects or for organizations that regularly rely on department managers to act in the role of project manager, because not all PMs have the ‘luxury’ of focusing solely on project management tasks. Some are temporarily thrust into the PM role while their primary responsibilities – and ultimately skill set – is outside the role of the project manager. We’ll look at the communication challenges faced in these types of situations.

The Communication Challenge

While managing your department, you’re in constant contact with your staff. Their tasks are well defined and recurring. Your people are focused on performance, and their careers depend on how well they execute their tasks. A project, by comparison, is often seen as an intrusion, a departure from the normal routine—even when it’s “normal” to disrupt that routine with a series of projects.

In addition to the manager-team dynamics, you must contend with communication on three other levels:

• The assignment. The executive (or committee) that first assigned the project to you may not agree with your idea of what the project should achieve; or he may change his mind about the outcome wihtout letting you know.
• Other departments. The managers of other departments have their own priorities and may resist your schedule. This usually applies in two situations: when members of their department are on your team or when you depend on that department to supply certain information.
• Outside resources. Your project may depend on help or information from “outside” resources—companies or individuals not part of the organization. These include other divisions, subsidiaries, or offices; a vendor or separate corporation; or a consultant.

Your budget and schedule are your best communication tools. They are useful in communicating with both your team members and outside resources. Each can be used in a number of ways.

The Budget as a Communication Tool

The budget defines the company’s financial commitment, and is used to ensure that project expenses are kept in line. If variances do occur, they often anticipate a scheduling problem as well.

The budget also measures the degree of risk involved with your project. Any change in the company is accompanied by risk, and when time and money are spent, the decision to go ahead is based on a judgment of risk. Management will proceed with the project if it is convinced that the risk is acceptable and that future profit potential justifies that risk. So, for example, when you propose a project, you should communicate in terms of risk and likely reward. Approval will be granted as long as you can convince management that there’s a good chance that future profits will recapture this investment within a reasonable period of time.

The Schedule as a Communication Tool

The schedule defines the project, and, as long as you share it with management, it is a useful tool for ensuring that your definition conforms to theirs. When it’s broken down into phases, with deadlines tied to the final result, management has the opportunity to validate your direction, and you can ensure that your understanding of the project’s goals is correct. At this early stage, you can define exactly what the project should achieve.

You also need to use the schedule during the later phases of your project in conjunction with review meetings to ensure (1) that you are on the right course and (2) that management’s desired outcome has not changed.

Finally, the schedule improves communication with your team, and helps avoid delays. By identifying weak links and by communicating with other department managers and outside resources, you will avoid unexpected problems.

Working with Other Department Managers

For relatively simple short-term projects that are executed strictly within a single department, you, as department manager, have direct control over the time commitments and priorities of each team member.

Because you are aware of your department’s deadlines and workload variations, you can build your schedule around the workload and adjust it as needed. You can also balance departmental and project demands on the basis of your knowledge of each and the scheduling flexibility and control you’re able to exercise.

As the scope of your project grows, your task assumes a greater dimension, and you will begin to work with people from other departments. This is where your communication skills are tested.

A common complaint often heard from other managers is, “You didn’t tell me in time,” regardless of whether problems arise because of deadlines, the use of an employee’s time, or conflicts in commitment. But you can solve most of the problems you will encounter in working with other departments by remembering this key point:

Keep other department managers informed at all times: before and during the project.

By applying a few basic rules for communication between departments, you will be able to defuse the problems that beset all managers at one time or another: territorial motives, power struggles, and—in cases where communication breaks down completely—outright refusal to cooperate. Most of the time, the breakdown of cooperation arises not from a political or personality problem but from a failure in the communication link—especially when you have made the effort to communicate, but only once. People need periodic reminding, so don’t assume that a single message will be remembered.

PM Best Practices for the New Project Manager

PM Tips is designed to be a discussion area and information source for both the experienced project manager and project managers with little to no experience. For PMs with a significant amount of experience, many of the things that are generally considered ‘best practices’ are things, hopefully, that we do without even thinking.

For the new PM, however, these concepts can not be taken lightly as they may not be intuitive yet and newer PMs may even be working in an organization that provides little to no support for the PM process. In some smaller organizations or companies where IT is a sidebar rather than a primary focus, the newly anointed PM may be standing alone trying to get their arms around a portfolio of ‘projects’ in various stages of disarray.

How do you jump in and take over managing in this type of situation. I’d like to discuss that at length and share my thoughts, but that’s probably for another article. Here, I’d like to discuss some of the ‘best practices’ that the new PM should employ as basics to getting started on the road to good, solid, project management performance. Paying close attention to these 5 key areas will help the project manager stay on track toward a successful project conclusion. The degree of effort that is put into any of these areas depends on the size, timeframe and budget for the project, but they all must be performed.

Scope Management

Get a good handle early on as to the proposed scope of the project that you’ve been handed. Gather as much info concerning the scope from whoever closed the deal and handed you the project. Jot down any project requirements you don’t fully understand and be sure to discuss those in detail with your customer before or during the kickoff meeting. This proposed scope is critical because it is the basis for the project, the input for the project schedule and ultimately what your project will be judged against.

Reporting

A good rule for the PM, at a minimum, is to provide your team and your customer with the following, in terms of project reporting on a regular basis:

• Weekly project status report
• Weekly budget status/forecast update (if applicable – discuss with your customer early on)
• Weekly revised project schedule

The project status report will be the document that drives the weekly status call with the customer and the weekly revised project schedule will be what shows the team and the customer whether or not the project is on track and will let each team member what their responsibilities are for the week and for the rest of the project.

Budget Management

It’s imperative that the PM management the budget and the forecast (both financial and resource) very closely. Whether that gets shared with the customer regularly may be a matter of corporate policy or may be based on your customer’s preferences. But at the very least, the PM must be on top of this at all times.

Losing control of the budget and the forecast – which can be relatively easy to do – can cause major problems down the road as the project nears completion. Finding out in the late stages that you’ve run out of money is hard news and sharing it with your customer as a ‘surprise’ will not only result in great customer dissatisfaction, it may either get you pulled from the project or it may get the project canceled on the spot. Both are bad for your career.

Timeline Management

The project schedule is what lays out the entire timeline for the project identifying key deliverables and milestones. As mentioned in Reporting above, the project schedule is a critical piece of information for each project team member and must be revised and distributed weekly to everyone.

I’ve not managed a project yet where the original project schedule remained unchanged throughout and I just managed from it. Because of change orders, issues, customer preferences, or revolving project resources, there are monthly, weekly and sometimes daily changes to the project schedule. Those must be accurately noted and distributed to the team and the customer on at least a weekly basis.

Customer Communication

As the Project Manager, how and what you communicate to the customer will go a long way in determining customer satisfaction on the projects you manage. Keep them engaged in all critical project communication. Don’t keep the bad news from them…but don’t tell them the sky is falling all the time either. If you have bad news to share, be well prepared to deliver it. In fact, it’s best if you already have a planned course of corrective action. But if not, share it with the customer and ask them to share in the corrective action. It’s their project, too…and they want you to succeed.

Closing Out the Project – Part 3

In Part 1 and Part 2, we covered the first six critical questions listed below that should be addressed when closing out any project. In the finale, Part 3, we’ll cover items seven through nine highlighted in bold letters below:

• Have all the project objectives been achieved?
• Is the client satisfied with the overall project?
• Have the necessary post-project support agreements been established?
• What were the major concerns with the project?
• What are the key lessons learned from the IT project?
• What would you do differently?
• Do you feel the solution was cost effective?
• When would it be applicable to enhance or update the delivered solution?
• What is your executive leaderships view of the project outcome?

Do you feel the solution was cost effective?

Here’s your chance to analyze the solution in words in financial terms. And we’re not really talking about budget here, but that’s a big part of it. In hindsight, did the engagement:

• Utilize the best level of resource skills and thus use resources in the most cost effective-way possible.
• Should Phase A really have been implemented first as the customer required, or would it have been a more sound business decision, in your opinion, to implement Phase B first?
• Is the final solution meeting the customer’s needs in the most cost effective manner possible? Would certain enhancements or different requirements have resulted in a more cost effective solution?

The list could be long, but I think you get the picture. Ask yourself the tough questions and imagine this isn’t for the customer to see. In fact, imagine you ARE the customer on this one but also have your additional insight.

I’m not saying you can’t involve the customer on this one – you certainly can – or you can perform it separately with your team and then with the customer and compare results.

When would it be applicable to enhance or update the delivered solution?

You’ve probably had an eye to the future all along and you’ve probably already discussed some key points along the way with the customer – especially if the project was a successful one and the customer satisfaction seems high. That’s what a good project manager does.

Think about ways you can provide new and future services to this customer and certainly keep in contact with them post-implementation on future product capabilities that you feel they will want or can benefit from.

What is your executive leaderships view of the project outcome?

This one is important to your career. No question about it. How does your leadership feel about the project? This likely will come more from leadership’s discussions with the customer than from your discussions with the leadership. And it should.

If it was a visible, critical project, you know that they’ve been in communication with the client along the way and if anything has gone wrong, they’ve heard about it. They’re not as likely to hear about the successes, but if you think the project has gone well, encourage your CEO or other leadership to follow-up with the client and discuss the outcome with them.

Summary

We’ve covered what I consider to be nine key questions to review once your project has been implemented. Most are for you and your team, some should also include the customer. But be sure to perform some sort of post-implementation checklist like this. You’ll benefit from it as a project manager, your team will benefit from it in learning what went right and what went wrong, and your organization will benefit from it – especially if you can share the successes and the lessons learned with others in the organization.

If you have other key points or questions to add, please comment.

Project Go – No-Go Decisions – Part 3

Part 3 of this segment comes primarily from Gary Heerkens’ book entitled “Project Management.” Here we are examining the use of financial criteria in determining the best project solution.

Using Financial Criteria for Project Selection

Companies that use project selection and justification methods often rely on financial calculations as a comparative tool and as a basic hurdle for management approval. Basic financial evaluation models—variously known as financial analysis, business case, project financials, or cost/benefit analysis—often include some combination of these four basic metrics: net present value, internal rate of return, payback period, and cash hole. Let’s take a look at each of these metrics in more detail.

• Net present value (NPV). Calculating a project’s NPV answers the question: How much money will this project make (or save)? It’s a calculation in dollars of the present value of all future cash flows expected from a project. It’s roughly analogous to the concept of profit.
• Internal rate of return (IRR). Calculating the IRR answers the question: How rapidly will the money be returned? It’s a calculation of the percentage rate at which the project will return wealth. It’s roughly analogous to the effective yield of a savings account.
• Payback period. Calculating this metric (also known as time to money or breakeven point) answers the question: When will the original investment (the amount spent on the project) be recovered through benefits? It’s typically expressed in months or years.
• Cash hole. Calculating the cash hole (also known as the maximum exposure) answers the question: What’s the most we’ll have invested at any given point in time? It’s expressed in terms of dollars.

Performing a Financial Analysis (or Cost vs. Benefit Analysis)

Each of the four financial metrics identified previously can be determined by performing a financial analysis. Although you may not be intimately involved in performing a complete financial analysis, as a savvy project manager you should understand how it’s done and the terminology involved. The basic financial analysis process is not as difficult as many think. It consists of four basic steps.

Step 1: Identify the Sources of Cash Flows (Inflows and Outflows)

Executing a project causes money to flow out and in. Cash inflows are any financial benefits that can be claimed as a result of executing your project: e.g., an increase in revenue from sales, a reduction in production or operating costs, material savings, and waste reduction. Cash outflows are any expenditures or losses due to the project or its downstream effects. The most obvious cash outflow is the cost of the project itself. However, an increase in operating costs due to the project would also be a cash outflow.

Step 2: Estimate the Magnitude of Specific Cash Flows

In some cases, it will be fairly straightforward to estimate cash flows. In other cases, it may be very difficult. For example, consider how confident you would feel in placing a specific dollar value on these benefits:

• Increased output due to enhanced employee satisfaction
• Improvement in vendor delivery reliability
• Improvement in workforce safety
• Increase in user comfort or convenience
• Reduction in potential legal action against your organization

In estimating some of these types of cash flows, it can be very useful to rely on historical data or benchmark data.

Step 3: Chart the Cash Flows

After you’ve estimated the magnitude of all cash flows, you can chart all cash outflows and inflows year by year throughout the useful life of the project.

Step 4: Calculate the Net Cash Flow Using an Agreed-upon Discount Rate

Because the value of a dollar in the future is less than the value of a dollar today, the value of future cash flows must discounted. In simple terms, it is what the investor (your company) could expect to receive from any other investment that is consistent with its risk tolerance. An NPV greater than zero indicates that your project is expected to provide a financial return that exceeds the organization’s investment expectations, so your project is likely to be approved (if there’s enough cash to fund it).

In Part 4, we’ll further discuss the project decision process by examining the non-financial criteria for project selection.