An Offer You Can't Refuse
If You Can't Articulate Your Worth—and Your Project's Benefits—to Executives, You May Not Get Your Foot in the Management Door
BY BIANCA M. WRIGHT
Project managers know they add value to their organizations. They know that their projects improve the bottom line. Unfortunately, they often don't know how to articulate this value, how to measure it concretely and how to speak in terms that executives understand.
“Lack of such measurement typically reflects failure to really think things through,” says Robert Neiman, founding partner of Stamford, Conn., USA-based Robert H. Schaffer & Associates Management Consultants, “so good measurement and quantification, even for undertakings that are dealing largely with so-called intangible ‘values,’ are vital.”
From the executives' point of view, without hard-line data, they can't mitigate the risk of failure because they can't see the value or potential of a project. “If you have the information, you can make the call to continue with the project or can it,” says Microsoft South Africa's Solutions and Technology Manager David Ives. “Quite often, information is not readily available for the project executive to make a decision. The decision could well be that, given the situation, the project should be discontinued as it will not be able to deliver on its initial promise or charter.”
METRICS FROM MANAGEMENT
To sell meaningful metrics to the executive level, think like an executive:
“The key metrics are meeting the key delivery dates, and comparing the actual costs to date, plus the estimates to completion, against the approved budget.”—Barry Muir, Managing Director of Innate, U.K.
“Project managers need to aim to deliver even before the set dates and be able to quantify the additional value gained from being able to start production earlier or get to market earlier.”—Ken Robson, President of PMI New Zealand and founder of AVPM Consulting, Wellington, New Zealand
“CIOs and CFOs are not as interested in every project which is running well and within pre-established tolerance levels for risk, cost, schedule, quality and resource constraints. On their dashboards, they just want the projects that have red lights.”—Josh Pickus, CEO of Redwood City, Calif., USA-based Niku
Executives often believe project management is for project managers only—not for them—so they don't see value in understanding it.
What's in It for Me?
Leaders who can demonstrate their project's ROI raise their own profile and elevate the significance of the profession, says Francie Dalton, founder and president of Columbia, Md., USA-based business consulting firm Dalton Alliances Inc. “It's sad that flawless execution gets zero attention,” she says. “It's kind of like the mother-in-law who comes to visit and checks for dust with a white glove. If she doesn't find any, she doesn't say anything. Flawless execution is expected, but not commented on.” Measuring the success of a project in concrete business terms—read nontechnical—can bring that flawless execution to the attention of management.
While focusing on the triple constraint of time, budget and quality has merit in terms of issues related to the business case, communicating solely in those terms is outdated, according to Jurie Smith, PMP, general manager of projects at Business Connexion, Midrand, Gauteng, South Africa. “Projects should be defined in quantifiable terms using a balanced scorecard that addresses the four main areas: financial, process, learning and growth, and the client's perspective—something that is often overlooked,” Mr. Smith says.
First, project leaders and stakeholders must agree on what to measure and how to gauge progress. “Define what will constitute failure for the project throughout the life cycle, not just at the end,” Mr. Smith says.
Ms. Dalton agrees: “It is not enough to say I want this piece of software operating flawlessly by the end of August. How do you define flawlessly? We might each define it differently.”
To make the criteria you set measurable, Ms. Dalton suggests you ask the Fill-In-the-Blank question. You essentially turn someone's request or instruction around so that they have to fill in the blank, so they have to set the criteria for measurement. “It leads to better understanding. Conceptual outcomes are not adequate.”
Projects should be defined in quantifiable terms using a balanced scorecard that addresses the four main areas: financial, process, learning and growth, and the client's perspective—something that is often overlooked.
—Jurie Smith, PMP, General Manager of Projects, Business Connexion, Midrand, Gauteng, South Africa
The Right Metrics
Finding the right metrics seems to be a difficult task, because what's “right” is so specific to an organization and depends on such things as its culture, process maturity and priorities, says Elizabeth Larson, principal of Minneapolis, Minn., USA-based Watermark Learning.
Some examples of metrics might include:
y Increased project productivity (functionality delivered or some ratio of total project hours to hours worked per week or month)
y Reduced end-product defects or rework
y Reduced amount of time or cost to deliver
y Improved communications (reduced number of customer or sponsor complaints; increased compliments or notices on the project “happy board;” willingness to use end product; requirement managed throughout project).
In finding the right metrics, project managers should look beyond the immediate effects. Consider not only the one project alone, but how the project fits into the company environment and how it interacts with the rest of the pieces of the company.
Mr. Neiman says value is demonstrated by providing some creative contributions, well beyond mechanically meeting commitments. “This means, often, moving beyond activity measurements, but producing and measuring actual bottom-line business value,” he says.
It's not enough to get a system in place on time and budget. “The project manager needs to see to it that the system also produces better service, lower cost or more profitable revenue,” Mr. Neiman says. “The project managers who succeed reach across the line and provide the impetus and help needed to assure bottom line payoff. That helps win the respect of executive management.” Consistency is important; value is demonstrated over time.
Project managers must make sure they are delivering the benefit they had hoped to deliver on time, says Ken Robson, PMP, president of PMI New Zealand and founder of AVPM Consulting, based in Wellington, New Zealand.
“Project managers need to check throughout the life of the project to ensure that the benefit is still there, because the window of opportunity may have closed due to a change in the market,” he says. “Many project managers are afraid to do that because they think managers will respond by asking, ‘What about what it has cost us to start this project?’ This should be countered with, ‘What about all the money we will save by not going on with the project because the market has changed?’ It is important to be courageous enough to say that you need to cancel a project that no longer adds value.”
Show them graphs and diagrams. Speak their language; speak in dollars-and-cents terms about profit margins.
—Ken Robson, PMP, President, PMI New Zealand and Founder, AVPM Consulting, Wellington, New Zealand
There also is the relationship issue, according to Mr. Neiman. He says that a large part of the project manager's value is in the area of soft skills—listening, empathizing and political astuteness. In fact, these skills may predominate in a manager's thinking about a project manager's capability.
Once you understand what needs to be measured and you have set the specific deadlines and success criteria for each interim component of the project, you need to communicate your progress to the executive level and to your internal or external client.
Ms. Dalton suggests keeping the executive level informed throughout the life cycle of the project and beyond. In this way, the picture of the project's progress and its value grows over time, and the executive gets a real understanding of exactly what the project has offered. And, she says, you do not have to rely solely on official reports to communicate the ROI; Informal e-mails or telephone calls during the project will keep it at the front of executives' minds without overburdening them with details.
Mr. Robson suggests that project managers create “project bites,” like “sound bites” so prevalent in the media. “These ‘project bites’ are short and sharp with not too much waffle,” he says. “Show them graphs and diagrams. Speak their language; speak in dollars-and-cents terms about profit margins.”
Another approach is to have project snapshots, where the project team and management spend a half or full day talking about the particular project. This is not a postmortem analysis, but rather a discussion of what went well, how to repeat successful things, how to avoid mistakes and so on.
Each project should be used as a learning tool to improve on the next one. “Make sure the benefits are measured throughout the life cycle and after its completion—sometimes the benefits are noticeable only a month or a year after project completion—and that the lessons learned are brought back into the organizational learning,” Mr. Smith says.
He believes that the assessment or evaluation of performance should be conducted by an objective third party who can report fairly on the true benefits of the project. He suggests either using an internal audit team or outsourcing the function to an external company. PM
LEADERSHIP / 2005 / WWW.PMI.ORG
LEADERSHIP / 2005