Project Management Institute

The price of authority

Executives must navigate the delicate interplay between responsibility and accountability to ensure pivotal decisions impact projects for the better.

BY ROSS FOTI

EVERYONE WANTS POWER, but it never comes free. Burgeoning project failure rates are an unfortunate sign of the times, and as executives are forced to explain the causes, they demand more accountability across the enterprise—at the price of bonuses, raises or even jobs.

“Large budgets mean power,” says Alexey Arefiev, partner, p.m. Office, Moscow, Russia. “In any case, project results mean a lot. So accountability is often considered a trade-off for power and tends to be redirected and distributed to the lower levels.”

Unfortunately, the relationship between authority and accountability is not always clear. Certain intangibles surround authority—direction and people skills to name only two—in addition to the formal processes and structure a firm has in place. “Authority often depends more on leadership skills, informal power and respect than on formal regulations,” Arefiev says. “But what is a project manager actually responsible for—hitting the goals or guiding the project management process properly? If a project goes wrong, it might not always be the manager's fault. If a methodology exists, the project manager becomes more accountable for the right processes, not just the goals.”

img Because people skills are difficult to quantify, leaders fail to realize just how integral their guidance is, which leads to project managers stepping on the lines of authority or inappropriately taking matters into their own hands. “People often need to learn to plan and focus on goals, instead of just performing work,” Arefiev says. “We are doing a lot of project management training thoroughly blended with techniques for developing skills such as holding effective meetings, business communications, goal setting and priorities management. It works.”

If business processes aren't formalized and regulated, project managers must carry out most decisions on their own, based on their individual track records and essentially in a leadership vacuum. “The best model for balancing authority and accountability is formalized and revised on a regular basis,” Arefiev says. “It is just like the fragile balance of a tightrope walker—continuous fine adjustments within critical tolerance.”

Alexey Arefiev Partner, p.m. Office, Moscow, Russia

Alexey Arefiev Partner, p.m. Office, Moscow, Russia

PHOTOGRAPHY BY HEINZ TESAREK

EXECUTIVE SUMMARY

img  Executives and project managers must understand the ins and outs of accountability and their scope of authority.

img  Each project player needs a clear picture of individual roles and responsibilities.

img  Executives should use an organizational chart and portfolio tracking tools to optimize lines of communication.

img  Executives must be clear in their expectations and how to measure results.

BEST PRACTICES

ALL EARS

Insurance giant AFLAC, Columbus, Ga., USA, has spent the last year revising corporate and project information technology (IT) governance to bring the business unit project owners into a more active role within projects. The project management office is situated between the business units and IT, according to Brian Abeyta, PMP, second vice president, project management office. “We had gotten to the point where we were approving every project presented instead of approving those with a valid business case,” he says. “We've instituted stricter measures to ensure projects have a valid business case and align with our strategic goals.”

AFLAC ensures results by requiring the business units to stay involved throughout the entire process. The business unit owner or sponsor chairs the project board for the duration of the effort and actively monitors all change requests. “They have to take change requests outside of their authority and go back to approval board to ask for any scope or funding changes,” Abeyta says.

As another safeguard, three to six months after the completion of every project, the sponsor has to present the project's return on investment to the board. “We measure results based on the calculation of net present value, payback and internal rate of return calculation—tangible and intangible benefits,” Abeyta says. “IT is our delivery organization. IT is responsible in all cases of delivery of a project. They're not responsible for an unsuccessful project because it has a bad business case. We keep project managers accountable based on capability maturity model standards and agreed-upon project deliverables.”

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Brian Abeyta, PMP, Second Vice President, Project Management Office, AFLAC, Columbus, Ga., USA

We've instituted stricter measures to ensure projects have a valid business case and align with our strategic goals.

Company: AFLAC, Columbus, Ga., USA, a Fortune 200 company that insures more than 40 million people worldwide

Project: New policy product revision, an enterprise project in excess of $1 million

Schedule: July 2003 to January 2004

Problem: It appeared that the product would be delayed beyond the expected product launch date.

Solution: By having the sponsor and IT management engaged throughout the process, the executives delayed other lower priority projects, thereby reallocating needed resources. The IT team members realized they needed to escalate the issue above their domain of authority and engage the project sponsors.

ROI: AFLAC has seen 100 percent ROI just in its ability to bring products to market faster, excluding future profit. This product delivered a system that allowed AFLAC sales agents to go to potential customers beyond its payroll groups.

Hand in Hand

When executives push accountability down to the project level, they often don't push the necessary authority to guarantee results along with it. “Ideally, accountability and authority do go hand in hand,” says Russell D. Archibald, PMP, PMI Fellow, an independent consultant based in San Miguel de Allende, Mexico. “But, it is usually very difficult to make certain that there is a reasonably good match between the two.”

img Each project player must have a clear picture of roles and responsibilities and those of the rest of the team. Often, this will keep executives from promising the moon and project managers from plotting the course. “When projects fail because the original objectives were not achievable, the person approving the business case must be held accountable,” Archibald says, “not the project manager who was given an impossible job. However, the project manager is accountable for determining as early in the project as possible whether or not the project can be achieved, and for giving an early estimate of the probabilities of success, which are then tracked through the life of the project.”

Instead of thinking in terms of who to blame, executives must consider the team that will contribute to success and how it coordinates decisions. The entire team must own the results, regardless of ultimate accountability. “I would rather have someone who has little authority but is willing to take accountability for the outcome,” says Art Haines, principal, Integral Strategy Group, Kenmore, Wash., USA. “I'm going to get more results from that person.”

img Better yet, executives can use an organizational chart and portfolio tracking tools to optimize lines of communication so slow decisions and misallocated resources don't show up on the bottom line. “In the modern organization, many of the important outcomes occur across functional lines of authority,” Haines says. “For example, the outcome of efficient, effective patient care is not delivered by any one functional department—it's all of them working together. If managers are willing to be accountable for outcomes and use their authority and influence to organize other resources toward that outcome, they start to use their skills far beyond the limits of their authority in the name of accountability.”

RIDE THE ESCALATOR

Given that project managers can't delegate resources, some problems will come from the top—either because the important decisions aren't made quickly enough or because the request for information needed to make those decisions reaches a dead end.

Often, dealing with an executive problem takes guts—and proof. “The way to escalate the solution to a problem that comes from the top is to gather real, documented and irrefutable data regarding the performance of the affected process and to publish that data internally,” says Tony Rizzo, CEO and president of the Product Development Institute Inc. “Further, so as to prevent any one project manager from becoming the executed messenger, the document should be authored by many people, and their names should be listed alphabetically.”

But before the matter spins out of control, that document should be sent to the executive who is perceived as responsible for the problem for approval, Rizzo says. “That approval may never be granted, and ultimately the document may never be released for internal publication. But at least the person responsible gets the message without human sacrifice.”

Art Haines, Integral Strategy Group, advocates a less direct approach: “Build a track record of performance so the person above you knows you can perform and trusts that when you're raising the yellow flag before there are real problems ahead,” he says. “Maintain regular communication so that when potential problems manifest, the CEO knows it's been coming for some time. This is difficult because it requires a project manager to say, ‘I can't accomplish the project because this hasn't happened. Here's what I need and since I haven't gotten it, here are the implications to scope, schedule and budget.’”

If the threat of failure doesn't get executives' attention, nothing will.

img

Art Haines, Principal, Integral Strategy Group, Kenmore, Wash., USA.

I would rather have someone who has little authority but is willing to take accountability for the outcome.

Delegation Game

Crossing those functional lines, the project sponsor—the executive who champions an effort, usually the head of the particular business unit that stands to gain from the effort—often plays the delegation game, shifting a portion of the accountability down the reporting chain toward the project manager. However, when things go wrong, the repercussions travel in the opposite direction. “An executive sponsor is about delegation—the level of risk and controlling your own fear,” says Ted A. Leemann, executive director of Management Concepts, Vienna, Va., USA. “In an increasingly complex world, it's impossible to be able to control everything.”

While sponsors have the CEO's ear, project managers don't often have a seat in the boardroom, so the reporting chain is integral. Project managers rely on the executive sponsor to step in when authority to make changes or requisition resources goes above and beyond the project management realm. “It's when we get surprised that we start talking about blame,” Leemann says. “Bad news doesn't get better with age. You have to stay on track, and you have to report things as they happen.”

To avoid nasty surprises, at the start of a project, the executive sponsors should clarify:

  • Mission
  • Goal
  • Objectives, or the steps to achieve the goal
  • Activities, including when, where and who is responsible
  • Results that are measurable up front.

Sponsors should deal with people based on their level of commitment and competence. “Give them the level of information that's appropriate for their understanding,” Leemann says.

Management should be open and honest about problems, learn from them, publish them—if caught early and dealt with appropriately, these issues can only make a company stronger and lend to its knowledge capital. “There is Americanized inalienable expectation that you can manage your way out of any situation—it's just not true,” Leemann says. “Contingencies exist for a reason. We can't be 100 percent on time and on budget always. There will be the unexpected. Encourage your project managers to set 10 percent aside. Set up a process to deal with problems so you can bring things to the fore and get back on track. Let's not be so aggressive in our schedule and assume we can do anything.”

Reasonable Measures

img And if executives really want accountability, they have to be very clear about their expectations and what range of success is acceptable. Exact measurements can produce their own unique problems, especially when they're not consistently upheld across the enterprise.

Managers must realize which unique model works for a firm's specific project types and then give project managers leeway and resources to constantly refine it. “Prioritizing, sequencing and properly scheduling all active projects would achieve two things instantly,” says Tony Rizzo, chief executive officer and president of the Product Development Institute Inc., Whippany, N.J., USA. “It would make life easier for everybody in the organization, and it would double the throughput of projects, with the same resources.”

ETHICS ON A SCHEDULE

Put all your dirty laundry on display for the world. That's essentially what the U.S. 2002 Sarbanes-Oxley Act mandates. Passed in the wake of corporate misdeeds, the law establishes new standards for corporate accountability and penalties for wrongdoing.

And although the final implications are just starting to emerge—in March, companies were required to start filing annual reports with chief executive officer and chief financial officer certifications and enhanced disclosures—project managers have been busy implementing an integrated technology-based framework that makes detailed reporting possible.

“The evolution of enterprise project management and the associated technology have shined a spotlight on the value of project management,” says Shelley Gaddie, president, Project Corps, Seattle, Wash., USA. “As executive ethics and accountability requirements increase and consequences are directed at the individual, project managers will find themselves in positions of heightened accountability as well.”

FILING DEADLINES*

2004 After 2005
Quarterly Reports 40 Days 35 Days
Annual Reports 60 Days 60 Days
*For fiscal years ending on or after 15 December Source: Parson Consulting.
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THE BEST MODEL FOR BALANCING AUTHORITY AND ACCOUNTABILITY IS FORMALIZED AND REVISED ON A REGULAR BASIS. IT IS JUST LIKE THE FRAGILE BALANCE OF A TIGHTROPE WALKER—CONTINUOUS FINE ADJUSTMENTS WITHIN CRITICAL TOLERANCE.

—ALEXEY AREFIEV, PARTNER, P.M. OFFICE, MOSCOW, RUSSIA

To help project managers succeed, executives must educate themselves about variation and the techniques needed to manage it. “The notion that an executive can dictate the end date of a project is futility personified,” Rizzo says, stressing that unforeseen obstacles can block delivery just as easily as synergy may make early delivery possible. The key is understanding root causes for delays or overages and then using authority to remove those obstacles.

Executives must stop using project plans as prescriptive tools in counterproductive attempts to achieve better performance, and instead use project plans as predictive tools to estimate acceptable ranges for delivery, Rizzo says. In other words, instead of executives pushing accountability down the chain of command, they must pull accountability up to their level. PM

To participate in an online discussion on authority with your colleagues, visit communities.pmi.org and go to the PMI Member Community.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK | MAY 2004 | WWW.PMI.ORG

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