Friday, February 26, 2010

Of Maps and Compass

A recent  piece by Piers Brendon* caught my eye as I was preparing a recent presentation on value earning:

"...the past is a map, not a compass. It charts human experience [read: project team], stops at the present, and gives no clear sense of direction"

One might argue a bit with the last point, but the first is clear enough: beware extrapolations of history based on trends developed from linear equations of past performance that purport to represent an accurate forecast of the uncertainties of the future.

The project manager's mission is clear: "Defeat the unfavorable forecast with assertive action to deliver the best value to the customer, taking measured risks to do so"

Bendon goes on: .."History does not repeat itself, nor does it proceed in rhythms or cycles [read: agilists beware!]. Events buck trends [read: have a decision protocol at the ready to deal with the uncertain]. Everything is subject to the 'viccistudes of fortune"

I don't get to use 'viccissitudes' that often, so I thought I would through that in!

*Noted author of "The Decline and Fall of the British Empire"

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Monday, February 15, 2010

Todd's Tech Bite - 4 - Small Teams

My fourth interview with Todd Ruopp was published on

In this tech bite, the subject is small teams, typically 6-12 people, co-located to the extent possible.

The point made in the interview is that trust is the number one ingredient to making a team work. Everyone comes into a team situation with some degree of trustfulness, what Covey calls the initial deposit, but personal performance on behalf of the team is needed to seal the deal!

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Friday, February 12, 2010

Random Numbers on the WBS? OMG!!

Yikes! who said random numbers belong on the WBS? Well, actually everyone who knows a lot about this business, and for that matter, a bunch of others who usually weigh in, say that single-point estimates are a poor choice, indeed in most situations they're a bad choice.

What's better? 'They' say: A three-point estimate--most optimistic, most pessimistic, and single trial most likely--is much 'better' for forming estimates and thereby budgets.

And, 'they' are right! Why so, why 'better'? A lot of reasons, but an obvious one is that there is simply more information, and so more information usually means a better outcome.

But, alas, a three point estimate is really three random numbers. A random number is really a number pair: < event value, event probability >, so what do you do when your work package managers hand you a bunch of charts that plot these number pairs on orthogonal axis', or just as bad, hand you a bunch of bivariate estimates?

You can't pass along a bunch of charts to your sponsor. You can't arithmetically add the number pairs--you can only convolve them. Egads! Convolution does not sound like program management--do we need a system engineer here?

You could outsource the whole thing to your project analysts and have them run a Monte Carlo simulation which does the convolution for you. However, that may be expensive and not timely, and certainly does not work off the back of an envelope.

The thing to do is what John Schyuler recommends in his excellent text on decision analysis, entitled "Risk and Decision Analysis in Projects", to wit: convert those three pesky random number estimates to a risk weighted average for each work package and then add them up!

That means doing the simple arithmetic to multiply the value times the value probability for each random number; then add all three for a risk weighted average.

There is actually rigorous proof for this idea that you can find in most applied handbooks on statistics, but it works well enough for project management without looking into the proof.

In the approximate world of ONE-SIGMA project management, 'risk weighted average' is what passes for expected value, the most powerful idea in statistics for the average project manager.

Of course, you may get asked about your confidence in the WBS budget as a weighted average. That takes a little more arithmetic, but that's all it is. However, that calculation is for another time.

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Saturday, February 6, 2010

Frederick P. Brooks, Jr. on estimates


Today's quote: Here's a quotation that is a favorite of mine drawn from Fred Brooks, Jr.'s "The Mythical Man-month"

"It is very difficult to make a vigorous, plausible, and job-risking defense of an estimate that is derived by no quantitative method, supported by little data, and certified chiefly by the hunches of the managers"

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Wednesday, February 3, 2010

That Financial Alphabet-DCF,EVA,NPV,IRR-for Program Managers

Good grief: talk about acronyms!  It's enough to keep up with the earned value system--PV, AC, EV, SPI, CPI, ETC, EAC--and now add in the accounting world.

In a whitepaper I wrote some time ago, I shed a little light on accounting for project managers.

It's entitled That Financial Alphabet�DCF, EVA, NPV: are they affecting your project?

For many in the crowd, this is pretty sleepy stuff, but wake up long enough to take notice that many projects never see the light of day because of unfavorable discounted cash flow--what's that?--and other projects get cancelled mid-stream, and still others disappoint their sponsors in ways that can rub on program managers.

So, it may be worth your while to take a few notes and be able to discuss your project with your accountant.

After all:
Cash is fact; profit is an opinion.

Is your project likely to make a profit for your enterprise, and are you being a good steward of cash?  You might be surprised--Check it out!