Saturday, April 13, 2024

Make the maximum cost minimal

Full disclosure: I wrote this posting myself, but I did ask ChatGPT for some ideas to include. 

It's always a PMO objective to minimize cost if scope and quality and schedule are constant. But they never are. So, those parameters are usually intertwined and mutually dependent variables along with cost. 

But suppose for discussion that scope and quality are held constant (not to be traded off to save cost or schedule), and the primary objective is minimization of cost. Here are a few ideas.

Labor-dominant projects
I'm talking about projects where labor is 60% or more of the cost. Many software projects fall in this box, but many other intellectual content (IC) projects do as well: HR, finance, marketing, just to name a few.

Assuming competence is not in question, the first order of business is productivity, which is always a ratio: output valued by the customer per unit of labor required for achievement. As in all ratios, the PMO can work on the maximizing numerator and minimizing the the denominator. 

Getting the numerator right the first time minimizes the cost of waste and rework and minimizes schedule mishaps. The skill required: good communications with the people who establish the value proposition. 

Minimize the "marching army" cost
But the numerator is also about finding useful outcomes for the "white space" that crops up: you have staff in place, you can't afford to let them scatter when there is downtime, so you have to have a ready backlog of useful second tier stuff. Staff you can't afford to lose, but may have downtime nonetheless, is often labeled the "marching army"

The denominator is sensitive to organizational stability and predictability, personal skills, tools, interferences, teamwork, and remote working. Anything that PMO can do about the first five is more or less mainstream PMO tasking. 

Remote working:
But the issue of large scale remote working is somewhat new since the Covid thing. Loosely coupled to that is greater emphasis on work-life balance rather than "do what ever it takes" and often for no overtime pay. 

Such has then spawned more of the "do the minimum not to get fired" mindset. All that has cast a shadow on remote working.

Cost-free synergism.
Consequently, the pendulum has swung in the direction of minimizing remote working in order to get the synergistic production (at nearly cost free) from casual contacts with other experts and innovators, to say nothing of problem avoidance and thereby waste and rework avoidance.

Risk management and scheduling
When it comes to labor, the first risk is dependable and predictable availability, particularly if the staff are so-called gig workers. Many PMOs limit W9s to less than 25% of the workforce for just this reason.
One anecdote is loose coupling on schedule tasks to allow for the occasional misstep in staffing. After all, even W2s have matters that interfere.

Material-dominant projects
Here is where a lot of construction projects, hardware development, and critical (or scarce) material projects come in.

Material impacts are largely mitigated by the usual strategies of earliest possible order, acceptance of interim and partial shipments, incentives for faster delivery, and strategic stockpiles of frequently used items.

The workforce for many of these type projects is often contracted by specific trades who have licenses to work on specific work. It's typical that these contactors operate in a matrix management environment of multiple and independent customers vying for a scarce and technical workforce. The impact is uncertainty of schedule and availability, and a cascade of dependencies that have to be reworked.

The customary approach to scarcity is cost incentives to direct resources to your need. 
The mitigation for cascading dependencies is schedule as loosely as possible so that slack among tasks forms risk management buffers to a slipping schedule.

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