I’ll open this post with a question: How can you define and identify who is a good project manager?
You might start to think about criteria which will help you to measure who is a good project manager but I believe the answer is much more simple: A good project manager is the one who surround himself with professional people in each one of the important functions – Procurement, safety, inspection and of course finance.
If the project manager got the right people in the right positions, doing their job well, then he rest assured that his project will run smoothly and his interference will be required only in special cases.
By the way, this is true for almost all managerial positions and not just for projects management.

One of the most critical functions for the project’s success is finance. Why finance is so important?
First of all, because by the end of the day the business purpose is to make profits. That why we are all here. And as you all know- profits equals money equals finance.
However, this is just a secondary reason. The main reason is that the finance analysts usually holds knowledge and instruments in economics disciplines which are not accessible for the operations. Finance are able to understand financial aspects and perform calculations which can hardly done without the appropriate education. A great example for that can be taken from a research done by prof. Annamaria Lusardi from Dartmouth College. In her research, done in 2007, Lusardi performed a survey among educated people in the U.S , asking a simple question: “Lets say you have 100 dollars in a saving account. The account earns 10% interest per year. How much would you have in the account in the end of 2 years?”
The answer is of course 121 dollars. Unfortunateley, only 18% of the participants provided correct answer although it was pretty simple question. What about more complex calculations like NPV, ROI, hedging or exchange rate impacts? This illustrate the need for a good finance support which will be able to handle this.

So, how can finance maximize his support for the project manager? I’ll provide 3 tips on that:

1)Take out the headache of finance calculations from your project manager – do it for him. Don’t bother your operations with your calculations, just provide them the bottom line.

2)Make sure your project manager sleeps well at night – by knowing that if something might go wrong from financial perspective, you will be there to give heads up soon enough before it will occur. If finance is able to raise the flag on time, it will provide flexibility to the operations to adjust their strategy to the new situation. Do that in professional way and the project manager will greatly trust you on other aspects as well.

3) Understand your project manager needs – when you truly understand your operation’s needs, first you are able to budget and forecast it in appropriate manner. Second, you are able to influence the decision makers to adjust their needs to the budget restriction by prioritize them.

These tips are just extra to the trivial things required from finance like analytical skills, forecast abilities etc., however they will help you to maximize the support you provide to your project manager.

yours,

Nir.

Thomas Kennedy (The PM Coach)  initiate this great club – The Project Management Book Club. I am sure you will find it valuable and interesting:  

Do you read books about project management? Do you want a way to study project management books online with other project managers and project team members? Then the Project Management Book Club might be for you!

The Project Management Book Club is the online book club for project managers and project teams. But it isn’t just another online book club. The Project Management Book Club is different in two ways:

First, as the title implies, the Project Management Book Club focuses on studying books about project management to help project managers and project teams study and discuss project management topics.

Second, the authors of project management books directly participate in the online book studies and discussions! That’s right… you get to study WITH the book authors and ask them questions to further expand your knowledge about the project management topic of study.

So how does it work?

The process is simple. In collaboration with its members, the Project Management Book Club picks a project management book to study, they set a starting date, they purchase the book, and then they discuss the book in the members only online forum. In addition, all previous book studies are captured and archived so members can go back at any time to review discussions about project management books studied in the past.

However, quite possibly the best part of the Project Management Book Club is the connections you will make with other project managers and project team members. The Project Management Book Club brings together people from around the globe to study and discuss books about project management.

To learn more, visit the Project Management Book Club.

–
Thomas Kennedy
PMBookClub.com | LinkedIn | Facebook | Twitter
The Online Book Club for Project Managers and Project Teams

Finance has a critical role in the success of construction projects. His main roles are funding, supporting and controlling.

Funding refers to finance’s responsibility of requesting the money for the project from the firm’s management while justifying rentability. This usually requires good analyzing and benchmarking skills.
Supporting refers to the financially assist that should be provided to the project manager. Finance should provide the project’s management ongoing information about the status of the project’s budget, cost risks and opportunities . He/She should alert the project manager in advance when he predicts that the desired scope of the project cannot be done in the current budget restriction. This requires good forecasting skills as the timing of the warning can be critical.

What about the controlling role?  How can finance cost control the project?
Usually if you’ll ask a new finance analyst what does it mean to have a good cost control on the project he will answer something like – “making sure the project is cheap and that we lower the cost as much as possible”.
This is amateurish answer. Making project as cheap as possible will probably cost you in other factors like quality or schedule as there is a tradeoff between the three. A professional analyst will just say that a good control on the project means to take care that things will be done efficiently.

Efficiency means either to minimize the cost of the project while maintaining all other factors fixed (scope, quality, schedule, safety etc.) or to maximize all those factors in a fixed cost. It also means to invest funds in scope that will yield good rate of return to the company and shareholders. In simple words – the scope of the project should worth its cost.

This means that in a budget challenged projects, the scope with the highest marginal benefit for the firm should be preferred upon a scope with a lower marginal benefit.
In a superfluous budget projects, a scope should be done only if its marginal output is larger than its marginal cost.
I bet some of you will find the above two sentences a bit fuzzy so in order to understand this principle i will give a very simple example: 
Imagine that you have endless budget in your project and that you need to decide if to invest in specific scope. The cost of that scope is one dollar (i.e. marginal cost). If you’ll execute it, it will increase the firm’s income by five dollars next year (i.e. marginal output). In this case , this scope is profitable as it yields profit of four dollars or rate of return of 500%. If the marginal cost is larger than the marginal output, then you shouldn’t invest money in that scope. If it’s equal, you are indifferent. It reminds me that every time someone ask me to describe what I learned in my Economics B.A I shortly answer - “marginal equals marginal”.

I will end this post with a fresh case that demonstrate what I just wrote – recently we had a fit up project in a floor of one of our campuses. The project ended with extra budget and the project manager wanted to invest the surplus funds in renovating the restrooms in the floor. The cost of the renovation was pretty small – around $70K. In one of my visits to this campus I took the opportunity to take a look on the restrooms and I found it to be in a good conditions. I talked to the project manager and he explained that he wants to renovate it to a very high standard restrooms so he can provide a “wow” effect to his customers. This is a typical thinking of the operations – they naturally wants to provide the best project to their customers, with the best quality and in relatively short time. However, this was a clear case of wasting money – the benefit of renovating those restroom was pretty low. After small discussion, a decision was made not to renovate those restroom and to give back the funds to the corporate so it can be invested in more beneficial projects.

So, what about my question in the title of the post? Can finance significantly impact the cost results of the project? It depends on him. If he can influence the project team to follow the above principles, then the answer is yes.

Yours,

Nir.

A man should know when to admit that he did a mistake.

We already talked in the past about Ego in project management . This time I did a mistake.

I did not recognize correctly the stakeholders of the project. Not because I was not familiar with their interests / agendas.  Just because I did not do an organized processes in order recognize them.

If we will return to the basic of project management, we could find several basic rules and tools that every project manager should master them before even considering learning how to use sophisticated software or smart estimation process…

Stakeholder analysis process is one of them. It helps you recognize all the relevant people involve in your project.

PMBOK definition: “Stakeholders analysis is a technique of systematically gathering and analyzing quantitative and qualitative information to determine whose interests should be taken into account throughout the project. It determines the interests, expectations, and influenza of stakeholders and relates them to the purpose of the project. I also helps identify stakeholders relationship that can be leveraged to build coalitions and potential partnerships to enhance the project’s chance to success”

PMs might think they can skip this process due to:

• Unprofessionalism (not familiar with process)
• And most important, Ego

If I look on my project, Ego was the case.

When I got this specific project, it had bloody history. A lot of arguments and disagreements during design, politics, tight budget…

I thought that I am familiar with the specific organization handling the project and started to work immediately. Meetings, emails, schedule meetings, design meetings and so on. I tried to shoot  in all directions.

This was a mistake.

I did not start my work in this project doing a real stakeholder analysis process. It is true I did some checking on the key personal (as I saw it) in the organization. But I never did a thorough process of analyzing if additional people have influence or interests in this project.

And as you can imagine, it blow in face.

At some point of the project (the most challenging one, as you can imagine) I was surprised to know that there are other people I should know. Someone else is really the decision-making.

This discovery required from me and the project team to do extra work in order to involve these stakeholders in the project. It delayed the project and will probably cost us in $ and reputation.

Why this happen? Ego.

I thought I know the organization, neglected the importance of the new environment I needed to work in, the new team members, counting too much on successful history and so on.

The main message I am want you to remember is that:

Assume that every project is unique. That every project involves someone you are not familiar with or change his role from the last time you worked with him. Only by that you will prevent surprises like I had.

Here you can find interesting articles about stakeholder analysis:

Stakeholder adventure maps. Drawing Smileys and walls.

How to build stakeholders analysis

Tools and psychological tidbits for stakeholder engagement

Good Luck!

Gilad

“verbal contract isn’t worth the paper it’s written on”

Samuel Goldwyn

Every PM know this feeling. The uncertainty before signing an important contract. Did I forget something? Did I protect my interests?   Did I set an appropriate change process which will keep me from bankrupt when changes will start to pop up, as they always do? and so on…

As it happen in most modern organizations, you will get the help of a procurement department which has an expertise in this area. But as the accountable to the project success, you will want to make sure you are backed-up. You do not want surprises.

Most PMs become obsessive collectors of documents. You collect during the years any document that describe requests from the contractor, set him limitations or enforce some actions. And when I say any, I mean it.

It became absurd. You find yourself adding documents from past projects, just because you do not want to be the one that remove them, you add documents just because one line, you add documents that you do not fully understand what they mean just because someone else did it and you change lines in your contract that has double meaning or write the same thing over and over just to clarify your point.

We do all this work just to find, after the project started, that we missed something. Can it done differently?

In his column  ” In Praise of the Handshake “ (Harvard Business Review ) Dan Ariely give us a challenge: If we cannot create an unbeaten contract (as any experience PM will tell you), do we have another way? According to Ariely, we have.

Instead of trying to put all our rules in it, is it possible that  in case of a conflict it will be solved according to the accepted practice in this area?

We just need to define what accepted practice is.

According to Ariely, a common social norms or values can lead people to the same solution (If A happen we for sure need to do B). So how we make sure that we and the other side are at the same page?

The solution might come from another publication by Dan Ariely: “Predictably Irrational “. Ariely called us liars. We do not exaggerate, but when we got the chance we will probably slipped. One of the ways to prevent such things, is to mention us the social norms we are obligate too.

So here is an idea: keep your contract short. Put in it only the necessary things. In addition, prepare an ethics and norms document which every side will signed. Another way is to do business with people who are formally obligate to the same social norms and ethics like you. For example, all certified PMPs signed the “code of ethics“. Doing business with another PMP supposed to let you play in a game with known rules.

It is sound idealistic in some way, but is the other way let you feel safe?

Good luck!

Gilad

“Always be nice to bankers. Always be nice to pension fund managers. Always be nice to the media. In that order.”

John Gotti.

It is one thing to manage the project planning and execution phases. It is another thing to achieve the funds that will eventually move the all process.

Specialization in the project management profession can take you to  higher levels in this field. You might get bigger projects to manage, get the most complicated tasks with the highest exposure and get yourself few promotions. But in order to jump and start play with the real sharks, be involved in the strategic planning process and gain additional control, you should master the funding process. Specially in a big organization.

Money talks!

Without the ability to achieve funds to your projects, you will not be able to move any initiative, or you will need to reduce your SOW, increase your projects duration, ignore quality issues and so on.

So how you become a master with the funding process in your company?

• Find a mentor - No matter how many guidelines you will read, nothing compare to a good teacher in this field. There are too many politics, bureaucracy barriers and surprises.  A good mentor will prevent you doing catastrophic mistakes (which might cause to a delay in your funds approval or even project cancellation), will sharpen yours documents and presentations and is most necessary in your first steps in this field.
• Understand the different  projects categories - Different projects have different funding processes and budgets. Knowing what to submit where, can achieve the necessary budget. Some projects have multiple funding options (for example, a system upgrade budget might also be achieved from energy conservation budget if you just present a positive ROI) or are part of specific strategic budget for example. Dig into details in this part.
• Understand the timelines – Different processes have different time cycles. For some you need to do half-year preparations and for the others you just need to show you can spend the money ASAP.
• Who approve what - You can prepare yourself by knowing who take the final decision. In some cases it might cause you to change the bucket you are targeting.
• Do not work alone  – It is not a one man show. Get advice from your supporting groups (if you are working in a company with structured processes, you will probably forced to do that).
• Do an alignment with your customers - If you are trying to get a budget for an internal customer project, do an alignment with him. Bring him to your approval sessions to back up you with the business justification.

“I only wish I had more time for fund raising”

Nido Qubein

Good luck!

Gilad

When coming to choose the best software for our PMO, we cannot find a single solution. There are different demands and the answer may be changed during the PMO development process. Sophisticated solution might not suit if we take into consideration additional data:

Choosing our software is not like entering into the computer store and buy some games. As the process of choosing our software and implementing it in our organization can take several  months / years, and the implications of choosing the wrong software might be devastated, you should work carefully to capture all the relevant data.

Research

You should do some research before you can jump to the water and play with nice graphs and indicators:

• What are you using – review all the tools you currently use to manage your projects. What solutions they give you? What they can not do? How many applications you need to operate? Who can operate them? And so on..
• What you need – as trivial as it sound, many people skip this step and start looking for the answer before knowing the question. As I see it, this step should involve all the factors that might use the PMO software: project managers, engineers, customers, management, teams members, etc.  you should check whether (but not limited):
• It should handle the project schedule
• You need to link between different projects
• You need a place to store the projects documents
• You need the software to manage the project from the project request (initiation) phase
• It should store the projects risks
• It should have built-in reports ( and easily add more)
• It should manage/ report the projects costs
• It could control the access for specific  area (permission levels)
• You need to manage a portfolio with it or separate projects
• It should have internal/ external access.

Find solutions

After completing the research, we should start looking for our solution. There are different places in which you can look, part of them are closer than you think:

• In Your company - you will be sometimes amazed how one department in a big organization, do not know what are the tools and techniques another department is using. Start with your IT guys. They usually have a marvelous collection of PM tools with nice graphs and indicators. Check how they use it and how you can implement it in your departments.
• In professional events - Usually all the big companies have some place where they present the latest solutions provided by them.
• From professional literature – PM Network , blogs, etc.
• From colleagues in the industry – this might narrow your search for software which is appropriate for your needs.

Choose your software

You gathered all the relevant data. Now it is the time to choose the appropriate software. You should check whether they fit to the needs you found in the research phase (remember that you will not found a software that fit all. You should rank them by their importance to you). Consider also:

• The implementation process – do you need a specialist? Could you do it by yourself?
• Organization guidelines- could you install any software you want or you need the IT department to approve it first?
• Current solutions - your company might already purchased a license to one of the suggested software.
• Price – of course…

The bottom line is that choosing a PMO software, is not just looking for nice graphs and dashboards. Doing it right will save you a lot of money and will give you a software that will serve you for long time.

Good luck!

Gilad

“Show me someone without an ego, and I’ll show you a loser”

Donald Trump (1946 – ), How to Get Rich

I wish it was that simple.

As a project manager, you should not totally put off your ego. But it will control your project unless you will control it.

Over the last years I found myself wondering what will make me a better project manager (What are the 5 basic rules of project management?). Is it improving my knowledge in scheduling, risk management…? Should I devote my time and develop complex matrixes and documents control systems? I do not think.

As I told you before, as I see it, the 5 basic rules of project management are:

·         People

·         Measure your work

·         Say Yes

·         Keep doing your scope

·         Say the truth

You can see that the softs skills are as much important as your technical knowledge. Soft skills include: communication, leading people, negotiation and so on. Controlling your ego will help you sharpen these skills. You should control it as a manager of people and for sure as a project manager that usually work in a matrix environment.

1.       Ego and your team: unless you will not work with team again, you can work 24 hours per day and no surprises will pop up (Project’s unexpected: change as a way of life for today PM), you need your people in order to succeed.

I assume that you want to be the decision maker. Otherwise you would not choose this job. But in order to keep your people motivate and in order to hear other opinions (believe it or not, there are other smart minds around you), you should create an open atmosphere where they can challenge you and suggest better ways.

Managing a project is not like managing a military action  

2.       Ego and your customer: this section is mostly about project managers that work with internal customers. When you work with external customers you will probably be more caution with your attitude.

You are familiar with the situation: a project manager from the company projects department is appointed to manage a system upgrade project. He has his schedule and budget constraints. He understands this project is a special request from the CEO and he is here in order to do it. He knows what to do.

 Just make sure those operation / system users’ guys will not disturb him. So what if they will need to use it for the next 10 years?

So if you want a quiet environment to work without the need of upper management solving conflicts between you and the ops guys, the solution here is simple: hug them. Do not agree on everything, but put your ego aside and talk with them as were talking to an external customer. Bring them to your side by convincing them. Do some small concessions and get an agreement on the important issues in return.

3.  Ego and yourself: “Avoid having your ego so close to your position that when your position falls, your ego goes with it.” Colin Powell (1937 – )  

 Good luck! 

Gilad

After long pause (too long…), new posts are coming.

Enjoy,

Gilad