Working out the probable completion date for a project and understanding the risks associated with achieving a target date have always been difficult. This article will take a quick look at the evolution of the techniques through to the current state of research reported at the Project Governance and Controls Symposium earlier this month.
The way PMI deals with risk in the PMBOK® Guide is simplistic. Calculating the effect of one risk using the suggested probability x severity calculation provides one value. For example, if there is an 20% probability an estimate is under valued by $50,000 the Expected Monetary Value (EMV) for this event will be:
-$50,000 x 0.2 = -$10,000 it is simple but its not a lot of use in the real world.
Breakdown structures are central to the practice of project management and have their origins in the industrial revolution. In the ‘Wealth of Nations’ Smith advocated breaking the production of goods into tiny tasks that can be undertaken by people following simple instructions. ‘Why hire a talented pin maker when ten factory workers using machines and working together can produce a thousand times more pins than the artisan working alone?’ Similar ideas underpinned Newtonian physics. Newton saw the world as a harmonious mechanism controlled by a universal law.
As planners we use numbers every day of the week but how real are they?
In the western world, numbers in the form we know and use today appeared in the 13th century when Leonardo Pisano Bigollo (c. 1170 – c. 1250), known as Fibonacci an Italian mathematician, published the Liber Abaci (1202). In the book, Fibonacci advocated numeration with the digits 0–9 and place value, and showed the practical importance of the new numeral system by applying it to commercial bookkeeping, and other applications.
Only fools and the bankers who created the GFC think the future is absolutely predictable. The rest of know there is always a degree of uncertainty in any prediction about what may happen at some point in the future. The key question is either what degree of uncertainty, or in project management space what is the probability of achieving a predetermined time or cost commitment.
There are essentially three ways to deal with this uncertainty:
Option oneis to hope the project will turn out OK. Unfortunately hope is not an effective strategy.
The Guild of Project Controls is in formation, and most people have a view of what is involved in ‘project controls’ but what is the ‘dictionary’ definition of ‘project controls’? To answer this question, my proposed definition for ‘project controls’ is:
The Complex Projects Contract 2013 (CPC2013) focuses on managing time to ensure projects are delivered to specification on budget and without delays. Unlike existing contracts, which target failure by requiring financial compensation for late completion, CPC2013 provides the procedures to enable parties to manage time, cost and risk events in a modern and proactive fashion. It is also the first standard form contract to cater for Building Information Modelling (BIM) and the future of collaborative design.
Planning Planet members are invited to a free AIPM Project Controls SIG (PC-SIG) meeting to be held at The Water Rat Hotel, 256 Moray Street, South Melbourne VIC, 3205: http://www.thewaterrathotel.com.au/
Date: Wednesday 20 November 2013, Start 5.30 pm – Start (note earlier start time) Finish 7.00 pm - There is no catering for the forum but interested participants are invited to pre and post- forum drinks at the bar (after all it is a pub!!).
The agenda for the meeting is:
There is not a project in this world that does not use spreadsheets from time to time and many are run exclusively by spreadsheets – in numerous surveys Microsoft Excel is listed as the most common / popular project management tool. And generally speaking Excel gets the calculations it is asked to perform 100% correct. Unfortunately the same cannot be said of the users who set up the calculations!
There is not a project in this world that does not use spreadsheets from time to time and many are run exclusively by spreadsheets – in numerous surveys Microsoft Excel is listed as the most common / popular project management tool. And generally speaking Excel gets the calculations it is asked to perform 100% correct. Unfortunately the same cannot be said of the users who set up the calculations!