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Welcome to the inaugural edition of the PMOUSA Network newsletter.
PMOUSA enevors to bring you the most current information effecting the Program Management Office (PMO) today.
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Building
a PMO to Last
A Theory of Constraints Approach
By Gerald I. Kendall
In my work in Asia, Australia, USA, Canada and Europe, in every company I
visit, management is complaining about the number of projects that are on
the go. Project managers are often angry about how unrealistic executives
have become with their due date demands and resource allocation. At the same
time, from my experience, I can tell you that executives are not making demands
to be hard-nosed. They are caught between a rock and a hard place. They feel
forced to escalate their demands, even without a softening economy. Every
PMO must find a way to quickly help both sides, or they will
soon be dead.
Having an experience base of 35 years in project management is not enough
to justify some outrageous claims I will share with you. My PMP designation
is also insufficient. Even my 88 year old mother doesn’t believe that I’m
so smart. So the only way that I can justify what I am about to tell you is
through experience – mine and that of a few other professionals who have achieved
something very special in terms of project management within an organization.
The most outrageous claim that I documented for a chapter in Dr. Harold Kerzner’s
book, Project Management – A System’s Approach, was a case study about
a company that increased the number of projects they were able to complete
with the same resources by 300%. Average project durations were cut by 50%.
In all documented cases, the improvements were accomplished within less than
a year. In all of the several dozen cases that I have read, investigated,
or implemented myself, where the same approach was used, the minimum improvement
was 25% and in all but two cases, the improvement was done within less than
a year, often within a few months.
I am convinced that there is only one way to accomplish such results in an
incredibly short time – and that is FOCUS ON ONE MAJOR ROOT PROBLEM. However,
the focus must be on the right problem, or the effort will be a complete
waste. What amazed me when I first learned a methodology called Theory of
Constraints (TOC for short) some 10 years ago, was how obvious the problem
is, after you discover it. In fact, you don’t need 15 management consultants
and a 6 month study to discover it – a few symptoms of the problem and a few
days will do fine.
In Project Management, the genius who invented TOC, Dr. Eli Goldratt, describes
in his book, Critical Chain, how so many negative effects are driven
by a common measurement that most organizations use today. Today, when an
estimate is given for a project task, it becomes the standard of performance
against which team members are measured. People who are frequently late on
task estimates are considered unreliable. No wonder people try to get “realistic
estimates” for their task times.
It is totally ludicrous to hold someone accountable to a task time estimate.
An estimate is just that – an estimate. A project, by definition, is something
we have not done exactly the same way before. So it is perfectly normal for
any estimate to be exceeded, even by 100% or more.
Aside from this bad practice of holding people accountable to their estimates,
there is another sinister attribute of today’s project management environment
that drives task estimates through the roof – bad multitasking. Almost every
team member that I meet has the perfect excuse about why a 5 day task must
be allotted 10, 20 or even 30 days to get done. “I’m working on six other
projects, plus I have operational responsibilities. You’re crazy if you think
I can just work on your project.” No wonder, with a company I visited in Canada,
a new product development that should have been completed in 2 months required
a year and a half (no exaggeration)! No wonder a strategic plan that the executives
should be able to implement within 3 months ends up taking all year and is
still not completed.
Why is there so much bad multitasking going on today? When I meet with CEOs
and senior management, I find that they are constantly pushing new projects
into the system, irrespective of the capacity of their organization to do
the work. If they managed their capital expenditures this way, every single
one of those companies would have been bankrupt a long time ago. But, a PMO
must understand that executives believe that they have no choice in this behavior.
They feel that they must constantly activate new projects in order to get
the improvements to warrant keeping their jobs.
What executives do not realize is that when a system is already at or over
capacity in project management, activating new projects throws the system
into chaos. They are choking the already clogged arteries of project work
and wasting 25% or more of their resource time, either with bad multitasking
or by having them work on the wrong project mix.
Goldratt’s prescription is profound. He claims that “the more complex the
problem, the simpler the solution must be, or it will not work.” A further
hint on his philosophy comes from his background in physics, a science that
does not like to accept the existence of complex systems. Goldratt claims
that, “I probably would have found my answers sooner, if I had studied theology
rather than physics.” The principle of oneness is something that Goldratt
believes aligns well with human beings. People do much better when they put
all their energy and focus into one thing, rather than many things. Perhaps
this explains why Balanced Scorecard performance measurement systems, with
8-12 measurements, have fared so poorly in the past few years.
To help people apply a process of ongoing improvement, Goldratt invented
five focusing steps. To date, these steps have led to breakthroughs in manufacturing
logistics, distribution and supply chain improvements, project management,
marketing and overall strategy. Below, I have described these 5 focusing steps
and how they have been successfully applied in project management:
1.
Identify the System’s Constraint – This step asks where
your biggest leverage point for improvement is, when considering how any system
behaves over a period of time. In project management, within the multi-project
environment, the practice of activating projects without consideration of
the capacity of the system is changed to staggering projects according to
the capacity of one resource – the strategic resource. Within each project,
the practice of holding team members
accountable to individual task estimates is replaced by the holistic measurement
of meeting the project due date. The Critical Chain is identified as the physical
sequence of tasks that determines project duration. It is the longest chain
of dependent events, considering both task and resource dependencies.
2.
Decide How to Exploit the System’s Constraint – This
step urges us to squeeze the most out of the project’s duration. For individuals
who are working on Critical Chain tasks, this means applying a “relay runner
work ethic” to those tasks. In projects, every team member and every manager
– resource, project and program managers, put their heads together every week
to make explicit decisions on how they can speed up the project’s duration
via focus on the Critical Chain. Every day that the Critical Chain is shortened
is a day saved for the entire project. For the multi-project arena, the focus
is on the strategic resource and significantly reducing the practice of bad
multitasking.
3.
Subordinate Everything Else to the Above Decision –
In order to squeeze the maximum out of a project, everyone must play second
to the constraint, including executives. Executives subordinate to the constraint,
the strategic resource, by agreeing to only activate projects according to
the agreed-upon capacity of the strategic resource. Team members and others
subordinate to those people doing Critical Chain work by helping them in any
way they can. This might mean doing their email for a few days, performing
support work on their behalf, making sure pieces of input work are ready on
time, etc.
4.
Elevate the Constraint – In project management, elevate
usually means adding resources. Note that this is where we will be spending
more money. Goldratt found, over a period of 25 years and applying the five
focusing steps, that often we can accomplish enough to break a constraint
by simply performing the first three of the five focusing steps. That is why
he sequenced the elevate step as step 4 – it is most often not necessary.
5.
Go back to Step 1 – Do not let inertia become your constraint.
If we are to have a process of ongoing improvement in project management,
we must keep looking for the biggest leverage point. That is the correct job
of a PMO.
While PMOs stand to gain a huge amount of credibility by implementing a Theory
of Constraints Critical Chain approach in projects, the best is yet to come.
When Goldratt’s life’s work is applied to an organizations logistics and strategy,
the results are even more exciting and more holistic. Anyone who believes
in, and has had success with, Dr. Edwards W. Deming’s approach to quality
and predictability in systems will find Goldratt’s work a logical extension
to and very complimentary with Deming’s work. It also fits nicely with Six
Sigma and Lean methodology.
The Theory of Constraints has been applied to not-for-profit organizations,
manufacturing, distribution, government, schools and every type of organization
you can imagine. There are now over 20 books on the subject, self-study CD
programs, articles, white papers and tens of thousands of web pages devoted
to this subject. For a further introduction and a list of available literature
and products, see www.marketkeyinc.com. Or email your inquiry
to Gerryikendall@cs.com.
Above and beyond the organizational improvements that I’ve personally witnessed
from this approach, the most heartwarming effect has been the improvement
in quality of life of project management professionals. A project manager,
today, has to have unbelievable dedication just to tolerate the constant challenges
and resource conflicts they face. When such significant changes are made in
their lives, within a few months, the reaction is often disbelief. Most project
managers have seen countless attempts to improve things, with little to show
for it. Of course, when attempts are made to improve things and those things
are not THE MAJOR ROOT PROBLEM, it is no wonder that everyone gets frustrated
in the process – including even those doing the improvement effort.
It is only an assumption of physics that the world is simpler than we sometimes
think it is. If you are willing to try that assumption, you will be amazed
at how powerful it is and how fantastic the results. Good luck with your efforts
and I wish you success and longevity. |
