EVMS General Topics

EVM Training – Decision Making & Charlie Munger – Part 2 – Tendency Toward Misjudgment

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EVM Training - Decision Making & Charlie Munger - Part 2 - Tendency Toward Misjudgment

Tendency Toward Misjudgment – Part 2

Tendency Toward Misjudgment

In part 1 of this topic we learned about Charles (Charlie) T. Munger, Vice Chairman of Berskshire Hathaway and partner of Warren Buffet and his listing of 25 innate human tendencies toward misjudgment that we harbor. I went through each of the 25 “tendencies” that are defined and discussed by Charlie and tried to think about how the tendency could disadvantage or could potentially aid decision making.

Decision-Making is Critical

Humphreys & Associates emphasizes in its EVM training material that the process of decision-making is critical, and I was greatly pleased to learn that Charlie thought that same way. In the first part of the blog we discussed just two of the list of tendencies Munger provided. It appears we humans are fraught with innate tendencies that, if not blocked, can lead us to make a misjudgment. A misjudgment would be a wrong decision in terms of this blog. With all that follows in the blog about misjudgment, we are trying to discern a sound process for decision making, with tools like decision trees, that can help avoid or counter the influences of the counterproductive tendencies. Developing your decision-making process should involve findings tactics that help you avoid or defeat or neutralize these tendencies in your processes.

Liking/Loving Tendency

Tendencies #2 and #3 are total opposites but very much related. Tendency #2 is called the “Liking/Loving Tendency.” It should be familiar to us all. The foundational notion is that people seek affection and approval. Maybe not all people do this, but it is a basic human tendency and we believe that most people have it. This tendency can be a problem when it gets in the way of rational thinking; for example, if people on your team ignore faults of people they like then how will they fairly evaluate proposals floated by those they like? What about when they favor the products, actions, or ideas of those they like? People may not even consciously understand the underlying bias is operating in any given situation, so we need to find a way to circumvent this tendency when we are processing a decision. We need to make a neutral playing field in order to get a fair evaluation.

Disliking/Hating Tendency

Tendency #3 is the opposite of that. It is the “Disliking/Hating Tendency” that can motivate people to ignore or devalue the works or opinions or ideas of those they dislike simply because they do not like the person. This tendency can be strong enough to lead to distortion of facts or judgment. Maybe you have worked with someone that you have strong negative “feelings” about. Can you remember that and imagine if you had that bias operating in a decision-making environment? Maybe the negative tendency toward bias would be operating below the conscious level just far enough to be influencing them, but without their understanding. They sincerely think they do not like the idea and that has nothing to do with the person posing the idea. Our problem is to devise a decision-making process that can work in the face of such underlying, and perhaps invisible, motivations.

Doubt/Avoidance Tendency

Tendency #4 is unrelated to those two. It is the “Doubt/Avoidance Tendency.” That is our tendency to avoid being in doubt and our penchant for moving to certainty. This can be a powerful motivator to move to a quick decision; perhaps before all the homework of deciding has been accomplished. It is human nature to make quick decisions and certainly we can understand that hasty decisions may not be the best decisions. This tendency can potentially rise to the level where it creates irrationality and the pressing need to remove doubt. Unfortunately, this tendency becomes stronger when we are under pressure; that means just when we need to be at our level-headed coolest and most deliberative, unfortunately, our motivation is to just make a decision and get on with it to rid ourselves of doubt. Again, our challenge is to not let this tendency dictate our decision-making process. A little pressure can be a good thing. Too much pressure, along with the unchecked tendency to want to move quickly away from doubt, can be ruinous.

Curiosity Tendency

Perhaps tendency #6 can help us here. This is a beneficial tendency of human nature; the tendency to be curious. Charlie Munger simply called it the “Curiosity Tendency.” It is our nature to be curious and that curiosity has brought humankind from the cave dwellers to the high-rise dwellers. If we can harness that tendency in our decision-making process, maybe it will help counter some of the negative and damaging tendencies. Maybe our curiosity will want to lead us to getting the facts before we decide emotionally.

Hopefully you get the idea now. The first two blogs together have not covered the entire list of tendencies; far from it. When things permit, the rest of the list developed by Charlie Munger will be presented here in terms of the process of decision-making. Meanwhile you can certainly look at your decision-making processes at work and maybe even at home to see if you have planned to subvert these tendencies.

Review EVM Training – Decision Making & Charlie Munger – Part 1

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EVM Training – Decision Making & Charlie Munger – Part 1

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Tendency Toward Misjudgment – Part 1

Charlie Munger and EVM Training

So, what does Charles (Charlie) T. Munger, Vice Chairman of Berskshire Hathaway and partner of Warren Buffet have to do with EVM training? Decision Making.  You can imagine the big-money decisions he has helped Buffett make during the many years of building up the legendary outfit. Along the way, he kept track of the happenings around him that through various speeches and writings espoused some clear thinking. Born in Omaha in 1924, Charlie began working with Warren at Buffett & Son, a grocery store owned by Warren Buffett’s grandfather. Eventually graduating magna cum laude from Harvard Law in 1948, Charlie moved into the business world.

Psychology of Human Misjudgment

This blog is narrowly focused on what I gleaned from Charlie’s writings about the “psychology of human misjudgment.” Looking to see how this information could be used to help guide a EVM training workshop on the topic of decision making, I went through each of the 25 “tendencies” that he defined and discussed. I would never have guessed that we humans have 25 tendencies that impinge on our thinking processes, but after studying his list, I think he nailed it. Most of the tendencies are backed up with some reference to psychological studies; so be assured Charlie did not make them up. This blog will treat them in numerical order and will add thoughts from the Humphreys & Associates earned value training material on decision making that will make the Charlie Munger points more specific to the subject at hand.

In our EVM training material, we emphasize the process of decision making is critical, and Charlie thought so way before I did. Bad decisions can come from good processes, but that is less likely than bad decisions coming from no process or, even worse, from a bad process. At one point Munger advises the use of checklists can help navigate through the minefield of human tendencies toward misjudgment. An amazingly timely idea, because here at Humphreys & Associates we are just wrapping up our work on “The Big Book of Project Management Checklists” that is aimed at doing just that.

Blocking Human Misjudgement

What about human misjudgment? It appears we humans are fraught with innate tendencies that, if not blocked, can lead us to make misjudgments. A misjudgment would be a wrong decision in terms of this blog. With all that follows in the blog about misjudgment, we are trying to discern a sound process for earned value decision making, with tools like decision trees, that can help avoid or counter the influences of the counterproductive tendencies. Developing your decision-making process should involve findings tactics that help you avoid or defeat or neutralize these tendencies in your EVMS processes.

Tendency #1 – Reward and Punishment Super-Response

Let’s cover one tendency as an example. Tendency #1 is called the “Reward and Punishment Super-Response Tendency.” The word “super” attached to the idea of response to reward is to emphasize that this is a case of over responding. We all know people move toward what is incentivized; they seek the reward. It must be obvious that, if the wrong thing is incentivized, people will be moving in the wrong direction. According to Munger, there is a strong tendency to move toward the reward; an overly strong tendency. Charlie cites some great examples from his experience. Your decision-making process should include some “clearing the minefield” efforts early on in the process to make sure that the decision will not be made in a move toward a reward that would be wrong for the situation. A simple example could be that you are involved in deciding about launch-ing a long-term effort that would cost quite a bit that does not have certainty to the outcome. If you are incentivized toward short terms profits, then you have the biased tendency to discard the idea in favor of short term gains.

Deprival Super-Reaction Tendency

There is a potentially related tendency called the “Deprival Super-Reaction Tendency.” This is the tendency to feel more pain from a loss than to feel pleasure from a gain of the same amount or thing. According to this tendency, there is more motivation associated with avoiding pain than making a gain. The see-saw is weighted in one direction. How counterproductive is that tendency toward carefully considered decision-making? If we are trying to make a gain in our decision process, we are not only fighting the facts of the situation but also our innate bias against taking a risk. The idea can be seen in the commonly observed action of throwing good money after bad. A loss is imminent, so the decision is to spend more to head it off to potentially save the day and avoid the pain; is that wise? Think about the situation where someone says or is known to think that “I will not be denied no matter the cost.” You probably do not want that kind of thinking involved in your decision making. Now think about a situation where tendency #1 and tendency #2 both align against one of the options being considered. Would an option that faces the tendency to risk some pain of loss and to move against a potential reward stand a chance if those tendencies were not neutralized?

Blog Series

Hopefully you get the idea now. This blog will be followed by another that covers some of the remaining tendencies identified by Charles T. Munger. I hope to learn more from and will translate what I learn here and in our EVM training material. Stay tuned.

EVM Training – Decision Making & Charlie Munger – Part 1 Read Post »

Project Management: Earned Value Consulting; Could You Use Some?

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Failed Projects

A recent article discussed the results of a survey on the reasons that projects failed. The definition of failure was that the project was abandoned. Abandonment does not occur frequently in the world of government projects; especially defense projects where there should be strong “must have” needs driving the project. These projects tend to persist until completed even though the outcomes are not satisfactory. But there is a lot to learn from the list of reasons for failure.

Of the sixteen reasons listed, the top four had to do with changes to the environment that had given rise to the project. For example, changes in the company priorities was the most often cited reason for abandonment. In that same vein were issues with changing objectives and inaccurate definition of requirements. These types of failures are not topics for this blog since they do not immediately involve execution of the project.

Execution Problems

Lower on the list of those environment related reasons for failure were the ones more related to execution problems. These are of significant interest to a project management using an earned value consulting company such as Humphreys & Associates (H&A). These reasons related more to issues of poor project management that could have been corrected. In this area were reasons like “poor change management,” “inaccurate cost estimates,” “inaccurate time estimates,” and “inexperienced project management.”

The answers given in a survey situation depend very much on the mindset of the person responding. Is the reason really “inaccurate cost estimates” or should it have been “failure to execute to the estimate”? How many times have you seen a problem in execution “swept under the carpet” as being an inaccurate estimate or plan? One of these two answers points to the estimating system and process while the other points to project management. The estimates were generated; and, at some point, they were deemed to be sufficiently detailed to launch the project. If a scrubbed and blessed estimate is “inaccurate” that would still be a failure of project management. If the problem were really a failure to execute, then how easy would it be to blame the problem on poor estimates? This blog will discuss the cited failures as if they were execution failures.

Earned Value Management (EVM) Consultant Specialists

There are situations in life where the need for specialized advice is common and well accepted by us all. When your doctor is unsure of the medical issues, the doctor will send you to a specialist. The reason is obvious. The specialist has learned so much more about a specific problem and has so much experience diagnosing and treating the problem that it would be foolish not to secure the services of that specialist. In fact, it might be malpractice. A project management consultant can be thought of much like a medical specialist.

There are similar situations in business where the need for specialized knowledge is critical. Large companies tend to have in-house legal departments to cover the day-to-day legal issues and tasks that are central to their businesses. However, the need to go to outside counsel for large or unusual issues is accepted. Companies do not hesitate to engage the services of outside law firms to help them through troubled times. Project management consultants are like outside counsel.

What if there were a project management or earned value management situation you have never encountered before? A good example would be the times that H&A has been called in to help clients navigate the unhappy circumstances of needing to go over-target. Going through the over-target-baseline (OTB) or over-target-schedule (OTS) process is not a common experience. It is a tense time when careers can be on the line and the company reputation might also be at risk. It takes specialized knowledge to get it right. In some cases, it even takes the objective view of an outsider to help make the right decisions.

Specialized Knowledge

Another example of specialized knowledge being crucial is when the customer has deemed some issue on the project to be deficient. In some situations, a customer’s Corrective Action Request (CAR) can result in cost penalties and damaged reputations; possibly even worse consequences could result. Engaging the services of an EVM consultant with experience in identifying problems, building Corrective Action Plans (CAP)s, and leading or helping implementing the corrective actions is often a valuable and necessary action. Ask yourself how smart it would be to assume that those who were involved in causing the issue would be capable of creating a satisfactory solution.

These scenarios are aligned with the idea of project management consulting being something you only need in a crisis. There are other non-crisis needs for specialized support. Often H&A is engaged simply to help a client prepare a proposal. A proposal situation puts heavy demands on the company staffing levels and can require areas of specialized knowledge not available in the company. What if the company has never created a fully compliant Integrated Master Schedule (IMS) and they could use help the first time? What if there are not enough trained and experienced schedulers to work on the proposal? What if the company does not have a documented project management system?

Make or Break Opportunities

Projects can be huge and risky. They can be make-or-break opportunities to a company. Where so much can depend on good project management, smart companies recognize the need for an outside opinion and outside talent. Just like the internal legal department, the internal project management group sometimes needs to call on outside subject matter experts. While it might be obvious, let’s look at some reasons why this is true.

There are more ordinary everyday reasons to engage a project management consultant. Perhaps an organization just managed to win a new project bigger than any they have won before. In this case, they may not be ready to handle the project in terms of experience, systems, and even just talented headcount. A project management consulting company such as H&A can bring solutions to your earned value woes. It can also provide temporary training staff to get things going until the client is ready to take over.

Poor Communication

Let’s get back to the survey of reasons that projects failed. Are there issues on the list where project management consulting could have made a difference? Imagine an improved project management process and staff after a period of consulting to support creating or improving systems and training personnel?

The fifth most frequent reason for failure is “poor communication.” A good project management system with trained personnel is all about communication. Communication of plans, communication of progress, communication of issues, and communication of corrective actions are all actions required in a project management system. Quite often the problem of “poor change management,” cited as the sixth most common reason for failure, is reduced or eliminated after using the consulting services of a specialist?

What about the twelfth cited problem of “inadequate resource forecasting”? Would a well built and maintained resource-loaded Integrated Master Schedule (IMS) go a long way in providing forecasts of resource needs and the impacts of not having the resources? In fact, a proper IMS would help with several of the cited reasons for failure, such as inaccurate duration estimates. In fact, the application of a process, such as Schedule Risk Analysis (SRA), with the help of an experienced consultant can identify such issues in advance while there is still time to take action.

Earned Value Training

Disregarding the threat of failure as a motivator, the need for constant improvement should be enough reason to consider a project management consultant. We can all laugh at the time-worn clichés of “not-invented-here” or “we’ve never done it that way;” however, these are clichés for a reason. There is resistance to outside help and there is resistance to change. But outside help can be a great logjam breaker. An experienced and knowledgeable consultant can be your voice when you need someone who has, to use another cliché, “been there and done that.”

In fact, our consultants can laugh when they say they have “been there” and they have more than a T-shirt to prove it.

Project Management: Earned Value Consulting; Could You Use Some? Read Post »

Who Owns EVM? Programs or Finance?

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earned value management: finance department or programsI have read several Earned Value Management (EVM) reports, papers, and articles that debate what company organization should “own” EVM and the company’s Earned Value Management System (EVMS). These debates most often mention the programs’ organization and the finance department as common EVM “owners.” The majority opinion seems to be that because EVM is a program management best practice it belongs in programs. A minority opinion is that because EVM is denominated in dollars, schedule included, and because EVM reports are financial in nature, EVM belongs in the finance department. Before we dive into this debate, a summary of the responsibilities of a Chief Financial Officer (CFO) and of the head of programs is useful. In our company A and company B examples to follow, both the CFO and the head of programs report to the company president.

WHAT ARE THE DUTIES OF A CHIEF FINANCIAL OFFICER ( CFO)?

A CFO has three duties, each measured in the time domain. The first duty of the CFO is as the company’s controller and is responsible to accurately and honestly report past company financial performance. The CFO is also responsible for the current financial health of the company – to insure that today’s decisions create rather than destroy value. And lastly, the CFO must protect the company’s future financial health and that all expenditures of capital maximize future financial health. Every business decision, especially those of the CFO, are either good decisions (are accretive – increase shareowner value) or are bad decisions (are dilutive – destroys shareowner value).

WHAT ARE THE DUTIES OF THE HEAD OF PROGRAMS?

The head of programs is typically a Vice President or higher and all program and project managers report to him or her. The head of all programs has profit and loss responsibility for his or her portfolio of programs and projects. In addition, each program is responsible for achieving the technical, cost and schedule requirements of the contracts it is executing on behalf of its customers.

A TALE OF TWO COMPANIES:

I will now describe first-hand experiences with two companies and how each company decided who should “own” EVM.

Company “A” had EVM assigned to the finance department. All EVM employees were overhead, even those assigned to a program. A new CFO arrived and quickly decided to reduce indirect costs, declaring that he was “coin-operated.” The new CFO terminated the employment of all EVM employees. Each program attempted to create an EVM branch office but failed. A level 3 CAR enumerating EVM deficiencies was issued and the CFO was fired. A second “new” CFO arrived and agreed to transfer EVM to the head of programs. The head of programs was instrumental in changing the disclosure statement making EVM personnel assigned to a program a direct charge to that program / contract. The head of programs created a Program Planning and Control (PP&C) organization and demanded all PMs and their program members to quickly learn, use and master EVM. A program control room was built with five screens. Daily 2:00 pm EVM data-driven reviews were held on short notice. These daily reviews became known as “CAM Bakes.” The EVM and program management culture changed quickly and dramatically at Company “A.”

Company “B” had EVM assigned to the CFO who was as “coin-operated” and unaware of EVM as the first “new” CFO of Company “A.” The culture of company “B” was very hostile to EVM, so it probably did not matter who “owned” EVM. The company failed 16 of 32 guidelines and was decertified. Significant withholdings were imposed and the company’s reputation was damaged. Several top managers hostile to EVM “sought employment elsewhere.” A new CFO arrived who was also “coin-operated” but expert in EVM. The new CFO formed a partnership with the head of programs. The new CFO was as much a PM as he was a CFO. The new CFO told his direct reports assigned to each program to “make the program managers successful.” And they did exactly that.

The new CFO understood that the company was the sum of all its contracts and that every dollar flowed from its customers. The EVM and program management culture at Company “B” changed rapidly.

Who Should “Own” EVM? Programs or Finance?

Returning to our original question of who should “own” EVM, the majority theory is that the Programs’ organization should “own” EVM. All else equal, I tend to agree with this theory.

However, while theory is suggestive, experience is conclusive. My experience at Company “A” proved that a strong programs’ leader could change the EVM and program management culture of a company rapidly. My experience at Company “B” proved that a CFO could “own” EVM and be successful at changing the company’s EVM and program management culture. The CFO and the head of programs must form an EVM partnership no matter who “owns” EVM.

Who “owns” EVM at your company?

Robert “Too Tall” Kenney
H&A Associate

Who Owns EVM? Programs or Finance? Read Post »

EVMS and Agile Implementation FAQ’s

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Title Image - EVMS and Agile Implementation FAQs

These are some of the frequently asked questions we receive when discussing EVMS and Agile implementations within the same company or on the same project. 

Question 1: What documentation do you have that I can use to help me understand EVMS and Agile and how they are implemented?

Answer 1: There is expansive EVMS documentation, and the EVMS guidelines are well documented. On the other hand, there is little in the way of Agile documentation since the Agile mindset is to be lean and not to document unless absolutely necessary. The DOD released an
EVMS and Agile Program Manager’s Desk Guide that can be used for quick reference. H&A has done the homework and has created training for EVMS and Agile.


Question 2: What is the comparable Agile term or artifact for this EVMS artifact (for example the WBS)?

Answer 2: There is no roadmap between EVMS and Agile that is hard and fast. The best approach would be to identify “similar to” situations or likenesses. For example the EVMS WBS is similar to the Product Backlog within Agile. The Steering Committee of The World Congress in Computer Science, Computer Engineering and Applied Computing reported on Constructs to Support Agile and EVMS


Question 3: What roles within the PMO are there for EVMS and for Agile and how do they relate?

Answer 3: In Agile there is no real “management” role. So the PMO roles that are management titled are not germane to Agile. And in the opposite direction, the Agile roles do not really exist within EVMS. For example the Agile “Product Owner” is a person with a customer view of the product and speaks for the customer. In a stretch this could be a high level Software or System Engineer with requirements responsibilities. The Scrum Master is a facilitator on the Scrum team and there is no corresponding EVMS role. The team members organize themselves so there is no team lead like the Control Account manager in an EVM System.


Question 4: Since the Sprint in the Agile/Scrum approach is defined as a time-box with a fixed end date, how do you reconcile that with the EVMS approach of working the task until it is done?

Answer 4: The EVMS baseline can be set above the Sprint level and can correspond to known “mandatory” delivery points such as release deliveries. This will then align the Agile deliveries to the EVMS structure and the two can work together.

Question 5: Does the fact that Agile/Scrum Sprints have very short durations cause a problem with EVMS performance measurement?

Answer 5: Not at all since teams update their progress daily. But it is preferable if the Sprints are four weeks or less and align with the cut-off dates for the EVMS. In that way the EVMS can pull the stated performance from the teams and use it as the input for the EVMS without any translation work. If a Sprint crosses an EVMS period, that would need special consideration.

Question 6: Since Agile work is not really budgeted, how does that reconcile with the EVMS need for budgets and budget control?

Answer 6: Budgets will be held in packages in the EVMS based on the plan for the Sprints and the teams doing the Sprints. The Agile weighting of work will be within the same packages but is not considered to be budgeting; it is weighting of milestones, if anything.

Question 7: We do not like the idea of the 0/100 EV Technique even with milestones. At our company we have an allowance to earn partial credit for milestone work. How does that fit into the EVMS and Agile implementations?

Answer 7: Agile wants to measure work when done. The work should be in such small stories, or tasks, that they are in-process for only a matter of days. Partial credit should not be needed in this situation; if it is, then perhaps there are issues with work definition.

Question 8: Agile applies to software development, but can we use it for other types of work?

Answer 8: Yes. It is a misconception that Agile is for software only. If you are creative you can find ways to use Agile Development in many areas. One company reports it uses it for circuit design and breadboarding resulting in significant time savings. 

For additional information about EVMS and Agile see the blog post: 

Agile/Scrum Ceremonies and Metrics Useful in EVMS Variance Analysis and Corrective Action

EVMS and Agile Implementation FAQ’s Read Post »

Earned Value Management: How Much Is Enough?

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How Much EVMS Is Enough

I took the scenic route to selecting the theme of this blog. First, it was suggested that I write a blog on the benefits and costs of the earned value process as it applies to program management. Next it was suggested that I describe the harm of not using any of the elements of the earned value process.

In the case of the benefits and costs of the earned value management process, it would be difficult to improve upon Dr. Christensen’s 1998 paper on this heading or to attempt to improve other papers and studies done by Wayne Abba, Gary Humphreys, Gary Christle, Coopers & Lybrand and others. So I will not make citations to these past studies. Rather I will leave them undisturbed, as the monuments they have become.

This blog will summarize my observations of how companies have chosen “how much EVM is enough” for them and share my observations of the results of these decisions. Each company has selected an EVM implementation strategy and each company’s strategy falls along a bounded continuum.

I will describe this continuum of company EVM strategies with a left hand and a right hand goal post, and the space between as a cross bar. The “left hand goal post” represents companies that elect to be very poor at EVM or to not use EVM at all. The “right hand goal post” represents companies that have committed to being “best-in-class” practitioners of the EVM process and are the polar opposite of the companies at the left hand goal post. There are few companies at either the left or right hand goal posts. The “cross bar” represents the vast majority of companies that have selected an EVM strategy somewhere between the left and right goal posts.

Two Goal Posts And A Cross Bar; Recalcitrant, Merely Compliant, Efficiently Expert

There are as many strategies to earned value management as there are companies using EVM to manage their programs and projects.

Left Goal Post; The Recalcitrant

I have firsthand experience with a company, that at the time I initially joined them and had decided to ignore earned value management even though it was a requirement in several of its contracts. After many painful years of attempting to maintain this recalcitrant EVM strategy, this company decided that a better strategy would be to become “efficiently expert” at EVM.

Cross Bar; Merely Compliant at EVM

It has been my experience that most companies desire to “become EVM compliant,” which generally means being compliant to the 32 guidelines and not failing those guidelines so as to be de-certified. This is the vast middle ground between the two goal posts. I will now share five observations regarding companies in the “cross bar” majority.

Observation #1: Compliance As A Goal; Golf and EVM

Compliance should be a “given,” or a “pre-condition,” not a “goal.” Remaining merely compliant implies a status quo or static posture.

I will use the game of golf as an analogy. Golf is a game of honor and compliance to well established rules. All PGA professional tour golfers “comply” with the rules that govern golf. Although all PGA tour pro golfers comply with these rules, their performance on tour differs dramatically.

Fifty-three percent of all PGA golf pros, past and present, have no tour wins. That means only 47% of all PGA tour golf pros have won at least a single PGA tour. There are seven players in the history of the PGA that have fifty or more tour wins. If the bar is lowered to forty or more wins, only three players are added to the list. If the bar is lowered yet again to thirty or more tour wins, only eight more players are added to the list. Only 18 golfers have won 30 or more PGA tournaments.

Professional golfers do not confuse compliance with performance, nor do these professionals assume that “being compliant” will improve their performance.

Observation #2: “The Tyranny of The Status Quo”

With apologies to Milton Friedman and his book of the same name, companies that attempt to maintain mere guideline compliance will do no better than the status quo, and more often than not, regress toward non-compliance. Maintaining status quo is a myth – you either improve or regress.

All professionals, companies included, must compete in their markets and selected fields. To succeed in this competition requires constant improvement in areas critical to success. A company, organization, or individual without the means or the desire to improve will eventually fail and perhaps perish.

Observation #3: Blaming The Scoreboard

As a program manager, I considered EVM as my scoreboard. I reacted to the EVM data – the scoreboard – and made decisions based on that data (GL #26).

I recall the 2014 Super Bowl’s final score: Patriots 28, Seahawks 24. Did the scoreboard cause the Seahawks to lose the game or did a poor decision by their coach cause the loss? Imagine a coach that cannot see the scoreboard. That coach does not know the score or how much time remains. That coach cannot react to the realities of the game.

Observation #4: EVM Causes Poor Program Performance

I have witnessed several company leaders assert that the use of EVM on a poorly performing program is the cause of that program’s poor cost and schedule performance. A correlation between two variables, or a sequence of two variables (use of EVM and poor performance), does not imply that one caused the other. This is the logical fallacy known as “X happened, then Y happened, therefore X caused Y.” Night follows day, but day does not cause night. Use of EVM does not cause poor program performance. Not reacting to EVM data and promptly taking corrective action with your program’s cost and schedule performance often leads to poor outcomes.

Observation #5: It Takes More Energy To Be Poor At EVM Than To Be Expert

Returning to the earlier golf analogy, professional golfers make very difficult shots appear easy. I played in one pro/am tournament years ago. The pro I was teamed with took me to the range hours before our tee time. He asked me how many balls I hit before each round. I told him sometimes none and sometimes 50. He hit 1,000 balls before our round. When we finished our round, he was ready for another 18 holes. I was not. Both of us “complied” with the rules of golf. His score was significantly lower than mine. His game was effortless and produced a below par score. My game was labored and produced a poor result.

And so it is with EVM or any other process. The better you are at a skill, the easier it becomes. Experts consume far fewer calories at their craft than ambivalent amateurs.

Right Goal Post; Efficiently Expert At EVM

The polar opposite of a recalcitrant strategy to EVM is a strategy to become “efficiently expert.” As I mentioned earlier, I joined a company that attempted to sustain a recalcitrant EVM strategy. Their recalcitrant EVM strategy led to de-certification, large dollar withholdings, and significant damage to their corporate reputation.

After the most ardent EVM recalcitrants in this company “sought employment elsewhere,” a new strategy was adopted. This company embraced a strategy to become “best-in-class” as expert practitioners of EVM. This company’s goal was EVM perfection. EVM perfection is an impossible ambition, but wiser than “mere compliance.” And as with the PGA tour golf pro, EVM became nearly effortless.

Which EVM strategy will your company choose?

 

Robert “Too Tall” Kenney
H&A Associate

Earned Value Management: How Much Is Enough? Read Post »

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