EVM Consultant Archives - Humphreys & Associates

EVM Training – Decision Making and Charlie Munger – Tendency Toward Misjudgment – Part 4

By Humphreys & Associates / October 1, 2018 / Dedecision-making, earned value training, EVM Consultant, EVM Training

Dedecision-making, earned value training, EVM Consultant, EVM Training

This is the fourth and final blog in this series about the human tendency toward misjudgment. In Parts 1, 2, and 3 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. In those three blogs we learned much from him and we will continue that learning in this blog. Charlie was born in 1924 so, at the time of this blog, Charlie he is 94, a wise old man from whom we should learn.

As mentioned previously, 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.

Kantian Fairness

The first of the tendencies discussed here is the “Kantian Fairness Tendency.” This does not apply to all people from all cultures around the world, but it certainly does to those you are most likely to be engaged with; those at your place of work. The tendency is that people tend to give and expect fair treatment. It is something innate and reinforced with something learned. An example would be the way people line up to wait and the way they expect others to obey the unwritten rules of waiting in line. People expect to be treated fairly and will wait their turn for that. Applying this tendency to decision-making, people expect the decision process to be fair. If it were to be skewed and unfair, they would hesitate to participate. Being unaware that there is such a bias can be dangerous to the decision-making process. If unfairness could be introduced and carefully hidden, the outcome could be skewed. Any unfairness must be rooted out, no matter how difficult.

Influence-from-Mere-Association

The second tendency covered in this fourth blog is subtle. It is the “Influence-from-Mere-Association Tendency.” Munger points out the problem with this tendency by explaining that if something good happened to us in the past, we will be more influenced by things that were associated with that good event or outcome. Something that is associated with a known good thing is not weighed and measured by the same standards as something that is a stand-alone non-associated item. But we do not really know in all cases that the things we are considering really factored into the previous success at all. If we are told that or assume that or just plain “know that” from company lore, we are on dangerous ground. We would need to know the exact cause and effect chain for the good outcome in the past to be sure we are dealing with a positive associated influence. About the best we can do is be skeptical and challenge things that are presented as associated with previous good outcomes. Our process should require proof of association when association is a factor.

Social-Proof

The third tendency here is one we should all be very familiar with. Munger calls it the “Social-proof Tendency.” You might know it by the name “groupthink” or “the herd instinct.” We need to understand that people tend to act and think as the others around them act and think. This tendency can become an issue in a team or group charged with deciding a crucial issue. Will the members have the strength for independent thought and action or will many of them “go along to get along”? The instinct can be much worse if the situation is a high stress one. The herd must react quickly to stress and the first movement, of the first spooked members, could lead to a stampede. Our decision process has to be sensitive to this and counter it is if needed. Deciders must be coached to avoid being a blind follower and to value independent thought and action. If necessary, the process might have to require mixing the attendance or substituting more independent-minded people.

Contrast Mis-reaction

Another powerful tendency is also one that can be easily exploited against the process. This is the so-called “Contrast Mis-reaction Tendency.” This can be seen as the reaction toward what is perceived as the lesser of two evils. We have all been taught that it is good to compare and contrast choices; but that is only useful when enough truth is known about the choices. A manipulative manager might use this tendency for mis-reaction by explaining to the deciders that there are two outcomes. The first is Outcome A which is described by the manager in such terms as to leave no doubt this is a terrible choice. The second one is Outcome B, also not good, but which appears to be so much better that A; by contrast, our reaction is a mis-reaction toward the one that is automatically more appealing. In this way, the unknowing members of the team see the obvious contrast and are drawn to the outcome favored by the manager while, to them, the whole process appears above board. Our process must be made to present all the choices and to treat them factually, so an uninfluenced choice is made. A good decision-making process does not make false contrasts.

There is not enough time to cover all the tendencies fairly. To do that, you should attend a Humphreys & Associates workshop to explore the entire subject of decision making.

Crucial Decision

In closing, I am going to postulate a situation where the authority to make a crucial decision is assigned, in a high stress situation, to a weak “groupthink team” with a strong leader who has a bloated opinion of himself. The team has been shown some very limited choices, some of which have been described as distasteful ones. The leader is in denial and trying to avoid loss. He wants to force a quick decision. How do you rate the chances of this scenario yielding a good well-considered decision, now that you can see the underlying tendencies to misjudgment?

EVM Training – Decision Making and Charlie Munger – Tendency Toward Misjudgment – Part 4 Read Post »

EVM Training – Decision Making and Charlie Munger Tendency Toward Misjudgment – Part 3

By Humphreys & Associates / September 3, 2018 / Dedecision-making, earned value training, EVM Consultant, EVM Training

Dedecision-making, earned value training, EVM Consultant, EVM Training

Tendency Toward Misjudgment – Part 3

Are Your People Being Manipulated?

In part 1 and part 2 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. In those two blogs we started to learn from him and we will continue that learning in this blog. Charlie was born in 1924 so, at the time of this blog, Charlie is 94, a wise old man from whom we should learn.

As mentioned in Parts 1 and 2, 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.

Is there a possibility that people in your decision-making processes are being manipulated? Have you ever been manipulated and known it? Have you ever been manipulated but didn’t know it? Of course, that question can only be answered by thinking back now; if you didn’t know it then, maybe you can see it with hindsight.

The Future of the Industry

Very recently a representative from a company called our leadership and asked for some help with gaining knowledge about the future of our industry. We are in the same industry and compete sometimes, so it seemed odd that this was happening. Along with the request for a favor came an offer; an offer to attend a session with others of their clients and associates on the future of the industry during which we would be given the chance to make even more valuable inputs.

What was going on? What a massive ego-stroking effort. I think it was application of the Ben franklin effect. Simply stated in Franklin’s own words about a situation where he had an opposition figure he needed to deal with, “Having heard that he had in his library a certain very scarce and curious book, I wrote a note to him, expressing my desire of perusing that book, and requesting he would do me the favour of lending it to me for a few days. He sent it immediately, and I return’d it in about a week with another note, expressing strongly my sense of the favour. When we next met in the House, he spoke to me (which he had never done before), and with great civility; and he ever after manifested a readiness to serve me on all occasions, so that we became great friends, and our friendship continued to his death.” In this story notice the use of the words “serve me.” Just asking for and receiving the smallest favor from the man changed the man’s attitude toward Franklin.

Enhancing Opinions

It can be analyzed like this: asking someone at work, with whom we may be opposed or with whom we are ‘on-the-outs’ can tell them that we consider them to have something valuable that we do not have, and we need. It might be made to sound as if they have more information, more under-standing, more ability. If they respond positively and give us something as slight as their time and attention, we stand a chance of enhancing their opinion of us because they then cannot see us as someone simultaneously unworthy and worthy. They just saw us as worthy of their time and atten-tion, so obviously we recognize and have acknowledged their value.

How does this play into decision-making? You need to be aware of the dynamics of any situation and to watch out for the subtle ways that influence can be used to maneuver a decision to the spot desired by someone or some faction. You need to be especially watchful if the person or faction doing the maneuvering is one you believe to not have the best interests of the project at heart.

More Tendencies

Let’s cover more of the tendencies and carry on our discussion about developing a sound decision making process farther. Please note that Charlie Munger named these tendencies, and sometimes I think he made up words that do not sit well with Microsoft spell checking tools.

Tendency #9

Tendency #9 is the one just discussed as the Ben Franklin effect. Munger named it the “Reciprocation Tendency.” It is the tendency to reciprocate favors and disfavors and can be a strong subconscious motivator. If the person being manipulated by Franklin had thought, “There’s that wily Ben again trying to win me over by asking me for help,” the ploy would not have worked. It must be subconsciously received. Isn’t this tendency why procurement departments prohibit buyers from taking favors from sellers? Judges do not associate with defendants. That is a procedural way to stop the potential for misuse of the tendency.

Tendency #12

Tendency #12 could be easily related to the Ben Franklin effect. Munger calls this the “Excessive Self-regard Tendency.” We have all known someone who has a very highly inflated opinion of themselves and we may even have seen the risk in that. This person can, and often does, misjudge his/her own knowledge, competence, capability to the high side. These people choose to associate with people like themselves, and they definitely are partial to their own ideas and conclusions. These people also can be negatively motivated when provided with a counter argument. They are dangerous in decision making because they may not be motivated by facts. They may just be on that personal voyage known as the ego trip. You could even worry that someone else has used the Ben Franklin ploy to get this ego-challenged person to align with this thinking.

Tendency #13

Tendency #13 may align with #12 since it is Munger’s “Over-optimism Tendency.” This is the human tendency to err on the side of optimism when thinking about the future, the work required, and the outcomes possible. For this person there is no time spent better than time walking down the primrose path trying out their new rose-colored glasses. There are so many opportunities for optimism to cause damage on a project, it is sobering. An overly aggressive schedule or budget that is seen as do-able is not going to work. A defined product or set of tasks that would be very hard to achieve could be seen as not-that-tough with the disastrous outcome you would expect. Your deci-sion-making process should force a way to look at facts realistically. Quickly committing to the impossible would be a death warrant. Also, a decision-making process should avoid the potential that an overly optimistic person is also one who has excessive self-regard. Using experts or others, who are not going to have to live with the decisions, can help bring reality into the process. Don’t you go to the doctor to hear the truth?

Conclusion

This is the third blog on the topic of Munger’s human tendencies toward misjudgment. Analyses like these blogs can be helpful to us at Humphreys & Associates in our support of clients and in our formulation of training materials. Hopefully this information has started you or helped you on your way to creating or beefing up a process for decision making that curbs or circumvents these human tendencies.

Review:
EVM Training – Decision Making & Charlie Munger – Part 1
EVM Training – Decision Making & Charlie Munger – Part 2

EVM Training – Decision Making and Charlie Munger Tendency Toward Misjudgment – Part 3 Read Post »

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

By Humphreys & Associates / August 1, 2018 / Dedecision-making, earned value training, EVM Consultant, EVM Training

Dedecision-making, earned value training, EVM Consultant, EVM Training

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

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

Summary Level Planning Packages (SLPPs) Misnomer and Alias

By Humphreys & Associates / May 1, 2018 / EVM Consultant, EVMIG, Summary Level Planning Packages (SLPPs)

EVM Consultant, EVMIG, Summary Level Planning Packages (SLPPs)

Origins

One of the confusing terms in the world of Earned Value terminology is “Summary Level Planning Packages” or SLPPs. The term first appeared in Section 1 of the Earned Value Management Implementation Guide (EVMIG), published in 1996 which read:

Summary Level Planning Packages (SLPP) – “When it is clearly impractical to plan authorized work in control accounts, budget and work should be identified to higher WBS or organizational levels for subdivision into CAs at the earliest opportunity.” At this time, EIA-748 was still in draft form.

When 748-1998 was released, the SLPP reference was included with a slight modification to its use being limited to; “work scope for business reasons, is not yet allocated to responsible control accounts”.

With that being said, the term was never specifically included in the EVMS Guidelines (neither the original 35 criteria nor the initial 32 EIA Standard Guidelines)! The concept itself was again put forth in 748-B where the title changed to “Higher Level Account”, but the SLPP was still not referenced. With 748-C, the same phrasing is found. Throughout this time, Guideline 8 has not changed, where it continues to say (underlines added):

“Budget for far-term efforts may be held in higher-level accounts until an appropriate time for allocation at the Control Account level.”

Higher Level Accounts

The term was “Higher Level Accounts” (HLA if you prefer an acronym), and that is the only mention in any of the Guidelines themselves. In their 25 June 2015 Cross Reference Checklist, however, the DCMA felt the need to clarify the term in several spots:

8.a.(2) Higher level WBS element budgets (where budgets are not yet broken down into control account budgets) also known as a Summary Level Planning Package?

b. Does the Contractor’s system description or procedures require that the sum of control accounts, Summary Level Planning Package (SLPP) budgets, Undistributed Budget(UB), and Management Reserve(MR) reconcile and trace to the CBB or Negotiated Contract Cost (NCC) plus the estimated cost of AUW) for any recognized OTB?
b. Are ETCs developed at the work package, planning package, and Summary Level Planning Package (SLPP) levels, or where resources are identified if lower than the work package level?
j. Are VACs calculated and analyzed with corrective actions at the control account (at a minimum) and Summary Level Planning Package (SLPP) levels?

Created to Help

The term “Higher Level Accounts (HLA)” was created to help contractors comply with the government requirement to distribute budgets from Undistributed Budget (UB) within two full accounting periods after definitization of the contract value. Many contractors on large, long term contracts were struggling with distributing work and budget for far-term effort about which they were not yet sure where or by whom the work would be performed.

The government allowance to create Higher Level Accounts enabled the contractors to “distribute” the scope and budget to an account – as though it were a Control Account – where someone would “tend it” until the contractor could better define where and by whom the work would be performed. While in the HLA status, the assigned higher-level manager (the PM or a functional manager designee) would be responsible to ensure the time phasing of the high-level budget was current and that the EAC for the work in the HLA was up to date (rates and time phasing ). Once the contractor determined the appropriate Control Account Manager responsible for getting the work performed, the scope, schedule, and budget in the HLA would be transferred (distributed) from the Higher Level Account to the Control Account.

Misnomer

As stated earlier, the origin of the term “Summary Level Planning Package – SLPP” is not really known, and it is really a misnomer:

It is not a Summary Level (i.e., other Control Accounts do not summarize into it).
It is really not a Planning Package (the responsible Higher Level Manager does not perform any planning for the work in the HLA – it is just a holding point until it can be distributed to, and planned by, the ultimate CAM).

This last point is where some people become confused. Being called a “Planning Package,” some people think the SLPP is part of a Control Account that is at a higher level within the Control Account than a Planning Package. That is another distinction between an SLPP (HLA) and a Planning Package – an SLPP can NEVER be directly detail planned into Work Packages. The budget in an SLPP must be transferred to a Control Account for that CAM to detail plan the work as necessary over the period of performance of the Control Account.

To be fair to the CAM receiving the HLA/ SLPP scope, schedule, and budget, the project should also have a “Rolling Wave Planning” approach for the HLA/SLPP, one that is at least 30 days in advance of the normal CAM Rolling Wave Planning process. This would give the CAM time to incorporate the work and budget time phasing into the Control Account (generally in one or more Planning Packages within the Control Account) in order to then be prepared for any necessary detail planning into Work Packages as part of the normal Rolling Wave Planning process.

Final Thought

Some people do not even consider Higher Level Account to be an appropriate description since the HLA/ SLPP is essentially at the same level as the Control Account. The “Higher Level” aspect means it is assigned to a higher level manager than a Control Account Manager (CAM) for that manager to “tend to” the scope, schedule, and budget until it is distributed to a CAM.

So even though HLA is what it is, SLPP is what it has become.

Higher Level Accounts or Summary Level Planning Packages can be confusing and often an area where projects need some help. A Humphreys & Associates EVM Consultant can provide the guidance you need for your unique production or development project. Please contact us for more information.

Summary Level Planning Packages (SLPPs) Misnomer and Alias Read Post »

Program Manager / Project Manager Use of Management Reserve

By Humphreys & Associates / April 3, 2018 / Earned Value Management System Description (EVMSD), EVM Consultant, Management Reserve, Management Reserve (MR), Management Reserve Log (MRL), Performance Measurement Baseline (PMB), Program Manager, Project Manager

Earned Value Management System Description (EVMSD), EVM Consultant, Management Reserve, Management Reserve (MR), Management Reserve Log (MRL), Performance Measurement Baseline (PMB), Program Manager, Project Manager

What is Management Reserve?

Management Reserve (MR) is developed and managed by the Program Manager / Project Manager. This discussion will provide guidance for establishing and using Management Reserve to effectively manage a project.

H&A description– The standard definition of management reserve is an amount of contract budget set aside for management control purposes (known unknowns) rather than designated for the accomplishment of one or more tasks. It is not part of the performance measurement baseline (PMB) but is included in the contract budget base.

DOE guidance – The ability to establish MR allows project management to react to unforeseen in‐scope situations that arise during the life of a project. It is budget for handling project risk and in‐scope unanticipated events. Management Reserve is not a source of funding for additional work scope or for the elimination of performance variances. It is an amount of the project budget set aside for management control purposes by the contractor. Management Reserve is the contractor’s budget and provides the project manager with a budget for unplanned activities within the current project scope. Because MR is budget that is not yet associated to work scope, it is not part of the PMB.

The Earned Value Management System Description (EVMSD)

The contractor must include a clear definition of MR in the EVM SD. For clarity and consistency, the EVM SD must describe the process and list allowable conditions under which it may be approved and allocated to the control accounts managers. Management Reserve cannot be used to offset accumulated overruns or under runs. Authorized uses of it include:

Previously unrecognized tasks or realized risks consistent with the general scope of work of the contract.
Change in execution strategy (e.g., make/buy decisions).
Unexpected future internal scope growth within the currently authorized scope of the project.
Direct and indirect rate changes and currency fluctuations.
Risk and opportunity handling (not for cost or schedule variance based risks).
Work that needs to be repeated (not the result of inaccurately reported progress).
Changes to the future budget of work not yet started (e.g., subcontractor activities that are negotiated post project award).

Baseline Planning

The first step in the process the PM must accomplish is establishing the Management Reserve at the initiation of the Performance Measurement Baseline development. The project manager has authority and control of the development and use of the MR budget.

The process steps are:

Reconciling the proposal estimates with the contract award.
The project manager will establish an MR budget based on examination of the contractual scope of work. Factors affecting the MR budget establishment are high technical risk areas, complex schedule problems, or an anticipated shortage in a critical resource area such as labor, material, or support services.
Once anticipated problem areas are isolated, Negotiations between the Project Manager and the Control Account Managerscan begin to determine the Control Account Budgets. This is an iterative process during which the PM will negotiate with the CAMs:
- The budget amount to be withheld from each Control Account(based on the results from step 2 above).
  Evaluating the scope of work, risk associated with the scope of work, maturity of the concepts/ designs/ manufacturing included in the scope of work and the CAMs past performance on similar projects.
- The PM can target a specific percent of the awarded budget based on the complexity, risk and duration of the contract and the scope in each control account
The PM will negotiate and issue budgets to the CAMs and the balance remaining from the authorized budgets and the Contract Budget Base establishes the Management Reserve. Typically, this amount should be 10-15 % of the CBB value.

The next step for the PM is to track the MR budget. This is done by creating a Management Reserve Log. This can be a separate log or part of the Contract Budget Base log.

Record the original amount of MR after the control account budgets have been authorized to the CAMs.
Record changes to MR as additional budgets are authorized to increase or decrease control account values. (Management reserve is decreased to provide budget for unplanned tasks within the contract scope of work or increased whenever work is decreased along with the allocated budget.)
Use the logs to report MR activity in the monthly reports to the customer.

Project Execution

During the actual execution of the project the PM may experience various scenarios that will require the use of Management Reserve. The process to identify, evaluate and authorize MR transactions should include the following steps:

Either the CAMs or the PM can identify new tasks or realized risks to be performed or deleted in the Control Account efforts.
The affected areas in the control accounts will be identified and the impacts quantified (resources/ time …..) for the scope being modified. Tasks identified to be outside of the Control Account scope (but within the overall Project Contract scope) will be authorized and budgeted from the Management Reserve. Reductions to the Control Account scope will be authorized and the appropriate budget and scope returned to the Undistributed Budget, where the SOW is deleted and the associated budget credited to the Management Reserve.
Management Reserve transactions cannot be made without identified scope being added/reduced from the Control Account and the associated budget recorded in the MR Log and updated Work Authorization documentation issued to the Control Account Managers.
Changes in the MR log will be identified and described in the monthly customer reports. If the transaction was for an identified Risk, the Risk Registerwill also be updated and reported to the customer.
Use the Change Control process to document the rationale for all baseline budget and schedule revisions.

Acceptable Uses of Management Reserve (Examples)

Authorize additional budget/ scope for previously unrecognized tasks and identified risks that are consistent within the scope of work of the contract.
Authorize changes in execution strategy such as a make/buy modification.
May be used to offset changes in direct/ indirect rates and currency fluctuations.
May be used for Risk/ Opportunity handling (does not include Cost or Schedule Variance based risks).
May be used for work that needs to be repeated.
May be used to adjust budgets for final negotiations with subcontractors.

Unacceptable Uses of Management Reserve

Cannot be used to cover overruns.
No changes to open Work Packages without customer approval.
MR cannot be a negative value.

Project Manager Authority/ Responsibility

Management Reserve belongs to the Project Manager.
The PM is responsible for controlling MR transactions.
The PM may or may not allocate MR based on the assessment of the CAMs requests and availability of MR balance.
The PM is responsible to ensure that all MR transactions are documented, reported, and traceable.

Summary

Management Reserve is a critical part of the PM’s toolkit. It allows the PM some flexibility in planning for Risks and Opportunities, and for required changes that are in scope to the contract but were not identified in the original baseline planning. The company’s EVM SD is the primary guide the PM should use in determining which MR requests are allowable and those that are not valid.

Some Data contained in this paper came from Humphreys & Associates and from DOE EVMS websites.

Program Manager / Project Manager Use of Management Reserve Read Post »

Hiring the Right EVM Professional

By Humphreys & Associates / February 22, 2018 / earned value training, EVM Consultant, evm consultants, evm hiring, evm jobs, EVM Training, evms jobs

earned value training, EVM Consultant, evm consultants, evm hiring, evm jobs, EVM Training, evms jobs

EVM Hiring, Not Selling

You are searching for the right person to fill that critical EVM program management or project controls position on one of your newer or one of your tough projects. So, what does the interview sound like? Probably like so many I have witnessed. But there is a much better way to conduct the interview and get the right person.

Many of the interviews I have participated in consisted largely of the interviewer telling the potential candidate about the position, about the company, and almost making the interview a selling situation. It sometimes seemed like the theme was “How can we convince this person to come on board?”

Always Clarify

Of course, some time in the interview must be spent explaining the situation to the candidate’s satisfaction. You would not want to make an offer to someone only to have them come back at you expressing confusion about the position or the project. That happened to me years ago. I was interviewing with a major computer firm for the position of “program manager.” Obviously, the ad I answered, and the screening process were flawed. I arrived at the interview and within a few minutes the interviewing manager was commenting on the fact I had no software programming experience. They were looking for a manager for a software development (programming) effort. They did not even understand the term program manager as it related to project management. We agreed to end the interview on good terms although I am sure we both realized we had wasted a lot of time.

Often an interviewer will focus on the certifications the interviewee has achieved. If the person is a PMP from the PMI, that is a good thing. But more than once I have met and worked with people who are certified and credentialed, but who really have no earned value training and cannot get the job done in the real world. Be careful and dig deeper. The right interview can help do that for you.

Can They Get the Job Done?

But the most frequent observation I have made about a defective interview process is the failure to verify that the candidate can do the job. The best illustration of this is from the book “Peopleware” by Tom DeMarco and Timothy Lister. The example is in Chapter 16 and is called “Hiring a Juggler.” It presents the story of the hiring manager, it was the circus manager, asking a lot of questions about other circuses the juggler has worked for, the things the juggler can juggle, how many things can he keep in the air at one time, and so on. At the end of the interview, the manager is satisfied he has found his new juggler and offers him the job. The surprised juggler asks one question only, “Don’t you want to see me juggle?”

At H&A, when we are looking at new individuals for our scheduling practice, we actually give them a test. They are provided a written description of an interview with a CAM in which the CAM explains what is supposed to happen in his or her control account. From that written discussion, the interviewees are asked to get into the scheduling software with which they are proficient and build the plan described by the CAM. With that plan, they are asked to determine the end date, locate the critical path, and otherwise verify that the schedule is a high-quality schedule. In other words, we ask our interviewees to show us they can juggle.

EVM Expert Questions

So what kinds of things would you want to talk about in an interview for a project manager candidate, an EVMS candidate, or a scheduling candidate? What direction could you take in the interview that would be more oriented to seeing if the person can juggle? How about some of these questions? Or at least how about the general direction of these questions?

Question List

In your opinion, who are the stakeholders for the project WBS?
What are the pitfalls that you would encounter while building the right WBS? How can they impact your project?
Tell me about the System Engineering Technical Review (SETR) process and how that would be part of your project?
How would you assess whether the amount of Management Reserve withheld on your project was the right amount?
What, from your experience, do you think is the single biggest project-killing issue, and how would you prevent or minimize it on your project?
In addition to that issue, what are three more serious potential problems that can cause failure?
What is total float (total slack) and how would you use that as a manager of a project?
What is a “driving path” and why would that be important to you on your project?
How would you evaluate a control account EAC on your project?
When you issue ground rules for developing a new project plan, what confidence level do you set for duration estimates and cost estimates from your teams?
What process would you recommend for developing the project-level best case, worst case, and most likely EACs?
From your point of view, what are the main duties of a control account manager?
What are some measures of cost and schedule performance-to-date in a control account and what do they mean to you as a manager?
When a control account has a CPI (cumulative) of .75, and SPI (cumulative) of 1.1, and a VAC of -20%, what does it mean?
What are some of the Generally Accepted Scheduling Principles (GASP)?
What is TCPI and what do you use it for?
Can you explain some of the key measures in a project schedule that you can use to assess its quality?
Please explain how a Schedule Risk Assessment is conducted and how the results are used.
What professional organizations do you belong to?
What is the last book you read about project management?

Extend

Now that you have had a chance to think about those questions, undoubtedly others have come to mind. An interview with the give-and-take generated from discussing a list of questions like those would be very revealing. At the end of that interview you should know if the interviewee can juggle. You will know where they have good understanding and where they might not be ready.

Does the interviewee have to be exactly right on every topic? Not at all. But the answers and the discussion can help you assess how much development is still needed for this candidate to be able to shine in the open position you are trying to fill. Not everyone knows everything. Experience is a great teacher, but it comes from the situations where the interviewee has been directly exposed. Or perhaps from their leaning.

Take a moment and think about the interviewing practices at your company. Are they like the ones we just discussed? Can they be improved? Where are they weak? Where are they strong?

Hiring the Right EVM Professional Read Post »