Who needs a bureaucracy?

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Who needs bureaucracy?

You might, if some of these situations are yours:

• If you don't know your people well enough to trust them
• And, you don't have time or opportunity to get to know them
• And there are consequences beyond just undoing a bad decision they might make, .....

Then the management solution is simplicity itself:

Invent a bureaucracy and assign them to it!

Bureaucracy is the management alternative to person-to-person trust. And, it's the go-to system for rules and boundaries. 

• Rules, regulations, protocols, and cultural doctrine do a lot of the work. No trust required; no fuss, no muss!
• Sometimes, incentives are useful, so don't leave them out.
• If it comes to it, HR probably has some bureaucratic rules for discipline

Now admittedly, bureaucracy cuts against the flat, agile grain which is "the way to do it" for modern managers. 

But, beyond a point, flat is too flat, and agile is too agile.

Let's be realistic:

• Many can not handle complete freedom, 
• Have questionable judgement, 
• Are misaligned to strategic goals and imperatives, and 
• Generally spend time and money without regard to the fact that neither the time nor the money is theirs.

Bring on the bureaucrats!

If you do, you might gain some of these acknowledged advantages:

• Generally efficient with large scale tasks because of predictable work flow and stable organization, buit-in personnel development, and committed capital resources.
• Predictable performance, because the 'way things are done' is very repeatable with central clustering of performance metrics.
• Generally neutral when the workforce is large, reflecting the corporate culture rather than individuals. Thus, diversity is very narrow centered on the corporate culture
• Accountability and durability is usually built-in with rule, protocols, and doctrine that are hard to budge

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If you had it, could you spend it in a month?

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Here's the challenge: On your project, if you had it in hand could you spend $1M in a month?

Take a minute and think about it.

Actually, take a minute and estimate the possibilities.

Does money solve all the problems?

Consider::

If it's just a workforce issue (marching army costs), then:

• If you've got 100 people with an annual payroll of $15-20M, then yes, it's possible, even likely
• If you've got 20 people with an annual payroll of $3-5M, then maybe, with overtime and some material charges.

But, if you need new physics, then money, even if you have it, may not be spendable.

So, can you spend it, or not?

Got your answer?

Good!

Then here's another challenge: If you can spend $1M in a month, can you do a $1M project in a month? Are they one and the same thing?

Probably not.

Consider:

• It's hard to get a crowd of people up and moving coherently to start and finish something in a month (that $1M may disappear into "start-up" inefficiencies)
• It's not too hard to get 20 people moving, but you might have to really work on motivation if you think you're going to spend $1M on people, but there may be tools, training, facilities, etc that will absorb funds.

So, having thought about it, maybe if you really need your 100-person team, 2 months and $2M is a better thing to have;

And, if you only need your 20-person team, even with overtime, you will be hard pressed to spend as much as $1M

What does all this mean?

To know whether you can spend $1M in a month, you've got to make some estimates (gasp! that dreaded word), if only on the back of the nearest envelope.

Perhaps a bit crude and rude, but at least the 'breadbox' is somewhat defined

But we do it all the time; most of us are decent estimators for those events and activities for which we have experience. Never let it be said that  we are not making estimates nearly every minute of the day:

• How long to get to the computer (home or office)
• How long for that meeting
• How much time to spend on email
• How much to spend on a car, hotel, or even a cruise
• On, and on, estimating!

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Make it a 'turn-key'

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You may say -- you may have heard -- "make a 'turn-key' project".

Fair enough.

What does that mean? 

Actually, there are a few things built into that expression:

• You're throwing off risk by pushing scope and cost to someone else, presumably with a proven track record of expertise and performance.
• You probably mean 'fixed price' for a 'fixed scope' of work. There's no 'bring me a rock' uncertainty; you know exactly what rock you want, and 'they' understand and commit to deliver it.
  
  
• "Call me when its done". You expect them to handle their work like a black box; the internal details are unknown to you, or even if not, you've given up all executive supervision.
• They carry the insurance. Liability, property damage, workman's compensation, OSHA penalties, and the like are all on them. Of course, there's no free lunch, so the cost of those insurance plans are built into the price you pay for the 'turn-key'.
  
  
• Cash flow is largely their problem, though you make be asked for a down payment, and you may be asked for progress (aka, earned value) payments. As cash flow is their problem, so is credit with lower tier suppliers, financiers, and the like.
• Capital investment for special tools and facilities, and expense for special training (and these day, recruitment and retention) are all on them. These financial details will come back to you, proportionately, as part of their overhead figured into their fixed price for the job.
  
  

That all sounds swell as a way to offload issues onto others. But, at the end of the day, you as PM for the overall project still are accountable to your project sponsors. No relief on that score!

Here are a few of the risks to you should be aware of:

• Contractors have biased interests also. The contractor may prioritize some part of the project to serve their interests more so than yours. So, don't be blind to that possibility
• Fixed price is not always a fixed price. Any small change in scope or schedule can be leveraged to the advantage of the contractor for them to 'get well' from a poorly estimated base contract.
  
  
• Scarcity provides leverage: If they've got it and you need it, and there is a scarcity of supply, your contractor is at an advantage. 
• Cash talks: Cost of capital is often no small matter to a contractor. The cash customer is always favored; the customer with a short invoice-to-payment cycle is favored. When you need a contractor for a turn-key, cash talks.

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"Rules for Metrics"

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"Management 3.0" has a blurb they call "12 Rules for Metrics"

There are a few of these I find unique and interesting, repeated here, more or less:

• "Measure for a purpose": Without using those words exactly, I have written on this topic many times. Don't ask for metrics and measurements unless you have a plan for using the data productively to advance the project
  
  
• "Shrink the unknown": This is a play on you 'can't measure everything'. Their advice: find peripheral metrics that add up to a better knowledge of that which is not directly measurable.
  
  
• "Set imprecise targets": A modern version of advice developed in post-World War II quality movements of the day, this idea is that precise targets become the tactical objective to the detriment of progress on the strategic purpose of the project.
  
  Editorial: innovation may be stifled if there is too much focus on the nearby tactical objective, to wit: be agile!
  
  
• "Don't connect metrics to rewards": Another piece of advice from the distant past which opines that rewards should be directed toward strategic outcomes.
  
  Anecdote: when incentives were placed on finding errors in code, then what occasionally happened is that coding was more near-term sloppy, knowing that putting the quality in last would be financially rewarding.

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ChatGPT on the risk matrix

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I asked ChatGPT for an assessment of the limitations and hazards of using the conventional risk matrix -- of impact vs probability in a matrix format -- in project management.

In a 'not too bad' response, ChatGPT responded this way (unedited, except for text formatting):

The risk matrix is a commonly used tool in project risk management, but it has several potential limitations, including:

1.     Over-simplification: A risk matrix can reduce complex risk factors into simple numeric values and colors, which can lead to oversimplification of the actual risk.

2.     Lack of consistency: Different people or organizations may use different criteria to assign numeric values to risks, leading to inconsistencies in risk assessment.

3.     False sense of precision: The use of numbers and colors in a risk matrix can give a false sense of precision and accuracy, even though the underlying risk assessment may be subjective and based on limited information.

4.     Lack of context: The risk matrix does not provide enough context or information about the risks being assessed, making it difficult to understand the underlying causes and potential impacts of risks.

5.     Limited scope: The risk matrix only considers risks that have been identified and may not take into account unknown or emerging risks.

6.     Over-reliance: Risk matrices are often used as the sole tool for risk assessment and management, leading to oversimplification of complex risks.

7.     Limited detail: Risk matrices provide limited information about individual risks and often do not include mitigation strategies.

8.     Qualitative vs Quantitative: The use of qualitative information to assign risk scores in a matrix can lead to subjective interpretations and inconsistencies between users.

9.     Inflexibility: Risk matrices are static, making it difficult to reflect changes in risk as a project progresses.

10.  False sense of security: The use of color-coding and other visual aids can create a false sense of security about the level of risk present in a project.

11.  Lack of integration: Risk matrices are often used in isolation, without being integrated into the overall risk management process.

12.  Culture and politics: The way risks are perceived and prioritized can be influenced by organizational culture and political considerations.

Not mentioned: Random number arithmetic. 

To that fairly complete list I would add that if the impact and probabilities are given numerically, regardless of their calibration or built-in biases, the numbers should be understood to be 'random numbers' drawn from (usually unknown) statistical distributions. 

'Random numbers' ordinary arithmetic between them is invalid. Only statistical processing of their distributions is technically possible. And that is often a 'bridge too far'.

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Delivering value (a question of utility)

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Presumably, at the outset of the project, either in the chartering process or some budget process, "they" have made the equation between project cost and value to the enterprise. 

And so, a bargain is struck: For the money (and other resource commitments), there are to be deliverables commensurate with that investment. That's the value proposition, at least at the outset.

Fair enough.

Actually, when you think about it, at some level this bargain can be modeled as a 'black box':

• There are inputs in the form of invested resources and raw materials
• There are (or should be) mechanisms for control and inspection from outside the 'box'
• The outputs are defined or specified
• The 'transfer function' from input to output has (or should have) a time dimension, aka schedule.
• For outsiders, there is no certain knowledge about how it all works inside, but somehow it does.

And off we go!

But then comes the more vexing part:

• At the outset, the utility of the first dollars spent is likely very high. You spend and the project gets started; inertia is overcome; innovation occurs; morale is usually high; and there's time to course correct around obstacles
  
  In other words, the marginal value of the early dollars is likely very high, perhaps greater than par. In spite of setup or startup costs, you get a lot out for every additional dollar in. Utility bends the resources to the advantage of the project.
  
  
• Near the end, the utility of resources bends the other way. The marginal value of one more dollar spent in pursuit of a deliverable is likely less than par. The money goes into fixing quality issues (rework or rejected outcomes); paying off risk premiums, bonuses, or penalties; tidying up the documentation; and paying for the transfer to production or operations.

But arguments may begin:

• Should we really spend that last low-utility dollar? Is it needed more on 'the bottom line'?
• What's the opportunity cost of the last dollar?
• Are there alternatives of lower cost which could be applied to end the project (smooth landing)?  

There are no prescriptive answers

The arguments are all context sensitive

The point is: situational awareness. These debates are coming to a project near you.

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