June 22, 2016 | Author: PM Hut | Filed under: Project Management Musings
Be Careful Which Projects You Agree to Manage
By James Young
I am bewildered when I encounter organizations wherein projects are created or bids won and then assigned to a Project Manager who has no prior knowledge of the project. Why would a Project Manager accept the responsibility for a project that he/she did not participate in developing? I’ve never witnessed a case under this circumstance where the Project Manager was “offered” a project and given the opportunity to evaluate the scope, cost and schedule before making a decision as to whether he/she would take the project on. I call these “mangy dogs looking for a home” projects.
In other circumstances, you may be a participant in the proposal team and be involved in the detail of the bid preparation and baseline schedule only to see the budget and schedule whacked before the contract is signed. The “whacking” is sometimes done internally by the marketing team with support of management in the pretext of a pricing strategy – a loss leader. I learned early in my career that loss leaders never improve and never produce additional opportunities wherein the sacrificed profits are never regained. Another way I’ve seen Level of Effort (Level of Effort) whacking take place as the result of the client’s ability renegotiate the price after-the-fact in an effort to force the project to fit their budget. I’ve encountered this tactic in both the public and private sector. These projects never turn out well and usually run over budget and schedule at completion and nobody is satisfied with the final results.
I recently participated in a DOT project bid and resulting project that is an example of the concept I’m presenting. Our team prepared a proposal for the project, a fiber optic network design with construction management included. I prepared a detailed response to the Request for Proposal (RFP) including the Level of Effort based on the scope of work, the schedule, and resources required to complete the project in accordance with the requirements of the RFP.
The fiber optic project was a one-off project for this DOT and the DOT was a large client for other work for other departments within our firm. During the Red Team review of the proposal, our management whacked the price with no consideration of the effect on the Level of Effort. It was just a “gut feeling” on the part of management that we should take 10% out of the bid.
The proposal was submitted and after oral presentations were conducted with the client, our firm was selected to perform the work. A couple of weeks went by and the scheduled start of the project pasted but we didn’t receive a Notice to Proceed (NTP) from the DOT. I contacted my counterpart to ask when we would get the NTP and agreement and I was told that it was in the “Procurement Department” and they had some problems with the commercial terms and couldn’t issue the NTP until adjustments were made to the Agreement. My client sent me a revised schedule of values that were be used in the Agreement, and of course the commercial terms were reduced from the original amounts included in our initial proposal. The new terms were presented as “take it or leave it”, so our team said we’d take it (over my protests).
The Scope of Work and the schedule were not changed, but the cost was significantly reduced compared to my original estimate. I didn’t mention earlier that the resources to be used for the work were not members of my business unit so I had no direct control over their assignments or utilization. That’s not an uncommon situation for a Project Manager. I should also mention that the staff had no experience with this type of project and would not recognize a fiber optic cable if they tripped over it. That’s also not an uncommon situation for a Project Manager, particularly in large engineering firms.
This wasn’t the first rodeo of this kind I’d participated in so I deconstructed the Scope of Work and the budget and issued instructions to the staff that they could work on the project for only an exact number of hours and NO MORE. I also instituted an exquisitely detailed “Change Order” log to record every event and activity that was out of scope.
In the end, we submitted deliverables that were substandard. I documented changes to the Scope of Work in my Progress, Plans, and Problems (PPP) weekly reports to the client and based on that documentation I prepared a detailed Change Order Request at the end of the project and presented it to our management with the recommendation that it be submitted to the client. Our management decided to not submit the Change Order Request for political reasons.
The key take away in this cases is that if you are “forced” to adopt a mangy dog, be prepared to document the circumstances and distribute the documentation to all levels internally in your organization. Be prepared to limit the Level of Effort of staff to the maximum amount available in the revised budget. Most importantly, document the scope changes in exquisite detail and be sure to distribute the documentation on a regular basis (see PPP Report Format) to your client.
Better yet, when you see a mangy dog approaching, Run, Run Fast…
James Young is a Senior Program Manager and Organizational Management Consultant specialing in engineering, construction, and project managment. He has successfully executed projects with a total value in excess of $1B. You can check James profile on LinkedIn.