Project Management Strategy by Business Approach

Summary

There are two leading project management approaches today. They are the traditional waterflow (PMBOK, PRINCE2) and the adaptive (AGILE) type of project management approaches. Traditional ones are managing the classical triple requirements (scope, budget and timeframe) as equally important objectives with special emphasize on planning and prediction to increase the success of project management. Adaptive approaches are more selective on the importance of the above mentioned requirements and handling scope as naturally and constantly changing subject, with special emphasize on fast adaptation to the changing business needs believing that long term planning and prediction are erroneous and costly. Therefore adaptive project management approaches are significantly different to the traditional ones. The questions we can ask ourselves

• Is there a general answer, which project management approach is better adaptive or the traditional waterflow?
• How to decide, which approach is to be used for a project (or a part of the project)?
• Can these methodologies be effectively combined?

In order to answer the above questions we may want to look for principles classifying modern business management strategies to consider whether the difference in business management approaches has anything to do with the selection of the Project Management approach and tools, specially because it is the business from where most of our projects are initiated and / or approved. There is another reason giving us hope to find the connection between business and project management strategies and it is the fact that projects similar to business strategies can be planned, but not predicted without uncertainty. Let’s assume that ‘uncertainty’ (both level of and reaction to) is playing a significant role in selecting company and project management strategies. Then the questions we can ask ourselves

• How a modern company strategy responds to an uncertain situation and decides “what to do next?”
• What is the link between Company & Project management strategies?
• Has IT perspective play a significant role in deciding the best approach?
• Is the organization ability and willingness to manage execution has any role in deciding the best approach?

The essay not only contains the answer to the above mentioned questions and provides with a clear strategy to choose and combine project management tools both macro and micro level, but also provides with live examples to show the implementation of the proposal in real live environment.

Running Title: Project Management Strategy by Business Approach

Key words: Harmonized Business and Project Management strategies; Combination of Prince and Agile; Project Management response to Uncertainty;

Date: 23-Sept-2009

Ervin Bányai

Ez az email cím védett a spam robotoktól, a megtekintéséhez engedélyezni kell a Javasriptet

+36 20 9373111

Article

There are two leading project management approaches today. They are the traditional waterflow (PMBOK, PRINCE2) and the adaptive (AGILE) type of project management approaches. Traditional ones are managing the classical triple requirements (scope, budget and timeframe) as equally important objectives with special emphasize on planning and prediction to increase the success of project management. Adaptive approaches are more selective on the importance of the above mentioned requirements and handling scope as naturally and constantly changing subject, with special emphasize on fast adaptation to the changing business needs believing that long term planning and prediction are erroneous and costly. Therefore adaptive project management approaches are significantly different to the traditional ones. The questions we can ask ourselves

• Is there a general answer which project management approach is better adaptive or the traditional waterflow?
• How to decide which approach is to be used for a project (or a part of the project)?
• Can these methodologies be effectively combined?

In order to answer the above questions we may want to look for principles classifying modern business management strategies to consider whether the difference in business management approaches has anything to do with the selection of the Project Management approach and tools, specially because it is the business from where most of our projects are initiated and / or approved. There is another reason giving us hope to find the connection between business and project management strategies and it is the fact that projects similar to business strategies can be planned, but not predicted without uncertainty. Let’s assume that ‘uncertainty’ (both level of and reaction to) is playing a significant role in selecting company and project management strategies. Then the question we can ask ourselves first is how a modern company strategy responds to an uncertain situation and decides “what to do next?”

“What to do next? The case for non-predictive strategy”

On one hand there are followers / second movers on the market positioning the organization within an exogenously given environment. On the other hand there are firms, particularly new ventures, may pursue their next steps with an emphasis on constructing or creating their own future, rather than positioning or reacting to what others are doing. While positioning deals with the relative emphasis on prediction and navigating in an exogenous environment, construction deals with deliberate efforts to make the environment endogenous.

• Positioning strategies are either focuses on planning and say “Try harder to predict better” or focuses on adaptation in a changing environment and say “Navigate better”.
• Constructing strategies are attempting to control either using a visionary approach built on a vision leaning upon the current strength of the company and say I have a vision let’s create something new or using a transforming approach by co-creating future possibilities typically with another company, such as acquisition and say let’s see what we can do together.

Both positioning and constructing strategies are using different approaches depending upon how confident the firm is in its ability to predict changes or how they want to cope with that given uncertainty.

• Predictive strategies are designed to handle lower level of uncertainty and want to know exactly where to go. Within that positioning strategy, which is the most traditional one, not only wants to know where to go, but also how to achieve the selected goals by using a set of “no regrets” move to position where the market is heading. Visionary strategy is also clear about the ends, but more flexible to means (how to achieve the vision).

• Non-predictive strategies are designed to handle higher level of uncertainty saying, not all predictions are equal and most of them are erroneous. Adaptive approaches are going step by step by shortening the foreseen horizon and incrementally recognizing where they are and not predicting where they will be. In an adaptive approach both cycle of actions and market feedbacks are short. Transformative approaches want to control and represent the highest level of uncertainty, in which stakeholders are committing their resources in exchange for a chance to re-shape the end results. Transformative approaches have different motivations compared to all other approaches, because they are more ‘means’ driven (rather then goal oriented action) going for affordable loss (rather than expected return) as evaluation criteria and leveraging possibilities (rather than avoiding contingences or events you do not foresee).

Summary of “What to do next” business mgmt. strategy

• “Visionary and transformative approaches will generate a wider range of innovations”
• “Transformative approaches will generate the most number of innovations opportunities”
• “Non-predictive strategies cost less to formulate and execute than predictive strategies”
• “Costs of failures resulting from non-predictive strategies are likely to be lower”

Balance point between Positioning and Constructing

Natural life-experiences seem to be in line with “What to do next?” suggestions. Constructing and creating something new means more uncertainty than Positioning. Not surprisingly more uncertainty represents a chance for more innovation.

Transforming approach is not only suggested due to more innovation, but also due to less cost, which is not a surprise either as we know from project management practice that planning and predicting usually consume one third of the total implementation timeframe, not talking about the cost of failure if it is recognize too late.

My suggestions for Business Management are

• attempt to control first and not only navigate even if you want to position only in order to generate the widest range of innovation and
• let the process solidify the shape of what will be created

There is an interesting dynamism to recognize. The attempt to control is expanding the means available and the converging cycle of constraints on goals decreasing it. Along this process there will be a point where it becomes important to re-evaluate the balance of prediction and control.

My suggestions for Project Management are

• to participate in the creation of the task from the earliest and maximize options by using all stakeholder’s ideas, including IT / PM as one of the stake holders
• to require minimum bureaucracy & do not get specs. commitments early in this pre project phase
• to generate and keep options open (incl. creating the demand) until dependency constraints on goals

By the time the strategy has been formulated, the process could mitigate uncertainty.

Project management tools by business approach

Proposition 1: PM method is not independent from business approach and it comes second

• Proposition 1 is not suggesting a direct (one to one) relation between business and PM approach. In order to understand the reason, let’s look at an example in which a macro level adaptive approach can easily be implemented by waterflow project management. CS 1 (Case Study): In the case of several billing system inherited from past acquisitions, the ultimate goal of consolidating them into 1 billing system can be achieved on macro level either with a waterflow big bang approach (specify and freeze the specification of the ultimate solution till the successful implementation of the new billing solution, such as 2 years in advance) or with an adaptive approach to consolidate among existing billing systems first and migrate (specify and freeze) to the ultimate solution as a last step of several migrations. In this example, if macro level business strategy has chosen the macro level adaptive approach, project management can still implement any particular billing system migration on project or sub-project level using waterflow project management methodology.
• Project Management approach is on the other hand not independent, as the chosen business approach can determine the ‘best’ project management approach.
  CS 2: Let’s look at another example using transformative business approach, in which a fix line ISP (Internet Service Provider) works together with a mobile ISP partner to find a set of common proposition. Fix line ISP motivation to collaborate with the mobile service provider is to provide with a mobile proposition for its existing customer base, which is strategically important to slow down churn to mobile. Mobile service provider motivation to collaborate with the fix line service provider is to extend its whole-sale capability with a large fix line customer base to increase its share on the market. When the two companies come together, the high level business goals working together becomes clear relatively soon including commercial terms, where the start date of providing common services can be vitally important. However to find the common set of cooperation in implementable details can be the result of a much longer process. Using the general IT view on the situation, business has no clue what they want, other then it should be ready and be on the market within the next let’s say 3 months. In this case an adaptive project management approach is much closer to the real business need than a waterflow could ever be.
• From the latter example it is clear that Business approach should always come first and IT aspect second in determining the best project management approach, because otherwise the pressure on early business specification commitment could kill to find the optimum solution or could force the entire project going through many „changes” at a later stage.

Proposition 2: IT prospective might move the balance point between Construction and Positioning

In many cases a business level Positioning approach (introducing something know in the market) can turn into Construction (creating something new), due to implementation difficulties both technological and technical level

• on technological level e.g.: the implementation of a new function can be very different task due to differences in legacy system’s solution or
• on technical level e.g.: the consolidation of a customer base can result in an extensive data-cleansing taskforce, which size and complexity is difficult to foreseen or plan, if we have stored different names for customers in different legacy systems

Balance point between Prediction and Control

When the horizon appears relatively certain, prediction and control shows a co-extensive relationship based on the traditional deterministic frameworks saying what can be predicted can be controlled. As this horizon becomes more uncertain, control and prediction becomes orthogonal and manager should also consider of using non predictive tools to control.

In order to understand where we stand at decision point between Prediction and Control similar questions are to be evaluated both from business and project management point of view.

• Business on one hand needs to understand what the confidentiality level of the company is to predict the future (what the foresight horizon and the nature of the changes ahead) and on the other hand business needs to evaluate the cost of prediction and the cost potential project failure, including the lost marketing opportunity.
• Project Management needs to judge the level of available details and reliability of prediction in three motions. Get business aspect first (e.g.: business specification is available and solid) and technical / technological aspect second (e.g.: is there a data-cleansing effort required, which is difficult to plan) and evaluate the frequency of changes as third. It is advisable to help the business with a business case comparing the cost and time requirement of the predictive and non predictive approach.

Proposition 3: Waterflow project management advantages can be utilized better in lower uncertainty level and Adaptive advantages in higher uncertainty level situations.

As we go from the relative certain situation towards the highly uncertain situation, the level of uncertainty suggests the project management method to follow. As an example a higher level of uncertainty asks for an adaptive method and the highest level of uncertainty asks for a prototype for testing the market and the solution both in market / firm and business / IT relations.

Interestingly enough there is a new aspect playing significant role and helping us in selecting project management tools, which is business & Project Management ability and willingness to control leading us to the 4^th proposition.

Proposition 4: Business & Project Management willingness to Control (direct or indirect management of implementation) and Project Management approaches are linked

It may come as a surprise that not only the nature of the task and environment, but also business ability and willingness to control suggests the best Project Management approach to follow. If we take the previous example (CS 1) to achieve the ultimate billing solution, in which we used macro level AGILE and project level Waterflow approaches, one can decide and follow either Waterflow or AGILE approaches implementing e.g.: an interface on micro level, as follows:

• Using the traditional waterflow approach one needs to get the specification of processes and the new functionality agreed with the business, the vendor’s contracted and test the solution once it has been delivered by both vendors. If there were misunderstanding of real business requirement of any misinterpretation of the specification that needs to be corrected usually on a serial manner.
• Using an AGILE approach one can take a different approach and give a try on using an AGILE software development tool, called TDD (Test Driven Development) virtually sitting in the middle of a triangle directing the two vendors and the business users. Any written code run on a set of data developed by vendor 1, can be used as a test case for vendor 2 (and vice-versa ) driving a more effective development cycle compared to the traditional waterflow approach, especially if the exchange of data has also been monitored and commented during development based on business processes in mind.

With other words, one can Predict and let the execution be managed contractually or one can Control and keep a more direct management responsibility.

As the above example also reveals, micro and macro level Project Management approaches can be different for both directions.

Natural combination of Project Management methodologies

Regardless whether we choose a traditional or adaptive approach, we still need to deal with the fundamentals of project management, which are scope, time-frame and budget.

Based on Proposition 1 – 4, we have found connections between business and project management approaches and described its nature. We have seen examples for choosing different approaches in both directions.

• Waterflow within Adaptive
  
  • Most of the cases in company’s practice, there is a point where we need to commit what we deliver for time and money
• Adaptive within Waterflow
  • Many Adaptive principles work within Waterflow specially taking over control for effectiveness (e.g.: TDD or collaboration)

However there is also an order of Project Management approaches based on the natural evaluation of information from idea to implementation

• Natural usage of methods in light of information availability
  • Chaos (only ideas are available)
    • Adaptive (primary objectives, timeframe and cost are available)
      • Prince (objective is planned and clear for the project
        • Adaptive (sub-project using adaptive PM and development)

One can stop on a certain level (e.g.: primary objectives, timeframe and cost are available) and do the implementation accordingly. However it will be very hard to skip or exchange any of the above mentioned level.

Note: Looking at the last 20 years of project management history and evolutions, is it possible that the impact of the above described natural process from thinking to implementation has been disregarded for so long?

Project Management methodologies used in practice

There are leading implementations for Waterflow (such as PMI/PMBOK or PRINCE2) and for Adaptive / AGILE (such as SDLC or DSDM) methodologies effectively used for managing projects. It is not the purpose of this article to provide with any kind of list or description / comparison of existing methodologies. From now on within this article we use PRINCE2 as an example of traditional / waterflow and AGILE in general as an example of adaptive methodology. We use PRINCE2 and not PMI/PMBOK as an example because PRINCE2 representing the perspective of an organization initiating and managing projects, starts in the process much earlier (not only sees a project starting when it is initiated by the client) and it is more of a methodology rather than a standard.

AGILE principles and practice within PRINCE2

As seen above, there are different levels we could combine methodologies in practice. In the below example we were using PRINCE2 as a frame for embedding AGILE principles in Start Up, Initiation and delivery stages to show how proposals above working for us successfully with no exception in real life.

Start Up phase

In practice we combine methodologies to achieve certain advantages for a particular project.

AGILE principles were used in the earlier described example of migrating billing systems on a step by step basis via existing legacy systems, rather then in one step (big bang) towards an unknown ultimate solution.

• Combined methodology in Start Up phase
  • Make start up discussions AGILE like
    • Collaborate with Stakeholders to understand motivations (e.g.: ultimate solution at the end; OPEX reduction and risk mitigation throughout the process) and create the best possible approaches on an iterative manner
    • Require minimum bureaucracy from Stakeholders
    • Do not ask for and freeze items too early (e.g.: features of ultimate solution)
• Set macro level Objectives using AGILE principle, such as „early and continuous delivery of valuable software”
  • Macro level objectives should be set using measurable, business like goals for short term (e.g.: migration and interface development to support automation by eliminating systems to achieve maximum OPEX reduction or to concentrate a customer segment in order to be able to provide with one invoice for a customer) and step by step approach to achieve long term ultimate goals
• Structure and document available information PRINCE like
  • Using PRINCE like structured documentation and process can significantly increase success later and the trust in project management

Initiation and Delivery Stages

Aiming to be good for all, one of the potential pitfalls with general project management tools is to require the same level of documentation from all projects. In order to help customization a general guidance can be provided splitting documents and level of control Mandatory and Optional based on the environment standards, which are to be further tailored between Sponsor and Project Manager based on project circumstances.

Another potential pitfalls of using heavy weight Waterflow methodologies is to ask for planning details too early and force the project managers to guess or to use methodology on a reactive documentary basis simply because the level of details are not available at the time methodology would require it. The solution could be to judge available planning details and risk to Initiate the project and handle the missing planning details as any other project deliverables scheduled and tracked for a later milestone and by doing so the creation of documents will be harmonized to project life cycle.

In summary, the level of control and documentation are to be harmonized with project complexity, agreed with sponsor. In this way, Project Initiation Document (PID) works as a contract between Sponsor and Project Manager balancing planning readiness (remaining risk), time, cost of further planning and setting appropriate level of bureaucracy (documentation and control).

AGILE principles can be used not only implementing a project, but also for a part of project delivery within a stage, such as TDD (Test Driven Design) for an Interface development. In this approach, the one managing development sits between two vendors representing the business requirements and

• Plan and use interim results of one side development to help the other
• Give priority to a sw. piece development to enable testing wider functionalities
• Test early with processes in mind to achieve

–       earlier recognition of specification issues and

–       help harmonizing interpretation of scope to avoid change requests later on

Obviously, if project manager decides to take over primary “contractor” role directly managing an interface development with vendors based on a high level specification it has responsibility and contractual consequences. In this example the price of the more active “control” for effectiveness is a less clear responsibility split and contractual setup, mitigated by planned contingency and fast decision / approval process. The way to handle the uncertainty is described below.

• Combined methodology in Initiation and further delivery stages
  • Planning and delivery
    • Optimum level of details
      • Just enough planning until level of scope details is enough for vendors to provide with a reliable time and budget projection
      • Further planning brings no reliable result (lack of info) or not feasible (time / effort or changing environment)
      • Milestones
        • Plan the work and set milestones by ‘working solutions’ with business value on a step by step basis (e.g.: migrate by customer segment or system)
        • Plan to collaborate
          • Try and use Test Driven Development (TDD) approach involving vendors and business (e.g.: interface dev.)
          • Contracting options, based on ability and willingness to control
            • Very Confident: TDD + T&M (Time and Material base)
              and PM in driving seat (e.g.: interpretation)
            • Confident: TDD + Fix price (incl. contingency or plan with contingency) and PM in driving seat (e.g.: interpretation)
            • Less Confident: Waterflow + Fix price
            • Responsibility split

TDD is contractually less clear and more Project Manager active by playing the primary contractor role

• Collaboration is more effective than heavy documentation with "stop loss" risk limitation control points (only part of the project runs with AGILE principle in mind)
• Early deviation reporting and fast approval process on changes along development (on the fly)

Proposition 5: Waterflow and Adaptive methodologies can effectively be combined within a project, as it is proven above.

Going back to the question, why we were combining the AGILE principles within PRINCE2 frames in above example?

• Macro level AGILE was used, because
• Micro level AGILE was used, because
• Prince framework was used, because

• it is less risk for overall failure
• we shoot for the low hanging fruits first, to realize the benefits the earliest
• we want to learn from first project prior to plan the latter ones
• don’t know the detailed expectation of the ultimate solution at early stage
• easier to modify direction

• we wanted to reduce cost (cheaper)
  • Hope 1: AGILE T&M or fix price with contingency cost less than Waterflow contracted price + estimated Change Requests cost
• We wanted to reduce time (faster)
  • Hope 2: Using AGILE TDD interface development becomes shorter than Waterflow specs., development, testing and correcting
• Easier to recognize short term deviation

1. More complex project requires it
2. Better planning and reporting possibility
3. More clear responsibility and contractu al conditions

SUMMARY

There is no decision between Waterflow and Adaptive project management methodologies.

There are on the other hand links revealed between nature of the task, willingness to control and the selected project management methodology starts in a much earlier phase than methodologies suggesting it with the natural combination of project management methodology determined by information evolution.

A clear strategy has been provided to participate in the creation of the task, to choose and combine project management tools both macro and micro level, including live examples to show the implementation of the proposals in real live environment.

REFERENCE

- Agile manifesto, 17 authors

- Agile Unified Process (AUP), Scott W. Ambler

- DSDM v4.2, 2006

- PMBOK® Guide–Fourth Edition, Leadership team

- PRINCE2 2009, Andy Murray

- The Agile System Development Life Cycle (SDLC), Scott W. Ambler

- Test-driven design (TDD), Beck 2003, Astels 2003

- SCRUM, Ken Schwaber

- WHAT TO DO NEXT? THE CASE FOR NON-PREDICTIVE STRATEGY,
Robert Wiltbank, Nicholas Dew, Saras D. Sarasvathy, Stuart Read

- and many other