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What capabilities should a PM possess?

 

  1. Strong organizational skills: The successful PM must be able to organize a project, the team, and address the many details that arise. This employee must be strong at organizing staff schedules and be able to handle more than one major project if necessary.

  2. Generalization: While a manager may have an interest in a particular project area, he or she must be familiar with all aspects of the project. However, PMs do not need to know all of the technical details for themselves. Being effective at delegation is very important. To be effective as a PM, one must have a strong ability to examine the broad scope of a project without becoming bogged down with the details.

  3. Ability to monitor the project: A PM must be able to monitor project status and display a willingness to ask for assistance when the situation warrants. Effective communications between members of the project team is vital.

  4. Communication: PMs must have good communications skills for both public speaking and writing. They must be able to communicate to both individuals and groups as marketers and as managers of the project team. In addition, they must be good listeners.

  5. Experience: Successful PMs must have broad experience in a variety of project types. They must have strong skills and experience in project budgeting, negotiating, marketing, and estimating. Their own database of previous project experiences is extremely useful.

  6. Leadership ability: The strong PM must be a leader; an individual who can direct and motivate the project team. He or she should have demonstrated leadership ability prior to becoming a PM.

  7. Ability to make decisions: A PM is a decision maker. The ability to make decisions and to carry them through is vital. In addition, the manager must be able to admit a mistake, and must be able to say no to a client or staff member when necessary.

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COST DECISIONS

 

Project managers are often called on to make decisions between different opportunities or different ways of accomplishing the goals and objectives of a company. The three types of cost that are used to make decisions are differential cost, sunk cost, and opportunity cost.

Differential Cost

Differential cost is simply the difference in cost between choosing one of two or more options to pursue. The other side of differential cost is differential revenue. When considering the different options to pursue, the differential cost and revenue of each option is reviewed, and the option that presents the higher income usually is chosen.

Let's look at an example of how differential cost may be used to choose between two options. ABC Web Company creates and supports Internet web sites for other companies. Often its revenues are tied, in part, to the success of the web sites it designs. ABC Web has been approached to produce a web site that it feels will be very successful, but currently its resources are working over capacity and cannot begin the work immediately.

ABC Web's alternatives are to ask the client to wait three months or to subcontract the work to another vendor that it has worked with in the past. The client has indicated that if ABC waits three months, it will pay a commission on the site's revenues for only 9 months instead of 12. Yet subcontracting is fairly expensive. Here is the differential calculation that ABC Web made:

According to this analysis, the differential revenues were $30,000, while the differential costs were $10,000, meaning that ABC Web would have $10,000 more revenue by choosing to subcontract this project to a vendor. By doing a differential cost study such as this, ABC Web is able to make a decision (see Exhibit 4.3).

 

  In House Production Sub-Contracted Differential Revenues
Revenues from Site Production $50,000 $50,000 $0
Commissions (Monthly)[*] $90,000 $120,000 $30,000
Cost of Production ($35,000) ($45,000) −$10,000
Gross Profit $105,000 $125,000 $20,000
Overhead ($2,000) ($2,000) $0
Net Revenue $103,000 $123,000 $20,000
[*]Project Monthly Commission $10,000
 

Differential Costs Example

 

SUNK COSTS

A sunk cost is any cost that is already incurred or sunk into a project. At times, when making decisions, managers may not wish to throw away money that has already been spent and will decide to continue so as to recoup the money already spent. This happens frequently in projects that are not going well. For example, take a software development project that was budgeted to cost $300,000. Now, with the delivery date six months past and the cost topping $400,000, the company must make a decision as to whether to continue or not.

Several of the programmers on the project want to continue. They say, "We think we are almost there, and besides, we've already spent $400,000. We don't want to waste the money!" However, the money that has been spent is gone (or sunk). It must not enter into the decision. The decision as to whether to continue or not should be made only on the chances of successfully completing the project, no matter what costs have already been sunk into it.

Therefore, spending more money when the success of the project is not clear (or when failure is all too clear) is not justified. In reality, since the money is already spent, it cannot be used to make future decisions. Sunk costs should never have a place in deciding future activities or operations.

 

OPPORTUNITY COSTS

Opportunity cost results when a decision is made to pursue one benefit over another. Although opportunity cost is important in making decisions, it is not a cost that enters into accounting statements, such as income expense reports or balance sheets. Some examples of opportunity cost could be:

  • The selection of one project over another. Since both projects represent potential revenue to the company, the revenue of the project not chosen is an opportunity cost.
  • Not pursuing a particular new product in order to invest in other areas. The potential revenue of this product is an opportunity cost.

As we can see in each of the decision costs descriptions, often the information used to make a decision comes from the same source and is in a similar format as other costs, but is used for a different purpose. For example, in the differential cost example the production cost of the software could include variable, semi-variable, and fixed cost, but in order to make a decision about whether to subcontract, the type of cost was less important than the difference in cost between the two options.

DELEGATION

 

Which Manager you prefer to work with?

 

OR

 

Which type of Manager are you?

 

Manager A:

“Call Tom Burton at Cavalier Computer. Ask him to give you the price list on an upgrade for our personal computers. I want to move up to Quad-core processor with 8 gigs of RAM and at least a 1.5-terabytes hard drive. Ask them to give you demonstration of the Windows 8 program operating system and Microsoft Office 365. I want to be able to establish collaboration capability for the entire group. Invite Cochran and Snow to the demonstration and let them try it out. Have them write up a summary of their needs and the potential applications they see for the new systems. Then prepare me a report with the costs and specifications of the upgrade for the entire departments. Oh yes, be sure to ask for information on service costs.”

 

Manager B:

“I’d like to do something about our personal computer system. I’ve been getting some complaints that the current systems are too slow, can’t run current software, and don’t allow for networking. Could you evaluate our options and give me a recommendation on what we should do? Our budget is around $2,000 per person, but I’d like to stay under that if we can. Feel free to talk to some of the managers to get their input, but we need to have this done as soon as possible.”

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MENTORING PROJECT MANAGERS

Mentoring Programs

One of the most effective devices to train and develop aspiring PMs (or any staff for that matter) is through a mentoring program. This device will likely achieve the fastest development of key staff and will enhance the performance of all who participate. Younger staff gain the benefit of the experience and wisdom of older hands and the more senior individuals are exposed to new ideas and techniques.

While mentoring seems to be a win/win situation for all involved, it is not always embraced in design and owner/client organizations. Depending on how extensively the program is developed, there can be sizable costs for staff time, administration, training fees, lost billable time, and many other items. Older staff may resist mentoring newcomers for fear of job security. Senior management may ask, “Why pay the higher salary of the older staff when the younger individuals can do almost the same (or the same) job?” Personality conflict can also be an issue if the assigned mentor is unable to achieve a good working relationship with the individual to be mentored.

In some situations, firms are strongly in favor of establishing mentoring programs; however, sometimes the younger staff members fail to appreciate the benefits of the program or the opportunity being presented to them. A number of years ago, as the chair of the Chicago AIA chapter Practice Management Committee, I helped to establish a mentoring program. A chief goal of the program was to match up architectural practitioners in Chicago with fourth, fifth, and sixth year architecture students at the local architectural schools. Practitioners were grouped by their spe-cialty such as design, technical areas, computer technology, and management, and students could select from their area of interest. Many practicing architects were enthusiastic about the program and readily signed up. Despite heavy promotion at the three local architecture schools, very few students applied for mentors. Sadly, this was a lost opportunity to learn a great deal about their chosen profession from those with real-world experience.

Types of Mentoring Programs

Mentoring programs exist in many forms; however, they can be broadly classified into two major groupings.

  1. Formal mentoring programs: A formal mentoring program requires a significant commitment of resources. Extensive record keeping is required, training budgets must be expanded, administrative systems for the program need to be developed, and lost billable time must be anticipated and monitored. There are typically four steps to the development of a formal mentoring program:

a) Description: Each job/position in the organization must have a written position description. Career paths must be laid out for each job grouping such as project managers. The criteria for advancing into a particular job/position needs to be described, and the criteria for performing a particular job/position must also be outlined. This step requires the organization to develop a process for mentoring. The firm must evaluate each position, staff advancement practices, training needs, and so on. It also provides benchmarks to measure performance and goal setting. For staff, this step provides a road map for advancement and improvement. Obviously, the achievement of goals must bring an appropriate reward such as a promotion or salary increase.

b) Skill assessment: Less experienced individuals participating in the mentoring process must first be assessed as to their current skill level and performance. This provides a benchmark for them and for the firm to measure their growth. Mentors must also be assessed for their capabilities in meeting the requirements of their role.

c) Mentoring: The actual mentoring process is time-consuming and continues over a long period of time. Implementation may require less experienced staff to seek an advanced degree, take other college courses, attend professional development seminars, read books, or undertake a myriad of other activities. The mentor must monitor and encourage this effort. Eventually, a mentor’s role may end and a new individual may take over as mentor.

d) Performance assessment: The success or failure of the mentoring effort must be regularly assessed. This process must be on an individual basis and for the program as a whole. The mentoring program must be continually appraised and adjusted to reflect the needs, capabilities, and growth of your staff.


  1. Informal mentoring programs: This is the most common type of mentoring program and is widely practiced in the construction industry. Informal programs occur in two types.

a) Kismet: In this type of informal program, mentoring is left to fate as younger and older staff develop friendships and working relationships. In some cases, a more experienced individual is committed to the development of junior staff and seeks to help them advance. Generally, the firm plays little or no role in this mentoring process.

b) Active encouragement: In some firms, the informal mentoring process is developed by encouraging more experienced staff to mentor junior members of the team. Activities may be planned to foster this effort, budgets may provide funds for mentoring and training programs, and a general atmosphere of concern for the development of younger staff may pervade the organization.

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Dealing with Delays

In some cases, project sponsor or the board of directors might not want to extend the end date of a project since it will be resulting in losing potential revenue or losing investors expectation. Therefore, project manager will need to choose the next step of action to meet the date line or else, your career reputation will be on the line. Here are options that you could take based on project condition:

  1. CRASH IT
    Crashing can help you to get back on track, but you must consider the availability and cost of resources. The main risk of this option is whether your project has enough budget to do crashing and whether the resources needed are available at the course of action. And not to forget, whether the manpower has enough skill and experience to execute the crashing activities.

  2. SET NEW PRORITIES
    In this option, you need to reprioritize activities that are critical for the project success. These activities can be identified in the critical path of a schedule. Delaying a single activity in critical path will result in delaying the whole project.

    Another method is to reprioritize the requirements. Sometimes it is better to have a working system with limited functionality than waiting for more time to have a complete system. The project delivery can be divided into different phases with the functionalities of the system are improving in every phase, until it meets all of the stakeholders requirements. This of course will need the project manager to get a buy in form the stakeholders.

  3. GET AGILE
    When a project is behind the schedule or at risk of a critical delay, turning to an agile approach is a good way to accelerate the timeline. First, analyse the scope that is at risk and divide it into smaller, tangible parts. Set a very short daily meeting or call with the key leaders of the delivery team to closely monitor progress. Dashboard can be used to track the progress of each scope, with proper tagging (not initialized, in progress or completed) in order to improve the coordination and communication with all team members.

  4. DIVIDE AND CONQUER
    Make a list of the causes of the delay, then identify which causes are internal and which are external. Internal items are within your groups control and therefore you need to coordinate with your team closely, preferably co-located team. Prioritize and fragmentize the problem into smaller parts which easier to be solved.
    For the external items that are usually undertaken by the supplier or vendor, they also need to do the same thing. Focus and prioritize on their own work to achieve the dateline. The external party can see what they need to do and that we are doing our part to get back on schedule.

  5. MINIMIZE DAMAGE
    When you detect a deviation in the project schedule, you must act quickly and decisively. You need to determine whether the damage occurs at the critical path of the project. If it is, then you can opt for adding more human resources to increase the pace of work while minimizing damage to the budget. If the team cooperation or client cooperation is the main issue, you will need to present possible solution, where usually it is either change request for confirm completion of missing items and time or reducing the project scope.

  6. MEET THE TEAM
    It is hard to find a project that move forward exactly along schedule. Every project is bound to have minor slippage on the time progress. To resolve the delay, it is necessary to bring all the involved parties to the table. The participants, timing and duration of these meeting depends on the root cause of the delay. It may take one meeting, a series of meetings or even bringing everyone to the site (co-location) to get project back on track. Getting everyone on site allowed us to have a long discussion, exchange ideas and ultimately recover the delay.

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