business management

The Revolution Will Not Be Televised — The Sustainability Manifesto for Projects

While doing stuff and living life (which seems to take me away from writing) there were a good many interesting things written on project management.  The very insightful Dave Gordon at his blog, The Practicing IT Project Manager, provides a useful weekly list of the latest contributions to the literature that are of note.  If you haven’t checked it out please do so–I recommend it highly.

While I was away Dave posted to an interesting link on the concept of sustainability in project management.  Along those lines three PM professionals have proposed a Sustainability Manifesto for Projects.  As Dave points out in his own post on the topic, it rests on three basic principles:

  • Benefits realization over metrics limited to time, scope, and cost
  • Value for many over value of money
  • The long-term impact of our projects over their immediate results

These are worthy goals and no one needs to have me rain on their parade.  I would like to see these ethical principles, which is what they really are, incorporated into how we all conduct ourselves in business.  But then there is reality–the “is” over the “ought.”

For example, Dave and I have had some correspondence regarding the nature of the marketplace in which we operate through this blog.  Some time ago I wrote a series of posts here, here, and here providing an analysis of the markets in which we operate both in macroeconomic and microeconomic terms.

This came in response to one my colleagues making the counterfactual assertion that we operate in a “free market” based on the concept of “private enterprise.”  Apparently, such just-so stories are lies we have to tell ourselves to make the hypocrisy of daily life bearable.  But, to bring the point home, in talking about the concept of sustainability, what concrete measures will the authors of the manifesto bring to the table to counter the financialization of American business that has occurred of the past 35 years?

For example, the news lately has been replete with stories of companies moving plants from the United States to Mexico.  This despite rising and record corporate profits during a period of stagnating median working class incomes.  Free trade and globalization have been cited as the cause, but this involves more hand waving and the invocation of mantras, rather than analysis.  There has also been the predictable invocations of the Ayn Randian cult and the pseudoscience* of Social Darwinism.  Those on the opposite side of the debate characterize things as a morality play, with the public good versus greed being the main issue.  All of these explanations miss their mark, some more than others.

An article setting aside a few myths was recently published by Jonathan Rothwell at Brookings, which came to me via Mark Thoma’s blog, in the article, “Make elites compete: Why the 1% earn so much and what to do about it”.  Rothwell looks at the relative gains of the market over the last 40 years and finds that corporate profits, while doing well, have not been the driver of inequality that Robert Reich and other economists would have it be.  In looking at another myth that has been promulgated by Greg Mankiw, he finds that the rewards of one’s labors is not related to any special intelligence or skill.  On the contrary, one’s entry into the 1% is actually related to what industry one chooses to enter, regardless of all other factors.  This disparity is known as a “pay premium”.  As expected, petroleum and coal products, financial instruments, financial institutions, and lawyers, are at the top of the pay premium.  What is not, against all expectations of popular culture and popular economic writing, is the IT industry–hardware, software, etc.  Though they are the poster children of new technology, Bill Gates, Mark Zuckerburg, and others are the exception to the rule in an industry that is marked by a 90% failure rate.  Our most educated and talented people–those in science, engineering, the arts, and academia–are poorly paid–with negative pay premiums associated with their vocations.

The financialization of the economy is not a new or unnoticed phenomenon.  Kevin Phillips, in Wealth and Democracy, which was written in 2003, noted this trend.  There have been others.  What has not happened as a result is a national discussion on what to do about it, particularly in defining the term “sustainability”.

For those of us who have worked in the acquisition community, the practical impact of financialization and de-industrialization have made logistics challenging to say the least.  As a young contract negotiator and Navy Contracting Officer, I was challenged to support the fleet when any kind of fabrication or production was involved, especially in non-stocked machined spares of any significant complexity or size.  Oftentimes my search would find that the company that manufactured the items was out of business, its pieces sold off during Chapter 11, and most of the production work for those items still available done seasonally out of country.  My “out” at the time–during the height of the Cold War–was to take the technical specs, which were paid for and therefore owned by the government, to one of the Navy industrial activities for fabrication and production.  The skillset for such work was still fairly widespread, supported by the quality control provided by a fairly well-unionized and trade-based workforce–especially among machinists and other skilled workers.

Given the new and unique ways judges and lawyers have applied privatized IP law to items financed by the public, such opportunities to support our public institutions and infrastructure, as I was able, have been largely closed out.  Furthermore, the places to send such work, where possible, have also gotten vanishingly smaller.  Perhaps digital printing will be the savior for manufacturing that it is touted to be.  What it will not do is stitch back the social fabric that has been ripped apart in communities hollowed out by the loss of their economic base, which, when replaced, comes with lowered expectations and quality of life–and often shortened lives.

In the end, though, such “fixes” benefit a shrinkingly few individuals at the expense of the democratic enterprise.  Capitalism did not exist when the country was formed, despite the assertion of polemicists to link the economic system to our democratic government.  Smith did not write his pre-modern scientific tract until 1776, and much of what it meant was years off into the future, and its relevance given what we’ve learned over the last 240 years about human nature and our world is up for debate.  What was not part of such a discussion back then–and would not have been understood–was the concept of sustainability.  Sustainability in the study of healthy ecosystems usually involves the maintenance of great diversity and the flourishing of life that denotes health.  This is science.  Economics, despite Keynes and others, is still largely rooted in 18th and 19th century pseudoscience.

I know of no fix or commitment to a sustainability manifesto that includes global, environmental, and social sustainability that makes this possible short of a major intellectual, social or political movement willing to make a long-term commitment to incremental, achievable goals toward that ultimate end.  Otherwise it’s just the mental equivalent to camping out in Zuccotti Park.  The anger we note around us during this election year of 2016 (our year of discontent) is a natural human reaction to the end of an idea, which has outlived its explanatory power and, therefore, its usefulness.  Which way shall we lurch?

The Sustainability Manifesto for Projects, then, is a modest proposal.  It may also simply be a sign of the times, albeit a rational one.  As such, it leaves open a lot of questions, and most of these questions cannot be addressed or determined by the people to which it is targeted: project managers, who are usually simply employees of a larger enterprise.  People behave as they are treated–to the incentives and disincentives presented to them, oftentimes not completely apparent on the conscious level.  Thus, I’m not sure if this manifesto hits its mark or even the right one.

*This term is often misunderstood by non-scientists.  Pseudoscience means non-science, just as alternative medicine means non-medicine.  If any of the various hypotheses of pseudoscience are found true, given proper vetting and methodology, that proposition would simply be called science.  Just as alternative methods of treatment, if found effective and consistent, given proper controls, would simply be called medicine.

Stay Calm and Carry On — The Business End of Software: How to handle malicious rumors

Veteran’s Day is approaching and, with it, the finale of conference and workshop season for people in my business.  Lately I have been engaged with the less than scrupulous members of my discipline who engage in character assassination and rumor.  Every market has bad players, and one must make the choice of whether you want to run with the black hats or the white hats.  I’m not referring to hackers here but to individuals who are less than savory in their business practices.  So here are a few bits of advice in how to handle such issues:

a.  Bring the rumor to light.  The rumor only has power if it hides in the dark and is allowed to inhabit that realm.  Acknowledge that you are aware of it.

b.  Ask the recipients of the rumor to identify the anonymous source.  Small privately-held companies are not public personalities.  Individuals within companies enjoy the protections of private persons.  The individual or individuals starting a rumor must be placed on an equal footing with those who must respond to it.  Of course, someone who anonymously spreads a rumor and doesn’t acknowledge they are the source is a coward and scumbag anyway, and anyone who would continue to associate with them must ask themselves why they would associate with someone who is a coward and scumbag.  Just saying.

c.  Determine the facts being used in the rumor.  In some cases this could be a leaked document from a civil case that would otherwise go unnoticed, a messy divorce, or some other type of “documentary” evidence provided out of context.  Most individuals who initiate such rumors naively believe they are insulated because the item is “true.”  But it’s not that easy.  Perhaps documentary evidence is transient and unsettled with its release not only interfering with contracts and business interests, but also with a civil case.  Oftentimes a “story” goes along with the document.  The story may be a complete fabrication and, by itself, constitute malicious intent.

d.  If you are confident that you are in the right then state so.  Nothing hurts someone who takes the advice of counsel and says “no comment.”  There are constructive ways to dealing with malicious intent in addressing an issue in public.  Use them.  Hesitation gives the wrong impression–that there is shame or hiding.  If you think you are wronged then state so strongly and without hesitation.

e.  Don’t litigate in public.  If the public doesn’t have an interest in the basis of the rumor, then they only need to know that you are handling the situation.  If it’s based on an internal dispute within the company, then state so.  For example, if there is a possible reversal in a civil suit or unsettled counterclaims, litigating issues in public not only may undermine your case, but inadvertently also give credence to unfounded claims.  The United States is a very litigious country.  Not being involved in a civil case would be extremely unusual for any company.

f.  Once you have determined the extent of the whisper campaign, issue a press release or public statement that combines items a through e above.  Keep in mind that as a CEO or senior executive that your duties are to your customers, your employees, your suppliers, and to defend the interests of the asset itself–your company.  Do not be intimidated or feel constrained from executing those duties.  State clearly that your company will continue to vigorously defend itself and press its own interests.

g.  Don’t take it personally.  Deal with the issue as you would any one in which a competitor is attempting to undermine you.  Understand that desperate people do desperate things.

As a retired senior U.S. Navy Commander with a spotless record and with multiple personal awards and decorations–having risen from the enlisted ranks to senior rank when I was on active duty–and then having a pretty remarkable career thus far in the software industry, I have found that sometimes you run into challenging situations that will test your mettle.  There are individuals out there who are so desperate that they will do their worst in trying to taint or tear someone down, even without good cause.  They must bring things down to their own level because that’s the only thing they understand–a type of psychological projection.

Years ago on one of my tours on ship as a young Navy Lieutenant a senior Navy Captain imparted some words of wisdom to me.  He said that if you achieve anything of importance that there are going to be times when you are brought before the “long green table” to account for your actions.  Thus, one must always be ready to defend themselves.  This is a particularly important inevitability to accept because a good U.S. Navy commissioned officer is trained to understand that between an act of commission–that is, that you took action in facing a challenge–and an act of omission–that you did nothing in the face of the challenge–that the first was defensible and the second was unforgiveable.  The other good piece of advice was that eventually the system screws with you.  It’s how you deal with it that will determine your character.

Thus, in entitling this post I have quoted an old British World War II poster that was recently discovered in an old building.  As a leader you must demonstrate resolve and confidence, even in the most challenging circumstances.  Stay calm and carry on.  I couldn’t say it better myself.

Don’t Be Cruel — Contract Withholds and the Failure of Digital Systems

Recent news over at Breaking Defense headlined a $25.7M withhold to Pratt & Whitney for the F135 engine.  This is the engine for the F35 Lightning II aircraft, also known as the Joint Strike Fighter (JSF).  The reason for the withhold in this particular case was for an insufficient cost and schedule business system that the company has in place to support project management.

The enforcement of withholds for deficiencies in business systems was instituted in August 2011.  These business systems include six areas:

  • Accounting
  • Estimating
  • Purchasing
  • EVMS (Earned Value Management System)
  • MMAS (Material Management and Accounting System), and
  • Government Property

As of November 30, 2013, $19 million had been held back from BAE Systems Plc, $5.2 million from Boeing Co., and $1.4 million Northrop Corporation.  These were on the heels of a massive $221 million held back from Lockheed Martin’s aeronautics unit for its deficient earned value management system.  In total, fourteen companies were impacted by withholds last year.

For those unfamiliar with the issue, these withholds may seem to be a reasonable enforcement mechanism that sufficient business systems are in place in order to ensure that there is traceability in the expenditure of government funds by contractors.  After all, given the disastrous state of affairs where there was massive loss of accountability by contractors in Iraq and Afghanistan, many senior personnel in DoD felt that there needed to be teeth given to contracting officer, and what better way to do this than through financial withholds?  The rationale is that if the systems are not adequate then the information originated from these systems is not credible.

This is probably a good approach for the acquisition of wartime goods and services, but doesn’t seem to fit the reality of the project management environment in which government contracting operates.  The strongest objections to the rule, I think, came from the legal community, most notably from the Bar Association’s Section of Public Contract Law.  Among these was that the amount of the withhold is based on an arbitrary percentage within the DFARS rule.  Another point made is that the defects in the systems in most cases are disconnected from actual performance and so redirect attention and resources away from the contractual obligation at hand.

These objections were made prior to the rule’s acceptance.  But now that the rule is being enforced the more important question is the effect of the withholds on project management.  My own anecdotal experience from having been a business manager in a program management staff is that the key to project success is oftentimes determined by cash flow.  While internal factors to the project, such as the effective construction of the integrated master schedule (IMS), performance management baseline (PMB), risk identification and handling, and performance tracking against these plans are the primary focus of project integrity, all too often the underlying financial constraints in which the project must operate is treated as a contingent factor.  If our capabilities due to financial constraints are severe, then the best plan in the world will not achieve the desired results because it fails to be realistic.

The principles that apply to any entrepreneurial enterprise also apply to complex projects.  It is true that large companies do have significant cash reserves and that these reserves have grown significantly since the 2007-2010 depression.  But a major program requires a large infusion of resources that constitutes a significant barrier to entry, and so such reserves contribute to the financial stability necessary to undertake such efforts.  Profit is not realized on every project.  This may sound surprising to those unfamiliar with public administration, but this is the case because it sometimes is worth breaking even or taking a slight loss so as not to lose essential organizational knowledge.  It takes years to develop an engineer who understands the interrelationships of the key factors in a jet fighter: the tradeoffs between speed, maneuverability, weight, and stress from the operational environment, like taking off from and landing on a large metal aircraft carrier that travels on salt water.  This cannot be taught in college nor can it be replaced if the knowledge is lost due to budget cuts, pay freezes, and sequestration.  Oftentimes, because of their size and complexity, project start-up costs much be financed using short term loans, adding risk when payments are delayed and work interrupted.  The withhold rule adds an additional, if not unnecessary, dimension of risk to project success.

Given that most of the artifacts that are deemed necessary to handle and reduce risk are done in a collaborative environment by the contractor-government project team through the Integrated Baseline Review (IBR) process and system validation–as well as pre-award certifications–it seems that there is no clear line of demarcation to place the onus of inadequate business systems on the contractor.  The reality of the situation, given cost-plus contracts for development contracts, is that industry is, in fact, a private extension of the defense infrastructure.

It is true that a line must be drawn in the contractual relationship to provide those necessary checks and balances to guard against fraud, waste, or a race to the lowest common denominator that undermines accountability and execution of the contractual obligation.  But this does not mean that the work of oversight requires another post-hoc layer of surveillance.  If we are not getting quality results from pre-award and post-award processes, then we must identify which ones are failing us and reform them.  Interrupting cash flow for inadequately assessed business systems may simply be counter-productive.

As Deming would argue, quality must be built into the process.  What defines quality must also be consistent.  That our systems are failing in that regard is indicative, I believe, in a failure of imagination on the part of our digital systems, on which most business systems rely.  It was fine in the first wave of microcomputer digitization in the 1980s and 1990s to simply design systems that mimicked the structure of pre-digital information specialization.  Cost performance systems were built to serve the needs of cost analysts, scheduling systems were designed for schedulers, risk systems for a sub-culture of risk specialists, and so on.

To break these stovepipes the response of the IT industry twofold, which constitutes the second wave of digitization of project management business processes.

One was in many ways a step back.  The mainframe culture in IT had been on the defensive since the introduction of the PC and “distributed” processing.  Here was an opening to reclaim the high ground and so expensive, hard-coded ERP, PPM, and BI systems were introduced.  The lack of security in deploying systems quickly in the first wave also provided the community with a convenient stalking horse, though even the “new” systems, as we have seen, lack adequate security in the digital arms race.  The ERP and BI systems are expensive and require specialized knowledge and expertise.  Solutions are hard-coded, require detailed modeling, and take a significant amount of time to deploy, supporting a new generation of coders.  The significant financial and personnel resources required to acquire and implement these systems–and the management reputation on the line for making the decision to acquire the systems in the first place–have become a rationale for their continued use, even when they fail at the same high rate of all IT development projects.  Thus, tradeoff analysis between sunk costs and prospective costs is rarely made in determining their sustainability.

Another response was to knit together the first wave, specialized systems in “best-of-breed” configurations.  In this case data is imported and reconciled between specialized systems to achieve integration needed to service the cross-functional nature of project management.  Oftentimes the estimating, IMS, PMB, and qualitative and quantitative risk artifacts are constructed by separate specialists with little or no coordination or fidelity.  These environments are characterized by workarounds, special resource-heavy reconciliation teams dedicated to verifying data between systems, the expenditure of resources in fixing errors after the fact, and in the development of Access and MS Excel-heavy one-off solutions designed to address deficiencies in the underlying systems.

That the deficiencies that are found in the solutions described above are mimicked in the findings of the deficiencies in business systems marks the culprits largely being the underlying information systems.  The solution, I think, is going to come from those portions of the digital community where the barriers to entry are low.  The current crop of software in place is reaching the end of its productive life from the first and second waves.  Hoping to protect market share and stave off the inevitable, new delivery and business models are being deployed by entrenched software companies, who have little incentive to drive the industry to the next phase.  Instead, they have been marketing SaaS and cloud computing as the panacea, though the nature of the work tends to militate against acceptance of external hosting.  In the end, I believe the answer is to leverage new technologies that eliminate the specialized and hard-coded nature of the first example, but achieve integration, while leveraging the existing historical data that exists in great abundance from the second example.

Note: The title and some portions of this post were modified from the original for clarity.