IT Consulting from the Trenches

PROJECT MANAGEMENT: INSIGHTS INTO THE IMPORTANCE OF CONTROLLING CHANGES

Failing to fully consider the impact of any change often causes major problems. Look at it from the painting contractor's point of view.

A project is born when a stakeholder wants to achieve an objective that will either maintain the status quo, give him an advantage over his competition, or transform a radical idea into reality. These, then, are the three types of projects:

1. Maintenance of an existing function
2. Improvement of an existing function or development of a new product or service
3. Transformative

Of the three, only transformative projects merit an explanation since the first two are self-explanatory. Transformative projects aim for objectives that have never been attempted before. In fact, many transformative projects aim for objectives that have never even been envisioned before. This type tends to cost the most and have the longer durations. Needless to say, these are the riskiest types. On the other hand, if the objective is achieved and it generates the benefits that were hoped for, it can create a new market or even a new industry that will transform the status quo. Some recent and prominent examples were Apple’s introduction of the iPod and the iPhone.

BREAKING DOWN THE WORK

Regardless of the project’s type, the work required in order to accomplish the objective is systematically broken down until it reaches a point where the specific activity can be assigned to an accountable resource. This is called decomposition and it is the essence of a planning task that aims to create the ‘Work Breakdown Structure.” A good example of this would be the maintenance project of repainting the interior of your house. Achieving that objective requires the satisfactory completion of numerous tasks. You have decided to hire a reputable painting contractor to do the job. The contractor’s team consists of a “stripper,” a “preparer,” and a “painter,” and a “cleaner.” The stripper strips old paint. The preparer cleans and prepares the work area. The painter does the actual painting. And finally, the cleaner cleans the work area. These men are resources who are accountable for their individual activities. The sum of their work is called the scope of the project. The individual activity that each resource performs is called a “work package” and was developed through the Work Breakdown Structure.

The project scope is clear. The resources have been scheduled. Now, what happens most of the time? Changes. The paint was already purchased but now, you want eggshell white instead of cotton white. Also, your wife decides that they might as well paint another room. These two requests change the project scope.

An experienced painting contractor will accept these changes but go through some kind of process control. What does “process control?” mean? It means that the before the contractor agrees, he will estimate the additional charges and revenues and determine how he will reschedule his resources.

THE CHANGE CONTROL PROCESS

Formal project management (PM) refers to this as the change control process. It plays an important role in PM. Failing to fully consider the impact of any change often causes major problems.

When the contractor was hired, you had mutually agreed that the painting would be finished in time for your son’s birthday, 15 days away. Faced with these two change requests, the contractor must now do the following:

1. Calculate his additional expense and the fee that he will now charge.
2. Decide what to do with the paint that was already purchased.
3. Determine how he can reschedule his resources that were already scheduled for other jobs.

In formal PM, these three steps constitute the change control process. (For simplicity, assume that his resources—the stripper, preparer, painter, and cleaner—will agree and that's not always going to happen!)

THE 80/20 RULE

You may have heard of the 80/20 rule. It actually has a name: the Pareto Principle. Courtesy of about.com, I present this informative background about it.

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth.

After Pareto made his observation and created his formula, many others observed similar phenomena in their own areas of expertise. An American pioneer in the field of quality management recognized a universal principle he called the "vital few and trivial many" and reduced it to writing. His work gave academics the impression that he was applying Pareto's observations about economics to a broader body of work. Unfortunately for this pioneer, his original contribution became known as the Pareto Principle. This pioneer’s observation of the "vital few and trivial many" generalizes that 20 percent of something is responsible for 80 percent of the results.

The 80/20 Rule means that in anything a few (20 percent) are vital and many (80 percent) are trivial. In Pareto's original work it meant 20 percent of the people owned 80 percent of the wealth. In the American pioneer’s initial work he noted that 20 percent of defects caused 80 percent of the problems.

Project Managers know that 20 percent of the work (the first 10 percent and the last 10 percent) consume 80 percent of your time and resources. You can apply the 80/20 Rule to almost anything, from the science of management to the physical world. This is an uncanny thing when you think about it.

How can it help you? Whether in business or your personal life, the Pareto Principle can serve as your guide to focus on the 20 percent that matters. Of the things you do during your day, only 20 percent really matter. Those 20 percent produce 80 percent of your results. Identify and focus on those things. When the fire drills of the day begin to sap your time, remind yourself of the 20 percent you need to focus on. If something in the schedule has to slip, if something isn't going to get done, make sure it's not part of that 20 percent. Pareto's Principle, the 80/20 Rule, should serve as a daily reminder to focus 80 percent of your time and energy on the 20 percent of you work that is really important. Don't just "work smart", work smart on the right things.

CH- CH- CH- CH- CH- CH- CHANGES...

This is a list of the most common causes of change:

1. business requirements change
2. business environments change
3. new opportunities or problems arise during the course of the project
4. modifications in the process or system are discovered
5. errors in the process or system are uncovered

The painting contractor has been confronted by a change in the project’s requirements (a different color and an additional room). Assuming he agrees to these changes, he has to do the three activities mentioned earlier, namely:

1. Calculate his additional expense and the fee that he will now charge.
2. Decide what to do with the paint that was already purchased.
3. Determine how he can reschedule his resources that were already scheduled for other jobs.

There is a good chance that the Pareto Principle was at work here. If the original contract involved painting ten rooms for $10,000, it is unlikely that the homeowners will agree to pay significantly more than $1,000 for the 11th room.

They may agree to pay $1,500 but that sum will only partially compensate the contractor for the time and effort he put into recalculations. While $1,500 increases the value of the total contract to $11,500, will it cover the work that the contractor does behind the scene?

THE CONTRACTOR'S DILEMMA

The sum of $11,500 to paint 11 rooms increased his revenue per room from $1,000 (from $10,000 divided by 10 rooms) to $1,045 (from $11,500 divided by 11 rooms). Many paint contractors would rather take the $10,000 rather than incur the additional trouble of dealing with the paint that was already purchased and, more importantly, dealing with the risk of delaying some other projects due to the rescheduling of his resources.

The contractor may have felt pressured to accept these changes simply because of the fierce competition in the paint contracting business. Additionally, most contractors rely on the recommendations of satisfied customers. You and your wife would probably not appreciate nor understand the amount of extra trouble that the contractor went through. It just would not make sense to you especially since you were willing to pay him anyway.

If he turned you down, you would probably not be satisfied customers even if the ten rooms were painted superbly and the entire experience went smoothly. You just wouldn’t understand.

Furthermore, if the two of you agreed to pay the contractor the extra $500 to bind him to finish the project by your son’s birthday, and he accepted, the pressure on the contractor increases. He has to juggle his resources even more carefully.

THE DENTIST

In the world of project management, that deadline is called a time constraint. This project is actually time-constrained before and after the changes. The contractor has no choice but to assign more resources to it in order to finish the project on time. If the contractor could simply not reschedule his resources, he is facing a resource constraint. He has to find additional resources (by hiring temporary help for example) or miss his deadline.

What did we learn? In the formal world of project management, it helps to make the change control process intentionally burdensome. That’s correct—make the process a hurdle, a pain in the rear, a trip to the dentist.

Our mentor—an experienced Program Manager—explained it this way (with some rephrasing on my part).

Most dentists advertise “pain-free” dentistry. That’s well and good but you will not go to the dentist without a compelling reason. In fact, when a tooth starts hurting, you will probably not schedule an appointment immediately. You will wait several days to feel whether the tooth continues to hurt. When you are convinced that the pain will not go away, then and only then will you schedule your appointment. When you are finally seated at the dentist’s chair, the dentist—true to his advertisement—promises that all you will feel is a pinch and then a little pressure.

The change control process should follow this analogy. Your customer should be “taught” that even though the change will be “pain-free” (but not free), she should carefully consider whether the contemplated change is worth the trouble of going through the change control process. If she does, she should be conditioned to feel a little pinch and some pressure. This could take the form of conceding to drop some lesser requirements and, of course, paying more.

You want your customer to weigh the facts. Will the outcome of that change exceed the trouble of undergoing the change control process? If she thinks it is, you, the Project Manager—unlike the painting contractor—should ensure that you charge her in proportion to the trouble and effort of managing the change.