Skip to main content

Author: Vilmos Rajda

Acting Without Thinking Too Much

As Project Managers when confronted with making important decisions, we always find ourselves carefully analyzing the situation before acting. We list all the alternatives, all the consequences, identify all the pros and cons for each option, and then employ very sophisticated tools to compute all utilities before reaching the optimal decision. Decision trees, linear programming methods, payoff tables and operations research are all at our disposal in the decision making process.

Sounds soothing and elegant, but the reality is that all the above are exceptions. In fact, I probably lost those readers by now who were interested in reading about real life Project Management. Just like life itself, our projects have become more complex with more uncertainty, which does not call for more sophistication, and further complications, but rather teaches us that “less is more and usually more effective”. The fact that our information processing capacity is finite, that we are unable to think through problems in any depth, coupled with the pressure of time, leads us to use heuristics for solving problems.

Heuristics refer to experience-based techniques for problem solving that give a solution which is not guaranteed to be optimal. They are not perfect, just simple, and easy to implement. They speed up the process of finding a satisfactory solution via shortcuts. Heuristics are really powerful when users are aware of their imperfections, and can become dangerous when their limitations are forgotten.

The word heuristic was derived from Archimedes’ famous exclamation ‘Eureka!’, when he discovered, during a bath, a method for determining whether King Hiero’s golden crown was in fact made of pure gold. According to the legend, Archimedes shouted ‘Eureka!’ (I found it!), and jumped out of the bathtub after finding the solution. Legend also says, that he continued shouting ‘Eureka!’ while running naked through the streets of Syracuse to finish his examination of the crown.

Heuristics are indispensable in multiple domains. Artificial intelligence relies heavily on heuristic algorithms, because, for example, to consider every chess move and entire chains of all subsequent moves would be beyond the earth’s computational power available today. Another domain, where heuristics are critical, is virus scanning and detection. Malicious computer code is ever evolving, which requires identifying new viruses or variants by looking for slight variations of code. Heuristic algorithms do that work.

In Project Management, we are most interested in heuristics in judgment and decision making. Facing complex problems with incomplete information and the need for speed make them indispensable. However, these rules of thumb can easily lead to errors, also known as cognitive (or mental) biases. 

In this article, I will describe examples of some common decision making heuristics, through examples from my most recent consulting work. The field of “errors in thinking” is growing fast and a comprehensive review of each heuristic is beyond our scope here. Thus, if the “heuristics” keyword gets additional hits on web search engines, then I did my part.

Recently I was the Project Manager for a large software modernization effort in one of the Ministries in the Ontario Government. The Ministry had just completed a multi-year project for documenting and cleaning-up the business requirements for the applications that needed to be replaced with a modern case management system. The next step was to finish and publish the Request for Proposal (RFP), which was expected to attract reputable systems integrators for the design and implementation of the new modernized system. My services were initially retained to plan and execute the project that was established for publishing the RFP, evaluating the incoming proposals and awarding the contract to the highest scoring vendor.

A major uncertainty for the project schedule was the number of submissions to be received. Estimation of this number was critical, because we needed it for allocating resources for evaluating the proposals, and for establishing a target completion date for this work. Originally, we estimated that ten vendors would submit proposals, because any of us in the project leadership team was readily able to recall ten or more vendors capable of implementing this large scale solution. This estimate was based on the Availability heuristic, which is a tendency to make a judgment about the frequency of an event or category based on how easy it is to recall similar instances. However, at the time when the RFP was published, we had adjusted the estimated number of submissions down to four, based on our observation of how many large system integrators attended our vendor days prior to publishing the RFP. (Vendor days were designed to educate vendors on Government’s procurement processes to avoid disqualification due to violations of the procurement policies). Luckily, we ended up receiving three submissions, which was close to our revised estimate, and required only minor adjustments to the project schedule

Anchoring heuristic was used by our Project Sponsor when he established a contract award date based on his departure date for a month long vacation. After this, all our schedule variances were explained in relation to this initial expectation, instead of relying on scientific calculations based on Project Evaluation and Review Technique (PERT) or any other rigorous scheduling methods. Anchoring heuristic is the human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions. Once an anchor is set, other judgments are made by adjusting away from that value, and there is a bias toward interpreting other information around the anchor.

Representativeness heuristic was in effect when project team members were skeptical about one of the contender’s seriousness, based on the clumsiness of their written proposal, and based on their lack of brand recognition. Representativeness heuristic is the tendency to judge probabilities on the basis of resemblance. The error that may be introduced with this heuristic is when probabilities are neglected. In other words, the fact that something is more representative does not make it more likely. We made inferences on the vendor’s capabilities, based on the look of their written proposal and their unknown brand. Fortunately, the procurement process required evaluating all proposals, and it turned out that all vendors met the scoring thresholds, and demonstrated being capable of building a solution required by the Ministry. Final selection ended up being dependent on pricing. Relying on representativeness heuristic alone to pre-filter proposals could have dismissed a perfectly viable contestant, and could have weakened the competition.

In everyday life you are invoking heuristics:

  • when turning on and off your laptop on its misbehaviour, instead of starting a painstaking troubleshooting exercise;
  • when you play lottery with computer generated numbers, instead of choosing numbers based on elaborate theories;
  • when you watch the movie Die Hard 5 based on your liking of previous movies in this series, instead of reading the reviews before you go.

What heuristics are you using?

Don’t forget to leave your comments below.

The Case Against Project Portfolio Management

Cropped_Feature_Dec_1Until recently I belonged to the wide-eyed crowd who was excited about the prospects of project management’s new silver bullet: Project Portfolio Management (PPM) software. Hordes of slick sales people from various PPM software vendors, will talk to you about the infinite value of applying their solutions. They will show you rainbow coloured bubble charts, black belt project prioritization features and six sigma resource management functionality. If you are not convinced by the end of their demo, then you probably do not own a cell phone that can make French toast (i.e. living in a cave), or you are a project neophyte who is just not getting it.

Well, not so fast. Before jumping on the bandwagon, stop and ask some questions about the emperor’s new clothes. You may be up for a surprise.

PPM software offerings are available for more than five years, and I am yet to see a reliable study on correlating PPM use with companies’ business success (share value growth, market share gain, or customer satisfaction improvement). Of course the exceptions are the PPM vendors themselves. According to Gartner, the $1.2 billion project and portfolio management market has grown strongly over the last five years.

In the following sections I will describe the most common assumptions that PPM vendors would not tell you, or would downplay in their sales literature. Paying attention to these assumptions can make the difference in successfully delivering business value, measured either in time-to-market reduction, increased resource productivity or improved cost containment.

Assumption 1: Everything You Do is a Project

While most of us working in Project Management would agree with this statement, the reality is that most organizations operate in some shade of matrix structure. Rarely is an organization fully projectized, unless it is a professional services firm. So, how is PPM performing in a matrix organization? Well, there are gaps. There will be employees who do not submit timesheets, who share their time between project and operational activities, and whose reporting relationships do not fit neatly into the PPM database structure. This creates exceptions in the PPM application, and you may just have the perfect solution to a small subset of your problems in your company due to erroneous definition of the real issue.

Assumption 2: Project Managers Have Unlimited Time to Track Project Minutia

Vendors sell you on the claim that, miraculously, real time data will be available on projects and portfolios once a PPM tool is implemented. To use an actual quote from a sales pamphlet: ‘Capture real-time program and project status automatically’. Really? Someone has to input the data into the PPM tool. If Project Managers (PM) spend their time continuously entering up to the minute schedules, budgets, risks, issues, resources, timesheets and status into the PPM tool, then you will achieve real-time data, however, at what expense. PM admin time increases significantly, which leads to job dissatisfaction and lost productivity, besides being distracted from dealing with client, team and deliverable related issues.

Assumption 3: Project Parameters are Facts

A major PPM vendor’s White Paper claims: ‘By comparing objective priority scores (e.g., financial valuation, strategic alignment score) across projects, fact-based decision-making discussions are made possible’. PPM vendors imply that executives can make project decisions based on factual data and not on vague speculative metrics. Let’s not kid ourselves. When a project is initiated, most of the parameters (costs, timelines) are order of magnitude estimates based on anecdotal evidence. Because we enter this into a PPM software, with two decimal places, they do not automatically become facts. NPV, ROI, payback calculations, timelines, budgets and resource plans are still only as good as their originator’s crystal ball. Just because they are captured in a PPM software, and can be presented on the screen in a bar chart, they are still what they are: estimates. Putting too much faith in and assigning too much authority to PPM reports reduces critical thinking and permeates incorrect project assumptions. For brevity, call it learned artificial unintelligence.

Assumption 4: Companies Have Mature Processes

Most of them don’t. And this is great for PPM vendors. They can sell professional services to you until the cows come home. Your company will require customization, configuration, adaptation, business process mapping, data mapping, data exchange interface development, report development and training. If not careful, you will be implementing advanced project management techniques with diminishing value. You may reach the pinnacle of Earned Value Management, and if done so I promise you will have a greater appreciation of the law of diminishing marginal returns.

Assumption 5: One Click Out-of-the-Box Reports

Here is an excerpt from Gartner’s Magic Quadrant report: ‘After seeing more than 30 demonstrations of IT PPM applications as part of the Magic Quadrant process, it is safe to say that the reporting service provided by IT PPM products are generally in need of an overhaul.’ Fear nothing, your friendly PPM vendor is available, for a small fee, to produce useful reports out of your newly implemented PPM application.

The Acid Test

If I still have not convinced you, I will make one more attempt and after that will rest my case.

A few years ago I was managing the implementation project of a leading PPM software at a mid-sized municipal utilities company. The vendor’s PPM application is consistently ranked for years in the visionary & leader quadrant in Gartner’s Magic Quadrant report. The company is US based and their Professional Services Project Manager, Jack (not his real name), came to Canada quite often to work with me on delivering the project.

‘Jack,’ I asked after we got comfortable with each other, ‘are you guys using your PPM application to track these client implementation projects?’ ‘No, we are not there yet,’ he answered with a smirk on his face. Jack’s honesty was refreshing, however, I am still amazed at his answer. Why on earth is a leading PPM software vendor not using its own product for their Professional Services division? I will let you figure it out.

 Don’t Forget to Leave Your Comments Below

Vilmos Rajda, MBA, PMP, is the Principal Consultant of ProjectAge Management Solutions, a boutique consulting firm in Toronto. He has over 10 years of experience with delivering PMO maturity, product development, applications development and IT infrastructure projects for telecommunication, financial, utilities and government organizations. He can be reached at [email protected].