Posts Tagged ‘Expected monetory value’

Project managers (PMs) have to deliver; yet power to get the job done can be elusive. Is there a way PMs can take care of themselves and the team knowing they are lower on the food chain? Can they get some power? Yes. How so? Let’s explore.

Portfolios, Programs, and Projects

First some background. A simple, common hierarchy with a current situation in the transportation industry is:

Location Position Example
External Client EPA
Internal Portfolio Mgr internal combustion engine
Internal Program Mgrs gasoline diesel
Internal Project Mgrs 1000cc 3000cc 4000cc 5000cc

The “client” in this case is the external regulatory agency. The deliverable is a reduction in emissions for the various types of engines a manufacturer produces with standards varying based on the displacement and fuel consumed. We’ll look at the client after examining the internal organization.

Internally, working from the top-down, there is a progression from strategic (market position, profits, etc.) to the tactical/tangible (every engine coming off the assembly line has to meet stringent requirements within the next few years). Teams in the internal combustion industry are feeling the heat with pressure coming down from above. Deadlines and goals have been set.

To maintain a healthy balance in this situation PMs will do best understanding and communicating in the language used by those with more strategic positions and power. This language also needs to provide a portal through which the PMs can express project concerns. The language is risk management.

Now, shift focus to the client. It is through the client the PM can gain influence – better known as power. The connection between the PM and the client is quality. As the old saying goes, “The proof of the pudding is in the eating.” Again, each engine needs to perform per regulatory limitations.

So, in a way, the PM has a direct connection with the client through quality. It is important to avoid being Pollyannaish and think the PM has the power baton of the client. The situation is subtler. This is where risk management comes into play.

By understanding how the performance of the deliverable is impacted by quality the PM can gain leverage communicating through the business case. How? The PM uses a specific aspect of risk management – Expected Monetary Value (EMV). EMV can take quality, time, and money and combine them into one model – a model understandable to both the business unit and project team. A good EMV model tells how good or bad things can get in the current risk environment and points to areas where changes (time, money, resources) are needed.

This seems a bit roundabout if quality is the focus. So, why do this? Simple. There can be an intrinsic desire for quality in an organization. That desire, though, can vary in commitment from organization to organization as well as within an organization.

On the other hand, the focus on time and money is pretty much universal and that is the context in which quality sits – always the bridesmaid, never the bride. EMV flips the situation and addresses time and money squarely in the context of quality looking to see how stable and acceptable the deliverable will be in various risk environments.

Consequently, EMV models can help bridge client power to the team’s need to perform and cross over the obstacles of time, money, and resource constraints by showing how squeezing the team too tightly or working in the current risk environment could hammer profits and viability in the long run.

With the stage set, in the next blog some of the specifics of the EMV model and how it works will be addressed.