Why Accounting and Project Cost Control roles Should be Neatly Separated

One of the most common misconceptions in the field of Project Cost Control is to believe that it is just an extension of Accounting – because it deals with money. Nothing could be furthest from the reality – Project Cost Control primarily requires a deep business understanding so as to be able to produce a sound forecast of the project situation at its completion. In our new White Paper 2014-02 we examine why there is such a difference in project environments and why Project Cost Control and Accounting should be neatly separated.

Dealing with $ numbers does not just involve accountants!

Financial forecasting is quite straightforward in most industries where the future is the repetition of the past, with a few tweaks. It can be safely left with accounting and usual financial analysis techniques. In projects, activities that are performed are unique. The discipline of Project Cost Control thus evolved as a specific requirement for projects so as to ensure that the Project Manager constantly has access to up-to-date cost information (Actual Cost) and to a proper forecast of the project completion based on sound business understanding.

The best way to keep control in projects is to create, from the beginning, a clear distinction between Accounting and Cost Control at the functional level, and make sure that any carry over work from Accounting, if unavoidable, is limited in scope and time. Our White Paper goes on to describe in detail how the duties can be split between Accounting and Project Cost Control. Read our new White Paper 2014-02 “Why Accounting and Cost Control roles Should be Neatly Separated in Project Organizations”!

Candor, a Key Cultural Trait for Project Success

Some corporate cultures refuse to watch reality in the eye. As a result, when issues inevitably happen during project execution, it takes a long time for these organizations to address them. This state of denial remains until the issue grows to a point that it is not possible any more to deny it – and it is often too late to do something about it. This destabilizing situation is entirely created by a lack of candor in the organization culture. How can we identify this undesirable trait and what can we do about it? This is the issue tackled in our new White Paper 2013-17 Candor, a Key Cultural Trait for Project Success.

Lack of candor is possibly the single most important factor in organization derailments, and it is particularly impactful when it comes to project management, which are much more fast-paced endeavors.

It is even more vital in project environments to detect preliminary signs of issues or dysfunctions early and act on them immediately so as not to jeopardize the project outcome. This explains why lack of candor is even worse in project organizations.

Candor is emotionally tough. This is why lots of people prefer to live in denial. 

Developing a candid culture is a must in project management organizations, in particular when large and complex projects are executed that could have dire and far reaching consequences in case of failure. Determine the level of candor in your organization, and make sure that through the right leadership, it improves to the point where no major issue gets denied, ever. Read our new White Paper 2013-17 Candor, a Key Cultural Trait for Project Success to figure out how to detect lack of candor and what you can do about it.

How to Transition Successfully to a Complex Projects’ Company

Complex Projects require a different organizational setup and a different mindset compared to Simple Projects. Every year, many companies try to transition into the realm of Complex Projects. Most fail. What process should they follow to be successful? This is the issue we investigate in our new White Paper 2013-16 How to Transition Successfully from a Simple Projects’ Company to a Complex Projects’ Company.

Your company has successfully delivered simple projects. You have developed an equipment asset base and human resources that support your ambition to move into larger and potentially more lucrative complex projects. Remember, it is not just a matter of scaling what you are doing now. It is a matter of transforming your organization’s business model and mindset.

It is essential to recognize that you are tackling complex projects so that you can consciously implement the right organization and tools.

We insist on 5 main actions:

• Implement complex projects in a different business unit
• Get the right key people onboard
• Invest in the appropriate systems
• Give the authority to the project leader and remove department fiefdoms
• Change your office physical configuration

You need to understand that shifting to global complex projects will change the organization down to its very roots. Yet for those that succeed in this transition, the rewards are there. Because in the Collaborative Age, the age of complexity, only those will thrive that will master complex project management. Find out how to do this transition successfully in our new White Paper 2013-16 How to Transition Successfully from a Simple Projects’ Company to a Complex Projects’ Company.

How Delegation is Required to Keep Agility in Complex Projects

When stating that project leaders should have more authority delegated to them, most organizations react negatively. The traditional way of running organizations is very limitative in delegation of authority. There is, however, a good fundamental reason why delegation should be increased when tackling large, complex projects: delegation is the adequate response to the required agility. In our new White Paper 2012-15 we investigate why, and how this authority delegation should be implemented in project organizations.

Let’s take some time to appreciate an amusing contradiction here, in particular in the realm of large, complex projects. The organization leaves the responsibility of project leadership to a person, knowing that project failure can have dramatic effects on the organization (complex project failure can easily lead to very substantial losses of an amount comparable to the project value, i.e. several hundred million dollars). At the same time, the organization often requires external approval for expenditures above a few hundred thousand dollars!

In summary, you can’t give the keys to your Ferrari to your project leader and them ask him to ask permission every time he would like to exceed 30 kph!!

Be consistent with your stand: you give someone responsibility for executing a project which would cost hundreds of millions if it were to fail. Give the project leader the possibility to take the required decisions in an agile manner to succeed!

In project environments, where agility is a requirement, delegation is not just a competitive advantage, it is a must. Understand why, and how to best implement delegation, in our new White Paper 2012-15.

How a Diverse, Effective Team is the Only Way to Overcome Complexity

We live and execute projects in an increasingly complex world. In this world, freak events happen beyond normal statistical variation. Still we need to deliver results. Traditional detailed scheduling and analytic approaches cannot tackle complexity beyond a certain threshold. Increasingly, research shows that the real solution is a dedicated, effective team that is diverse and integrated. Discover in our new White Paper 2013-14 how a Diverse, Effective Team is the Only Way to Overcome Complexity.

Diverse, integrated teams with a large degree of autonomy are the best response to the unpredictability of complexity. And effective team leadership is about fostering conflict for sound decision-making.

Allow Conflict… but no Blame. In our experience, 100% of the projects where Blame has developed do fail – because then the team is dysfunctional.

The main ingredient for success in complex projects is the team. Nurture it.
The Team is the central success factor for complex projects. Don’t underestimate its influence on the final result. Diverse, integrated teams with a large degree of autonomy are the best response to the unpredictability of complexity. Project leaders need to know how to foster the right team build-up, foster creative conflict, do powerful emotional work in decision-making, and above all, make sure that blame will never take root.
In these conditions, project teams will do extraordinary things. Discover how in our new White Paper 2013-14 how a Diverse, Effective Team is the Only Way to Overcome Complexity.

Minimizing complexity – the core of complex projects preparation

Complexity creates uncertainty and unpredictability. A key practice for mastering large, complex projects is to minimize complexity. This needs to be done early during the project strategic preparation phase because it touches the very structure of project execution.

Several commonly accepted organization practices actually relate to this complexity minimization. In our new White Paper 2013-13, we investigate what are those strategic complexity minimization practices for the project preparation phase and how they can help to execute reliably successful projects.

The main action points are:

• Be clear on what you want to achieve
• Is your objective too complicated?
• Package your project
• Minimize and align your contributors
• Get rid of internal interfaces

Helping to minimize complexity is actually a key intervention topic for Project Value Delivery and a number of consultancies active in the field of project execution. It is arguably, when done early enough to enable thorough implementation, the intervention with the greatest value leverage for large, complex projects, both in terms of project value and reliability.
Examine the projects you are about to undertake, or that you are considering. What are the few decisions you could make to structure them so as to diminish drastically their complexity? Discover valuable hints in our new White Paper 2013-13 Minimizing complexity – the core of complex projects preparation!

This paper complements White Paper 2012-25 “Fundamental Insights on Minimizing Complex Project Risk for a Single Project” which deals with complexity reduction at the start-up and execution stages.

Actual Project Leadership is About Organizing Effective Conversations

Conventional project management invokes a series of processes and tools that are often run by specialists with great expense of resources, like for example scheduling, cost control, project risk, scope management, etc. Most conventional project practitioners make sure that those processes are followed with application. What they don’t realize is that these tools are only there for one reason: allow the project leader to have effective conversations with its team, and in general, catalyze effective conversations.

The value of these tools actually lies more in these conversations than in the actual formal result of the tool. This perspective changes everything in how these tools should be run.

In our new White Paper 2013-12 ‘Actual Project Leadership is About Organizing Effective Conversations – not to Run Properly Complicated Tools’, we discuss how to leverage the full value of all these processes.

The project leader cannot just be like an orchestra director ensuring the coordination between a number of specialists according to a predefined partition. The role of the project director is to ensure that effective conversations lead to effective decisions.

You can’t afford not to have these meaningful conversations

Having more of these tough conversations, more often, needs to be a constant objective of the project leader. It needs to be supported by appropriate outputs from all the tools that are run at great expense of resources. Understanding that the ultimate goal of all these tools is effective communication of major issues is key in implementing them in the right way. Never keep this objective out of your mind! Read our new White Paper 2013-12!

Why and How to Increase your Project Schedule Resilience

Beyond a project schedule hides a very important question: how resilient is this schedule to unavoidable events and surprises? For Large, Complex projects this question is critical, because the resilience of the schedule can vary greatly without the management being aware. In our new White Paper 2013-11 we discuss the notion of resilience and offer some principles to make your project’s schedule more resilient.

The question is, is it better to have a schedule with a very neat critical path and other chains of events very subcritical, or is it better to have a schedule with many chains of events competing for criticality?

This paper brings together the teachings of White Paper 2013-09 (crude estimates of project overrun) and 2013-10 (what you should really seek when conducting a schedule statistical analysis). It discusses the importance of schedule resilience and gives tip to increase it. For us, it is clearly important to have a schedule with a very clear and resilient critical path on which everybody can focus.

It is now part of Project Value Delivery’s methodology to examine the resilience of a project schedule. It is often possible to improve significantly the schedule’s resilience at minimum cost by some counter-intuitive actions such as starting subcritical chains earlier. The advantages of this practice are numerous; the most notable arguably is to give the project management team a stable focus on a critical path that will not change except in case of major disruption, hence ensuring appropriate decision-making throughout the project.

Read our latest White Paper 2013-11 to understand the concept of schedule resilience and how to use it.