Cost Management is Not Optional

All too often, I see companies and/or projects where project cost management is not done at all. Project Managers just don't deal with the money aspect. In many companies, the PM is not expected to manage the cost of the project. In some, the PM is even discouraged from doing this.
I saw many organizations where the executives somehow did not even know that PMs can do this for their projects, let alone should do it. When the (skilled) PM brings the topic up and demonstrates how this can be done and how beneficial this is, they are surprised. And happy.
But it is a fact that in many places, PMs are not required to manage the project cost.

The point I want to make in this post is:

Even if you (the PM) are not expected to manage your project cost, you should still do it!

Considering the fact that cost is one of the 3 famous project constraints, this is one of the most fundamental skills that PMs must have and must apply for their projects. And, it is one the most important activities that the PM must engage in. Even if the PM is not required to manage cost, they must feel compelled to do it anyway. At least two reasons:

• For your own professional development. As a PM you must become skilled in cost management. Without some basic skill and experience in this area, IMHO, you cannot be regarded as a senior professional. If you work in a company where cost management is not expected of you, what better environment can you have to practice and learn? And educate the management?
  
• Cost management is a critical tool for better managing and executing projects and programs. Without cost management, it is impossible to calculate such things as ROI, NPV and Earned Value. If a company wants to have a solid project/program strategy, it must use these (and many other) tools. Without project cost management, the company gropes in the dark.

Company financials are not a simple matter at all. In order to perform really good project cost management, the PM must be familiar with general business financial management and the specifics of his organization. This requires from the PM a significant investment in time and effort to achieve a good level of expertise. This is undoubtedly a discouraging factor and may explain why cost management is a 'weak link" in software project management. However, I want to claim that this should not stop the PM from practicing some basic-level of cost management. Two important points:

Even minimal cost management can provide significant benefit
Forget all the company financial policies and general finance management theory. All you need to do is estimate costs and track expenses for your project. That's all. You'll be surprised how many good things can come out of this. And...

Minimal cost management is actually pretty easy to do
Current project management software tools make it relatively easy to estimate costs and track expenses. Here are some guidelines, using MS Project (although any project management software tool can do that).

In MS Project, go to the Resource Sheet. All your resources are listed here. For each resource it is possible to define various parameters. One of them is Std. Rate (= Standard Rate). This is measured in $/hour. All you need to do is enter the rate of each resource in the table. True, usually, you don't know how much a person's salary is but I am sure you can make a reasonable guess. As soon as you entered rates for all the resources, MS Project automatically calculates the cost of each task in your schedule, plus roll-up of totals to summary tasks, all the way up to the full project cost. Plus totals and breakdowns per resource. That's it. So simple, so powerful.

You can also easily add fixed costs (such as purchases, travel expenses, fixed-price consultaning, etc.). Add a task for each of the fixed cost items. Add the Fixed Cost pre-defined column in the table (see MS Project help on how to add columns). For each fixed cost entry in the schedule, enter its cost in the Fixed Cost column. That's it. So simple, so powerful.

Don't forget to baseline.

As the project progresses, be sure to update the schedule to correctly reflect the project status. You update the tasks (start date, end date, percent complete) and MS Project will calculate updated current costs. And with the baseline that you remembered to save, MS Project will also calculate all the Earned Value info for you, full break down and roll up.

Once you start doing this minimal work you will be surprised how easy and useful it is. And when you show it to your manager or executive (who did not even think you could do something like that), they will be delighted and never let you off the hook again.

This is why I say: cost management is not optional.

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Technorati Tags: buffers, Cost management, padding, Project Management, Project Manager, project schedule, Software Engineering, Software Project Management
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To Pad or Not to Pad

To many, this is still the question. We all know this practice. Make some time estimate, then pad it to compensate for... Actually for what not? Overloading, distractions, interruptions, pressure to speed up work, Murphy's Low and what not. Actually, one more: the inability of the programmer to do good estimates in the first place. Even the programmers admit that they are over-optimistic and that their time estimates are always too short.

This typical predicament is nicely expressed in Rita Mulcahy's book, PMP Exam Prep:

"I have no Idea how long it will take. I do not even know what I am being asked to do. So, what do I say? I will make my best guess and double it!"

In general, padding is bad. Again, as Rita explains it, "Padding is a sign of poor project management!". if you are not sure about your team's time estimates, you should treat is as a risk and not camouflage it as hidden padding.

Actually, why is it bad to pad? Here are several reasons:

• Padding means that there is an inherent deficiency in the estimation (and likely in the estimator's skill). By padding, we disguise the problem instead of facing it and dealing with it.
• When the resource sees their padded tasks, they naturally assume that their task completion date is the one that includes the pad. You are giving the resource "extra time" before they even started the task.
• Once padded, the original estimation disappears. There is no way to hold the estimator accountable for their original estimates.

So, what do we, PMs, do? We know that if we take the estimators' input "at face value" we are most likely in trouble right from the first moment of the project. There are all kinds of things that a Project Manager can (and should) do to improve the situation. None of them is a magic bullet but in combination, they can improve things significantly. Here are some suggestions:

• Give them more time. One of the most compromising factors is the time that we (don't) give to the estimator. If we ask the estimator to estimate a task and want an answer right then, we may assume that the estimator is just throwing a number in the air to get us off their back. Give them time and encourage them to use it to think more carefully and wisely.
• Review the estimates with a critical eye. If you have experience in time estimation and in SW development, you can identify cases where the estimation doesn't seem right.
• Let an expert review. An expert will be able to provide a lot of insight.
• Train the estimator in time-estimation techniques. There are techniques for estimating time. verify that the estimators use them.
• Remind them of the implied sub-tasks. Remind the estimator that there are typically several activities included in a single programming task. Once the programmer realizes that, he/she will benefit in 2 ways: It will be easier to make a more accurate estimation and it will help them remember to do all of these things
• Some thinking, planning, designing.
• Prototyping
• Implementing
• Developing unit tests
• Unit-testing
• Fixing bugs.

All the above are things that the estimator can do to improve their estimates. But there are also a couple of things that you, the Project Manager, can do.

Estimate Effort, not Duration

Estimators easily fall in this trap. They think in terms of duration rather than effort. This automatically introduces padding into the estimation process. You need to make sure they provide their estimates as effort. You usually will have to coach them on this and continuously verify that the numbers they give you are indeed effort and not duration. Estimates in duration muddy the waters.

Nobody Ever Works at Full Load

No human being executes their tasks at 100% of their time. People are human beings. They take breaks, rest, take care of administrative things, go to the doctor, etc. When an estimator provides an estimation of the effort, the number should reflect continuous, non-stop work. In real life, this never happens. Project Management SW tools allow you to specify the load level of the resource. I usually set the load of Individual Contributors to 80% and of Managers to 50%. Granted, this is probably a form of padding but it does not come from uncertainty in the estimate but rather from sound experience. It's not an uncertainty, it's a certainty that people do not perform at 100%. The only uncertainty is the actual percentage. This is up to you to estimate.

Add Project-Level Buffers

This is a mechanism that I invented years ago, only to learn that it was a standard element in Critical Chain Management. I found it extremely powerful even if I don't use Critical Chain Management. Here is how it works:

The Gantt chart shows a project with a series of tasks (in Blue). At the end of the project, I added 3 Milestones:

• Optimistic. This is when all the tasks are complete. No buffers, no padding. In the chart it is on 5/18.
• Realistic. This is a date I got by adding 20% to the total duration of the project (from day 1 to the Optimistic milestone). In the chart it is on 6/15.
• Pessimistic. This is a date I got by adding 40% to the total duration of the project (from day 1 to the Optimistic milestone). In the chart it is on 7/12.

As the project progresses a delay may develop in the project end-date. This will cause the first (Optimistic) milestone to move to the right. The other 2 milestones never move. This way we can see how the current projected end-date moves relative to the buffers. In other words, how much of the buffers is being consumed by the delay. This is an excellent indicator that allows the PM to see "how bad things are" and decide if it's time to take some corrective actions.

These are my safety buffers. Generally, I prefer not to show the 3 buffers to my team members. I only show the Optimistic milestone and do not even call it Optimistic. As far as they are concerned, that is the target date that they need to hit. The 3 milestones are for the people that I am accountable to: My manager, the project sponsor, the executives and the customer. I explain these milestones to them as follows:

• Optimistic. We will finish the project on this date only if everything goes perfectly. No delays, no surprises. This is the ideal end date. I have a low level of confidence in this date but I am going to drive the project to this date and try to hit it.
• Realistic. I think this is the date that I can realistically hit and I recommend that you assume and make your plans to this date. I have a good level of confidence in this date.
• Pessimistic. This is the day we will be done if many things go really wrong. I have a high level of confidence in this date.
• If the project runs later than the Pessimistic milestone, something is really bad in the project and we need to reevaluate the entire project.

I used this approach in the past with great success. Managers and customers were very impressed and pleased with this approach. They stopped being fixated on a single delivery date. Now the project is not held by its throat to a single date. There is flexibility but it's OK with management and customers because it is not open-ended. It is bounded. They accept the fact that I do not commit to a single date because they know it's not realistic but they are not worried that I open the door to a runaway project because the end date has a reasonable range.

Let me know what you think...

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Technorati tags: project manager, software project management, project management, software engineering, schedule, project schedule

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Why Hasn’t Software Development Gotten Any Better?

This is the title of a very good post that Ed Yourdon published in his blog. Highly recommended. Read it and also my comment.

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Technorati tags: Software Engineering, software project, software project management

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Software Requirements Specification Is King - Part 2

In Part 1, I explained why the Software Requirements Specification (SRS) is the most critical and valuable product document. In this part - Part 2, I will provide some guidelines, suggestions, tips, etc. that Project Managers need to know in order to make the SRS experience good and beneficial.

We will start where I left off in Part 1:

If you don't intend to use it seriously, don't bother to write it.

This is actually applicable to all project and product related documents. So many project teams write so many documents (sometimes even reviewing and approving them) only to put them in the drawer and forget them forever. What's that good for? A frustrating and boring task, expanding resources with no benefit. So, don't bother.

Those of you who have seen a well written SRS know that it's not a trivial undertaking at all. Writing a high-quality SRS is very demanding, both in quality and quantity. This is one of the main reasons why it's often hard to get the team to write it. I have found in my experience that you - the PM - can make things easier if you and the team follow some simple rules.

• Substance is more important than form. In the beginning, don't worry too much about the appearance and format. Just make sure that the info is there. Worry about looks later. In fact it will probably be best to get a tech writer for that.
• Something is better than nothing. Trying to write a full, complete, comprehensive spec in the first shot is discouraging. It's a very large task. Encourage your team to start with something. Start small and add as you go.

These 2 principles will allow the team to start with a relatively small effort and get something started. The team will routinely add and improve and over time the document will be high quality.

Now we want to cover some important principles for the contents of the SRS. I will not cover this material here. There are tons of books out there and I don't need to repeat that. No added value. But I do want to recommend that you take a look at Scott Sehlhorst's article: Big Ten Rules - Writing Correct Requirements. This is a very good review of the characteristics of good requirements. It is probably more than you want to know or do for starters. But as you improve the quality of your SRS, this is certainly something that you should look at. The only thing that I want to add here is: if you start the SRS small, as I recommend, then, IMHO, the most important principle in Scott's blog above is actually the last one - correct. The important point here is: errors are unacceptable. They cause more damage than if there was no SRS in the first place. So scrutinize the SRS very carefully for correctness. Worry about the other rules later.

This is it for now. I covered some principles for generating the SRS. Sometime in the future (sooner than later, if there is interest), I will cover the principles for using the SRS.
Let me know what you think.

 

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Technorati tags: Software Project, Software Project Management, Software Engineering, Software Requirements Specification

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Software Requirements Specification Is King - Part 1

One of the problems that Software Project Managers encounter is the struggle with the team over product development documentation. Documents, documents, documents. Theory says that the development of the SW product must be accompanied by a series of documents: Market Requirements Specification, Software Requirements Specification (SRS, SW Architecture, SW Design, SW Detailed Design, test documentation, Release... On and on.

People usually hate to write documents. They like to do their job, be it market research, SW design, SE architecture, etc. But they hate to sit down and put all their knowledge on paper. And on top of that, there are the theorists who claim that documenting is a bad idea anyway (especially if they have to do it :). And to make matters even worse, even if they finally agree (or are forced) to write one of these documents, it's usually bad quality because they are not skilled in writing such documents. This surely does not add to the popularity of generating and maintaining documentation.

In this post, I don't intend to go into this debate about: does a SW product need documentation? This will require a rather elaborate discussion. To be clear, I do have an opinion - I think documentation is very important as long as it's done wisely, but this is for another discussion. What I want to cover here is the following rule that I strongly believe in:

If nothing else, at least maintain and use a decent Requirements Specification.

The Software Requirements Specification (SRS) is the most important and useful of the various SW development documents. It tells everybody, and I mean everybody, what this piece of SW should be doing. If you think for a moment, I think you will be surprised when you realize the long list of project stakeholders that will find the SRS useful and beneficial (and that's why I say everybody). Here is a list (let me know if I forgot anybody):

• Product Manager - needs to be able to tell potential customers what the product does
• Sales Manager - needs to be able to tell potential customers what the product does
• SW Architect - uses it to develop the architecture.
• SW Designer - uses it to design the product.
• Programmer - uses it to make sure his implementation provides the correct features/behavior
• QA will test against the SRS
• Customer will know what to expect and what to test (acceptance testing)
• Technical Writer will use it as the reference for the user's documentation (User's Guide, User's Manual, etc.).
• Executives will use it for various purposes (such as in case of dispute, especially with the customer).

Without a SRS, every stakeholder has their own picture in their mind of what this product should do and how it should behave. How many times have you seen the bewildered Product Manager asking why is this feature different form what we agreed? Or the angry customer asking what is this new thing that was never mentioned to us? What does it do? How do we use it? Why do we need it? Did you ask us if we needed it? And where is this important feature that we did want to have and you agreed to provide? Or the angry engineer who says to the QA tester "Why does this test fail? The implementation is correct. You don't know how to write tests". And the tester answering "according to my information, this should behave differently. My test is correct". And who is right? If it's not written down, who knows?

No other document has this power of putting all the stakeholders on the same page like the SRS. So, please, if you don't write any other document, please, at least, write a Requirements Specification.

I will continue in the next post and provide some useful suggestions to make the chore of writing and maintaining the SRS easier. I will also suggest some rules for maintaining the SRS and how to effectively use it. I will just give you a little heads-up here as a teaser:

If you don't intend to use it seriously, don't bother to write it.

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Technorati tags: Software Project Management, Software Engineering, Software Project, Requirements Specification

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Why do SW PMs need to know Software Engineering?

This sounds pretty trivial. It sure makes sense that SW PMs need to know SW Engineering. After all, SW Engineering is a very important discipline in the world of SW development. No brainer. Construction PMs need to understand construction technology, right? Ship building PMs need to know ship construction technology, right? Aerospace PMs need to know Aerospace technology, and so on. Same for SW PMs.
All the above is true and right and we all know it. Nothing new here. However, the point that I'm trying to make is that in the SW development world, it is so much more important that PMs know SW engineering. And why?

Because Software Engineers don't know Software Engineering !

OK, at this point all SW engineers are ready to jump on me and finish me off. So, let me explain. First, what actually is SW Engineering? Here is where there is a lot of confusion. Wikipedia notes that there are many different definitions for this term. The one that I like most is from IEEE Standard 610.12:

Software engineering is "(1) the application of a systematic, disciplined, quantifiable approach to the development, operation, and maintenance of software, that is, the application of engineering to software," and "(2) the study of approaches as in (1)."

"the application of engineering to software" - this is the essence of this. It's not the coding. It's not the testing. It's the approach to SW development as an engineering endeavor. This means the classical activities of requirements definition, analysis, design, implementation, etc. And it doesn't matter right now if this is Waterfall, RUP, Agile or whatever. And when I talk about the above activities, I don't mean only the actual execution of the activities (such as writing the requirements, coding, running the tests, etc..) I mean the Methodology. The practices, processes, policies, etc. All of those things that everybody loves to hate but we (PMs) know that the project can't succeed without them. And yes, I know and agree that we need to be careful not to overkill with these things but we must have some.
Now, everybody basically understands the basic concept of the SDLC. We all know how to recite the waterfall phases or the Agile principles. But how many people really know how to do them? In detail?
Consider this: a person goes to college and graduates with a degree in Computer science. What is his profession? software Engineer? No - Computer Scientist. It's not the same. But when that same person gets a typical job at a SW shop, what will his title be? Computer Scientist? No, it will almost always be... Yes, you guessed - Software Engineer. But does he really have the skill set (not to say experience) required for a Software Engineer? No. Colleges do not teach software engineering almost at all. Interestingly, this person will not work as a Computer Scientist either. In most of the cases, the computer scientist by education (and some skills) and Software Engineer by title is neither. He is a programmer. All this stuff above with terms and titles is not just playing with words. These different titles do really mean different things, require different skills and are all important in the SDLC world. But the vast majority of professionals in the SW development world are programmers. Nothing else.
Now, if you are a single person who sits at home and uses his programming skills to write a little nice program, you do not need Software Engineering skills. But if we talk about a large company in which multiple programmers (and other professionals) have to work together to produce multiple products - possibly under multiple programs with multiple versions and multiple configurations for multiple customers... You can see where this is going if there is a lack in Software Engineering skills. This is a guaranteed mess.
I want to emphasize at this point that all of the above is not something theoretical. I have been around and I have seen time and again how companies struggle and they don't even know why. And when you put a SW Engineering methodology in place, things become so much better. This is a real problem in the SW technology world and it is everywhere.
So if you are the PM, you operate in this kind of demanding SW production environment and the SW engineers don't know SW Engineering, good luck. What do you do? Well, you need to know at least the basics of SW engineering so that you can:

• Educate the engineers (and others).
  
• Intelligently observe the project execution by the various professionals and make your own judgment about the quality of the operation.

This is why it's so important for SW PMs to know SW Engineering. Sadly, in the current state of affairs, these who should know don't know so you'd better know.
In the coming posts, I will go into more details on what I think PMs need to know about SW Engineering. In the meantime, let me know what you think. All comments welcome.

 

Technorati tags: Software Project Management, Project Management, Software Engineering