Smart Project Endings Add Serious Value

December 8, 2013

Failing to effectively end projects can have high but hidden costs.  Some companies are so buried in the latest and hottest project or in “fighting fires” that they fail to close projects constructively.  In doing so they not only miss opportunities to generate extra value for the company and everyone involved, but also to maintain the quality of management information (financial and other types) and prevent or limit cost overruns. When projects aren’t formally ended some workers may go on working on them unaware that it is time to move on to other work.  Other workers may find reason to continue to charge the project for their time, especially if they run into a slack period without enough work to keep them busy (which happens naturally in many product development organizations or in highly seasonal work).  This is especially likely where “charging overhead” has a negative stigma attached to it and project charge codes are not shut off.  There are many ways that project endings provide value, however, if they are timely, well planned, and properly executed .  Here are a bunch of them: Read the rest of this entry »

Which is Better? A Budget with “Challenge” or a Budget with “Reserve”?

November 26, 2013

In the defense contracting world budgeting is typically done under a rigorous “earned value management system” (EVMS) that usually includes keeping aside 10% of the budget for use as a “management reserve”.  This can then be doled out in bits and pieces as needed to fund changes in what needs to be done (“scope” in the project-organized world) and solutions for problems that arise during the course of business.  It also allows people within the organization to cope with unexpected changes without feeling like they are endangering the project or organization when they have to ask for more funding.  They all still have to do what they can to stay within budget, but it gives the appearance that upper management accepts that unexpected changes happen and are going to be reasonable in helping people dealing with them.  That’s not how budgets are typically presented in the rest of the business world, however. Read the rest of this entry »

Finding the Roots of Organizational Incompetence

June 15, 2011

First let me define my term “Organizational Incompetence”.  Sometimes in business you sit in a meeting and hear people grousing and struggling, and perhaps arguing and talking over each other in their frustration.  The problems they describe are almost always not of their own making, nor do they have the wherewithal to remedy them by themselves.  You begin to perceive that on some particular aspect of business the organization just doesn’t do well, and it keeps posing problems to groups and individuals and holding up productive work.  The appearance is that the organization is incompetent, at least in some particular way or area, and is suffering from needless cost, waste, and widespread frustration and stress.  In essence, the organization or a system within it is dysfunctional.  So how does this occur and what can you do about it? Read the rest of this entry »

Pay for Performance Revisited – It Still Has Problems

April 24, 2010

Pay for performance sounds good, until you think about it. I added a comment to an item on HRM Today this week suggesting “pay for performance” may not be the best way to manage people’s compensation.  This is a complex area and sometimes what seems simply intuitive turns out to be a poor approach under closer examination. Read the rest of this entry »

Knowing the Important Costs is Often Difficult

May 20, 2008

Companies can’t be faulted entirely for missing important costs.  It is human nature to measure what is easily measured, and to optimize that which is measured.  Admittedly, that’s like the drunk looking for his wallet under the street light, instead of where he actually lost it, because the light is better under the street light.  The important costs may not always be the obvious ones, however.  The savvy manager who understands human nature will look more deeply into costs and find hidden opportunities.  I will discuss the nature of costs and give some examples of hidden costs and the mishandling of cost information. Read the rest of this entry »