Edinburgh Castle

The Edinburgh Tram Project exceeded budget by 52% and is the subject of an enquiry.  The issues with the project appeared to occur for two major reasons.

Optimism Bias

The project was born out of the political desire for Edinburgh to have a light rail system. However, reviewing past project it is quite normal for these sort of projects to come in over budget and extremely rare for them to come in under budget. Furthermore, increases over budget can be very large, often up to 80% over budget, whereas any cost savings are likely to be 10% or less. Seen in this light, the cost overruns on the Edinburgh Tram Project were not that unusual.

One way to avoid optimism bias is to first perform and estimate and then look at cost overruns on similar projects. For example, if you estimate a cost at 10 million, but past similar projects have seen cost overruns of 50%, then a better estimate for your project might be 15 million. This is becoming more normal practise in well-managed construction projects, but still, there’s a temptation to skew the set of other projects that you look at for comparison. This can reduce the uplift to costs, but may create a less accurate picture of how things will turn out.

Poor Governance

It appears that the management of project communications may have been poor. Stakeholders did not receive timely and accurate information and different agencies had different levels of commitment to the project. These frictions hurt the project. Once it was off course, then that information was not broadly shared, which then made problems hard to correct. In addition, different stakeholders working at different purposes did not help the project. It appears Edinburgh politicians were strongly in favour of the project, whereas national politicians were not.

Conclusion

In the grand scheme of things, the cost overruns of the Edinburgh Tram Project should not be viewed as a disaster, the outcome is similar to many other trophy projects run by governments and some cost overruns are likely with these projects based on history. However, problems in communication and lack of stakeholder alignment were an obvious issue that should have been relatively easy to correct.

The title comes from the amount of time Peter’s process will take each day if you follow it, though to me, the book worked better as a list of interesting ideas, than a single plan to adhere to, and I think that’s ultimately the author’s thinking too.

” Put a computer in a robot body and it can walk from cubicle to cubicle handing out assignments, checking on progress, and adjusting schedules and budgets on the fly. A robot could easily juggle the complexity of dozens of projects. It could be talking to you in your cubicle while simultaneously having a phone call with another employee and texting a third without you even knowing as it happens.” 

I don’t think this is a reasonable prediction. So much of project management requires soft skills and judgement to understand how a project is going that reducing it to a simple input/output process that can be accelerated by a machine is misleading. It’s it’s likely you’d just achieve ‘garbage in – garbage out’ at scale.

“The robots will be free of human bias and optimism, so I would expect them to do a better job of estimating budgets and timelines than humans.”

I totally agree with this, robots can make better decisions in certain contexts than humans (Nate Silver’s recent book Signal vs. Noise is good on this topic), and being free from bias and optimism is one advantage. However, without being too pessimistic, it’s likely that humans would tilt their inputs to the robot to get the biased outcome they want. In a sense, we estimate budgets and timelines with robots today, it’s called software, such as SAP, Excel or Microsoft Project. Not all robots have a human form, in fact, few do.

I recommend, the post The Future of Middle Management even if you disagree with it (as I do in most places) it makes you think. Thanks to Marc Gawley for spotting this article.

The 100 points method

“100 points” validation is a useful exercise, because it forces the stakeholders and to make exactly the same as those of that you have to make. This is how it works. Having collected all the requirements from stakeholders, we then ask them to allocate 100 points across all of the requirements. If, for example, one requirement is absolutely critical above all others then they might ‘spend’ 100 points on that alone. If there are five requirements of equal value then they might ‘spend’ 20 points across all five. The only constraints are that the points must sum to 100, and no score for any requirement can be less than 0. In this way you’re able and to get stakeholders to supply quantitative information on what they need to see from a project.

Unspoken requirements create a more formidable challenge. Speaking to a large number of stakeholders can reduce the risk of omission. Secondly, ethnographic observation, which involves watching people going about the tasks that the project will help address. This can help you spots areas that are important but may not be explicitly asked for in requirements for example if you might see a process which takes 30 minutes of people’s time each day and you know with the project you can help reduce the time spent on that. However it’s so commonplace in the thinking of the stakeholders that it is omitted from the project requirements. This just scratches the surface of a very thorny topic, but 100 point exercise and ethnographic observation can be useful tools for determining your next set of requirements.

Nonetheless, it did happen, 27 batters up, 27 down, the 23rd perfect game in baseball and the first in Mariners history.

Aside from being an electric experience, it was a good reminder that though statistics can give you a guide to what may happen after the event the odds are always 100% or 0%. 

If you engage in risk management, as all project managers do, then be aware of the work of the Chicago economist Sam Peltzman.

What Peltzman identified is that behavior can change substantially in response to risk management policies. For example in the case of seat belts, people tend to drive faster and have more collisions when they use seat belts because of the sense of security it gives them. This is not to say that seat belts are ineffective, it seems that traffic safety overall (especially in terms of road deaths) has improved as a result of them, but not as much as you would have expected, because of this behavioral offset.

And more omniously, though drivers are safer from seat belts, cyclists and pedestrians are more at risk with seat belts because drivers tend to drive faster and those outside the car don’t have any offsetting protection.

Similar studies have shown the same phenomena in NASCAR racing, when safety improves drivers then notch up the risks they are willing to take, offsetting some of the benefit.

photo credit: Roger Barker

So the question for the project manager is are your risk management policies changing behavior? This is not to say you shouldn’t bother with risk management, just as with seat belts the overall benefit is likely to be positive, but pay attention to how behavior is changing as a result of the changes you implement. Are people less cautious knowing there is a more robust monitoring process in place for their projects? Are team members less focused on escalating problems knowing that someone else is watching out for them?

The lessons from other areas such these unintended consequences may be more important than you may initially suspect.

Advertising briefs are a specific type of project with three characteristics:
1. Extreme creativity. The goal with any advertising work is to come up with something sufficiently original to break through all the clutter.
2. Reliance on client management. It is not enough to merely come up with a great ad, but to make sure the client believes in it too.
3. Ongoing iteration. This reflects the creative process where the goal is to sift through ideas to find the highest quality solution before the deadline.

The Creative Process Illustrated by Glenn Griffin and Deborah Morrison, interview leading advertising executives to learn more about their processes. From these interviews a few insights emerge. The best advertisers start by questioning the client’s brief, and working with the client as soon as possible.

“most creative briefs cannot lead to good advertising unless they are developed with input from creatives”

Then the process of creativity has two important aspects. The first is to collect a large number of ideas.

“It’s like the old story about cows that are let out of the barn. The ones that stop at the first grass they come to end up chewing bits of weeds and muddy tufts. The more adventurous cows who make it through the first (or second) pastures find the good, deep, tasty stuff. Just don’t go too far and become roadkill.”

The second is to consume more than you create. Nothing is ever really a bolt from the blue, it more likely combines existing ideas in a new way. The more content you consume, whether through books, blogs or museums, the more ideas you’ll be able to combine into original concepts.

As a project manager, examination of advertising projects is a healthy reminder on the importance of ongoing client engagement and that creativity comes from ‘combining’ a large number of existing ideas and finessing the good ones, rather than any sort of truly unique gift.

Consider trading the decision. If it’s relatively small, consider saying “Ok you win this time, but I’ll take the next decision.”

Determine who wants it more. Let the person with greater passion behind their view take the decision. This is the difference between counting votes and weighing them.

Clearly, for larger decisions these tactics risk worsening the outcome, but for smaller issues, these aren’t bad approaches to finding consensus quickly.