Are You Incentivizing Project Predictability or Secrecy?

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QUARTER 4, 2018 » l INSIGHT 17 BY JUSTIN LUCAS duration of the project and on future proj- ects. Another reason they choose Option B is that they fall victim to optimism bias, telling themselves that they will be able to right the ship. And why wouldn't they choose Option B? If team members are measured solely on project outcomes, there is no reason to tell management the bad news early in the project. Nobody is eager to tell their boss bad news, especially when there is disincentive to do so. Now imagine instead that the project team was measured based on predict- ability, incentivized to report project outcomes early, AND be as accurate as possible. The project team would be much more likely to choose Option A, leaving management with ample time for course correcting measures – possibly shifting resources from another project, valuing engineering efforts, renegotiating contracts, using contingency funds, etc. This proactivity, in turn, stands to signifi- cantly improve project cost performance across the enterprise, as organizational culture shifts to foster transparent and predictable projects. THE MISSING LINK According to KPMG, the missing link in transforming the performance of proj- ects-driven organizations is integrating people, governance, and technology. "It's not enough to address these com- ponents independently — we have to find new ways to make them work together in an integrated fashion … When these three critical performance drivers work in har- mony, the sum can truly be greater than the parts." according to KPMG's Global Construction Survey Report. But how can integrating technology with your people and governance help im- prove incentivization and ultimately the performance of your enterprise? Technology can help you accurately and consistently measure project outcomes. By utilizing a projects performance based software system such as EcoSys, you can go a step further. The software serves as the basis for ensuring all the pillars of predictability are supported across your organization. These pillars encompass well-developed processes for (1) portfolio management, (2) integrated change and risk management, (3) project and contract controls, and (4) perfor- mance management, including progress measurement and the "Living Forecast". The software can then synthesize pre- dictability metrics such as Normalized Cost Timeliness (NCT), measuring how timely cost variances are predicted, and Cost Predictability (CP), a metric that combines NCT with overall cost variance. CP ensures both factors are taken into account in one universal metric that can be applied across the enterprise at any level of aggregation. When teams are scored based on predictability, it becomes much easier to incentivize them based on early identifi- cation of issues and accurate forecasting of project outcomes. Another added benefit is the ability to analyze, bench- mark and compare project teams based on predictability - knowing which project teams, divisions and regions are deliver- ing the most predictable projects. That provides a catalyst to change the culture in an organization to one that rewards transparency and predictability rather than secrecy. Even the best project teams face issues that are beyond their control; what matters is how you deal with those issues. When properly integrated and utilized, technology can help change the culture of an organization, turning the human factor into a competitive advantage. By utilizing the predictability metrics available in software like EcoSys, you can incentivize early identification of issues and help drive better projects (and financial) per- formance. ■ >> >> Justin Lucas is the Marketing Manager for EcoSys, projects performance software. He is based in Huntsville, AL, USA.

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