Change your project management approach or risk project success

Differences in Managing Projects for Commercial versus Federal Government Clients

Parag Ambardekar August 25, 2014

[email protected] 301-805-9700

Outline

§  Context

§  Key Environmental Differences

§  Suggestion for applying PMBOK Processes

§  Suggestions for applying PMBOK Knowledge Area Concepts

§  Key Takeaways

§  Q & A

© 2014 Dash Group, Inc. and Parag Ambardekar 2

Presentation Context


Logic Underlying the Presentation

§  Commercial and government project environments differ considerably

§  Project manager needs to be aware of the differences

§  Project success is jeopardized if the project management approach is not adapted to the environmental differences


Presentation Focus

§  Commercial project and environment

§  Contrasting with government projects and environment when necessary


Applicability to Projects

§  Funded by a commercial, for-profit entity

§  End-user and client are non-governmental entities


Key Environmental Differences


Project Parameters Are Different


Proposal

Government Sector Commercial Sector

•  Larger •  More formal •  Longer procurement cycles

•  Smaller •  Less formal •  Quicker turnaround

Contract

•  T & M, Cost Plus common •  Firm Fixed Priced infrequent

•  Firm Fixed Price common •  Contingency, results-based

Size

•  Larger •  Mega-millions common •  Frequently Multi-year

•  Smaller •  Frequently < $ 10 Million •  Shorter durations

Client Approach is Different


Risk


•  Client assumes/shares risk •  Vendor assumes the risk

Margins

•  Lower •  Single Digit Generally

•  Considerably higher •  > 20% common

Emphasis

•  Results through process •  Methodology

•  Results (Client and Vendor) •  Vendor focus on margins

Requirements for Information Differ


Meetings


•  More •  Less

Reporting

•  More formal •  Relatively more

•  Informal •  Relatively less

Deliverables

•  More formal deliverables •  Requires work products

•  Fewer Deliverables •  Requires few work products

Client Perspectives Are Different


Government Sector Commercial Sector •  I am using public funds •  Reduce risk by applying

process and methodology •  More communication, status

information, and reports will give us early warning of trouble

•  I protect my team, my agency dollars through the audit trail I create should project go astray

•  I am using investment $$$ •  Get me the results

•  I do not care how you achieve the results because “it is on your dime”

•  Be mindful of the cost of involving my staff and me in project work and meetings

•  It is easy and quick to replace you.

Suggestions for Applying PMBOK Processes


Project Initiation - Quicker and Less Formal Than Federal Project


•  Master the contract details before you show up on Day 1 •  Develop Project Charter as an informal document •  Verify Project Charter details preferably in the first meeting but

do not involve them in the development of Project Charter

Complete the initiation phase work in the first 1-2 days

Project durations are shorter

Information needed for Project Charter already exists

Initiation documents are rarely formal deliverables

Project Manager To-Do’s

Because

Project Planning – Requires Fewer Deliverables and More Granularity for Schedule and Costs


•  Requirements should be clear, detailed, atomic, and testable •  Project Schedule should have tasks of about 8-20 hour duration •  Lowest level of WBS should represent about 8-20 hours of work •  Plan based on shorter procurement cycle, if any.

Should enable granular level project monitoring and control

Project durations are shorter

Less time available to recover from cost and schedule variances

Early warning of areas requiring attention is critical


Because

Project Execution – Application of Some Processes Require a Different Approach


•  Manage stakeholder engagement and communications based on Client’s authority, sphere of influence, and preferences

•  Leverage client authority and sphere of influence in conducting procurements

Communication, Stakeholder, Risk, and Procurement Management require a different approach

All stakeholders could be direct reports of client (e.g. CIO, CFO)

Client may want less communications due to org. dynamics

Client’s influential position shortens procurement cycle


Because

Project Monitoring & Control – Warrants Frequent Monitoring & Tighter Variance Thresholds


•  Make thresholds and metrics to trigger corrective action on variances tighter

•  Keep monitoring frequency higher and consistent with the higher level of granularity in planning

Tighten your tolerance on cost, schedule, and quality variances

Project risks are high on commercial projects

Project durations are short

Less time to recover from variances


Because

Closing the Project Same as in Federal Projects


•  Initiate project closure document with the client to guard against misunderstanding arising from change in personnel

•  Close each procurement conducted on the project with a formal letter as stated in PMBOK

Insist on formality

Personnel changes at client executive level are frequent

Formality in project closure lends finality to project completion


Because

Suggestions for Applying PMBOK Knowledge Area Concepts


Start Risk Management at Proposal Response


•  Risk premium is added to contract price •  Clients know that risk premium is added but not the specifics •  Probability of some risks occurring is high

Implications for Project Manager

•  Master the basis of risk premium included in contract price •  Limit client involvement in risk identification and analysis •  Involve client in risk response process •  Frequent monitoring of risks is critical

Influencing Factors Short Project Duration High Risk Contracts

Reality and Key facts

Focus on Scope Management is Critical to Achieve Promised Results and Financial Targets


•  Proposal response gives a head start to scope definition •  Client pushback on change requests is common •  Easy to give an impression of “Nickel and Diming” to client


•  Know the assumptions & basis of estimate in proposal on Day 1 •  Assess changes in scope since RFP in Week 1 •  Avoid giving client the impression of “Nickel and Diming”



Communications Management Use Minimalist Approach


•  Client sensitivity to time demands on their staff is high •  Client may prefer less communications due to org. dynamics


•  Be selective and minimalist in communications •  Plan fewer meetings and reports. Use pull mechanisms •  No “White Papers” •  Adapt plan to client’s sphere of influence and org. dynamics



Stakeholder Management Let Client’s Sphere of Influence Dictate Approach


•  All Stakeholders may be direct reports of client (e.g. CFO, CIO) •  Sponsoring client may prefer fewer stakeholder communications

based on organizational dynamics


•  Leverage client’s sphere of influence •  Adapt plan to client’s sphere of influence and preference •  Expect fewer stakeholders and communication channels to

manage

Influencing Factors Organizational Dynamics

Clients Sphere of Influence


Procurement Management – Leverage Informality & Shorter Procurement Cycles to Manage Schedule


•  Procurements are by invitation only which makes managing procurement schedule easier than in Federal sector

•  Client may want to do the procurements with contractor assistance or include it in the turn key contract

•  Be ready with research and analysis to suggest/evaluate vendors


•  Leverage client’s and employer’s organizational assets •  Capitalize on shorter procurement cycles and less formality

Influencing Factors Less Formality Shorter Procurement Cycles


Time and Cost Management – Have More Granularity with Higher Frequency of Monitoring


•  Less time available to recover from negative variances •  Negative variances impact financial targets


•  Tighten thresholds to trigger corrective action •  Make frequency of monitoring consistent with the higher level of

granularity in planning (daily check common on shorter projects) •  Apply Earned Value and Schedule compression techniques •  Do not hesitate to use the authority and responsibility for P&L



High Margin Contracts

Key Takeaways


Key Takeaways

§  Beware of the environmental differences between commercial and federal projects

§  Adapt the project management approach to environmental differences to ensure project success


Mapping to PMBOK Knowledge Areas in PMBOK Table 3-1


Knowledge Areas Extent of Change Needed in How PMBOK Concepts are Applied

Project Integration Management Minor Change Needed

Project Scope Management Change Needed

Project Time Management Change Needed

Project Cost Management Change Needed

Project Quality Management No Change Needed

Project Human Resource Mgt. No Change Needed

Project Communication Mgt. Fair Amount of Change Needed

Project Risk Management Fair Amount of Change Needed

Project Procurement Management Fair Amount of Change Needed

Project Stakeholder Management Fair Amount of Change Needed

Questions & Answers


Questions and Answers


•  Available now and after the presentation

•  Free consultation (sounding board, mentoring, etc.) offered ü  Every Wednesday 3.00 to 4.00 PM by prior appointment

•  Contact Information

E-mail: [email protected] Telephone: 301-805-9700

Company Web Site: www.dashgroupinc.net

Personal Web Site: www.paragconsults.com Blog: www.paragcmc.blogspot.com

Leadership & Management

Change your project management approach or risk project success