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Thursday, April 26, 2012

The Long-Term Damage from Juggling Too Many Projects

strategy + business magazine:


Scrambling to shift scant resources in order to meet deadlines can have a chaotic ripple effect.

Authors: K. Yaghootkar and N. Gil (both University of Manchester)
Publisher: International Journal of Project Management, vol. 30, no. 1
Date Published: January 2012
Managers who try to meet important product development deadlines by shifting resources from other projects
Every project is implemented under three const...
Every project is implemented under three constraints, scope, costs and schedule. The diagram shows quality as the fourth constraint or as a result of the three aforementioned constraints Project Management (Photo credit: Wikipedia)
may succeed in the short term, this paper finds, but the continuous shuffling of resources and team members has a harmful ripple effect over time. Ultimately, the company’s ability to deliver projects reliably will suffer from this schedule-driven approach to project management.
The insight applies to any company that finds itself overextended in the rush to make good on multiple commitments. But it has particular relevance now, given the recent recession and the ongoing so-called jobless recovery, the authors write, because companies have few resources (for example, their highly skilled engineers are in short supply) and are reluctant or unable to hire and train new staff.
If product development and manufacturing firms are to survive in competitive markets, they must continuously tweak their offerings and create new products that feature emerging technologies and trends. As a result, these firms typically have many projects cooking at once, and have different teams sharing engineering and design resources, which can become overextended at peak times. They’re also under pressure to accelerate product development and reduce the time it takes to get their merchandise to market, especially for cutting-edge technology or in-demand goods.
Project Management main phases
Project Management main phases (Photo credit: Wikipedia)
Accordingly, top managers often try to allocate resources from concurrent jobs to ramp up an important project that has fallen behind because of a late start or insufficient support, ... . And some projects are simply more critical to the business than others. ... Many contracts also stipulate penalties for delays.
But what is the long-term effect of this schedule-driven project management approach? To find out, the authors studied the product development division of a manufacturer of high-performance trucks, which embodied the challenges faced by many companies that work on several projects and deadlines at once. ...
Risk matrix for use with a small-scale project...
Risk matrix for use with a small-scale project management methodology. (Photo credit: Wikipedia)
The company in the study builds about 100,000 trucks annually, mostly tractor units for semitrailers or rigs, but very few are identical. A top management team allocates the annual R&D budget to a number of initiatives to develop new business, and the approved projects share the same pool of specialized resources.
The authors conducted more than 80 one-on-one interviews, eight group presentations, a four-hour workshop, and an analysis of the firm’s archives, as well as making direct observations at the company from 2004 to 2009. Employees participating in the study had diverse job roles, including engineering designers and project and portfolio managers.
Project Management Lifecycle
Project Management Lifecycle (Photo credit: IvanWalsh.com)
The resulting data was then fed into several computer-based models that probed the effects of schedule-driven pressure on long-term productivity. Specifically, the authors examined scenarios in which the time crunch resulted from a policy to complete business-critical projects by the deadline, regardless of whether they started late or initially lacked resources.
The simulations showed that as top management put pressure on a team to finish a project, the time lost on subsequent projects tended to snowball in several stages. First, as one project sacrificed resources, it also came under schedule pressure. Second, as the pressure ratcheted up on more projects, resources switched back and forth more frequently as managers struggled to prioritize. Third, productivity went down as the teams’ size increasingly fluctuated and employees logged long overtime hours.
Taken together, these effects “exacerbate schedule pressure in a self-reinforcing vicious cycle,” the authors write, “generating a persistent steady state that degrades the organization’s long-term performance in terms of its capability to deliver projects efficiently.” ...
The authors caution that the best practices in single-project management, notably up-front planning, can have limited benefits when top managers ignore the harmful long-term effects of systematically “hijacking” resources from concurrent projects.
“A badly implemented schedule-driven project management policy can lead to disenchantment among project staff,” the authors write, “who, disheartened with (and powerless to change) top management’s attitudes[,] have no choice but to get accustomed to reactive but ineffective project management practice.”
Companies should be wary of rewarding top managers on the basis of their ability to implement short-term fixes regardless of their negative long-term impact on the company’s performance, the authors write. Instead, multi-project organizations should put in place rewards and incentives that ensure managers take a holistic view. This means understanding the importance of negotiating project budgets and allocating resources within planned timetables that don’t push back new projects.
The results also suggest that top management should work hard to keep some specialized resources available at all times in case of emergencies. As with “investments in product flexibility...organizations ought to frame an investment in free resource capacity as acquiring an insurance [policy] against future eventualities,” they write. “This investment will then pay off whenever a critical project [comes] unexpectedly under schedule pressure.”
Otherwise, the authors warn, organizations can get trapped in a “firefighting mode” whenever teams fail to spend time up front agreeing on parameters, discussing uncertainties, and planning ways to reduce risk. Constantly putting out fires in the production chain, they write, can become a “self-reinforcing phenomenon when teams are kept overloaded.”
Bottom Line:
Faced with deadlines and working on multiple projects, firms often shift resources among teams so they can deliver slow-moving but important projects on time. This schedule-driven product development strategy is detrimental in the long term, however, as the effects of continuously shifting resources among fluctuating projects degrade a company’s ability to meet deadlines reliably.
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