Project Management KPIs-the Three Musketeers

A blog post by Emerson’s Anand Iyer.

Emerson's Anand IyerThe last couple of decades have seen integrated engineering across the globe. Some of this actually started with the Y2K and internet and cloud have been largely responsible for this mode of operation. A philosophical argument could be that we as humans have been collaborating over millenniums…Anyway, today it looks like the best of talent across the globe is available at the best of prices to everyone and this would benefit everyone in the globe and seemingly in the Milky Way!!

Source: Kellogg Center for Global Marketing Practice, http://jimc.me/17Xmd6s

In any typical project, the engineering could be led by one office or several offices with integrated teams from several continents comprising subject matter experts, project engineers, and project and program managers. All combine together to provide an optimum solution.

This explosion has also seen the rise of facilitation managers or maybe the facilitation managers have caused this explosion. In fact, so important has been their role in convincing the tasks that could be done elsewhere, making people meet and interact and so on, breaking down complex tasks into easier ones that could be easily done in other regional centers, that today, very often these very people lead the organizations and set benchmarks for the entire operations.

The facilitation managers have been the lubricant, without which the high friction to change would have brought down the entire machinery.

Frankly, in the late nineties, the PLC-SCADA or controller-SCADA combined or SCADA with I/O was supposed to make DCSs (distributed control systems) a thing of the past. But, these very facilitation managers have actually turned the tables for DCS suppliers. This along with other factors such as DCS supplier consolidation, larger acceptance of Windows technology, and so on.

On one hand, facilitation managers are the key lubricant due to which the machinery works smoothly and on the other, facilitation managers are a representation of the waste due to friction in the system. Actually, they are a very measure of the inefficiencies in the system.

As in machinery, lubrication should not become a goal in itself, but every effort should be directed towards engineering frictionless or low friction surfaces and promoting very frugal and efficient usage of lubricants, so should this be done with this facilitation.

Too much facilitation may have its invisible problems. Cost itself could be an invisible issue. One major aspect affected could be the availability of resources that could be driven by individual preferences. And considering that these facilitators have more IQ in such matters, this could adversely affect the performance or select engineers and project managers. Lopsided resource handling wherein one resource is overloaded while others are not loaded and so on.

This over time should be visible as many projects with financial losses, delays and some quality issues, overall reduction in profits per resource and so on. Even when visible, it is very difficult for management to remove or reduce the facilitators as friction may resurface and bring in older inefficiencies.

We need some new KPIs in the new consolidation phase. The three musketeers are one such set…

Athos: Facilitation personnel cost per dollar of profit. All resource managers, facilitation meeting costs, other such personnel whose primary goal is to analyze and break work and send it to best cost regions would comprise of the facilitation costs. Some would also like to add administrative costs to these.

Porthos: Dollar ratio of high-cost to best-cost resource per project. This measure provides a direct measure of the best-cost, cost utilization and provides management a visible area to take actions to strengthen the best-cost engineering skills to reduce future costs. The ratio may also provide pointers to areas where friction may be surfacing.

Aramis: Lost profit opportunity per project. Higher of (profits at actual gross profit (GP) without Facilitation costs, profits without facilitation costs at zero GP) – Profit with Facilitation costs at project cost. This calculation attributes the lowering of project sale value to cumulative inefficiencies in the system. This would also drive the management to target more efficient usage of resources over longer durations.

D’Artagnan: Facilitators may play a key role in the transitioning to a KPI driven approach and later a KPI monitoring and new avenues identification approach. Each office and business area / unit could have its target KPIs. These would slowly drive out the need for large presence of facilitators. Facilitators may actually be needed to shuttle between several offices and monitor that the KPIs are being maintained and target other efficiencies that could become visible over time.

Irrespective of the KPIs and methods chosen, the facilitation costs should be diligently calculated and monitored. Facilitation should probably be introduced in new areas for established engineering activity (these could be doing similar projects in say Africa or other continents), new offices that are not using best-cost engineering. Once businesses start working with the targeted KPIs, engineers diverted to facilitation roles should gradually find productive use in deliverable-based roles.

Update: Anand sent me a note to slightly tweak the equation for the 3rd Musketeer.

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