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ProjectExperts Articles: Project Levers and Gauges
by Stacy Goff, PMP; President of ProjectExperts and asapm Vice President (published 2004)
Abstract
Government and Enterprises are trying to do more with less.
Faster and Cheaper is an attractive theme, but can result in poor project performance without
agreement about the priorities, and competent project management to achieve them. This article
points out the flaws of mistakenly attempting to control project gauges, and the benefits of more
effectively managing the project levers, so Project Managers and teams achieve their targets.
Prioritizing the Most Important Project Factors
In our project consulting practice, the first step we use in coaching the kick-off of large projects is to
prioritize the project’s key dashboard factors (see diagram at right; click it for a larger view).
The factors consist of four to six or more key elements, most of which are related to project knowledge areas: Time, Cost, Scope, Quality, Risk, and Benefit/Cost Ratio. We include Benefit/Cost ratio in the prioritization because while it is difficult to evaluate, it is an ultimate success measure in many projects.
In our Initiation process, stakeholders prioritize the factors to get rank-ordered priority of the top three. Then during the project, we manage to optimize those factors, while monitoring all of them, typically using a project dashboard (see graphic). The result: Everyone is managing to the same success criteria. For more information on this prioritization exercise, see our article on this initiation exercise by clicking here.
Ways to Get to Faster and Cheaper
Given agreement about which factors are most important (and Time and Cost are often among them),
we’ve seen two approaches Project Managers (and their Managers) use to succeed in managing them:
1. Attempting to control Time and Cost to assure you meet those targets
2. Intelligently managing the other project factors to achieve the desired Time and Cost outcomes
The problem: too many of today’s Project Managers use only the first approach, while the second approach is far more effective.
To help audiences of all experience levels to better understand the difference between the two approaches, we’ve used for many years a number of different analogies. Those analogies include leading indicators vs. trailing indicators, front window vs. rear-view-mirror monitoring, and managing inputs versus controlling outputs. These analogies are crystal clear for the vast majority of audiences.
Introducing Levers and Gauges
We've recently been using the concept of Levers and Gauges as a new way to illustrate the difference
between the two approaches. Rather than giving you a dictionary definition f Lever and of Gauge,
let’s instead take a few (non-project) examples.
Example 1
Setting: Dinner. The levers are your fork and knife. What is the gauge? (don't peek!)
Answer: How full you feel. Interestingly, for most of us, the gauge has about a half-hour
lag before we get an "over-full" reading. Except for chocolate, which never
registers on my gauges. Note that in this example, there are two levers, and one must master
the correct use of each.
Question 1: Is the gauge important? Definitely! In fact, because of the lag in response, we need ways to determine the trend toward fullness if we are to be successful managing to it.
Question 2: Can you avoid over-fullness by attempting to control the gauge? No! You must manage the levers properly to do so. Already we can see useful comparisons to the project environment!
Example 2
Setting: The Shower. Your gauge is the hot/cold sensation when you test it with your hand.
Other parts of your body may have different calibration for what temperature is “right”.
This means that you adjust the findings of the gauge leaving a bit of tolerance for your safety.
What is the lever?
Answer: The faucet handle or handles. Note that single-lever handles are easier to adjust,
but are sometimes harder to figure out.
Question 1: Again, is the gauge important? Absolutely! So much so, that some of us instinctively back away from the shower flow if we sense a change in the water pressure—a survival skill to avoid scalding that depends on another gauge, that of sensing water pressure.
Question 2: Does everyone have the same “ideal temperature”, or do people’s individual preferences vary? This is starting to sound a lot like project work, but with softer measurements.
Example 3
Setting: The Stock Market. A little closer to the project world, now that the preceding examples
help show the crucial interaction between levers and gauges, let’s try this one. In the stock market,
an important gauge is Share Price. Can you change performance by acting on the gauge? Despite the efforts
of some day traders and commodity traders, only with very short term success.
Question: What are the levers?
Answer: They would have to include earnings growth, together with more subjective factors,
such as how well the company communicates with its stakeholders.
Manage Levers and Monitor Gauges
By now you have probably figured out which of the key factors are levers and which are gauges. Cost and Time are gauges.
They are often top priority factors in most projects, but you cannot get optimum results just by controlling
them. Instead, you must manage the levers (most of the other factors), and then monitor the gauges to verify that
your efforts are working.
Here are just a few of the many tactics smart organizations use to manage the levers so they get desired readings with their gauges.
Tactic 1: Measure Scope Early, Manage it Constantly
Example: If Scope increases, and all else is constant, what happens to Time and Cost? Clearly
Cost goes up, and Time does as well if you cannot productively add more resources.
Thus, managing Scope as a lever offers directly affects the project Time and Cost. Of course, this suggests that you have a way to measure Scope. How do you prove the project is larger, and by how much? Most disciplines have measurement points and methods for managing Scope, but the measures differ radically—as do expectations about how much change is too much.
Tactic 2: Improve Team Member Performance
Put the right people with the right skills and experience on your highest-priority
projects.
Example: Two factors, Business Analysis
and Application Experience. Based on Barry Boehm’s 2000 work1 the
difference in an Information Technology project between one team with Very Low ratings,
compared to another team with Very High ratings is about 3 times the cost!
That doesn’t even reflect the quality problems of the Very Low team’s results. Thus delivering the same scope costs three times as much, just based on these skillset levers. And, what do you think happens to Time?
Tactic 3: Eliminate Unnecessary Constraints
Boehm also identified an unrealistically tight deadline as increasing Cost
by 40%, just by itself. What do you think that does to Time? Does it impact
Quality? So much for a controlling a project through its gauges, rather than managing its levers!
Tactic 4: Eliminate Project Interruptions and Other Work Commitments
Example: Stretched-thin organizations (remember doing more with less?) sub-optimize
project performance when the interruption rate goes beyond a certain level
(which we define by the size of project). We’ve polled groups for 20
years, asking “what is your mean time between interruptions”,
and seen many organizations where the typical range is 8-15 minutes.
The result: the work costs twice what it needed to. Want proof? If you attempt to complete a 20 hour assignment during the week, how much time would it take you if you came in on a weekend? For many of us who are subject to interruptions, it may take just 8-12 hours when done on a weekend. Check your own work pattern here, because interruptions can also cause defects if you are doing deep-thought work. Anyone here do deep-thought work? I thought so.
Why We Focus On
Trying to Control the Gauges
There are many different reasons why we focus on trying to control the Project Gauges (rather than Levers).
Here is a short list of (not necessarily very good) reasons why so many of us do so.
- It’s easier
- That is all the folks upstairs are interested in
- We don't know any better
- That’s all the software tells us
- They are easier to measure than the other factors
- It does not require as much skill or Competence
If you still insist on managing by gauges, consider including Benefit/Cost Ratio or Return on Investment in your prioritization process. You’ll find that it is a SuperFactor, because it reflects a post-project aggregate measure (gauge) of the right Scope, at the right level of Quality, delivered in the right Time at the right Cost. Over time, paying close attention to managing the right levers helps drive organizations to increased levels of project success. This is so crucial that we always suggest that some Return on Investment measure be added to the Balanced Scorecard for clients who use such measures on projects.
Keep Your Hand on the Levers and Your Eye on the Gauges
With credit to Dr. Lew Ireland, who coined the above heading, today's most effective Project Managers understand
the interaction between the project levers and gauges. Specifically, they understand:
* The project levers control or influence the readings of the gauges
* There can be very large latency between action on a project lever and a result on the gauge
* Managing levers is pro-active; attempting to manage by gauges alone is purely reactive
* Gentle nudging of the levers tends to work better than massive changes in them
* It is actually far easier to manage the levers than to attempt to control it by its gauges
* Involving the team in managing levers improves communication. Controlling gauges reduces it
The gauges of a project are very important; especially for organizations that prioritize them in their top three project factors to optimize. But this article describes one differentiating factor that separates great Project Managers and teams from those that are not. That factor is whether you understand that to manage, rather than merely control, you must manage the Levers, and monitor the Gauges.
1 Boehm, Barry W. et.al. Software Estimation With COCOMO II. Prentice-Hall, 2000.
