Moving Office? – Stake holder analysis – Management Team

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Recently, I had an opportunity to manage a project which was totally unrelated to my core competency. I wasn’t aware about nuances of real estate business and yet it came a challenge to me. I had deep dive into multiple facets of the project and connect with multiple agencies. Internet search reveals lots of information, however, interaction with multiple agencies led me to better understanding. Here is an attempt to consolidate all the information in a series of articles which may be useful for everyone.

You may be setting the office for the first time or planning to move your office in near future, my experience might help you. The life is unfolding in different projects and project management approach does help to a great extent. It is not necessary to follow a set methodology pattern for every project. It needs to be changed according to the type of project. I hope these articles will be of some help.

This article discusses about internal stake holders involve in office move project and their expectations.

Management team: By management team, I mean the stake holders responsible for decision making towards the location, budget etc.

The new office location would be based on the future plans of the organization. Many startups have started in garages or home offices. However, when ready to scale up or meet growing demand of the business, it is necessary to discuss upfront what is to be achieved. Location of the office could be based on proximity to customers, talent pool, other resources or even space required or future growth prospects etc. With new communication technologies available management may decide to have head office in a commercial center such San Francisco, London or any mega/metro city in the world, and have operating or back offices at other location. Hence it necessary to understand the purpose.

The floor space needed should be finalized. It is important decision for both owned or rented properties. The driver to decide the floor space needed is based on the growth plans. If the company is rapidly evolving, there is a chance that you will outgrow your space. Another criterion would be ownership of the property. If it is owned, it would be difficult to change office location in a relatively short term, hence long term considerations are factored. If it is rented property, the landlord would expect minimum rental commitment. It could be 3 to 5 years or more. The landlord would be more encouraged to spend more money on tenant improvements for longer duration. The tenant improvement allowance is the amount a landlord is willing to spend so that the tenant can retrofit or renovate the office space. It is usually expressed in a per-square-foot or total dollar sum. This amount is decided upon during lease negotiations.

The management would always be interested in knowing what would be the impact of office move on balance sheet and P&L. Rather, they would provide you indications of how much increase can be afforded OR they are expecting reduction in the expenses. The impact on the balance sheet would be coming up from capex involved. Capex could be in the form of “build out” or “Tenant improvement cost”, new infrastructure, furniture etc. The P&L impact may come from increase in rent, utilities and other services.

The landed rental cost includes actual rent for the space occupied, shared services cost, utility cost, parking charges, janitorial services etc. In a multi-tenant office, some services such as lobby, lifts, clubs, security etc., are common and shared among multiple tenants. The rate card for rental properties have multiple methodologies.

There are three basic types of commercial real estate leases. These leases are organized around two rent calculation methods: “net” and “gross”. The gross lease typically means a tenant pays one lump sum for rent, from which the landlord pays his expenses. The net lease has a smaller base rent, with other expenses paid for by the tenant. In a gross lease, the rent is all-inclusive. The landlord pays all or most expenses associated with the property, including taxes, insurance, and maintenance out of the rents received from tenants. Utilities and janitorial services are included within one easy, tenant-friendly rent payment. When negotiating a gross lease, the tenant should ask which janitorial services are provided, and how often they are offered. Excess utility consumption beyond building standards is sometimes charged back to tenant; so if the tenant is a big consumer of electricity, this point should be clarified in the lease as well. In a net lease, the landlord charges a lower base rent for the commercial space, plus some or all of “usual costs,” which are expenses associated with operations, maintenance, and use that the landlord pays. These can include real estate taxes; property insurance; and common area maintenance items (CAMS), which include janitorial services, property management fees, sewer, water, trash collection, landscaping, parking lots, fire sprinklers, and any commonly shared area or service. One need to understand different types of net leases as it has impact on budgets.

I have covered the expectations of management team in project related to office move. We will discuss about other stake holders in subsequent articles.

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What do you need?

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Recently, I watched few episodes of a TV serial “Scandal” by American Broadcasting Company. A leading character Olivia Pope, in the serial has a first question to ask all her clients, before she takes any assignment. “What do you need?’. Occasionally proceeds with statements like, “I am not interested in knowing, “what you want”, I am interested in knowing, “what you need”. A simple yet very important question, which people forget to ask.

Interestingly, this question is equally applicable, rather extremely  important to project management. I strongly believe, if this question is not answered & documented, it would result in failure of the project. I have encountered multiple situations where project team exerts time, money, and efforts to achieve a wish list, which may or may not be essential to meet the needs.

Hence the question, “What do you need?”.

Yet another related question is the stage of the project life cycle, at which this question should be asked. It is evident that this question should be asked in initial stages of the project when scope of the project is defined.   If not address in the initial stages the project team move in wrong direction and this question will keep haunting throughout the project cycle. In one of the recent project, tremendous energy was wasted due to back and forth communication between project teams as the team perceived needs differently.

Another important question would be the people responsible for stating the needs. If we broadly divide the hierarchy into three levels such as “Top management”, “Middle management” and “Operations management”, each member of the hierarchy will state different needs. It is critical to ensure that all associated members of the team are covered in “need definition process. Often, they are missed out as Project team is unaware of such members.

Identification of the members responsible to state needs and discussing the needs is defined as “Stakeholder analysis”.

Hence, do not forget to ask, “What do you need?”…..

You are CFO of your project

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A faint smile appeared when this statement was made. I am referring to a discussion in one of the project manager’s forum. The speaker was explaining paramountcy of managing finances during project execution.

However, this statement made me ponder over what is correlation between a CFO and project manager. To delve further we need to understand what a CFO contributes to the success of organization. CFO ensures that business decisions are grounded in solid financial criteria. Provide insight and analysis to support senior managers which enables to decide strategy of organization. A project manager’s role is no different than CFO, except the area of coverage is different. While a CFO has to think about organization, project manager has to encompass projects being managed.

When we think of project management, we mention about managing triple constraints, namely, cost, schedule & scope. One of the most frustrating parts of any project can be managing the financial components of the triple constraint. Here are some thoughts which helped me think like a CFO of a project and eased frustrations.

During project execution multiple agencies are involved:

a)      An organization for which project is being executed. (Project owner)

b)      Service provider(s) who implement project for that organization (executor)

c)       Suppliers who provide material/services to owner or executor

Each transaction that happens in a project impacts these agencies, either favorably or adversely.

Generally a project manager is assigned a budget for each project being managed. The budget is provided for manpower, raw material, equipments and components required to execute the project. Majority of these budgets are based on some estimates and previous execution experience of similar projects. Hence project managers “Financial Intelligence” leads to manage projects pragmatically.

To perform various activities in a project, manpower is needed of varied skills and expertise. They are needed as and when the task is due for execution. When a project is being planned, concerned responsible assess the skills and expertise needed for each activity. A project manager is expected to utilize resources of the requisite skills & expertise as planned. Each skill has different cost attached to it and it further changes based on expertise within skills.  If a project manager utilizes manpower of higher skill or experience level, it adversely impacts project cost and manpower budget will be consumed earlier.

Complexities creep in when the requisite skills are not available easily internally or externally. Under such circumstances, tendency is to secure such resource well ahead of time even if it adds to cost of the project. Insurance comes at cost!

If continued further the project will end up with cost overrun. This impacts project profitability, which can be observed in gross margin of the project. Depending on size of project and number of project, such deviations would impact gross margin of the organization. If an organization is not able to generate enough gross margin, it will raise doubts about organizations capability to generate money (at desired level) which stakeholders will reject. Hence project gross margin is one of the performance metrics for project managers.

Hence project managers are recommended to stick to budgeted manpower based on skill, experience and timelines for resource deployment.

Other resources such as equipment, raw material or components, need to be made available in time for project, else the manpower, even if available will remain idle and will add to cost. Many large turnkey projects need commodity items, prices of which keep fluctuating in international market and a project manager is required to plan ahead of time.

Schedule: Why is schedule so important and how does it impact organizations profitability? Projects being managed with desired gross margin do not mean that it is successful. It will be termed as successful if cash flow is as desired by both sponsor and implementer.

Schedule of a project decides cash flow of the company and most significantly the opportunities that project will open up once completed. During budgeting process the sponsoring and implementing company would project cash flow (Inward & outward). A project progressing as scheduled does not make any harm to any entity. However, a project delayed may have adverse impact.

For a project implementation company, a project generates revenue at completion of every milestone. Any delay in completion of milestone will delay incoming cash flow which is important to run operations. Advancement of schedule though helpful, creates need for additional working capital for project sponsoring company. It becomes more critical if the project would not payback till its completion which may further impact financial prospects. Equity holders, expect growth in their net worth when they invest in an organization. Any delayed in schedule delays growth prospect of organization, more prominent for organization which have multiple projects being executed simultaneously.

While cost and schedule have significant impact of finances of project organization, scope and quality have their contribution too. Desired scope increase will lead to benefit to agencies involved in project implementation. Often these are settled as change requests. However, increase in undesired scope leads to unwarranted increase in resource requirement and impacts schedule. It adversely affects financial performance of the project as illustrated earlier.

Cost of substandard quality of deliverables lead to rework. It not only increases the resource requirement on the project, but leads to project delays also.

No wonder, the speaker was intimate with the statement, “You are CFO of your project”. I would be eager to know your views on this subject. Please leave them in comment section.

Inspirations:

“Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean” – Karen Berman, Joe Knight, John Case

“A Guide to the Project Management Body of Knowledge: PMBOK(R)” – Guide by Project Management Institute

Avatars of successful Project Management Professional

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Recently, I came across an article depicting six different types of thinkers that one should have in a team. The author has described the composition of a team which can lead to successful completion of assignment with high probability.

Pondering over the thought, I realized that these are essential imperatives that a project manager should have to execute projects successfully. I would call them as six avatars of project manager which he has to perform in each of his assignment as situation arises.

Avatar #1: The dreamer

The ability to imagine, to think or fancy is an important attribute of every leader. Availability of various tools to manage projects makes our jobs easy. However, only imaginative mind is able to get best out of it. It is essential not only for project planning but project execution also. On multiple occasions we end the day with a situation to manage and do not get any solution. Our subconscious self keeps churning this situation. Meditating over the situation without any disruptions helps to manage such complex situations.  

Avatar #2: The debater

A project manager doesn’t sit in a corner of the project office and manage the project. He needs to be on the battlefield. Planning, execution, and monitoring of project needs personal involvement. When would you call a plan as an optimal plan? We do meticulous planning for project execution. We drill down every project to task level, define dependencies on all types of resources and balance the resource load during planning. We keep on improvising it till we reach to best of the plans. During the entire exercise of planning, we work with certain assumptions and as a “debater”, we debate each assumption. We assess risks associated with the project and work towards risk mitigation plan. Each risk is challenged and multiple mitigation plans are discussed before a final decision is arrived.

In spite of meticulous planning and risk management activity, we default. We debate/discuss on how we can bring the project on track. Should we deploy more resources and incur extra cost? Or should we compromise on quality and jump few steps? And so on… Certainly, there would be multiple such occasions that we encounter on every project.

Avatar #3: The disruptor

Have you come across a project where everything is smooth? You might find that every resource is busy working at their own pace and priorities, and yet one of the triple constraint is fired. What would you do in such a situation? We come at loggerheads over issues related to sharing of resources, or in situations where the product specifications and technical capability do not complement each other. General tendency is to work around the technological constraints to meet product features expected. The disruptor in us helps here. Our ability to challenge status quo and work around helps us to move further.

Avatar #4: The driver

Project manager is not only responsible for the work he/she is supposed to do but also for work to be performed by team members. Have you not found yourself leading or navigating your team’s efforts towards end objective? Have you not micro managed some of the team members or crusading entire team occasionally?

Avatar #5: The detailer

A project manager gets involved in an engagement at an early stage of project life cycle. Such as when, the scope is being finalized, or project schedule is being prepared, or staffing plan is being prepared. In the narration of Debater (Avatar #2), I have mentioned A project manager doesn’t sit in a corner of project office and manage the project. However, when it comes to detailing a plan, updating stakeholders, we isolate ourselves and articulate the stature eloquently.

Plagiarizing the words from article, we dig into every facet of a project. We focus on practicalities and save everyone else from silly mistakes and fatal design flaws because we think through all the angles and implications. We identify what’s missing in even the best-laid plans, and can diagnose the precise point when something could break or be improved.

Avatar #6: The Doer

How can we forget the task master within us? From conceptualization to realization, we are involved in all activities of project. In all the Avatars mentioned above task management is involved. The tasks that needs to be done by others and by us.

Do you think we are all in agreement? The blog is not an apotheosis of project management professionals but an attempt to epitomize attributes of project managers. I welcome your comments

Works Cited

Anderson, Katya. “The 6 Types of Thinkers to Seek For Your Team.”  Web Source.   http://www.linkedin.com/today/post/article/20131020181102-6200057-6-types-of-thinkers-to-seek-for-your-team

Romancing Project Management

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Interesting thought! According to Dictionary.com, the definition of romance is ‘a spirit of, or inclination for adventure, excitement, or mystery’. My journey through project management has been a romantic affair of sorts.

When I started my career as consultant I had never imagined that I would be pursuing career in project management. The more I got involved in project management, the more I started loving it. Each project has been adventurous. It brought in abundance of excitement, and yet it was like solving a mystery.

Adventure: I have executed about 15 projects, either as a project manager or a consultant, before taking up a higher role in project management office. As I look back, each project has been an adventure. Each new project brings in new technology, new set of people, and new challenges; however, it may seem repetitive. The project becomes more adventurous, when you step in as project manager in the middle of the execution process. I remember a project, which I took over with 40% schedule overrun, a team with low morale -who had given up- and had high stakes beyond the deadline. It needed micro management: it needed a task master. I made people converse with each other, fight over previous errors, and provide a vent to their frustration. Eventually, the project was brought back on track. This project had a lot to deal with the emotions of people.

Excitement: To excite means to arouse, generate a very strong feeling or to stir up. When I was managing a practice, a project wasn’t progressing at the pace and efficiency that it was supposed to. Every attempt to bring it back on track was failing. As a last resort, I had to change the project manager of the project. I realize now, that the reason for the failure was neither the methodology nor project management knowledge of the team. The team showed no excitement to complete the project. Team building sessions were conducted to arouse excitement among the team member. Once the team was excited about the project, their efficiency increased, and they were willing to put in more efforts and longer hours to complete the project. Finally, we executed the project with little delay.

Mystery: Mystery is anything that is kept secret or remains unexplained or unknown.  All projects are planned to the last detail to ensure successful execution. But, only 35% of the projects are considered as successful in terms of known measurement parameters. The mysterious events that occur on projects have always surprised me. These events challenged our project plan to deviate from our course of action. It was essential to revisit the project plan and bring it back on track. And like all mysterious events, it was exciting to understanding and solve them.  

This has been my romance with project management, Adventurous, full of excitements and mysterious events. Let me know how romantic your project management career had been.

Abstract nature of Project Management

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Many debates have been concluded by defining “Management” as a scientific art. I always wonder how a painter is able to portrait a surreal landscape on canvas. An artist thinks about every stroke of brush that he wants to draw on canvas. He enjoys imagining what he wishes to draw and the force on the brush and sequence of paints & strokes while painting. He takes care to follow a definite process or sequence while painting to ensure exact re-appearance of what he had imagined.

In majority of projects, project managers are not involved in the initial sales cycle and they end up embracing what has been envisaged and promised by others. It is a challenge that every project manager has to accept. While analyzing and solving puzzle of project deliverable, timeline, budget, staffing plan, his judgment and past experience is subjected to test. I personally have enjoyed working on complex assignments.

Project management is a combination of the concrete and the abstract.

The abstract part of project management relates imagining how a project would be structured and delivered. Having imagined, it is scientific knowledge that project manager has acquired over a period of time needs to be applied in structured manner which I would consider as a science or concrete part of project management skill.

In all training forums it is emphasized that every project is unique project. The uniqueness brings in inherent risk of unknown factors which a project manager needs to be observant. While project manager need not be a visionary, his abstract foreshadowing skill helps him to envisage about series of events that would happen in future and assess approaching events or risk. Having identified risks the next step is a scientific process of risk management wherein each risk is analyzed for its impact on project success and probability of occurrence, which leads to next process of mitigation plan.

With advent of technology, a multi-cultural and multi-location team is assigned to projects. The abstract component is quite complex here. He need to deal with human behavior and communication among other things wherein one cannot take a structured approach. I have come across many team members who are self motivated and follow through with the tasks assigned. Other team members need to be micro-managed. A project manager should recognize such team members and decide strategy. He/she needs to come out with innovative ideas to get the work done and keep the team on track.

Project execution is often governed by established delivery methodology governed by policies, procedures, templates & tools. The standard being followed could be either adapted or internally developed. It s expected that a project manager and team would follow the method without any deviations, unless unanimously approved by stakeholders. During my discussions with my mentor I learned that a successful methodology should produce consistent results, either good or bad. The methodology needs to be reviewed and upgraded periodically to mitigate risks, although the probability of success will never be 100%, else it would be a certainty. To ensure that the project is successful, often, it is subjected to audits. The audits could be detailed to check every step (policing?) or just analysis of how the project is initiated, and how it is monitored. I have had many consultations with aspiring project managers without understanding intricacies of abstract project management. The Science or Concrete part of project management is easily understood, however the art of managing expectations, uncertainties and people management is learned only by observation and experience.

Let me know your thoughts about project management. How much percentage of your time is consumed in Concrete and degree to which it is abstract.

Why I learned Project Management.

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A surprise to many of the consultants, this blog post would be! Why should a consultant learn project management when a ‘project manager’ is assigned to a project? How would it help to make a project successful? I had this question in mind when I started my career as a consultant in IT industry. As I went on executing projects as consultant, I started realizing the importance of knowing what project management is all about.

Project Management involves managing all the aspects of a project from inception to closure using a structured delivery methodology . It involves planning, organizing and managing resources provided by both customer and service provider.  It includes: identifying requirements, establishing clear and achievable objectives, managing expectations of different stakeholders. It is not a normal day to day activity that we perform. It involves dealing with Timeline, resources, tools & fellow team members.

Scope management: Each project revolves around interpretation of scope. The scope could be defined in terms of project scope and product scope. As a consultant, we must understand “The service that needs to be rendered to deliver a product or service with the specified features and functions” is appropriately considered as project scope.  It is necessary for a consultant to understand agreed scope and all stakeholders are made aware of the scope. Projects are expected to meet strict deadlines with resource restraints, and unapproved changes in the scope can affect project success. Scope creep sometimes causes cost overrun.  As a consultant, one should bring any such request to notice of manager and work on additional scope only upon approval.

Schedule management: When we execute a project, we work on timelines based on past experience. Each activity to be performed needs to be meticulously planned and executed to ensure that we complete assigned task in time. As a consultant one need to plan assigned activities well ahead of time and track progress. This can be achieved by having regular review of tasks to be accomplished and tracking schedule adherence. While project manager is looking at overall adherence, a consultant should be tracking tasks associated to him/her. Alarm should be raised in case of schedule slippage.

Quality management: “Quality” refers to the ability of a process, or product to satisfy both stated and implied needs. Often, project quality is decided by quality of the solution provided and documentation generated for future reference. Quality of solution, documentation and test results have direct bearing on customer satisfaction and effort, schedule and cost of a project. A consultant, we must understand cost of quality.

Risk Management: A risk is something that may happen and if it does, will have a positive or negative impact on the project. “That may happen” implies a probability of occurrence is less than 100%. If it has a probability of 100% – in other words, the event is certain to happen – it becomes an issue. A consultant must be in a position to differentiate between Risk and Issue. A risk must also have a probability something above 0%. It must be a chance to happen or it is not a risk. A consultant, is responsible to observe and bring to notice of project team and stakeholders, any event or activity that may jeopardize project. An early warning will help is working towards mitigation plan.

Communication management: With projects being executed from multiple locations with people aligned to different cultures; dealing with coalitions of people coming together with multiple loyalties, intersection of the organization needs to be managed. It is recommended to understand communication plan and escalation matrix ahead of time. Managing communication, escalations can effectively be done with good understanding of project management.

Does it mean that consultants who do not know project management are unable to execute the projects? It is not about just executing the project; it is all about executing project effectively.

In conclusion, Project Management has become indispensable to the consultants and they form the basis of project success.