The Regenerate Web

I have been thinking about this topic of whether actions add up to produce results for a while and recorded this eight minute audio post. Check it out.

Prescription Instructions

1. The magic pill must be taken, by managers, once per week, on Monday.
2. The magic pill has no effect on the manager during the week until 40 work hours have been logged.
3. Once 40 work hours have been logged, the magic pill prevents the manager from thinking about work activities.
4. Blackberries and remote email are considered work activities by the magic pill.
5. If the manager persists in thinking about work activities, the magic pill will shut down conscious thought and make the subject sleep for a temporary period (naptime).
6. In most cases, the magic pill has been shown to change the work habits of managers, who now know they must be effective within 40 work hours per week.
7. In clinical trials, in some cases, side effects of the magic pill have improved family and social activities.

Think about this magic pill. If you took the magic pill, what habits would you change to become more effective?

The use of 3 point estimates is fraught with statistical integrity problems. Don't elicit estimates in this way.

While many will have anecdotal evidence of this working for them personally on small self contained projects, the issue of estimating impacts enterprise, multiple supplier, and integrated project teams (IPTs).

Summary of the Three Point Estimate Approach to Cost and Schedule

• The estimates are biased values
• The estimates are not anchored to the underlying probability distributes
• The estimates are not correlated with the other estimates in the project network or cost structure model

This approach starts with two primary sources. Effective Risk Management, Dr. Edmund Conrow, AIAA, 2003 and "Judgment Under Uncertainty: heuristics and Biases," Tversky and Kahnemanm Science, Volume 185, 27 September 1974.

People often rely on a limited number of heuristic principles that reduce complex tasks of assessing probabilities and predicting values to simpler judgmental operations. These heuristics can lead to biased assessments of probability. Three such heuristics, first discussed by Yversky and Kahneman, include adjustment and anchoring, availability, and representativeness.

The broader discussion of these biases can be found in the full length discussion in Judgment Under Uncertainty: Heuristics and Biases, Cambridge University Press 1982. This is a primary source work. Conrow and others have derived the impacts from this material. Primary impacts can be found in Complex estimating problems in software development, large construction, oil & gas capacity estimating (field production capacities), and economics.

As stated by Tversky and Kaheman: "In many situation people make estimates by starting from the initial value that is adjusted to yield the final answer." The judgment heuristic is called "adjustments. Adjustments are typically insufficient - different starting points yield different estimates which are biases toward the initial values (hence the term anchoring).

The consequences of adjustment and anchoring lead to an underestimation bias of potential minimum and maximum values associated with the likelihood of an event, a duration, or the probability distribution representing these activities.

So Now the 3 Point Estimate Problem - Part 2

Many of the probabilistic questions (what is the likely duration of the task?) with which people are concerned belong to one of the following types:

• What is the probability of an object A belonging to a class B?
  
• What is the probability that process B will generate event A? 

In these cases, people often rely on representativeness in which the probabilities are evaluated by the degrees to which A is representative of B, that is, by the degree to which A resembles B.

This is what happens when you ask a developer or planned to define the Most Likely duration for work and then ask what is the upper and lower limits of that duration. A Naval Research study and studies in the oil & gas field production estimating domain  have clearly shown that the order in which you ask those question results in statistically significant difference in the estimated values.

But There is More

The heuristic above is called representativeness and it affects risk related decisions (duration estimates are actually risk estimates - the risk of completing on or before a specific date). This risks include:

1. Insensitivity to prior probability - the Bayesian statistical impacts spoken about by K in Bayes Theorem for Project Managers.
2. Insensitivity to sample size - this is the classic anecdotal evidence of "it works for me on my sample projects, so it must work in general."
3. Misconceptions of change - the drawing of a triangle or any arbitrary curve, placing to end points and marking the peak of the curve and drawing conclusions in the absence of any confirm that this pseudo-probability distribution has any connection what so ever with reality. Or worse, reverse engineering a probability distribution curve to fit the data for one project and then generalizing that process to all projects in the universe. This latter is how the Beta curve, with fixed symmetric standard deviations resulted in the PERT formula. PERT can have up to 27% unfavorable bias in the presence of coupling between tasks.
4. Insensitivity to predictability - again a Bayesian problem.
5. The illusion of validity - no calibrated variances.
6. Misconceptions of regression.

It's the first of these heuristics that is the source of the exclusion of the 3-point process as practiced by many - asking the subject matter expert for the three values.

When faced by ambiguity or uncertain information, people have a tendency to interpret information that confirms their beliefs; with new data they tend to accept information that confirms their beliefs but to question new information that conflicts with them.

Improving Risk Communication, National Research Council, National Academy Press, Washington DC, 1989.

Conclusion

Making the 3 point estimate process the basis of project cost and schedule estimating is very sporty business. For personal projects, projects where you are the personal lead, have a small group of friends working the project, or the project is essentially self contained with your small group of friends, the risk is lower.

If your project is being implemented in a larger context, by essentially strangers - contractors, teams beyond your direct experience and control (other staff teams, development teams from other locations, subcontractors, 3rd parties, COTS providers) - you're taking on risk and may not know it, be able to quantify it, or even characterize this risk profile.

This is a primary source of project failure - there is no credible source of cost and schedule estimates when you simply ask some "what is the most likely, upper, and lower limits of cost or duration." You've planted the seeds of late and over budget and may not even know it.

"I know planning is important, but I have so much to do today," Lauren explained, hoping I would let her off the hook.

I nodded my head. "I know you have a lot to do, today. How much of what you do today will be effective?" I asked.

"What do you mean? I have phone calls to return, emails to answer, meetings to go to. I have a couple of employees I have to speak to about things they were supposed to take care. I have two projects that are behind schedule. A lot of things piled up over the past week."

"How much of what you do today will be effective?" I repeated.

"Well." Lauren stopped. "I know some things are more important than other things."

"And, how do you make that decision? How do you know what you do is effective? How do you know what you do is important?" Lauren's posture shifted. She backed off the table between us. She was listening. "I will venture that 80 percent of what you do today will be wasted time and only 20 percent of what you do will be effective. How will you know you are working on the 20 percent?"

A recent post at PM Hut describes the process of capturing 3-Point estimates for schedule. This is an example of Yogi's quote in action

In theory there is no difference between theory and practice. In practice there is. - Yogi Berra

While it may be appropriate in the classroom to teach about the 3 point estimate process - minimum, most likely, and maximum - it is not appropriate in practice. This does not mean there are not gobs of people out there doing this. It doesn't matter how many people teach this, how often it is said, it's simply not good practice.

Here's why:

• If you ask someone to estimate how long something will take by having them think about the Most Likely duration, they will for the most part actually think about the "average" duration. The most likely duration is the value that appears most often if you were to ask a group of people the same question. The Most Likely is the Mode of the samples of that question. It is the value that occurs most often.
• Now when you ask someone the estimate what the least value the duration might be. Or ask them what the most value the duration might be, you'll get statistically significant different values, depending on the order you ask that question. This understanding has been developed by many organizations ranging from the US Navy to petroleum engineers estimating the contents of gas reserves.

So What's the Point Here?

Do not, I repeat Do Not ask for 3 point estimates of duration and cost. Instead as for "variances" of the probability distribution around the Most Likely number. Worse case ask for variances around the Mean (the average). But care must be taken for the measure of the Mean. Since the mean is a value formed by adding all the possible measures, it itself is subject to variance. Most Likely - the Mode - is a simple counting of the most recurring observed value - it is ordinal.

Why Is This Important?

When you ask for the Most Likely, High and Low, you can get up to 27% estimating bias on the estimates. This bias can be favorable or unfavorable. No matter, it is a bias.

The way to do this for duration and cost is to construct a variance ranking processes. Here's a sample table.

Now there are several important things about this table:

• The risk level classification is not a number, it is a letter. This avoids the natural tendency to do arithmetic on the risk ranking. This is a common failure mode for anyone using the PMI style risk management. Take the probability of occurrence and multiply it by the consequential outcome to get a risk rank. NOT.

Both the probability of occurrence and the consequential outcomes are probability distributions, represented by integral equations. Multiplication is not an operator on integral equations - except in their Laplace Transform representations.

• The descriptions of the risk classification represent the operational aspects of the project for a specific technology or process. This means that the words in the classification column can change depending on the problem domain. For manned space flight a Risk Classification D, may have different words, and certai9ntly have different variance ranges than a risk variance D for an Oracle ERP system roll out.

What we need is a table like this for every major risk category.

A similar table can be built for the consequential outcomes. Then and ONLY then can the risk matrix be constructed.

The final advise is risk ranking in terms of variance should be geometric.

The reason you want to do this is that the separation of differences is not linear, it needs to be geometric. The scale 1, 2, 3, 4, 5 means that the difference between 1 and 2 is 100%. The difference between 4 and 5, is 20%.

Here's a Live Example

Connecting the dots - from NOT doing three point estimates - to doing probabilist impacts for the probability of occurrence and the consequential outcomes is shown in the picture below.

So:

• No three point measures asked to the engineers - only variance estimates for each class of risk
• No arithmetic between occurrence and impact
• Narratives of the measures (in the NASA example above they use numbers - not good - use letters)

I will be sending out the next edition of my newsletter, called Lead Well, this coming Monday. I try to make the content of the newsletter unique to what's on the blog because I know many of you subscribe to both. If you are not currently getting the newsletter, click here to sign up. We do not use your email to spam you, we just send the quarterly newsletter.

This quarter's newsletter is focused on Organizational Agility. Articles will offer a way to look at what agility IS and IS NOT and how it differs from change management and change acceptance. I am shairng a list of questions you can use to assess your organization's agility - and how agile YOU are as an individual leader and manager. It is a meaty edition of Lead Well and I hope you sign up to receive it.

"Last week, you assigned this task to Dale, but you ended up doing it," I observed. I could tell Sondra was very pleased with the project result, but miffed that she spent the weekend working when Dale had all of last week to work on it.

"I thought about, what you said, being more explicit about my deadline. Next time, I will try to remember that," Sondra replied.

"More than that, the target completion time is essential to the task assignment. Dale gets all kinds of assignments. To complete them, he has to use his own discretion, primarily about pace and quality. Most of the decisions he makes are about pace and quality. Without a target completion time, he has no frame of reference in which to make his decisions. His ASAP will ALWAYS be different than your ASAP. ASAP is not a target completion time."

Sondra smiled. I took a look at her project. It was really very good. She will make her client meeting today and life will go on.

I have heard a few people assert that employees are not disengaged, they might just not be engaged in what we want. Under this scenario, the job for managers is to redirect the employee's engagement. And I think this is true for some employees and managers need to learn how to tap into their employees' engagement.

AND I also think that some employees are not engaged - not engaged in what we want, not engaged in work, not engaged in their families, not engaged in their community, not engaged in their health, not engaged period. This is a tougher management challenge because the root cause likely has nothing to do with you.

A few years back, I might have been in the "everyone is engaged" camp, but I have seen and met several folks who are not engaged in any aspect of their lives, and honestly, I have suffered a few temporary bouts of disengagement myself. It feels quite aweful.

What is a manager to do? The folks I have known have benefited from help getting their lives refocused. A few, however, were so disinterested that they did not want to make the effort to try. Does your company have resources to allow folks coaching? Have a conversation with your employees and discover if there is any way you can support them.

Health, wealth, and success - or lack of these things - can take a toll on folks and might be the cause of disengagement. As a forty-something woman, I have had suffered the usual middle age biochemical changes (lower hormones, low thyroid, sleep disturbances, vitamin D deficiency, and several other imbalances). Apparently my body thinks it is done and ready to be put out to pasture..... I share all this information not to drum up sympathy (cash and gifts are always welcome) but to highlight a common health cause of disengagement for "mature" professionals. There are other reasons and causes. And think about the toll the economy has taken on some people. And then there is seasonal depression. And, and, and.

As you know if you have read Two Weeks to a Breakthrough, I am a big supporter of taking ownership and turning things around. And even though I wrote the book about generating breakthroughs, I have sometimes struggled to get engaged - in anything.

The point of this post is to encourage managers to build the close relationships they will need to learn how they can help their employees do their best work. If you have employees who seem unengaged in most aspects of their lives, do what you can to help them get the support they need. 

Building an engaged team is worth the effort and I think it is more complex than, "they are engaged, but just not in what you want." And for those of you who question whether disengagement caused by outside factors should be of interest to managers, here is my take. The primary job of the manager is manage and lead so that their employees can, and choose to, do their best work.

What do you think? Am I full of it? Do you think all employees are engaged in something?

I was driving on the freeway today behind a van that had the word "voltage" in bold red letters across the back doors. I started thinking about voltage and decided it was a great term to describe energy in the workplace.

According to Wikipedia, voltage is:

The voltage between two points is a short name for the electrical force that would drive an electric current between those points. Specifically, voltage is equal to energy per unit charge. In the case of static electric fields, the voltage between two points is equal to the change in electrical potential difference between those points.

So the voltage in your workplace could be described as the amount of energy available to move between people. Cool. I am digging this concept of energy transfer. What's energy if it can't travel through the work, through people, and through the organization? Like a drag racing car at the starting line, burning rubber, but not going anywhere. I'll stop mixing metaphors, now.

What can managers do to increase both voltage and energy transfer?

• Structure workplace communication so that time is set aside to share information.
• Reinforce collaboration.
• Create interdependent tasks, projects, and measures.
• Help employees build relationships - this may not happen on its own. Structure the work so that people get to know each other.
• Provide a challenge - give people something that gives them energy.

And of course, it is important to model energy and energy transfer. Give energy, receive energy, give it back again.

In Focus Like a Laser Beam, I wrote about how generating focus is a lot like shining a laser beam (the particles in lasers are super excited). Yes, that is another metaphor, but it's similar in a way...

Is your department high voltage? If not, what's your part in that?

I am guessing some of you might bring up the fact that high voltage can be deadly and perhaps voltage is not always a good thing. Same with teams. The voltage needs to be high enough to create the sparks of excellence, but not so high that the workplace becomes overwhelming, draining, and one big pit of drama. But I think that most workplaces are so far away from being too high in voltage that you don't need to worry about it too much.