April 8, 2015

On-time projects are everyone's fantasy

George Vairaktarakis
George Vairaktarakis, Ph.D., is the William E. Umstattd Professor of Industrial Economics and Professor of Operations at the Weatherhead School of Management. 

But why so? Doesn't management always emphasize timely delivery and the importance of designing a new product or entering a new market on time? Isn't the workforce conscious of time, especially in light of the consequences of missing important deadlines? Is "experience" the answer? Probably not; in the project world a mere 10% of projects are completed on time. Maybe the reason is that the importance of projects is overrated. But then why is the word "project" in nearly everyone's business title?

Whenever answers are hard to come by, something tells me nothing is as it seems – right out of a spy movie – which prompts examining the virtual reality that has become our second nature in real-world projects.

First up, the D-word: deadlines. When an activity duration is determined – giving new homework to a student, say – the student determines the approximate amount of time it takes to securely finish the activity; however, that estimate is based on the most pessimistic outlook a mind can conjure. What if the lab is closed? What if there is a historic amount of snowfall? What if I get busy with my other courses? As a result, the student fights tooth and nail to negotiate two weeks for the homework, even though it only takes three hours to complete.

Having fought the good fight and having won ample time for an activity in the business world, student syndrome kicks in: an operator takes upfront whatever slack was negotiated for the activity, trusting that Murphy will never strike. How do I know? Because the first queries I ever receive from students are always one day before the deadline they negotiated!

I don't pay monthly salaries to my students. The majority does not have two kids and a mortgage, and most of them are financially supported. In the real world, however, operators are dependent on their monthly salaries from the firm to support their families and meet a host of financial obligations. This contrast highlights how important it is that individuals' deadlines are well-padded in the real world. This is our first lesson:
Setting deadlines is a lost cause for firms - it guarantees longer-than-necessary project durations.
Either management has to discover new negotiation and psychological tools or they should abolish deadlines.

Since every operator is so determined to meet hard-fought deadlines and projects are well padded by design, why are 90% of them late? To answer this question, consider flipping a coin. This is exactly what a student does when he starts homework one day before the due date. The coin will yield heads – the homework is submitted on time – or tails, resulting in a 50% expected on-time completion rate. In the real world, projects include hundreds of activities, some of which are bound to finish late just because some coin flips yield tails.

Those late activities are typically done by operators who became overloaded during the course of an activity, were involved with lots of administrative and little actual work, were traveling too much, or faced an unforeseen issue never encountered before. As it is impossible to prevent coins from turning tails, nothing can be done to ensure that individuals' activities will complete on time, even when student syndrome does not kick in. After all, if you asked a mathematician to estimate with 100% confidence how long it will take to lift a finger, the answer is: eternity. Why? Because 100% confidence must cover the possibility that a passing meteorite hands our project the fate its ancestor handed to the dinosaurs! How long would you say the last dinosaur project is going to take?

However simple an activity or diligent and creative its operator, some activities will always complete late. That's a fact. Suppose, therefore, that my predecessor in the project incurred delays in his activity, and the project is handed to me, say, one week late. Doesn't this mean that my deadline is automatically extended by one week? Of course it does. For if I deliver a week early, the next time I am given a similar activity I will not be able to negotiate a safe duration that I can meet with confidence. As a result, delays accumulate from one activity to the next throughout the project.

Suppose that I defy common logic and I do finish my activity one week sooner than negotiated. Why would I report it? If I do, my project manager will never let me pad my activities again. Instead, I would rather make myself look busy. That, too, has its basis in psychology. It is known as Parkinson's Law: Work is like gas, expanding to cover all available space (or time in our case).

So, if I happen to finish my activity one week early, my shrink can ensure you that I will suffer temporary Parkinson symptoms that will last for precisely one week. In the schizophrenic event that I do report the gain, the person to whom I hand the project next is not ready to start because he didn't expect me to finish early. Therefore, the project will waste my gains waiting on someone else's desk rather than mine. In other words, work gains are never reported. That's our second lesson:
A culture of deadlines causes activity delays to accumulate and gains to be left unreported.
Clearly, even if we decide to abolish deadlines, a new communication protocol is needed to measure project progress and incentivize the right behavior.

Fortunately, during the last 20 years, project management researchers at the Weatherhead School of Management and elsewhere have developed a method known as The Critical Chain Method that provides answers to the aforementioned gloom-and-doom scenarios. Every year, managers from around the country join our open enrollment project management offerings at the Weatherhead School of Management to learn how they can transform their organizations into pleasant, cooperative work environments where on-time project delivery becomes a competitive advantage rather than a chance event.

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