WELCOME to The 2018 Kerzner Lecture and International Project Management Day November 1 FEATURED SPEAKER Prof. Jeffrey Pinto, Ph.D. u Andrew Morrow and Elizabeth Lee Black Chair in the Management of Technology. u Lead faculty member for Penn State’s Master of Project Management program. u Author and editor of over 23 books and 120 scientific papers. u Tw o -time recipient of the Distinguished Contribution Award from the PMI (1997, 2001). u PMI’s Research Achievement Award in 2009 and International Project Management Association’s Research Achievement Award in 2017. u Consulted widely in the US and Europe on a variety of topics. When the Unexpected Becomes the Expected … Which Becomes the Accepted Jeffrey Pinto, Ph.D. Penn State University Project Governance u The use of systems, structures of authority and processes to allocate resources and coordinate or control activity in a project. Means of Governance u Through top-down methods that primarily involve upper management oversight. u Through market or competitive mechanisms that allow comparison across projects. u Through professional standards of best practices. Dynamic Tension STANDARDS OF BEST PRACTICE “NORMALIZATION OF DEVIANCE” “Normalization of Deviance” u Space Shuttle Columbia disaster u First Flight on 12 April, 1981 u 28 Total Flights u 160 Crew Members u 4,808 Earth Orbits u DOZENS OF REPORTED CASES OF FOAM INSULLATION STRIKES AGAINST FUSELAGE u Columbia Destroyed on Reentry (1 Feb 2003) Costa Concordia u On January 13, 2012, the Carnival cruise ship hit rocks off Giglio Island u 32 of the 4,252 passengers were killed u The course was unapproved but tradition allowed for “ship salute” publicity stunts Costa Concordia Disaster “Carnival directors not only approved, but promoted the ship salutes as a convenient, effective marketing tool.” The Phenomenon? “Nomalization of Deviance” u Well-intentioned organizations become desensitized to deviations from the norm. u “Unexpected becomes the expected which becomes the accepted.” u In the Columbia example, insulating foam strikes became an accepted phenomenon of launches. u For Costa Concordia, risky ship salutes were the norm. Our Study u Interviewed 21 Project Managers in 3 Organizations – 1) Multinational EPCM, 2) Computer and IT Contractor, 3) Medical Device Manufacturer u “Consider examples in your organization of gradual processes through which unacceptable pm practices have become accepted and standardized.” u Search for Common Themes How Does NoD Affect Project Management? u Project Proposals and Strategic Misrepresentation u Client/Contractor Relationships u Planning and Scheduling Dynamics Normalization of Deviance (NoD) Effect #1 u Project Proposals and Strategic Misrepresentation u In public projects, it is the norm to low-ball estimates and bids in order to get a project “on the books” u Lack of clarity in accountability makes it tough to find a culprit (and, hence, a “fall guy”) u Use of contractor scapegoating is a common side effect Examples u California High-Speed Rail u 2008 estimate: $33 billion u 2018 estimate: $200 billion and climbing u Honolulu’s Elevated Rail Project u “Dear Mr. President, please cancel our project!” u Boston’s Big Dig u Olympic Games Bidding u Rome’s response: Thanks, but no thanks NoD Effect #2 u Client/Contractor Relationships u Where did the marriage fail? u What does “trust” mean to them? To us? u Getting rich on change orders is not a long- term relationship builder u One Cause: Sales versus Engineering u Decoupling sub-group rewards from the project’s “whole” outcomes u Another Cause: Rival Camps Mentalities In Practice, What Does This Dynamic Resemble? NoD Effect #3 u Planning and Scheduling Dynamics u Optimism bias u Massaging the plan u End date-driven schedules u Superficial risk management u Undermining Good Faith Efforts to Develop Workable Plans Breeds Cynicism and Demotivation u Telling the bosses what they want to hear Implications? u Up to 200% schedule and budget overruns are viewed as the “norm” in many organizations. u Our Project Management Practices are Fundamentally Self-Defeating u Short-term results vs. Long-term relationships u Cutting corners u Willful blindness to self-correction (“But it works fine this way!” u “Management, at all levels, in many organizations, creates, by their own choice, a world that is contrary to what they say they prefer and contrary to the managerial stewardship they espouse” u Argyris, 1990 Three Organizational Failures u Project underperformance is a function of opportunistic behavior by key interests leading to regular approval of non-viable projects u Performance problems are the result of misaligned or underdeveloped governance mechanisms u Performance problems have, at their heart, competing project cultures Echoes “Functional Stupidity” u Incapacity or Disinclination to Critically Reflect on what we are Doing (Reflexivity) u Refusal to Understand Why We are Doing It (Justification) u Refusal to Understand the Consequences of Our Activities Beyond the Immediate Task at Hand (Substantive Reasoning) So What’s the Good News? u These NoD Behaviors are Visible! u Remember, these behaviors are not hidden; they are simply accepted u We can Usually Link Cause and Effect u “Doing this is leading to that” u Solutions May be Hard, but They are Often Clear (and Measurable) What is the Role for Governance? (1/3) u Analyze Standard Operating Procedures u May require “fresh eyes” u The Inside View is not our friend! u Educate Organizational Members u Remember: NoD has become accepted behavior u Show why these behaviors are wrong (present evidence) u Identify gaps between “accepted” and “expected” What is the Role for Governance? (2/3) u Clarify Standards u Devil is in the details – Who clarifies? What standards? u E.g., PMI’s Code of Ethics and Professional Conduct u Push for Transparency u Remember that NoD is, at the core, a failure of culture What is the Role for Governance? (3/3) u Reward Compliance u People aren’t stupid; you get what you reinforce Fundamental Questions u First: In the Governance of Projects, where does the “Normalization of Deviance” lead us? u Second: What Role does the “Politicization” of Project Estimation and Control Play in Failure? Fundamental Questions u Third: How do we Begin Charting a Path from the Present to the Intended Future? u Who has to be on board? u How do we gain buy-in? Thank You! Questions? Jeff Pinto [email protected].