Improving Managerial Improving Managerial Decision Making Quality Decision Making Quality using a Systematic using a Systematic Logical ModelLogical Model

Shimon Zeierman

RAFAEL Advanced Defense Systems Ltd.

IntroductionIntroduction Quality management is reflected in the success of the

managed task, whether it’s project management, company management, quality management itself or any other type of management.

The success of a managed task us measured relative to the goals fixed for that task. A well established definition for task goals could

invigorate its success. Decision making is a substantial part of managers’

activities while doing their job. Improvement in the quality of decision making will

contribute to the improvement of the quality and the results of the management task.

Decision making according to guidelines derived from a systematic logical model helps to achieve the improvement so longed for.

The systematic logical model defines the primary managerial factors and the logical interrelations between them.

The presentation will show the implementation of the method for improving management quality in the specific environment of project management.

The Primary Factors of The Primary Factors of ManagementManagement

Each managerial domain is characterized by several key factors that maintain interrelations between them. Each managerial domain possesses a specific definition yet we can notice some common features to all mangerial domains.

Each managerial domain has three primary factors that characterize it and answer the three question: What? When? How much?o What should happen? This is the primary factor,

the first one, the one that expresses the motivation. The answer is: Definition of the product of the

managed task.o When will we need the task’s products? This is

the secondary factor, the one that expresses the constraint. The answer is: Definition of the time allocated for the

managed task.o How much resources are needed in order to

complete the task? This is the third factor, the one that expresses the shortage. The answer is: Definition of the resources allocated for

the execution of the managed task.

Primary Project Primary Project FactorsFactors

Allocated Time

Delivery mileston

es schedule

Allocated

Budget

Keep cost

within planned budget

Specified Scope

Performance

ReliabilityQuality

Cost...

Project Manager’s Mission is to Manage Project Manager’s Mission is to Manage and Deliver:and Deliver:

The Manager, The Manager, The Customer The Customer and and The Performing The Performing OrganizationOrganization

Each managerial domain is an operative world which is connected to a customer a customer that receives the products of the managed task and pays for it as well as to the performing organization that mediates between thethe customercustomer and the manager, supplies the resources needed to perform the managerial task and expects profit in return to the usage of these resources.o A project manager delivers products to the the customercustomer

and works within the frame of the performing organization.

o A CEO of a commercial firm sells products to merchantsmerchants and works within the instruction of his SVB.

o A manager of a public owned hospital supplies health to the citizen the citizen and works within the frame of the ministry of health.

o A technical manager in a project delivers products to the customer the customer and works within the frame of the Project Management Office.

The manager is responsible to coordinate his activities with the needs of the customer the customer as well as with the needs of the performing organization.

Primary Project Primary Project FactorsFactors

Allocated Time

Delivery mileston

es schedule

Allocated

Budget

Keep cost

within planned budget

Specified Scope

Performance

ReliabilityQuality

Cost...

In accordanc

e with Customer needs and Performin

g Organization goals

Project Manager’s Mission is to Manage Project Manager’s Mission is to Manage and Deliver:and Deliver:

Project Factors InterrelationsProject Factors InterrelationsThe triple constraintThe triple constraint

Scope

TimeBudg

et

Project Factors InterrelationsProject Factors Interrelationsa) The equivalence of value relationa) The equivalence of value relation

סדנת הצלחות וכשלונות בפרויקטיםקורס למנהלי פרויקטים

24.5.09תע"ש,

הרצאה מאת שמעון זיירמןסגן למו"פ ופרויקטים

מנהלת מערכות לחימה יבשתיותמנהל הגנה, חמח"ן, רפאל

Scope

TimeBudg

et

All three factors are equally important and are equally valued at project’s successful

completion

Preface: The Organizational Hierarchy Leading the hierarchy: The customerLeading the hierarchy: The customer, he

who makes the buying decision. Following: The performing organization Following: The performing organization that

adapts the product to the customer the customer needs, invests resources and makes a decision concerning the organizationalorganizational profit goal.

The third: The manager, he is the one who accepts operational decisions to support and materialize the managerial goals.

Project Factors InterrelationsProject Factors Interrelationsb) The hierarchical relationb) The hierarchical relation

Project Factors InterrelationsProject Factors Interrelationsb) The hierarchical relationb) The hierarchical relation

ScopeScopeHas to fit customer needsHas to fit customer needs

Has primary influence on time Has primary influence on time and costand cost

Time/ScheduleTime/ScheduleHas to be the right “Time To Has to be the right “Time To

Market”Market” Has primary influence on costHas primary influence on cost

Budget/CostBudget/CostHas to be affordable to Has to be affordable to

customercustomer Has primary influence on Has primary influence on

profitprofit

Scope=>Time=>Budgethierarchy is common to both customercustomer and performing organizationperforming organization

The The customercustomer makes makes project buy decisionproject buy decisionThe The performing organization performing organization sets profit goals sets profit goals

How do we define project How do we define project success?success?

Project success is measured, according to the equivalence relation between the primary factors, at the end of the management period, and in relation to the managerial goals set for the specific managerial task.

Successful management is the one that was completed while delivering the right product scope,

under the right schedule and the right cost.

Improving management quality and success is possible while exploiting the logic presented in the scheme of hierarchy between the primary factors of the managed task.

This logic is exploited to set guidelines to quality decisions be managers, as will be shown later on.

Before we do that, let us discuss the “right” managerial goals concept.

The concept of “right” in The concept of “right” in project goalsproject goals

The scope, schedule or cost are the “right” for the project when the following situation exists:

1.Fit customer customer needs, he is the one that orders and pays for the product.

2.Serve the goals of the performing organizationperforming organization.

3.Feasible using best estimated made by project manager and his team.

The hierarchy of stakeholders (The customerThe customer, the performing the performing organizationorganization and the project manager) is setting preferences in the process of defining the “right” goals.

“Right” is dynamic, alive and kicking, changes continuously with time from project kick-off to project completion:Definition of product scope may change or become clear with time.Project milestones schedule may be shortened or extended by stakeholders or by a default.Budget assigned may be changed during the execution period by stakeholders or by project actual track.

Ingredients of the Project Ingredients of the Project Management TaskManagement Task

• Project management task is comprised of the following sub-tasks:

• Planning• Build a plan that is aimed to reach all success

goals i.e. being on spec, on time and on budget.• Make decisions related to the design and

planning of the project on the basis of goals being the "right" ones known at time of planning while making all provisions for changes and updates as long as they are required.

• Monitoring• Monitor the planning goals and their “rightness”

relative to customer needs, performing organization goals and new data revealed during project execution

• Monitor project and identify deviation from plan• Corrective Actions

• Make decisions related to the redefinition of the “right” goals, if needed.

• Make decisions to update plans to adapt to new goals, if any, and to compensate for deviation from current goals.

Guidelines for decision making are based on the hierarchical relation between project factors:

First priority will be given to achieving the "right" specificationDecision should reflect top priority to reaching the “right” specificationAdverse effect on schedule and cost should be taken care of with further decisionsSecond priority will be given to staying on the "right" scheduleDecisions should reflect second priority given to staying on the "right" schedule (no spec compromised)Adverse effect on cost should be taken care of with further decisionsThird priority will be given to the "right" costDecisions to stay on the “right” cost should be taken (no spec or schedule compromised)Increasing efficiency of operations, exhausting cooperation with other projects conducted in the same performing organization, taking calculated risks etc.Last priority – when all other choices are fully exhaustedAddress the customer or the performing organization and ask for relief in specification, project milestones rescheduling or financial aid (budget increase or profitability decrease).

Decisions – the primary parameter Decisions – the primary parameter affecting project successaffecting project success

DilemmaA gap is observed in the actual vs. planned characteristic of product.How should the project manager react?Recommended DecisionImmediate initiation of further development to close the gap.Re-plan project by making decisions aimed at closing schedule and cost deviation incurred.ExampleA component is found to be less reliable than planned during verification tests. The "right" reliability is discussed with the customer and it is agreed that the specified reliability is crucial to project success. The decision recommended is to replace the component with a more reliable design. Project plans are changed to reflect this decision. An effort is invested in finding ways to complete the project on time and to reduce cost overflow to minimum.

Examples for Dilemmas and DecisionsExamples for Dilemmas and DecisionsA) The Specification GapA) The Specification Gap

DilemmaA way was found to close a deviation of schedule yet it requires an unexpected extra budget. How should the project manager react?Recommended DecisionApprove extra expenditure and initiate schedule deviation closureLook for ways and make decisions that will lower the extra investment to minimum. ExampleDelivery schedule of a purchased item appears to push the project out of the "right" schedule. Extra payment to supplier can expedite delivery.The extra payment is significantly lower than the direct cost of delaying project delivery schedule. There are still some funds left in the project budget reserved for unexpected-unplanned activities. The decision is taken.

Examples for Dilemmas and DecisionsExamples for Dilemmas and DecisionsB) The Time DilemmaB) The Time Dilemma

SummarySummary

The project task is to manage the building of a right product

delivered to the customer at the right time and on the right

budget, while leaving the performing organization with the

right profit.

Project , customer and performing organization environments

are dynamically interacting, continuously redefining the

“right” goals for the primary project factors.

A hierarchical relation between primary project factors is

suggested:

Prioritization rule is defined, to be used by project managers

while making programmatic decisions.

Proposed scheme was successfully implemented in several

projects.

Scope Time Budget

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