Gaming the Process

I was enjoying a good book lately, “In Search of Business Value” by Robert McDowell and William Simon. In it a particular quote captured my attention. It was made by Lawrence Baxter Executive VP of Wachovia Corporation who was talking about portfolio management. “People can game the process,” he said. I was struck by the comment mostly because it is so true. For those of us working on implementing systems for project portfolio management, the key element that’s easy to forget is the human factor. Once the rules of a game are understood, people will naturally work towards turning the game to their advantage. I’ve seen a number of project systems deployed where the organization has gone to extreme lengths to implement a process to prioritize projects and the allocation of resources to them only to find that months later, project priorities haven’t changed much.
The problem comes down to how to create the rules of the game and then how you referee those rules. When we think about the rules themselves, it’s critical to press as much as is humanly possible for empirical measures. The degree to which the measurements will be subjective is the degree to which they can be easily manipulated.

Consider a common approach to portfolio project management. Some of the common measures which are implemented into a scoring formula might be “return on investment”, “alignment with corporate strategy” and “degree of risk”. All of these measures can have very wide degrees of subjective measure within them. These scores will all often result in some numerical value which seems to add to their legitimacy but let’s take a deeper look.
The return on investment factor depends on cost, expected return and the speed of that return. The expected return and the speed of that return are estimates and somewhere in those estimates will almost certainly exist some subjective analysis. The alignment with corporate strategy is another common yet critical element which is easily abused. After all, everyone would like to assume that their particular project is the one which is most important to the organization. A “degree of risk” factor also potentially involves a high degree of personal analysis and is therefore often coloured by the perspective of the person delivering that analysis.
When all these factors are added, up a mathematical formula ranks the projects in a portfolio view so that an evaluation or management team can determine if projects are able to move forward or not and if they should get higher or lower priority access to resources.
In organizations of virtually any size, the desire of project managers to get higher priority access to resources is universal so it shouldn’t be surprising that people are ‘adjusting’ their analysis of certain factors to enable their project to score better in the portfolio view.
The result is often an analysis which doesn’t pass a reality check with the evaluation team and thus devolves into a subjective review of what the team thinks is “really important”. This carries the significance of whatever perspectives the members of the evaluation team have and is often both frustrating and ineffective.

In the worst case scenario, the project and portfolio management tools and even methodology are seen as at fault and abandoned.

There are ways to protect yourself from this scenario. The first is to spend a bunch of effort when creating the portfolio management rules. If you’re creating a project stage-gate system, then you want to ensure that the factors that are measured have the most objective values possible and can carry an audit if need be. While I always dislike telling Finance people how important they are, it’s worthwhile taking a page from the finance book by considering the system from an audit standpoint. Imagine that an audit team has arrived to ask you to justify why money was spent on one project rather than another. You’d need to justify each of the measurements contained in the portfolio analysis. There will only be a handful of such measures so the work doesn’t seem that daunting at first blush. Remember though, you’ve got to think like this is an audit. Your job is to take each factor and trace it back to the source data, the source input that made up the measurement. Whenever you find a subjective entry, look and see if there isn’t an objective (measurable) input that could be used instead. This exercise alone will almost always yield interesting results.
The second exercise is to look at the referees. Imagine in a hockey game (I know, it’s hard to remember hockey) if we had lots of rules but no one would referee the game. In very little time the game would devolve to chaos. A process is only as good as the people who follow it and looking at the whole tracking of the process is critical.
Start with who the referees are. Are they as impartial as possible? Are they skilled in how to evaluate the projects they are presented with? Do they understand how the process was designed and what results it needs to produce? Sometimes just doing a workshop for the project evaluation committee who oversee your portfolio management is enough to return the whole project portfolio analysis exercise to the right path.
There is no such thing as a completely impartial judge however. Virtually anyone with enough knowledge about the project management process in an organization will also have a bias oriented around how they participate in the process. This can be mitigated by balancing one perspective from another or in appointing a facilitator who will oversee the process itself.

Just putting attention on the following of the rules will often be enough to make a big dent in the gamers’ plans.
Now, for those of you thinking “Oh no, more effort in the PPM process!”, you are absolutely correct. The challenge with any enterprise process is embedding the idea that effort in the improvement of the process is continual. Some part of your organizational budget must be devoted to maintaining and improving the process on a continual basis.
For those of you following Project Maturity Model thinking, I think this is the most exciting aspect of moving towards a PMM model. While there are numerous PMM models on the street, virtually all of them show the notion of a continuous improvement of the process as the highest point in the process. The degree to which this kind of thinking is adopted by our industry is the degree to which we can see a shift towards continual improvement of the project management process within an organization.

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