Monday, March 24, 2014

Dear PM Advisor. Mar 24, 2014

Dear PM Advisor,

I am a team member on a project and my Project Manager is strict about me meeting my activity deadlines. So I add a buffer when she asks me how long an activity takes. Recently I admitted I was doing this and she got real mad at me. She gets a buffer; why shouldn't I? 

War On Buffer in Cambridge, MA

Dear War On,

Buffers are a very tricky thing. Let's take your example to the extreme to see why not everyone should get a buffer and then show you why the way your PM is acting is correct.

Say the project is composed of a bunch of activities and all the team members add 25% as a buffer to the schedule and cost of each of these activities. Then their functional managers add another 25% to ensure their departments don't look bad. Then the PM adds 25% to make sure she can hit the baselines. The Steering Committee adds 25% before they decide if they want to pursue it. What does this do to a project that should have taken a year and cost $1,000,000?

12 mo x 1.25 = 15 mo. $1,000,000 x 1.25 = $1,250,000 (Team Member buffer)
15 mo x 1.25 = 19 mo. $1,687,500 x 1.25 = $1,562,500 (Functional Manager buffer)
19 mo x 1.25 = 23 mo. $1,562,500 x 1.25 = $1,953,125 (Project Manager buffer)
23 mo x 1.25 = 29 mo. $1,953,125 x 1.25 = $2,441,406 (Steering Committee buffer)

So our project more than doubled in size by adding all these buffers. Sounds good to you, right? But the steering committee may look at this and decide the project is not worth doing. And your leaner competitor will beat you to the market. So you won't be doing projects much longer here either way.

Buffer given out it is rarely given back. If you realize that the three day activity has been buffered to seven days, you probably won't start it right away and you won't feel the pressure to finish it in three days. So you'll start it on day three and finish it on day seven and feel proud of your accomplishment.

Here is the right way to add buffer to a project:

  1. Each Team Member estimates the activity duration and cost given the most likely scenario while feeling pressure. They don't add buffer.
  2. The Functional Managers review the TM's estimates and make adjustments if they think the TM made errors. They also don't add buffer. 
  3. The Project Manager adds up all the costs and durations and determines the overall budget and schedule for the project. She also looks at the risks associated with this project and suggests a buffer based on all the known unknowns. She adds that to the request to the Steering Committee. 
  4. The Steering Committee adds a buffer to account for all the things that go wrong on projects that we don't identify during the planning session. These unknown unknowns are taken care of using the Management Reserve, usually around 20%.

Let's look at what this does to our project:

12 mo x 1.00 = 12 mo. $1,000,000 x 1.00 = $1,000,000 (Team Member NO buffer)
12 mo x 1.00 = 12 mo. $1,000,000 x 1.00 = $1,000,000 (Functional Manager NO buffer)
12 mo x 1.10 = 13 mo. $1,000,000 x 1.10 = $1,100,000 (Project Manager Risk buffer)
13 mo x 1.20 = 16 mo. $1,100,000 x 1.20 = $1,320,000 (Steering Committee Management Reserve)

Now our project has an appropriate buffer but is still doable. The Team Members will feel pressure but they can accomplish their work.

But pay close attention to how we use this buffer. When you estimated three days on an activity, you need to do it in that time. Even though the overall project's schedule has been increased by 32%, you don't get to use that on every activity. That buffer belongs to the PM and she gets to distribute it when needed. She should be stingy with it. Remember it was placed there for Known Risks and Unknown Risks.

So you get three days for your activity. If you run into a problem you hadn't expected or hit a risk you had identified and you need another day, the PM should provide this from her four-month buffer. If you finish the next activity a day early, give that day back to her so she can add it back to the buffer. She will need every day she can get for that big problem that hits every project.

Wow! Long answer for a simple question but that was an important question that a lot of people get wrong.

Good luck,

PM Advisor.

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