Social Impact Bonds

We've heard the adages many times. "It's cheaper to pay to reform people than jail them." "It's chaeaper to educate them than support them later through welfare." But if the governemnt is already struggling to pay for existing services, how are they going to make the investment that will result in the long-term savings?

How about issuing bonds? That works when you need to build a canal or a power plant and the theory is the same. They will pay dividends in the future to those who make the investment now.

An experiment is being run right now in Britain to test out the theories using the bond model.

An article in Saturday's NY Times explains the program:

The idea comes from various thinkers, social service experts and captains of industry in Britain who formed a group called Social Finance to build a social investment market there. It raised £5 million — about $8 million — from 17 investors in Britain and the United States,  The investors will get their money back only if One Service succeeds.   The bondholders are mostly charitable groups who would normally give money away; they were willing to be guinea pigs because of their desire to see this financial instrument succeed.

Convicts leave prison in Britain with £46 in their pockets and nothing more; often, they walk out of the prison gate alone. The One Service, meets everyone in Peterborough at the prison gate, even the prisoners who didn’t sign up for the service. They go to breakfast — usually at McDonald’s, at the men’s request — and then to the office. “Sometimes you see the person inside prison and he says, ‘I don’t need help,’” said Janette Powell, who runs the One Service. “But when you meet them at the gate they say ‘I’m glad you turned up.’ ”

Over the next six years, the recidivism rates of men released from Peterborough (all of them, not just the ones who become clients of the One Service) will be compared to the recidivism of a matched group of prisoners elsewhere. If Peterborough’s re-conviction rates are 7.5 percent less than the control group,the British government will repay the bondholders with interest. (If that threshold isn’t met, investors lose their money, which means that technically it is not a bond.) The better the recividism rates, the larger the payout for investors, which is capped at the equivalent of 13 percent per year over an eight-year period.

Massachusetts will be the first place in the United States to try one. The state is hoping to sign contracts this summer to back $50 million in bonds for two projects:one to help people coming out of the juvenile justice system make the transition to adult life, and another to house the chronically homeless.

This sounds like a great idea to me. If the program works, the government saves money. If it doesn't the government pays no money. And we finally get to test out these ideas. What do you think?

Dear PM Advisor June 24, 2012

Dear PM Advisor,

What is your advice when you badly need people for your project, and you got a very good resume, technically the person sounds very good, has mechanical engineering background. Communication skills are very poor with strong Chinese accent (phone interview). When your new employee arrived you are shocked. He has very strong neurological disorder. Can't communicate at all. Probably autistic. Covered with psoriasis and bowing and shaking all the time. Looks very scared.
From the moment he arrived, he grabbed IQ, OQ protocol and started to correct it.  Good quality results.
But client is shocked: Who is this person, Who hired him? He looks like an invalid. We can't trust him with our equipment.

What would you do in this situation. He is a good engineer, but bad PR.

Natasha in South Carolina.

Dear Natasha,

From the looks of the deliverables on this project, Installation Qualification and Operation Qualification protocols, it looks like you are running a validation project, not the next Project Runway. As such, the client is hiring a mind, a set of experience and someone who can do the work, not the next Fabio. It seems like this guy fits those requirements. He could be a quadriplegic with Ebola and still be perfectly acceptable as long as his deliverables are up to par.

The client seems to care what he looks and acts like. Is that fair? Unfortunately, if Jackie Psoriasis is sitting in a cubicle on-site, it does happen. They will get nervous and find excuses to get rid of him. And this can affect your job as a consultant with this company. They question your ability to hire good people to do their work.

Your job, as project manager, is to insulate the client from him. You have the social and presentation skills that he lacks. So be that intermediary, have him work remotely and show off the worker's results. Soon they'll forget about his appearance.

And in future, you always need to meet your fellow consultants before they arrive on the job site. If they are not fit for public display, seat them off-site and have them filter their work through you. You can show the client that you are saving them money by not having to pay for travel costs, cubicle space and commuting time.

If they insist that no-one works off-site, explain that the person has a disability that does not affect their work. Plan out his deliverables an a piece-work basis and bill the client accordingly. If they get billed fairly for good work, they'll ask for him again.

Good luck,

PM Advisor

Send me your questions at bfieggen@gmail.com

Thirty-eighth excerpt from 'Twelve Towers'

Gwilym was stumbling and blind from lack of air so he stopped for a few minutes, with hands on his knees, pulling air into his bursting lungs. He willed his body to obey the strident orders of his mind: Get to Huish and protect his sons. As soon as the oxygen returned to his leg muscles, he set off again toward Huish.

Once again, he remembered Mecca, his bewilderment at his predicament: Twelve years old and alone in the Meccan bazaar. He knew the language and customs of this place and knew that, as a headman, Escalbor had power in this town to hunt him down and kill him. His light coloring and height made him stick out, even in this trading town, so he must escape now. But leaving town meant either walking through the desert to the next town or joining a camel train. Both would be expected and he would be easily discovered by the sheik’s men. No. He needed to hide in the bazaar somehow, but not with any of the people that the sheik knew. He had to find someone right now who could protect him yet owed no allegiance to this sheik. He wished he knew enough about the local politics to know which clans hated Escalbor’s people.

Just then he saw the fringed garment and side-locks of an observant Jew crossing an alley nearby. Of course! Here was his chance. He ran after the man and followed him into the building. It was the back room of a trading establishment that bought goods from the caravans and sold them to local Meccans.

The man turned around and looked with surprise at Gwilym. “What do you seek, young man?” he asked.

“Sanctuary, Rabbi,” begged Gwilym and he told the man he was being hunted by Escalbor’s men.

The Jew looked frightened and ran to the doors to see if Gwilym had been seen entering his house. Seeing the vacant streets immediately to the rear of his store he became calm and listened to Gwilym’s story.

He introduced himself as Shebna ben Eliud and he promised Gwilym protection if he would stay inside and not make himself known to anyone else. Gwilym promised. Then the enormity of what had happened this morning hit him: his father murdered, himself hunted, his life and this Shebna’s life being in danger and he ran to the corner of the room and threw up. He burst into tears at the shame of defiling this savior’s house. Then he felt a comforting arm around him, a damp cloth on his face, wiping away his tears and vomit and he was led into a back room by the man’s wife. The woman sat Gwilym on a stool by the table.

The man explained the situation to his wife in Hebrew, not guessing that Gwilym could understand their tongue. “The boy’s father was murdered by Escalbor. He was that crazy Christian who asked about Joseph a few weeks back. We need to protect the boy until we can get him safely out of here.”

The wife nodded and turned to the stove where she produced some soup, ladled it into a bowl and sat in front of Gwilym, spoon-feeding him like a baby, murmuring calming words. Before long Gwilym grew tired and was taken upstairs to sleep.

He stayed with this family for three months, never letting on that he spoke Hebrew for fear of embarrassing them that he had understood their first words. He helped out in the back room, organizing their stores and learning the inventory system. He learned about the camel trade routes from China to Constantinople and Cairo. The two talked about their trades with merchants and customers and Gwilym learned all about how to negotiate the best deal. “Remember, Gwilym,” Shebna had told him, “The most money you make per hour are the last few shekels you add to a deal at the very end.”

In the evenings he talked with the couple and learned their story. They had been married for forty years and their children had long since moved away. Their oldest son lived in Jerusalem and was one of their trading partners. They were part of a small Jewish community in Mecca who were at the mercy of the whims of the sheiks and their families. The community had lent money to the man for some of his expeditions and he owed them but they knew that Escalbor’s father had once cancelled the debt and killed many Jews who objected. It was a tense relationship.

“Why did you protect me?” asked Gwilym of the man one day.

“Our people have been oppressed by others for most of our history and often have received sanctuary from the unlikeliest sources. This is our way of paying back past kindnesses.”

After three months, Shebna told Gwilym that he would be transporting him, along with a shipment of slaves to his son in Jerusalem. This motley group of various races was pulled from many countries to the south and east and was being brought to the slave market in Cairo. Shebna blackened Gwilym’s face and hair, told him to act mute and to trust the caravan leader. In this way Gwilym left town and was set free in Jerusalem.

To read the entire first draft in one shot, click here:

Projects always have problems

In my first formal Project Management training course I was taught to embrace project problems. Cadence told me that:
1. Projects always have problems
2. The earlier you identify problems, the sooner you can work on solutions
3. People who tell you that their projects have no problems are lying

This advice has always worked for me so I reserve a section in my status report for problems or issues.

Colin Powell's latest autobiography

This week I'm reading Colin Powell's latest book: 'It worked for me.' Lots of great leadership advice in there.

He addresses problems in Chapter Six:
"If your desk is clean and no-one is bringing you problems, you should be very worried. It means that people don't think you can solve them or think you don't want to hear about them. Or, far worse, it means they think you don't care. Either way it means your followers have lost confidence in you and you are no longer their leader."

What do you guys think of this advice?

Dear PM Advisor June 18, 2012

Dear PM Advisor-

I am a new project manager in a company, however once started, it seems more like a Program Manager role, and the role they call Coordinators are in truth, Project Managers, who occasionally coordinate on projects. Could you speak to the roles and communication protocols that exist in best practice between Program Managers, Project Managers and Coordinators? A lot or confusion exists over the interplay between coordinators and project managers. Can you help with this?" 

'Puzzled in Portland' 

Dear Puzzled,

Every company does things differently, that's why there is an organization called the Project Management Institute who has set itself the goal of standardizing terminology across the Project Mangement Spectrum. They have gone so far as making their book, 'Guide to the Project Management Body of Knowledge' (PMBOK) an ANSI standard.

We can look here for the definitions and find the following:

• Program Manager: No definition
• Project Manager: The person assigned by the performing organization to achieve the project objectives
• Project Coordinator: No definition

Not much help is it? While you may be a voice crying out in the wilderness, try to get your organization to simplify the three roles to the following job descriptions:

• Program Manager: Manages Programs which are made up of multiple linked projects
• Project Manager: Manages one or more projects
• Project Coordinator: Assists Project Managers in the administration of projects.  

So the coordinator may update Gantt charts, gather status, write status reports, meeeting minutes and set agendas. The Project Manager is responsible for the success of a Project, often using the assistance of a Project Coordinator. The Program Manager is responsible for the success of a Program, using many Project Managers to aid in this effort.

Think of the three roles like a functional organization. The Program Manager is the Director, responsible for managing many different managers and lots of related projects and ongoing operations while completing large business objectives. His communications with the project managers may be once or twice a month. The Project Manager is like a manager in the organization, managing one to four projects. She communicates with her team multiple times a day to keep the projects on track. The Project Coordinator is like the manager's administrative assistant, doing all the routine work, uncovering the problems while the Project Manager solves the big problems, removes the obstacles to the team's success. Communication is several times a day.

Communication moves up and down through these three roles in a functional manner also. The Coordinator uncovers a problem and tells the Project Manager. She tries to resolve the problem and, if it affects the overall project timeline or budget, lets the Program Manager know in case it affects the program.

The Program Manager realizes that this delay will cause a dependent project to finish ahead of the parent project so he asks another Project Manager to slow down their schedule. This Project Manager tells his team to slow down and his Coordinator adjusts the Gantt chart accordingly.

Does that help?

PM Advisor

Send me your questions at bfieggen@gmail.com

How democratic do we want Egypt to be?

A woman voted at a polling station in Cairo on Saturday. By DAVID D. KIRKPATRICK

When the Egyptian military dissolved Parliament this week, just before the presidential runoff that will likely result the candidate from the Muslim Brotherhood winning, what was that huge sigh of relief I heard? We stand here, that shining city on the hill, espousing Democracy to the world but we get nervous when the likely winners of the democratic process will be a party who wants to see a return to Shariah law. Is that fair?

If we consider that Shariah law in Egypt will likely result in less freedoms than the people enjoyed under Mubarak's dictatorship, maybe that is fair. We have Iran as a perfect example of what can happen. Are women better off in Iran now or under the Shah? How about political protesters?

Northern Africa has consistently resorted to military coups to repress the emergence of an Islamic party so it's no surprise to see it happening again. While an Islamist may win the presidency, with a dissolved parliament, the generals will hold the real power in the country.

Politics makes strange bedfellows and I see the American leaders bedding down with the Egyptian generals to head off an Islamist-led Egypt. But it makes me a little ill to see it. What happened to the passion we saw in Tahrir square last spring? Why did all these people choose to support a party that will take away their freedom? Why couldn't there be a moderate leader who could lead from a secular angle, bringing Egypt into the 21st century and putting it in the forefront of the region?

Kiwi invents wind power improvement

A New Zealand invention, designed to make wind power more efficient and cheaper, has been singled out by a renowned wind technology expert as one of the world’s leading new innovations.
The invention, Gyroscopic Variable Transmission (GVT), is the brainchild of New Zealander Mr Jega Jegatheeson. Mr Jegatheeson, previously an engineer with the former Electricity Corporation of New Zealand, has been working for over 15 years to solve the problems faced by the wind power industry of gearboxes breaking as a result of the massive wind gust forces they are subjected to.

“It’s widely recognised in the industry that the gearboxes cannot stand up to the incessant forces over time and many fail within as little as five to seven years. The costs of repairs and also the downtime are very significant and alternatives such as direct drive create other expensive problems,” says Mr Jegatheeson.
“Unlike traditional wind turbine gearboxes around the world, GVT technology doesn’t rely on gears and expensive electronics. It instead uses gyroscopic reaction forces to transfer the power from the blades to the generator with less stress on the turbine. This will significantly reduce costs – possibly as much as 50% compared to existing systems.”
Another feature of GVT is that it can handle more turbulent air. This means that wind turbines equipped with the GVT technology could be built on the edges of existing wind farms in places previously thought unsuitable. The result would mean significant increases in energy generated from an existing wind farm using the same infrastructure.
“We are currently trying to raise funds to build a large GVT transmission and test it in a full size working wind turbine. A major New Zealand power company has offered us a turbine for the trial, but the problem, as always, is the funding. We now have to look overseas and have interest from China and the UK at present. That’s the reality of developing such challenging technologies in a small country,” says Mr Jegatheeson.
“Wind power is growing at a phenomenal rate worldwide and it would be nice if a New Zealand invention could be powering the wind turbines of the future.”

Read the full press release