WELCOMEtoThe 2018 Kerzner Lecture andInternational Project Management DayNovember 1

FEATURED SPEAKERProf. 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 Two-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 UnexpectedBecomes 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 Dynamicsu Optimism bias

u Massaging the planu End date-driven schedules

u Superficial risk management

u Undermining Good Faith Efforts to Develop Workable Plans Breeds Cynicism and Demotivationu 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 acceptedu 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 Pintojkp4@psu.edu