Transcript Adaptive Management Intaver Institute Inc. 303, 6707, Elbow Drive S.W, Calgary, AB, Canada Tel: +1(403)692-2252 Fax: +1(403)459-4533 www.intaver.com.

Adaptive Management
Intaver Institute Inc.
303, 6707, Elbow Drive S.W, Calgary, AB, Canada
Tel: +1(403)692-2252
Fax: +1(403)459-4533
www.intaver.com
Power of Adaptation
Will Polar Bears Be Extinct Because of
Global Warming?
Hopefully not, as
they are capable of
adapting to
changing conditions
Adaptive Management
Proposed by ecologists
C.S. Holling and Carl J.
Walters as a framework
for managing ecological
problems
Adaptive management of fish
stocks
Adaptive management is a structured and systematic
process for continually improving decisions,
management policies, and practices by learning from the
outcomes of previous decisions.
Agile Project Management
From the Agile Manifesto:
We are uncovering better ways of developing software
by doing it and helping others do it. Through this work we
have come to value:
Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
Main Principles of Adaptive Management
Organizational Principles
• Iterative decisionmaking: make
choices based on
learning from the
outcomes of previous
decisions
• Strategic flexibility:
avoid irreversible
decisions
Quantitative Methods
• Continuous
quantitative
analysis: multi-model
analysis and
hypothesis testing
• Measurement of
actual performance
PMBOK® Guide About Adaptive Management
The PMBOK® Guide (Project Management Institute,
2004) does not explicitly use the term adaptive
management.
However, you will find important information related to
adaptive management in two process groups: project
execution and project monitoring and controlling.
The project monitoring and controlling process group includes the
following project management processes:
•
Monitor and control project work
•
Integrated change control
•
Quality Control
•
Risk Monitoring and Control
Most Living Organisms Are Able to Adapt
Except one
creature
This creature is
the project
manager
Why? - Human psychology
Tendency to Be Consistent
People tend to resist any
inconsistencies for
themselves and others
The ability to change
direction based on external
input is an important skill for
project managers.
A police interrogation
technique is based on
an attempt to find
inconsistency in the
statements.
Sunk Cost Effect
Good example
X-33’s composite liquid hydrogen
fuel tank failed during testing in
November 1999.
X-33 investment: $912 million
NASA overcame the sunk cost
effect: a cost incurred in the past
that affects present or future
decisions. Sunk costs should
be ignored.
Lockheed Martin proposed to
complete the development of the
X-33 by replacing its two
composite liquid hydrogen tanks
with aluminum tanks. But NASA
concluded that the benefits of
testing the X-33 in flight did not
justify the cost.
Bad example
Concord project
“Guilt of Indecisiveness”
Organizations expect managers to
make decisions, even if managers do
not have enough reliable information
required to make these decisions.
Decisiveness is a clear plan that:
outlines when, where, and how to
collect missing information, and
when and how to make decisions.
Active vs. Passive Adaptive Management
Traditional Approach
PMBOK@ Guide
Reevaluation if Strategy Failed
Project
Strategy
Project
Planning and
Scheduling
Project
Execution
Project
Monitoring and
Control
Project
Evaluation and
Review
Passive Adaptive Management
Adaptive Learning
Iteration
Strategy
Iteration
Planning and
Scheduling
Iteration
Execution
Agile Approach
Iteration
Monitoring and
Control
Iteration
Evaluation and
Review
Active Adaptive Management
Adaptive Learning
Modeling
Iteration
Strategy
Hypothesis
Generation
Execution
Modeling
Modeling
Execution
Hypothesis testing
Iteration
Monitoring and
Control
Iteration
Evaluation and
Review
Should she kill her cow?
Or how people make irreversible decisions
1
2
$2/lb
$3/lb
Three
irreversible
decisions
3
$5/lb
Avoiding Irreversible Decisions
• Rule # 1: Always consider alternatives
• Rule #2: Try to postpone the most important
decisions for as long as possible, so as to
be able to collect new information
• Rule #3: Try to minimize the cost of
decision reversals
Continuous Quantitative Analysis
• Use multiple models (project schedules) to
plan and analyze the project
• Always perform project performance
measurement; use reality checks at each
project milestone
• Perform quantitative risk analysis to
generate actual forecasts at each project
milestone
Role of Project Metrics
Adaptive Learning
Modeling
Iteration
Strategy
Hypothesis
Generation
Execution
Modeling
Modeling
Execution
Hypothesis testing
Project Metrics are
used as part of active
learning and
hypothesis testing
Iteration
Monitoring and
Control
Iteration
Evaluation and
Review
Quantitative Analysis: Practical Example
Project schedule
What will happen with this
schedule if certain risks
occur?
Risk Breakdown Structure
Identify risks with
probabilities and
impacts
Track Actual Project Performance
Some tasks are
100% complete
Other tasks are
partially
complete or
incomplete
What will happen if the project schedule is based on
information about actual performance?
Adjust Your Forecast Based on Actual Data
Forecast: Low,
Most likely, and
High estimates
Original (baseline) project
duration
Project is partially
done (actual data)
Analyze and Forecast Costs With Risks and
Uncertainties
Cost forecast
(with risks)
Actual cash
flow
Original cost estimate
Monte Carlo cost risk analysis provides insight into validity of current cost
estimates
Quantitative Analysis of Iterative
Development Process
Risk
20%
Risk
20%
Scenario 1
Risk
20%
Risk
60%
Scenario 2
Monte Carlo risk analysis can be performed in Agile projects
Why You Should Mitigate Risk
As Soon As Possible
When a risk occurs can drastically affect your project outcomes
Is Your Company Ready for Adaptive
Management?
The Role of the Business Environment
A small test will help determine the
“adaptive management maturity” in
your organization.
Test Question 1
A young engineer comes to the senior manager with a
proposal to save $10 million on a $50 million project.
According to his plan, the project will be completed on
time, but 20% of the work will need to be redone.
How would the manager respond?
• Dismiss the idea on the spot – 0 pts
• Promise, but never actually perform a review – 1 pts
• Conduct a detailed and serious review immediately – 4 pts
Test Question 2
A project manager and his team fail badly on a project.
The project manager must explain what happened to
senior management. Senior management does not
understand the scope of the project. How would the
project manager explain the situation?
• The failure occurred because of weather, contractors, bad
materials, Lord Voldemort, aliens, etc. – 0 pts
• Due to unpredictable and unexpected circumstances our
team had some issues - 1 pts
• We screwed up badly, but we know how to fix it - 4 pts
Test Question 3
When did your organization or team last have a
meaningful project review or evaluation?
• During the last ice age or earlier – 0 pts
• When something exploded, someone killed, etc. - 1 pts
• When we completed our last project - 4 pts
Test Question 4
Do you use an iterative project development process in
your organization?
• What is an iterative project development process? – 0 pts
• For some projects, if necessary - 1 pts
• This is how we manage complex projects - 4 pts
Adaptive Management “Maturity
Assessment”
• 0 – 8 – Your projects will benefit from adaptive
management practices as soon as they are
established in your organization
• 8 – 12 – Your organizational culture supports
adaptive management, but there is opportunity for
improvement
• 12 – 16 – You probably don’t need to be at this
presentation: your organization already has good
adaptive management processes.
Recommendations
1. Whenever possible, do not define a detailed project plan
upfront, instead use an iterative project management
approach.
2. Always identify multiple project alternatives or
hypotheses; model these alternatives; and if it is deemed
beneficial, start implementing a few alternatives at the
same time.
3. Use quantitative risk analysis at each phase and
iteration of the project.
Recommendations
4. Integrate original assumptions and new learnings
when planning next project iterations.
5. Try to minimize the cost of decision reversals; minimize
risk by keeping the option to change project direction
available.
6. Ensure that adaptive management is implemented
within a creative business environment, which is
characterized by a collaborative structure for stakeholder
participation and learning.
Future Reading
Lev Virine and Michael Trumper
Project Decisions:
The Art and Science
Management Concepts, Vienna, VA, 2007
Lev Virine and Michael Trumper
Project Think:
Why Good Managers Make Poor Project Choices
Gower, 2013
Questions?