Digital transformation for chiefs and owners. Volume 2. Systems thinking. Dzhimsher Chelidze

this direction of management that I mastered the most deeply. As a result, I have experience with both startups and giants: LUKOIL, Gazprom, Ministry of Energy, Mazda-Sollers. Additionally, I can say with certainty that in industry we do not know how to manage projects: choose the wrong organization. structures, methodologies, focus on formal tools, do not elaborate goals, objectives, resource availability, risks… However, don’t think we’re alone. The Standish Group has reached the following conclusions about the causes of project failures after having studied more than 50,000 projects worldwide:

      – Lack of Resources

      This is a typical story – let’s initiate the project, and how to implement, we will understand later. So, I had a project in one corporation that involved 7,500 people, which we accompanied with the help of Excel. Should we talk about this fun adventure, and what quality of data was there?

      – Unrealistic Terms

      I think everyone knows «had to yesterday». Unreal deadlines are not so bad if we keep in mind that they will be disrupted, and try to become better. However, as practice shows, this approach is almost not followed.

      – Errors in the formulation of the objectives

      As a rule, the objectives are either vague or vague, and there is an error in the causal relationship, and the objectives do not reflect the objectives to be achieved.

      – Not enough detailed planning

      If you think about it, this is the reason for all the other points.

      – The quality of interaction within the team is poor

      Unfortunately, within corporations, people are used to formal communication, through notes and correspondence. Additionally, most problems could be solved simply by normal communication before the aftereffects.

      – Change of objectives during the project

      Again, with proper planning of the initiation and planning stages, this can be avoided. After all, people are extremely poorly tolerated by chaos and uncertainty.

      Project management statistics

      First of all I want to give a diagram of the statistics of project management.

      Project management statistics

      Moreover, if you dive deeper into research, then from the 1990s to the early 2000s, the dynamics were positive, and then everything stalled. Even by industry, the situation does not differ significantly.

      Statistics by industry

      The dependence of success on project size and methodology

      The dependence of success on project size and methodology

      Let’s look at our companies. All gravitate to mega projects and, preferably, on a cascade (waterfall) model. What it is and what is the difference, let’s analyze in this chapter.

      Even more interesting are the statistics on time and cost overruns.

      Statistics on time and cost overruns

      That is, on average, the budget is over half, and the timeline – almost twice. And this is exactly what project managers say informally.

      It turns out, in order to successfully implement projects on digital transformation, it is better to do not megaproject, but a large number of small on flexible methodologies. It’s unusual, isn’t it? It requires a completely different corporate culture than what we’re used to seeing.

      At the same time, the competence of the project management becomes more and more obligatory, it cannot be ignored, and here is why:

      – the share of projects in GDP, for example, in the UK, increased from 5% to 35% in 100 years;

      – the global trend is not to sell individual products, but complex projects. And we are behind in this direction for a whole generation. If everyone comes to the fact that it is necessary to sell not a gas turbine, and service turnkey, with delivery, installation, all auxiliary equipment, maintenance organization, we still sell the iron, and then – the customer’s care;

      – according to some projections, by 2030 up to 60% of the time of a top-level manager will be spent on projects;

      – at the same time, according to the recommendations of the standards and my observations, mistakes made and not corrected at the beginning of the project can be guaranteed to bury it. I’ve been through dead projects, and I’ve been pulling out «troublemakers». The cost of the same changes increases from 10 nominal rubles at the initiation and planning stage to 10,000 at commissioning. The ability to correct errors is reduced. Therefore, modern methods provide for up to 30—40% of the time of the entire project for its planning and risk development.

      Possible approaches and standards for project management

      In the world and in particular in Russia there are several standards and approaches to project management:

      – Standards on the competence of the manager:

      – ICB standard from IPMA (International Project Management Association);

      – STK standard from OWNET, which is a translation of ICB.

      2. Standards that build processes:

      – PMBOK from PMI

      – ISO 21500 from ISO is a summary of PMBOK (100 pages instead of 500+)

      – P2M from PMAJ – both pro and pro projects. Focused on the values that should get by the end of implementation.

      – Prince2, developed by the authors of ITIL, a standard for the management of IT services.

      There is also Agile as a set of principles and tools aimed at flexibility in the face of uncertainty and the need to test hypotheses, with a powerful psychological basis within.

      If simplified, the approaches to the implementation of projects can be divided into:

      – Waterfall model;

      Cascade approach to project implementation – delivery of project product at the end of implementation

      – hybrid;

      Example of a hybrid approach with iterations at the requirement collection / initiation and design / project planning stage

      – Agile.

      An example of a flexible approach to project implementation

      In turn, flexible approaches can also be decomposed into 3 types: iterative, incremental, iterative-incremental.

      3 subtypes of a flexible approach to project implementation

      At the same time, according to various studies, in life mostly (60—70%) used hybrid methods. Pure approach is very little, and it is normal, because it is impossible to create a universal tool for all occasions.

      How to choose the right approach?

      Before going through the basic approaches, I want to share one, essentially, key tool that allows you to understand at an early stage which project is in front of you,