An Engineer working as an IT Project Manager?

For the past 4 months, I have been working on a new role as a Project Manager in the Information Technology division of my company. My interest in this position evolved naturally after 2 years working as a Senior Business Analyst and 8 months as a Project Consultant.

I am now only 7 months away from obtaining my Professional Engineer provincial designation (P.Eng.). Inevitably, since Industrial/System Engineering is not a common profession in my province, there seems to be a common confusion about what these types of engineers actually do.

An Engineer working as an IT Project Manager? It is a question that people constantly asks me. Please allow me to connect the dots between these two professions:

As defined by the Institute of Industrial Enginners, “Industrial engineers figure out how to do things better. They engineer processes and systems that improve quality and productivity. They work to eliminate waste of time, money, materials, energy and other commodities.” This profession developed quickly after World War two from what was previously know as Operations Management or Management Science. It evolved thanks to the previous efforts by Henry Ford; after figuring out how to mass-produce vehicles in a cost-effective manner; and the subsequent work on industrial efficiency by Frederick Taylor.

Systems engineering is a subspecialty within engineering. It refers to the study of complex systems (not necessarily Information Systems). It is a science with an underlying philosophy known as “Systems Theory”. It allows engineers to identify and manage complexity within a system, understand the life cycles, understand the flow of information and data, the interrelation of its components and the dynamics of such and the system as a whole.

So what does all that has to do with Project Management? (Spoiler alert) Actually, Project Management is a discipline/profession that evolved from Engineering, Industrial Engineering to be more precise. The beginning of modern Project Management was marked by the planning and control techniques introduced by Henry Gantt (yes, the guy of the Gantt chart) and the use of the management functions developed by Henri Fayol (and that are the foundation of the PMBOK). Both were Frederick Taylor’s alums and the three of them are fathers of Management Science/Industrial Engineering. In fact, many other elements of IE are present in PM such as the WBS, resource planning methods, PERT analysis, and more recently the Theory of Constraints (TOC), etc.

So, that might explain why I ended up choosing Project Management as a career. It is actually quite common for engineers to become project managers in different disciples such as construction, aerospace, public infrastructure, manufacturing, etc. For me, Information Technology was the next natural step and an area where I see myself learning and growing the most.

I really enjoy my new gig. I plan to continue to develop my project management skills in the next few years and at the same time find opportunities to incorporate my engineering skills such as:

· Finding better ways and tools to manage a project.
· Incorporate “Theory of Constraints” concepts to better manage the three project constraints: cost, scope and time.
· Exploring the complexities of budgeting and resource optimization.
· Introduce simulation to estimate project outcomes.
· Understand the complexity and interrelationship between projects and within the program.
· Develop long-term sustainable technology plans and strategies.

I will keep you posted with my experiences as I gain knowledge in becoming a Project Manager and obtaining my PMP in three years down the road.

Selecting the Right Performance Metrics

Part of sustaining a profitable and cost-effective operation is to identify, report and track the key performance metrics that provide business managers with the ability to measure the status quo of their operation and the ability to re-act to variance in a prompt and effective manner. These are not always easy to identify and to "sell" to a client, especially if they have operated over 20 years with the same time-service measure.

A well-thought metric is a powerful tool to understand the interconnections of your resources with work flow and how these variables directly and indirectly affects productivity, service, velocity and quality. If a business has been running for years with only a few performance metrics, but somehow manages to produce a big stack of reports at month- or quarter-end, managers might be making the incorrect mistake of focusing on the complexity of the details as opposed to focus on what is really important to sustain a business - profit growth.

To achieve or sustain profit growth, we need to explode the variables to form your business' profit model. A good and reliable performance metric should be able to provide managers with enough information to be traced back to the most fundamental operations (front-line). A properly design operational balance scorecard and metrics should be read an understood by a manager just as natural as reading your favorite book or magazine.

Helpful Tips to Select the Right Metrics

1. Start from scratch - Do not try to incorporate the old metrics if these do not provide managers with the information needed to sustain a cost-effective operation.
2. Keep it simple - Do not incorporate dozens of metrics that do not provide additional information or that present duplicate information in a different format.
3. Go one level up and one level down - Include metrics that become increasingly significant to different levels of management, especially if these metrics will be shared/reviewed vertically. Consider this as "translating" the metric to a different level of decision-maker.
4. If you are a cost centre, focus on cost - Remember that your most fundamental role is to support the operation in a cost-effective manner, that is, producing the highest level of throughput with a minimal level of resources. A productivity metric such as parts per paid hour will tell middle managers how much they are getting for their buck.
5. If you are a profit centre, focus on profit - Design a metric that describes profit as percentage of sales expenses, sales force, territory, market share, etc.
6. Be creative - This is your opportunity to play with data and come up with ratios or values that can only be significant in that particular situation and that actually means something. What the heck! Create your own units of measure and call it after you. "Sr., this quarter we have performed 25% over our targeted requirement of 0.25 Saldivarians".
7. Keep them dynamic - In these times of rapid change, it might not make sense to "lock in" a metric for decades. Re-evaluate your metrics as soon as they start to lose significance. Re-design them and setup new targets. However, keep in mind that changing them all the time might mean that you will not be able to compare historical trends.
8. Try to add metrics for all four quadrants of business performance - quality, velocity, service and productivity. However, do not force it. If you do not have a proper quality program and measurement system, adding a quality metric might not be a priority at this point.
9. If data does not exist - Re-design your information systems to incorporate they new required fields. Sometimes just by adding a couple of fields and investing in a proper system enhancement will make a huge difference in decision-making abilities.
10. Ensure data integrity - If your data source is not reliable you might want to evaluate what level of clean-up does your data require. If your data integrity is a major issue and requires a significant investment, consider interim solutions such as small databases that you can use until you feel comfortable to make a decision in regards to your data.

I hope you find this information useful. Performance metrics provide managers with the power of prompt information, tools to perform variance analysis, identify weaknesses on their operation and take corrective action.

My process re-engineering career has officially started.

I am currently embarking on a new role within my company: a project leader for a process re-engineering initiative within our Head Office operation. We are working with external consultants to analyze our internal operations and implement changes that will guarantee a staged cost-effective sustainability and reduce operational expenses.

This complicates the answer to the question “What do you do for a living?” On a nutshell, and based on what I have experienced so far, the answer would be:

I analyze business processes by mapping them out and identifying weaknesses in the form of delays, bottlenecks, redundant processes or inappropriate flow of information and resources. We do this to identify potential areas of opportunity that will be later translated in financial terms.

I then analyze the activities performed by employees by using time studies. Time studies will allow me to identify which activities add value to the client and which activities don’t. This way we can quantify the level of value for each role and eliminate lost time. This is aligned with lean manufacturing methodology with the exception that the service industry comprises a higher level of complexity. This complexity can be attributed to the human factor that is present in every process.

The time studies also serve the purpose to collect statistical data that will be used in combination with entity volumes and frequencies to estimate the workload for each employee. Then we can translate this into a utilization factor that usually oscillates between 70%-85%. With this factor we can assist manager with making decisions in terms of staff resources needed to operate on an efficient and cost-effective manner.

Once I identify process changes from the activity and process analysis, we come up with suggestions on how to reduce the non-value added activities, increase the utilization factor of employees and ensure that each functional area has performance metrics that they can use to track and monitor their service, productivity and quality.

This is really a fulfilling role which I am greatly enjoying. In the next few months, I will share my personal experiences and thoughts on process re-engineering. Its advantages, pitfalls and required factors that will ensure that these type of initiatives are sustained throughout a company’s lifetime.

Stay tuned…

Happy New Year!

Thoughts on Complexity

As a System Theorist, I view complexity as the intrinsic force that governs our universe by weaving intangible and intricate network systems that, if deciphered, would provide an encyclopaedia of how our world operates.

Understanding complexity is an ability that is obtained through years of studying interrelationships, co-factors, correlations, cause-effect, and structural behaviour. As P. Senge described in the Fifth Discipline, behaviour is based on the systems’ structure and people that belong to that system are bound to be ruled by behavioural factors that would not allow them to understand their own complexity.

In organizations, complexity is ruled by:
a) the laws of probability;
b) information flow between departments or areas;
c) the structure of processes;
d) staff behaviour, which is itself ruled by the structure of processes;
e) human nature and their interaction in a professional environment;
f) the organization’s principles and philosophy and how it affects the above;

It takes a trained mind to understand all the cause-effect relationships and feedback loops within a sub-system. An easy way to start to engage your staff in understanding the complexity of your department or area is to use graphical methods and allow the staff member’s participation in a brainstorming session to understand how their actions/decisions affect other areas, the client, the industry or even the economy. Try it out, buy a large piece of brown paper and hang it on an empty office or cubicle. Engage staff in completing your complexity masterpiece. This will be a first step to providing them with a solid framework to understand direct and indirect relationships and how they actions impact the organization’s interaction with clients, competitors, distributors and the entire industry.

Juan Saldivar

Process Simulation in the Service Industry

Systems simulation has been around for several decades and has proven successful in mainly manufacturing environments and other applications such as military weaponry tactics. In the last decades it has also been proven successful in healthcare systems around to world to test different triage procedures and reduce patient waiting times. This powerful tool provides analysts with the ability to look into the future and evaluate status quo at any given point in time and using variances as estimators instead of deterministic “rule-of-thumb’ indicators such as historical averages. This strategic ability is the basis for making important decisions in terms of capital investment, process re-engineering and marketing policies.

But how can you sell the idea of investing on this tool in white-collar/service industries? If you are familiar with simulation you know that the textbook example of using simulation in a service industry is banking. However, there are many service industries with different business processes and functions. Simulation is not a tool that can be used in every industry. An easy way to determine if simulation can be used in your workplace is to determine if your company has the following (not an inclusive list):

a) A service or deliverable that is transformed and where value is added during the process. b) Quantifiable goals such as targeted sales volume, service turnaround targets, etc. c) Basic information technology resources to track input, throughput, and output data. d) Different resources (human, technological) with defined tasks and responsibilities and that add value to the entity. These resources should follow structured activities each with an estimated processing time.
e) Traceable costs that can be associated to the entity.
Possibly, the hardest part of using simulation in a service industry is the human factor. Machines are programmed to perform at a specified rate of time. Humans, on the other hand, act based on multiple stochastic factors and have independent decision-making abilities. This makes humans very hard to predict in terms of decisions and processing times. Therefore, we can only estimate human activity by using:
a) Conditional probability, which allows the analyst to estimate decision making based on a series of co-factors and based on the historical response of the resource.
b) Historical data, to use the statistical variance as the allowable human error margin. c) Triangular distribution parameters, when data is not available to estimate the historical probability distribution based on the worst, most likely and best case scenario. This methodology can be used in both process and project simulations (PERT) and it is quite useful. Another approach is to replace the Triangular for the Beta distribution for a more accurate approach as per Law and Kelton (1991).

In a recent simulation project I worked on, I had the chance to test Process Simulator 2009 by ProModel. I found this application quite useful and user-friendly. It uses MS Visio as a liaison to import process models and add simulation properties to them. One attribute that I found quite appropriate for service industries is the use of hierarchical modeling. This allows breaking the process into sub models to allow for a more detailed study.

Process simulator has other features that are useful for service industry studies. These include a scheduling tool for staff resources, cost accumulation properties for entities, multiple scenario management, workflow animation and pre-formatted output metrics and charts. The software allows exporting data for further independent analysis. However, the pre-formatted output metrics and charts are quite useful to analyze resource utilization, entities’ average states, cycle times, throughput volume, etc.

So how can we effectively use this output data to make business decisions in the service industry? First of all, remember that the indicators you are looking for are aligned with your corporate strategies and KPI’s. Examples of output analysis include:

a) Sensitivity Analysis: This encompasses evaluating different scenarios. The “Scenarios” tool of Process Simulator makes sensitivity analysis easier. It is important to identify how the system responds to these different scenarios so that a proper risk assessment and management principles are established. Sensitivity analysis will provide the analyst with an insight of the system’s resilience and will help determine the factors of a failing system. When performing these ‘what if’ scenarios, be wary to identify what are the effects of these scenarios in terms of cost, resource utilization, cycle time and volume.
b) Resource Management: Simulation will allow the analysis of current of future re-sourcing strategies, evaluate their utilization and identify possible bottleneck or excess idle situation. Using the scenario properties of the application, the simulation can be run for different resource settings and average resource usage cost can be estimated.
c) Costing and Pricing: Simulation will aid the analyst with determining or tracing the cost amount of an entity (service or similar deliverable). This can be used for budgeting purposes, to complement managerial accounting estimates, or as a base to price a service provided.
d) ROI - Capital Investments: One of the most important selling points of simulation is to replace costly pilot implementations of capital investments (in particular when investing in information technology solutions). Simulation can provide the estimated impact of a pilot implementation; however it has the downfall that appropriate feedback is not collected. Therefore, it might not be suggested to use simulation for iterative technology design methods.
e) Budgeting: By analyzing throughput volumes and average unit costs, simulation can be a complementary tool for budgeting.
f) Long term strategic planning. By using all of the above examples, simulation can be a powerful tool to look into the long term operation and simulate the effects of price increases or inflation, scarcity of resources, and different marketing strategies (aggressive sales, niche market, etc). That broad perspective of comparing costs/benefits, resource needs, assessing feasibility, properly managing the risk identified, identifying feedback loops (cause/effect), and steering the organization’s operation into the established vision/mission will be greatly incremented by using simulation as a complementary strategic management tool.

It is important to remember that simulation is undertaken on a fully ideal or ‘vacuum’ environment. Therefore it is critical to establish the goal, scope, assumptions, constraints and limitations of every simulation study. After all, simulation is nothing else more than an “estimate”. Be wary of focusing too much on the details of the simulation and try to keep a holistic mindset. Always keep the ‘Big Picture’ in mind as suggested by P.Senge. My advise, have fun while you simulate. Think of simulation as your own RPG videogame where you get to be the master of your universe (sort of as in SimCity). Check out the free trial of Process Simulator 2009 and assess if simulation is appropriate for your workplace. Discuss the benefits of simulation with your management.

Good Luck!

(r) ProModel Corporation

My System Simulation Experience

I recently worked on a process improvement initiative using system simulation at my workplace. Some interesting results were obtained from using such tool in a white-collar service industry. Stay tuned ...

More music to share

Also my other cousin, Hoss, has released a couple of new tracks on his my space site. You've gotta check it out too..

http://www.myspace.com/theblurrededges