An often neglected, yet essential, element of project and program management is project risk management.

Project Risk Management is concerned with the identification and planning for potential risks that may impact the project (both positive and negative impacts).

Risks can be positive (Opportunities) or negative (Risks or Threats).

* Positive Risks:

• Per-GB cost of storage may decrease during the course of the project
• Scope of data conversion work may turn out to be less than we anticipated

* Negative Risks:

• Commercial software product may not perform as expected
• Degree of software modification may turn out to be greater than we anticipated

Note: Risks and Opportunities are not mirror images of each other. For one thing, a risk that has a less negative impact than expected can be considered a positive risk, though it may not necessarily offer an opportunity. In addition, definitions of opportunities are usually less precise than definitions of risks.

Risk has two primary components for a given event:

• A probability of occurrence of that event
• Impact (or consequence) of the event occurring (amount at stake)

Issues vs. Risks

There is some confusion between issues and risks. While both issues and risks have consequences (impact), the probability (and, to some extent, the time) dimension is different.

A risk is an event or situation that may possibly, but not necessarily occur, in the future. The probability can range from 0% to 100%. An example: possible loss of key staff members. When risks are identified ahead of time, we can determine mitigations and responses to prevent the risk from becoming an issue.

An issue is a situation that either is currently occurring or will occur in the future. It’s usually unexpected or has a low enough impact and/or probability that developing a mitigation or response was a low priority and, therefore, not part of the risk register (see below). The probability is 100%. An issue that has occurred or is currently happening is referred to as a problem. An example: upcoming termination of vendor support for an older release of a software product. When we know that the end-of-support date is approaching, it becomes an issue. When the date is actually upon us, it becomes a problem. When we know that an issue is coming up, we can try to take steps to deal with the issue before it becomes a problem. Too often, however, issues arise unexpectedly and immediately and must be addressed immediately.

Steps in the Project Risk Management Process

Project risk management proceeds as follows:

1. Early in the planning, the project lead defines how risk management will be conducted for the project. The output of this activity is the risk management plan which becomes part of the overall project plan.
2. The project lead then works with project team to identify the project risks and conducts qualitative and quantitative analyses of the risks to determine the probabilities and impacts of the risks.
3. After scoring the risks based on the probabilities and impact, the top risks are identified and a risk mitigation / risk response plan is developed defining the actions to be taken in the event of those risks.
4. Throughout the duration of the project, as part of monitoring & controlling, the risk responses are carried out (when needed), new risks are identified, and previously identified risks are re-evaluated for any changes in their impact or probability. As a result of these activities, the schedule and/or cost baselines may be modified.

Risk mitigation vs. risk response.

Risk mitigation is a planning technique used to reduce the probability of  a risk occurring or reduces the impact to an acceptable threshold.

Risk response is the action to be taken in the event that the risk actually occurs. As each risk in the risk register is identified, one or more responses to the risk are determined and documented. Creating the risk register along with risk mitigation and responses is important:

Imagine this scenario. Due to the complexity and unique nature of your organization’s business processes, the development of the business rules for a new ERP system is taking 3 times as long as expected. When the project sponsor asks about this set-back, you reply, “I knew this was going to happen!”

If you don’t have risk response previously identified, then the sponsor can ask you, “if you knew this was going to happen, why didn’t you have a response plan in place?!?”

Another element of risk is cause. The existence of something or the lack of something can cause a risky or dangerous situation to exist. The source or cause of this situation is referred to as a hazard. The degree of risk can be viewed as a function of hazards vs. safeguards where safeguards mitigate the level of risk. For example, lack of technical knowledge can be a hazard that can be mitigated by training.

The risk management processes occur throughout the project life cycle – starting with risk identification during the Planning phase, continuing with risk analyses and the creation of the risk register.

The risk register is reviewed during project monitoring:

• Changes in the project plan can lead to additional risk identification.
• The occurrence of a previously identified risk can result in changes to the project plan.
• Scope changes can result in new risks. Scope changes can also result in the elimination of previously identified risks.

Sources:

The Guide to the Project Management Book of Knowledge, 4^th Edition (PMBOK Guide), ©2008, Project Management Institute

Practice Standard for Project Risk Management, © 2009, Project Management Institute

Project Management: A Systems Approach to Planning, Scheduling, and Controlling, Tenth Edition, by Harold Kerzner, John Wiley & Sons © 2009

© 2011, Jerry Bucknoff, MBA, PMP

Organizational Structures for organizations that do not have a full-scale project management environment.

Guide to the PMBOK, 4th Edition, defines Project Manager as “The person assigned by the performing organization to achieve the project objectives.” (Pg. 444). In full scale project management environments, the project manager devotes his full time to managing projects or, as a program manager, managing programs of projects.
This is in contrast to a Functional Manager, which the PMBOK Guide, 4th Edition defines as “Someone with management authority over an organizational unit within a functional organization. The manager of any group that actually makes a product or performs a service. Sometimes called a line manager.”(Pg. 26, 436)

Many organizations do not have a full-scale project management environment. This is particularly common in IT environments, although, thanks to the growing recognition by organizations of project management as a profession, this is rapidly changing. When the organization has a functional management structure and does not support a full-scale Project Management environment, the following project support roles may be used.

Project Expediter
The Project Expediter monitors and reports on the status of the project to senior management. This role has no authority.

The Project Expediter acts as a communication coordinator only and cannot enforce any decisions.

Project Coordinator
The Project Coordinator role is similar to expediter, but has some limited, referential authority. The project coordinator may report to someone higher on the management food chain than the expediter. The Project Coordinator has some authority to make decisions.

In IT, this person may be what recruiters refer to as “a PM who can roll-up his sleeves and debug code” or “PM/Business Analyst who can create project documentation and supervise others.” These are actually team member roles and not true project manager roles. However, in addition to his/her hands-on, team-member, tasks, this person also has some limited supervisory responsibilities as well project monitoring and status reporting responsibility.

These two roles are not limited to organizations that do not have a full-scale project management environment. These roles can also be utilized in situations where a project manager (PM) or program manager (PgM) has responsibility for large, complex, project or program. Some components of the project monitoring, reporting, may be delegated to a junior person (less than 3 years of PM experience). In addition, where the scope of the PM’s or PgM’s work is large, tasks that are not appropriate for a PM or PgM or can be taken off the PM’s plate, such as requirements gathering, setting up meetings, identifying resource availability, writing management reports, creating presentation, can be delegated to a project coordinator.

In some cases, where the project is very small or the project effort is short (less than 3 months, less than 50 person-days, less than 3 team members plus the lead), a project coordinator can be assigned to supervise the day-to-day work and ensure that targets and committments are being made.

In PMOs (project/program management offices), a PMO analyst (often miscorrectly refered to as “the PMO”) may also take on project coordinator tasks such as helping the PM develop the project schedule, project scope, generate communications, collect and report project status.

Do not confuse these, very different roles. In particular, do not confuse these roles with that of a project manager or a program manager. Occassionally, due to the economy or, more rarely, by choice a project manager by profession may take on one of these roles, usually on a contractual basis between full-time jobs. However, while the person is a project manager by profession, he/she is not performing in that role while taking on one of the above, more junior, project roles.

Jerry Bucknoff, MBA, PMP

One of the key professional responsibilities of a project manager is contributing to the project management knowledge base. What does this mean?

In a nutshell, don’t keep your knowledge and experience locked in your brain. Share it!! 

• Share knowledge
• Research
• Build the capabilities of colleagues (i.e., teach, mentor, provide opportunities for your colleagues and your team members to build experience and knowledge)
• Advance the profession (engage in activities that will improve the overall PM profession; engage in activities that will promote the profession)
• Step up, at your own organization, to champion the value of project management. That is, playing a key role in the growth of PM within your organization
• Always record “lessons learned” at the end of a project or project phase; contribute to your organization’s organization process assets (OPAs). These 2 activities contribute to PM knowledge base and will help your colleagues during future projects
• Participate in PM forums, conferences and PMI chapter meetings
• Write articles

PMI expects PMPs to stay engaged with the profession.

During my time at PMI’s Global Congress in Orlando, one of the questions that came up repeatedly was “how can I get started on the PMI-RMP Certification? What materials should I be using to prepare myself for the exam component of the certification”

Here’s what I learned.

The four PMI standards you should be focusing on are:

1) The Guide to the PMBOK 4th Edition, particularly Chapter 11 (Project Risk Management). Because risk communication represents 27% of the topics on the exam component of the PMI-RMP credential, you should be comfortable with Chapter 10 (Project Communication Management) as well.

2) The Standard for Program Management, 2nd Edition, particularly Chapter 11 (Program Risk Management)

3) The Standard for Portfolio Management, 2nd Edition, particularly Chapter 5 (Portfolio Risk Management)

and especially:
4) The Practice Standard for Project Risk Management, 1st Edition, 2009.
PMI writes: “The Practice Standard can be used by project management practitioners to validate the risk management process being employed in a specific situtation, project or organization. The Practice Standard for Project Risk Management is consistent with the current release of A Guide to the Project Management Body of Knowledge (PMBOK® Guide) — Fourth Edition.” 

You can supplement your study with books such as:

Risk Management: Concepts and Guidance, 3rd edition by Carl L. Pritchard. Pritchard was the Team Lead for Chapter 11 of the current PMBOK Guide.

Risk Management, Tricks of the Trade for Project Managers by Rita Mulcahy. This is a practitioner book with plenty of exercises to develop and reinforce your risk management skills.

Linkedin.com has a PMI-RMP group and a PMI-RMP study group, both hosted by Annette Suh, PMI-RMP

If any of you out there do go through the process of earning this credential, please keep me apprised of your progress and share your experience with the process with the rest of us.

Clearing Up Some Misconceptions About the PMBOK Guide

Listening to PMP candidates, project managers, and students of management and project management,  I’ve learned that there are some misconceptions about what the PMBOK Guide is. Some think that it’s intended as a textbook on project management. Others think that it describes some kind of project  management methodology. Yet others have the notion that it’s meant as a study guide for the examination component of the PMP credential. Some even think that the PMP exam is on something called “PMBOK” (whatever that is) and that the Guide to the PMBOK is a study guide or textbook covering the topic of “PMBOK.”

I’d like to clear up some of the misconceptions.

The PMBOK Guide is a standard for the project management profession. Its intention is to serve as a guide to the body of knowledge within the project management community and as practiced by members of the profession. There is no single document that contains the project management body of knowledge. Indeed, some of it is not published at all but, rather, is simply recognized as good practices and norms within the profession. This body of knowledge is growing every day.

The PMBOK Guide is not intended to be used to learn project management or project management concepts. It’s especially not intended to teach or suggest PM techniques or methodologies.

It’s not a “how to” book nor is it a description of a methodology. It’s a standard, not a methodology. PM professionals and the organizations they work for can use the PMBOK Guide as a guide for developing their own methodologies or for creating organization standards.

It’s particularly important to understand that it is not a standard or specification for the examination portion of the PMP certification. For one thing, at least 30% of the material on the examination is not covered by the PMBOK Guide. (There IS an exam on the PMBOK Guide. It’s the CAPM exam, which only covers knowledge of the PMBOK Guide.)

While the PMBOK Guide only changes once every 4 years, the exam component of the PMP credential is constantly changing. Much of the material that showed up in the 4th (2008) edition of the PMBOK Guide has ALREADY been showing up on the PMP exam for several years – e.g., PTA, TCPI, etc. PMBOK Guide 4th edition came out in December, 2008, but these topics have been showing up on the PMP exam as early as 2006. The group at PMI that develops the standards (such the PMBOK Guide, the Standard for Risk Management, etc.) and the group at PMI that develops the the certifications and their corresponding exams (such as PMP, CAPM, PMI-SP, etc.) are two separate groups that DO NOT interface with each other. They are two separate groups. If anything, the standards group looks at the work that the credential group (PMP, CAPM) does and uses it as one of the many inputs for what they put into the standards such as the PMBOK Guide.

A reviewer on Amazon.com observed that there is a widely held notion that PMBOK = Project Management. I disagree with that observation. The false notion he observed is only held by those people who do not know what the PMBOK is. Also “PMBOK” is not the same as “PMBOK Guide.” PMBOK is an acronym for the Project Management Body of Knowledge. As I said, above, there is no single document that contains the project management body of knowledge. It’s simply the body of knowledge that is collectively known among practitioners,  academics and organizations who practice or research project management. The document known as the PMBOK Guide is simply a guide to that massive body of knowledge; an entry-point to further information and a standard for developing protocols, methodologies, techniques and practices within your own organizations and project management practices.

The PMBOK Guide is a reference work, not a text book or a study guide. It’s not meant as an introduction to project management any more than a volume of statutes is meant to be used as an introduction to the practice of law or the Physician’s Desk Reference (PDR) is meant to be used as an introduction to pharmacology for doctors and pharmacists. As with technical references for other professions (such as statute books for lawyers, clinical references for doctors, etc.), non professionals may find the PMBOK Guide difficult to follow and even dry. An experienced and trained project manager should find the PMBOK Guide perfectly understandable and not very difficult to follow. An experienced and professional project manager looking at the PMBOK Guide for the first time may find its format unfamiliar (at first), but he/she should find the material and the concepts in the document familiar (though organized in a way they may not be used to).

On the other hand, an entry-level project manager, or a non-project manager who is thrown into project management tasks may, indeed, find the PMBOK Guide difficult to follow and difficult to understand. This is not unlike a sophomore accounting student opening up a set of GAAP or IFRS guidelines and finding it hard to follow or finding the writing style very didactic and anything but light reading, while this would NOT be the experience of a certified CPA or an experienced accountant or financial professional.

Very important: The PMBOK Guide is not an I.T. text nor should it be considered part of the literature covering the topic of information technology. For some reason, the document is shelved in book stores along with I.T. books. It really should be shelved with books on management. In the same way, PMP examination study guides are also shelved next to I.T. books. The PMP credential is not an I.T. “cert.” In fact, it’s not even in the same class or category of “certifications” as technical and I.T. “certs.” The PMP is a professional credential, in the same category of certifications for other professions, such as accounting, law or medicine. Unlike I.T. “certs”, where the only requirement to earn the certification is the ability to make an appointment at the Prometric center and where the only criteria for earning the certification is the ability to pass a test, the PMP credential has experience, education, continuing education & professional contribution requirements. There is also a requirement to adhere to a professional code of conduct.

Because of the “cert” fever within the I.T. community and among I.T. workers, many non-PMs in the I.T. sector are pressured to add the “PMP” letters to their names. Recruiters are among those who create this pressure. Because they are not experienced project managers, these I.T. people are pressured into lying about their background and skills during the PMP qualification process — and getting friends to lie during the audit and vetting process. This may account for the number of (dishonestly earned) PMPs out there who may have the letters after their name (though they got those letters under false pretenses) but who are not really project managers at all. This is why people see a lot of “PMPs” who have no idea about what they are doing.

Project management is a profession. While there are many professional project managers out there practicing their profession, there are quite a lot of non-project managers who have been thrown into PM responsibilities and roles. While they do, indeed, hold a “job” as a “project manager” and are being asked to perform the tasks of a project manager (and may even have a title called “project manager”), they are not project managers. They’re just people who have been asked to do the work of project managers.

The PMP credential is not for people want to move into project management. It’s for people who ALREADY ARE project managers and have been for several years. The PMP credential verifies that the individual has the education, years of experience, professional training, adherence to a professional code of ethics, commitment to ongoing continuing education and commitment to ongoing contributions to the project management profession. The exam portion of the credential verifies that, in addition to all of the above, the individual has an understanding of the profession he/she has been practicing; that the individual knows that project management is NOT common sense and that he/she is not managing project by seat of his/her pants or via intuition; that the individual understands that sound project management is based on the past experiences of other members of the profession, based on research and sound empirical (scientific) study; that the “art” and practice of project management is based on science, not intuition.

Finally, as to the question “what would be the best alternative book”: there is no alternative. The PMBOK Guide is the accepted global standard and the recognized guide to the project management body of knowledge. That’s all it’s intended to be and it serves that purpose well. It’s not the end to all ends. The members of the project management profession who contributed to the document did not aspire to cover all there is to know about project management. It’s not perfect and it’s constantly changing (every 4 years) as the profession continues to grow and mature.

You can (and should) supplement the PMBOK Guide with other PMI standards and frameworks — e.g., The Standard for Program Management, The Project Manager Comptency Development Framework, The Practice Standard for Work Breakdown Structures, etc. There are supplemental standards and frameworks developed by other professional and academic organizations as well. However, as the GUIDE to the “body of knowledge” within the profession, the PMBOK Guide is the standard. There are other books and sources on other topics of project management, including sources on methodologies, leadership, PM tools, general management, the management of people, budgeting, scheduling, quality management practices, organizational behavior, etc. as well as industry specific literature on project management, such as marketing project management, I.T. project management, construction project management, research & development project management, etc. However, such topics are outside the scope and purpose of the PMBOK Guide. Of course, since anywhere from 60% – 70% of the material in the examination portion of the PMP certification either comes directly from the PMBOK Guide or requires understanding of the concepts in the PMP Guide, a knowledge of the material in the document is important to anyone who is planning to sit for the exam. So, while the PMBOK Guide is NOT a study guide for the exam and is not intended to serve as such, familiarity with it is an important part of both practicing the PM profession as well as earning the profession’s certification.

For more information on the relationship between the PMBOK Guide and the PMP Credential, see:
Is studying the PMBOK Guide enough to pass the PMP certification?

I get this question a lot and find myself answering it over and over again, on message boards, blogs and in person. In doing so I’ve come to realize that a large number of PMP aspirants do not understand what the PMP credential is nor do they have have a sufficient knowledge of what is covered on the exam component of the certification process.

First of all, unlike I.T. vendor “certs” and other commercial “certifications”, where the only requirement to earn the “cert” is the ability to pass an exam, the PMP credential is a professional credential. The credential is competence based and, as such, is best described as a credential as opposed to simply a certification. The credential infers a candidate’s ability to actually perform professional tasks (e.g., Project Management) at a given level. Unlike vendor “cert” exams, the exam component of the PMP credential is more than simply knowledge based. It encompasses both knowledge of the subject and the necessary skills to apply that knowledge.

In addition to passing a rigorous exam, the PMP credential requires a certain minimum amount of documented (and verified) experience in the profession, a certain level of education (both formal, academic education as well as professional training), adherence to a professional code of conduct, and a commitment to on-going continuing education and contribution to the project management community.

Having said that, what does the examination portion of the PMP certification process cover? Is studying the PMBOK sufficient to succeed on the exam?

The short answer is that, if you are pursing the CAPM credential, then the PMBOK can be enough. This is because the CAPM exam is only based on the material on the PMBOK. Nevertheless, I would strongly recommend supplementing any CAPM exam study with at least one study guide and with a good exam question test bank.

As far as the the exam portion of the PMP certification process is concerned, the exam covers a lot more than just the material in the PMBOK Guide.

If you are pursing the PMP credential, then you need to prepare for questions from other areas (i.e., non-PMBOK Guide) as well.

For one thing, while the PMBOK Guide only changes once every 4 years, the exam component of the PMP credential is constantly changing. Much of the material that showed up in the 4th (2008) edition of the PMBOK Guide has ALREADY been showing up on the PMP exam for several years – e.g., PTA, TCPI, etc. PMBOK Guide 4th edition came out in December, 2008, but these topics have been showing up on the PMP exam as early as 2006. The group at PMI that develops the standards (such the PMBOK Guide, the Standard for Risk Management, etc.) and the group at PMI that develops the the certifications and their corresponding exams (such as PMP, CAPM, PMI-SP, etc.) are two separate (and independent) groups that occasionally communicate with each other but DO NOT work each other. They are two separate groups. If anything, the standards group (who, by the way, I have met personally and have been to standards development meetings with) looks at the work that the credential group (PMP, CAPM) does and uses it as one of the many inputs for what they put into the standards such as the PMBOK Guide.

In a nutshell, you should expect the exam component of the PMP certification process to cover the following:

• Your PM Experience
• Knowledge of globally recognized standards (the PMBOK Guide is the “guide” to this) including the 5 project management process groups and the 42 project management processes described in the PMBOK Guide.
• Trends and research in the PM profession.
• Professional responsibility and contributing to the PM profession.
• Understanding (though not memorizing) the inputs / tools & techniques / outputs of the various project management processes.
• Organizational theories and Quality methodologies
• PM situational scenarios: A combination of knowing concepts & definitions and applying those concepts to given scenarios; being able to answer questions about those scenarios based on what you’ve learned as an experienced PM — for example, knowing that the best next step to take in a situation is whichever step will move the project along and reduce/avoid impact (unless that step is unethical or violates the code of professional behavior).

About 60% – 70% of the above is either directly from the PMBOK Guide or requires (among other things) knowledge of one or more concepts from the PMBOK Guide. So you do need a solid understanding of the topics in the PMBOK Guide. But you also need a good study guide (Andy Crowe, Rita Mulcahy, Tony Johnson, etc.) along with a good (not cheap and definitely not free) exam question test bank. The test bank one I recommend (and I’ve seen them all) is the one from Crosswind PM. Not only does it have over 3,000 questions, it has over 2 dozen complete four-hour (200 question) sample exams. I’ve spoken to Tony Johnson and he tells me that he updates his test bank CD one or more times over the 4 years between PMBOK Guides because, I as said above, changes in the PMP exam is not synchronized with the quadrennial (once in 4 years) changes to the PMBOK Guide but,  rather, the exam is constantly changing, independent of (not in anticipation of) the changes to the PMBOK Guide.

Remember, the PMP credential is not some I.T. vendor “cert” where all you have to do is read a study book and pass a test. It’s a professional credential that certifies that you are an experienced project manager (and have been for several years) and that, IN ADDITION to have been working in a PM role or performing PM tasks, you ALSO UNDERSTAND the job of a PM and the globally recognized standards, knowledge and trends of the profession. You won’t find all this information in any one book. However, the PMBOK Guide (along with PMI’s other standards and frameworks) serves as a guide to this information. You can use it as map for the continuing development of your PM knowledge and as a guide to the continuing development of standards, procedures, protocols and new knowledge in the PM profession.

So, yes, the PMBOK Guide can be enough for the exam component of the CAPM credential, though I would strongly recommend that you supplement it with some study materials; but, NO, you can’t just study the PMBOK Guide and be assured of passing the exam component of the PMP credential without using some other study material — especially if you’ve only been a PM for a few (i.e., 3 or 4) years and are still new to the profession and especially if your PM training over the years has been limited.

Good luck. It’s a journey, but PMP certification is a worthwhile credential to earn.

Jerry Bucknoff, PMP

As promised, I’m following up on my post from Sept. 14, 2009: Lack of training among project managers.

There continues to be  widespread lack of formal project management training among PMP candidates. In my original post, I wrote:

From my visits to message boards and blogs, I’m seeing a common misunderstanding among many PMP candidates; a misunderstanding is related to the trend of PMP candidates using their exam preparation classes to satisfy their 35 contact hour requirement. Many candidates seem to believe that taking a 35 hour prep class is actually a requirement to sit for the exam.

Here is one of my responses on one of the popular PM related blogs, http://www.askaboutprojects.com.

As before, this is a question I’d like to think about and discuss more on this board. What is your take on this? Your comments are welcomed.

I came a across an interesting article on the Projects@work website, Enabling Career Advancement by Mary Ann Bopp, Diana Bing and Sheila Forte-Trammell, which is an excerpt from their book, Agile Career Development: Lessons and Approaches from IBM.

Their basic premise is that: “Project-driven organizations can benefit in many ways from creating a career framework that gives employees the opportunity to grow — and share — their knowledge and skills by moving across job roles or business units. In the process, they align company values and culture, optimize resources and increase client satisfaction.”

This information is very useful for PM professionals who have permanent, full-time jobs and for organizations whose business model calls for full-time, long-term staff as opposed to short-term, per-diem (contract) staff. However, the growing trend among organizations is to use less and less permanent resources and more temporary (per-diem) resources.

This is especially true when it comes to projects. Projects, by their very nature, are discrete and time-based. Too often, organizations can’t see beyond the end of a current project when it comes to finding and developing talent. Contract project managers along with temporary team members (often called “consultants”) are brought in for the duration of the project and let go at the end of the project. There is no value to the organization to grow the long-term skills of these temporary workers. In many cases, skill development as well as career development are seen as annoyances that just get in the way of the short-term goals of the current project. Organizations would prefer that these “consultants” would build their skills and grow their careers on somebody else’s nickel — either before they come on board or after they have successfully delivered on their short-term project and their contracts terminated.

A related trend is the attempt by organizations to use a single, temporary, contractor to fill two, very different roles. These are the, so-called, PM/BA (project manager / business analyst) spots and (for I.T. projects) the, so called, PM/Technical Lead spots. You simply can’t manage the baseball team AND play short-stop. If you try to do both, then something has to give. (See my discussion on the PM Best Practices blog: Economic Crisis).

There are some legal, financial and public relations reasons for using “temporary employees.” (1) Lack of privity between the temporary worker and the client, thus relieving the client from any legal liability or requirement to comply with tax and labor laws; (2) some cost containment and cost management, knowing that they won’t have to pay the temporary worker after the project is completed and the freedom to reduce hours during the course of the project; (3) the ability to layoff entire groups of workers without a hit to their PR — e.g., if a Fortune 500 company lays off 1,500 temporary employees, there is no report in the media that “XXX Company laid off 6% of their workforce.” Even though they did, indeed, layoff 6% of their workforce, since they weren’t “officially” employees, the layoff doesn’t get reported in the company’s turnover statistics; (4) savings on health and unemployment insurance costs, including the paperwork involved with claims.

However, I believe that the benefits (described above) are exceeded by the long-term costs to both organizations as well as to the growth and adoption of proven and repeatable project and program management standards and processes — not to mention the big hit on the careers of PM professionals. These organizations end up with a bunch of project deliverables delivered by a group of professionals who have long left the scene and moved on to another client. This short term view gets deliverables out the door, but may not deliver much value to the organization. The PMs (and their teams) rarely have the time or are given the opportunity to take the long-term view of what is happening. The organizations go from project-to-project contantly inventing the wheel over and over again. Neither the organization nor the temporary PMs they contract have much of a chance to grow.

Meanwhile, the PM professionals get a reputation for “jumping around from job to job” which is really not their fault (and very often, not their choice). Careerwise, rather than moving up a career ladder, they end up jumping sideways (and sometimes even down) on a career “jungle gym” (similar to the ones they played on in the playground of their elementary schools). At the recent (Oct, 2009) North America PMI Congress, Dr. Harold Kerzner spoke about “strategic alliances” between organizations and the consultants and consulting firms that provide the project management expertise. This gives the PM consultants the incentive to continuously hone their PM skills and their business skils if, in exchange for making the effort to do this, the organizations will form a long-term partnership with them, providing on-going business for the PM consultants. In this way, both the organizations and their PM consulting partners can grow their PM maturity together. This can go a long way to mitigating the problems associated with the overuse of “temporary employees” (as opposed to long-term, permanent staff), discussed above.

Right now, one of the biggest obstacles to achieving this partnership is the rise of the intermediary organization or “sub contactor.” The sub contractor’s only goal is to make a short-term match between a PM professional and an organization in order to collect a fee. Not only does this increase the cost to the organization and lower the earnings of the PM professional, it also gets in the way of the organization’s ability to identify and build a long-term, strategic relationship with the best PM professionals. I mentioned three of the top reasons that organizations use temporary employees, and there are many more. If organizations can somehow work around the sub-contractor obstacles or, at least, find a way to continue to gain the legal, financial and PR benefits of temporary employees while building a closer and direct relationship with the professionals in the field, the entire industry could achieve very great benefits and skilled project management professionals can build their skills, experience and their CAREERS in way that will be beneficial to both themselves and the organizations that they bring value to.

Anticipation!

I’m on my way to Orlando for PMI’s 2009 North America Global Congress. Due to scheduling conflicts, I have not been able to attend a PMI Global Congress since 2006.

I have my business cards ready (as you can see on the right) and look forward to a lot of networking. These congresses are a great opportunity to meet and exchange ideas with my fellow project managers, many from outside of North America.

Once again, I’ll be participating in the Standards Program Working Session where we will be working on PMI standards. The last time I did this, back in 2006, we worked on The PMBOK Guide 4th Edition. Since this is the “off” year for that standard (i.e., the 1st year after the updated standard is published, out of the 4 years of the PMBOK Guide development cycle), we probably will not be working on the PMBOK Guide. Follow my posts here to find out exactly which standard I ended up working on.