Efficiency and Effectiveness in PM

Efficiency and Effectiveness in PM, the theme of the PMRC, IPMA-China, Congress held August 24-25 2013, in Wuhan China, inspired this article. The full title was Efficiency and Effectiveness in Project Management, and both Mladen Radujkovik, IPMA President, and I presented keynotes. This article provides more details on the first half of my topic, Balance Efficiency and Effectiveness With Actionable Project Information.

Efficiency Awareness

The 1960s were the era of the Efficiency Expert. These were people with training or skills in process optimization, who then moved into productivity improvement, which became a buzzphrase of the 1970s. In the mid-1970s, practitioners merged productivity improvement with interpersonal skills. This became the foundation of the systems analyst or business analyst of the 1980s. Look how far we’ve come! Today we have certifications for people who demonstrate many of these skills—and more. Efficiency became part of an entire gamut of systems engineering disciplines. Efficiency is clearly important.

But, do we consistently apply Efficiency? Not really! In fact, the “re-engineering of the organization” in the 1980s and 1990s was not RE-engineering at all. It was the first-ever true engineering of poorly-designed processes, randomly piled on top of other processes during the ’70s and ’80s. The efficiency focus benefited projects, because many project managers brought efficiency and productivity into their projects. How do I know? I learned from some of the best during that time.

One problem with this emphasis on efficiency was evident in many organizations’ initiatives over the last 50 years. We can go overboard—sometimes focusing so much on efficiency that we forget about effectiveness. Part of this is because it is easier to look at efficiency; easy to identify it; to measure it. You see, efficiency by itself can be dangerous: If you look up Efficiency Expert on Wikipedia, one section notes: see also Layoffs.

Effectiveness and the Quality Movement

Effectiveness adds another dimension. The quality movements of the 1980s, and into the ’90s, increased business emphasis on effectiveness. They achieved this, in part, by also focusing on results. A handful of visionaries, including Deming, Juran, Crosby, Shewhart, and others, introduced a range of concepts into companies that made it clear that success is not just about numbers and statistics, it is about satisfaction. That satisfaction requirement included customers, staff, and other stakeholders, such as shareholders.

Effectiveness did not replace the efficiency mentality, it improved it.

If efficiency is “Doing Things Right,” then effectiveness is “Doing the Right Things.” I first read this in Drucker’s work in the 1970s. At that time, I was deep  into the world of efficiency experts, productivity improvement, and systems and business analysis. But when I read Drucker’s distinction, I realized that one must be both efficient and effective. These practices are not competitors, they are the perfect pair, and we must managed them in the correct proportion.

In theory, great; in practice, how does it work? Not always well. You see, some people are more in touch with efficiency; they have little interest in effectiveness. Others are more partial to effectiveness, and disdain efficiency. Influencers of these preferences include your profession, your current role, your personal styles, and core values. You must demonstrate focus, insight, and an open mind to appropriately balance efficiency and effectiveness in the right amounts, and in the right timing.

Efficiency and Effectiveness in PM

In projects, we often see a false sense of efficiency; we seldom see the proper blend of efficiency and effectiveness. To correct this, in the early 1980s we identified “The Vital Signs” of projects, as shown at right. Originally inspired by Dr. Martin Barnes’ Triple Constraint (Dr. Barnes is from APM, IPMA-UK), we saw that there were more than three factors to manage if one truly intended to succeed in projects.

Note that versions of these factors later made it into pm bodies of knowledge, beginning with Max Wideman’s mid-’80s efforts. Of course, the Triple Constraints were only constraining for project managers who could not communicate the wasteful consequences of irrational limits. We knew even then the damaging impact of a false sense of efficiency. See our articles in the Articles section of this website, Tight, Inflexible Deadlines: Scourge of Projects, and Th Prls f rbtrry Prjct Cst Mngmnt for recent insights on these factors.

Which brings up this hypothesis: Certain of our Vital Signs are efficiency factors; and certain are effectiveness factors. Which are which? We’ll wait a bit while you form your response…

Our Answer

Efficiency and Effectiveness in PM: Here is our answer: 1 Time, 2 Cost and 4 Quality are Efficiency factors. The others, including 3, 4, 5 & 6 are effectiveness factors. As stated above, some project managers—and their managers and executives—focus on the efficiency factors. Others focus on the effectiveness factors. And both are essential. Doing the Right Things begins with portfolio prioritization and decision-making. Doing Things Right involves obviously, Time, Cost and Quality. And project and business success also require intelligent and appropriate use of the harder-to-measure factors of Scope, Risk, Talent, and … Quality.

Of course, the ultimate efficiency is to avoid doing the project at all—which is often better than constraining the project severely with inadequate Time, Cost, and Talent flexibility. But that avoids making any business change whatsoever—which is the entire purpose of projects in the first place. But this may be a better option than creating a failing project. It is efficient and effective to cancel a failing project early. Yet many project managers—and their managers—are fearful of doing that.

Where Quality Fits

Are you troubled by that assertion above that Quality drives both efficiency and effectiveness? I offer a brief explanation: Process quality, testing of inputs, and defect measures are efficiency-oriented. Results that are fit for purpose, that achieve stakeholder satisfaction, and meet the business needs, are effectiveness-oriented. You have low effectiveness in your end results if you are missing efficiency in your processes. See the symbiotic relationship? The Vital Sign named Quality has elements that impact both efficiency and effectiveness.

And here is an obvious connection that you can glean from the paragraph above: Efficiency tends to focus on process; effectiveness tends to focus on results—or consequences, a form of result. Do you not require both in your projects?

Leading and Lagging Factors

This article might place a burden on project managers who have difficulty just managing their still-present triple constraints. Adding three more factors with our Vital Signs increases the need for true competence—especially in complex projects. But here is a secret: The most successful project managers know that in projects, you manage the effectiveness factors, and monitor the efficiency factors.

These sets of factors reflect cause and effect. You can understand more about that secret in another of my articles, Project Levers and Gauges.

Efficiency and Effectiveness in PM: This article also supports my keynote at the PMRC, IPMA-China Congress, held in Wuhan, China, August 24-25 2013. The event was terrific, turnout was great, and our hosts, PMRC and its leaders, were wonderful! In November 2014 they will host their next event in Beijing. See you there!

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