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On the Subject of Contracts and Legal Systems

 

LETTER TO THE EDITOR

 

1 November 2019

Response to the article: “ARE SMART CONTRACTS THE FUTURE OF CONTRACTS?” in PM World Journal of Oct. 2019, with references to the Max Wideman glossary and the Rule of Law Institute of Australia

 

Hi David,

The author, Swati Dangi, introduces his otherwise fine article with definitions of what constitutes a contract:

  1. “A contract is generally defined as ‘An agreement between two or more persons, which created an obligation to do a particular thing. Its essentials are competent parties, subject matter, legal consideration, mutuality of agreement, and mutuality of obligation.’”
  2. “A contract is a binding agreement between two or more parties. It has several legal elements, such as an offer made by one party; acceptance of the offer by another party; intention to create a legal relationship by the parties; and consideration for the offer. An agreement can be formed in writing, through a discussion by parties (oral), or it can be implied.”

The first definition references to Max Wideman, an accomplished and esteemed colleague, born in the United Kingdom and living in Canada. The second is taken from a publication of the Rule of Law Institute of Australia.

As the statements serve as definitions, corrections are appropriate if the definitions are wrong or not universally applicable. The latter is the case here.

There are two major groups of legal systems in use around the world, Common Law and Civil Law. Common Law, also referred to as Anglo-American Law, is much older. However, Civil Law, based on the works of Charles-Louis de Secondat, Baron de La Brède et de Montesquieu (), is more widely distributed. There is a number of other law systems in use, such as Islamic Law and Party Law, however the focus will here be on the two largest systems.

Common Law is mostly characterized by the existence of a Civil Code and of universal separation of powers. Common Law countries generally don’t have a universal Civil Code and therefore need to rely on jurisprudence, case law.

The definitions of contracts above are from Common Law countries, UK, Canada, Australia. The author, Swati Dangi, is from India, another Common Law country.

However, in Civil Law countries, such as France, Germany, Scandinavia, Italy, Japan, etc., the definition of a contract is much simpler: Offer and acceptance as two identical declarations of will in words or actions under high autonomy. “…intention to create a legal relationship by the parties; and consideration…” bear generally no relevance here, but “good faith” comes in as a legal and mutual obligation that is unknown in Common Law jurisdictions, because it is outside the four corners of the contract.

Civil Law is not too exotic to be mentioned. As the map shows, it is in use in many countries.

We need to be careful to apply definitions that work in one country, in another one without checking first. This should have been easy for the author: she affiliates herself with the SKEMA Business School in France, where she is also living. France is the home country of Civil Law.

PS: I describe these differences in detail in my book “Project Business Management”. The map is taken from the book.

Mit freundlichen Grüßen – Kind regards

Oliver F. Lehmann, MSc, PMP, Project Management Trainer
PMI Southern Germany Chapter – Member of the Board
Web: www.oliverlehmann.com (en)
www.oliverlehmann-training.de (de)

 

On Project Management as a National Competence

 

LETTER TO THE EDITOR

18 October 2019

Ref: Yanjaun, Y. (2018). Project Management is a National Competence: Interview with David Pells, PMR Magazine, 29 March.

 

Hello, David,

I have just read an interview with you in Project Management Review. It is very nice and important for me to read that you consider governments’ engagement in project management as the 5th big change in our profession. The more that you have so much experience with governments. Moreover, the editors (or you?) advanced this topic to the title of interview – what even more stresses its importance.

Yes, a central organization is indispensable for introducing government-level project management (called by myself Governmental Project Implementation System, GPIS). And then, step by step, governments may slowly strive to build their full GPIS. It would be more effective if they have some organized guidelines for it or, at least, a collection of practices applied in other countries. Hence so important is that you published my papers on this subject. Thank you again.

So far, several books on government project management have been written – e.g. by Wirick, Kassel, Barkley. But they have two limitations: firstly, they are oriented mainly towards the American environment (which is very advanced in this area), and not to less developed countries. Secondly, they mostly refer to the management of individual projects or programs; they are written from the point of view of their managers. And the governments of less developed countries need knowledge on organizing the whole GPIS in their countries. I wrote such a book, collecting and systemizing governmental PM practices from over 60 countries (this is in Polish but I think of translating it into English and publishing abroad).

Best regards

Dr Stanislaw Gasik

Warsaw, Poland

 

How to cite this article: Gasik, S. (2019). On Project Management as a National Competence; letter to the editor. PM World Journal, Vol. VIII, Issue X, November. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/11/pmwj87-Nov2019-Gasik-Letter-to-Editor-on-project-management-as-natonal-competence.pdf

 

 

On the Subject of The History of EVM

 

LETTER TO THE EDITOR

 

By Dr. Paul D. Giammalvo

Jakarta, Indonesia

 


 

In Response to Pat Weaver’s Letter to the Editor in the October edition of the PM World Journal, related to Ms. Bertille Hu’s paper on the History of EVM in the September PMWJ

19 September 2019

Ref: Hu. B. (2019). The History of Earned Value Management through Incentive Plans, PM World Journal, Vol. VIII, Issue VIII, September.

Ref: Weaver, P. (2019) Letter to the Editor On the Subject of the History of EVM, PM World Journal, Vol. VIII, Issue IX, October.

 

Dear Editor,

Dr Paul Giammalvo [PDG].  As the supervising professor of Ms. Bertille Hu’s paper, I would like to respond to the challenges raised by Pat Weaver.

The article ‘The History of Earned Value Management Through Incentives Plans’ in the September edition of PM World Journal, is fundamentally flawed.  The paper’s title has no relationship to the conclusions, and the material, as presented, fails to support the presumption implied in the title.

Earned value management has three fundamental components:

  1. All of the resources and work planned and used in the course of a project is reduced to a single metric (usually money), this includes labor, materials, suppliers, subcontractors and overheads.
  2. The work is planned, and progress measured based on the ‘metric’ to derive the planned, earned and actual ‘values’, for the entire scope of work required to complete the project.
  3. As work progresses, the current difference between planned and actual performance (as measured by the metric) is used to forecast future outcomes.

The incentive schemes and piece rate payments described in the paper fail to achieve any of these fundamental objectives, and the issues discussed around ‘project failure’ while significant in themselves, have little relevance to either earned value or incentivization.

[PDG] An investigation of the various incentive plans that the author has shown in Figure 9 when combined with the timeline shown in Figure 8, shows a clear evolutionary relationship between incentive payment or “payment for performance” and the formalized growth of earned value management. They evolved TOGETHER and for good and valid reasons.

The fundamental problem ignored by the author is that incentive schemes focus on a very limited aspect of the work of a project (or manufacturing organization). The only aspect incentivized is that portion of the total scope of work undertaken by a team or an individual where predetermined performance targets can be set. There is always a lot of ‘other work’ for which incentive rates have not or cannot be set.

[PDG] I disagree that the author ignored the fact that incentive schemes focus ONLY on specific elements (tasks) and not the “big picture”.

 

More (much more)…

 

To read entire Letter to the Editor, click here

 

How to cite this article: Giammalvo, P.D. (2019).  On the Subject of the History of EVM. Letter to the Editor. PM World Journal, Vol. VIII, Issue X, November. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/11/pmwj87-Nov2019-Giammalvo-Letter-to-Editor-on-the-history-of-evm.pdf

 

 

On the Subject of the History of EVM

 

LETTER TO THE EDITOR

19 September 2019

Ref: Featured paper titled The History of Earned Value Management through Incentive Plans, published in the September edition of the PM World Journal

 

Dear Editor,

The article ‘The History of Earned Value Management Through Incentives Plans’ in the September edition of PM World Journal, is fundamentally flawed.  The paper’s title has no relationship to the conclusions, and the material, as presented, fails to support the presumption implied in the title.

Earned value management has three fundamental components:

  1. All of the resources and work planned and used in the course of a project is reduced to a single metric (usually money), this includes labor, materials, suppliers, subcontractors and overheads.
  2. The work is planned, and progress measured based on the ‘metric’ to derive the planned, earned and actual ‘values’, for the entire scope of work required to complete the project.
  3. As work progresses, the current difference between planned and actual performance (as measured by the metric) is used to forecast future outcomes.

The incentive schemes and piece rate payments described in the paper fail to achieve any of these fundamental objectives, and the issues discussed around ‘project failure’ while significant in themselves, have little relevance to either earned value or incentivization.

The fundamental problem ignored by the author is that incentive schemes focus on a very limited aspect of the work of a project (or manufacturing organization). The only aspect incentivized is that portion of the total scope of work undertaken by a team or an individual where predetermined performance targets can be set. There is always a lot of ‘other work’ for which incentive rates have not or cannot be set.

The concept of piece rate payments, which underpin most of the incentive schemes outlined in the paper, extend back into the ‘Dark Ages’. Stonemasons were paid by the number of ‘pieces’ of stone they cut and finished for use in the construction of castles, cathedrals, and other structures (which is why stones have ‘mason’s marks’ carved in the back). However, in this type of payment system the cost per item is pre-set and fixed, the employer always pays exactly the same amount, the variable is how much each individual earns in any given time period. Different workers working on the same task can earn very different amounts of money (but the cost to the ‘project’ per item and in total remains the same).

This fundamental limitation is compounded by the fact that apart from ‘profit sharing’, which has nothing to do with the management of a project, the various schemes listed all fail to deal with the cost and usage of materials, suppliers, subcontractors, supervisors, and other elements incorporated into earned value calculations.  None of the systems attempt any form of aggregation, they are designed to focus on motivating individuals, or small teams.

The second failing is far more significant: none of the systems listed make any attempt to forecast future outcomes. Given there is no change in the set cost, there is no cost variability to measure, and while there is data that would allow some prediction of time outcomes, there is no evidence of anyone ever attempting this calculation for a ‘project’. The fact data could have been derived from these incentive systems that may have been capable of forecasting overall time outcomes based on actual performance is not particularly useful in the absence of any evidence this concept was used.

We know the ancient Babylonians were capable of calculating how long a gang of slaves would take to excavate a trapezoidal water canal based on the production rate for ‘slaves digging sand’.  The process of estimating the cost of doing work is a constant for at least the last 4000 years, and nothing much changed through to the early 20th century. Similar calculations are used in incentive schemes, and are used in project cost estimating, but I would suggest all this shows is that project cost management and incentive schemes have common roots rather than one lead to the development of the other.

The closest I have been able to find of anyone deriving some form of overall measurement based on information in an incentive scheme is the work undertaken by Henry Gantt during WW1.  He was able to assess the percent complete for the construction of a ship’s hull based on the number of rivets fastened by workers compared to the total number in a ship’s hull.

Gantt’s approach combined two sets of data, the total number of rivets needed to complete the hull derived from the drawings developed for the ship and the number of rivets fastened by the crews derived from the piecework payment records. Unfortunately, apart from recognizing the work was ahead or behind schedule and instigating actions to ‘catch up’ when needed, this concept seems to be a ‘dead end’.  Extending on Gantt’s work to predict the time needed to complete each hull was feasible, but it did not happen (or, more accurately, is not recorded as occurring in his books), and, as with all of the other systems, the cost of the riveting was fixed and did not change – the workers still received a fixed price per rivet, and the total cost of riveting was known and fixed.

In summary, the objective of incentive plans is to motivate people to work harder, this is an important HR concept. But the concept of motivation has nothing to do with measuring the effect of this ‘incentivization’ on productivity, the overall cost of the work, and based on this predicting the consequences at project completion.

The shift in thinking from comparing planned to actual and then making arbitrary decisions based on that information to manage the work, to a paradigm where information is used to dynamically model future outcomes seems to have its roots in concept of ‘Operations Research’ (OR) which originated in the 1930s.

OR uses the mathematics of optimization and linear programming, applied to a scenario, to assess expected future outcomes. These concepts underpinned the systems used by the British Airforce in the ‘Battle of Britain’ and then went on to be applied on both sides of the Atlantic, in a wide range of situations where a range of outcomes was possible. OR was the foundation of critical path and PERT scheduling and the combination of PERT with project cost management (a concept that goes back to the 14th century at least) gave rise to PERT Cost, which in turn evolved in the C/SCSC and then into what we know today as ‘Earned Value’. The overall flow of developments looking something like this:

Note: this diagram is being developed for a paper on the origins of EVM which I hope to publish early in 2020. While many of the links are well documented, others still need more substantiation.

While it is true that both project controls (including earned value) and incentive systems rely on the ability to calculate the expected time and effort required to accomplish a task, all this shows is they have this common root. However, a common heritage which dates back to the Babylonians does not mean one influenced the other.  The two systems are fundamentally different!

In summary, I would suggest the assertion contained in this paper that an incentive system that paid individuals a pre-set amount for work they have actually done (and pays different amounts to different people based on their individual efforts), somehow lead to a system that holistically looks at current performance and uses that information to predict future outcomes of a project, is, fundamentally flawed.

Yours sincerely,

Patrick Weaver
Melbourne, Australia

Note:  Research and copies of original documents that support the assertions in this letter can be freely accessed at: https://mosaicprojects.com.au/PMKI-ZSY.php.

 

 

On the Subject of John Schlichter’s recent articles

 

LETTER TO THE EDITOR

 

31 July 2019

Sir,

In 1999, John Schlichter introduced me to the value and personal satisfaction of volunteering in PMI. I then contributed to his pioneering work on OPM3 for several years. His current series of articles (“Alexander and the Indian King”) is clearly based on a powerful vision and a sincere desire to ensure that PMI can continue to cater for the needs of its members and of project management in general, in an ever-changing world. I would therefore like to add a few supporting examples and comments to those articles and the issues that they address.

1) The takeover of international conferences by the corporate organization (after the great success of international conferences organized by the national chapters with support from PMI at the start of the millennium) and the similar disbanding of the volunteer-run SIGs. In each case, much of the enjoyment and spontaneity of the volunteers has been squeezed out in favour of heavy (and somewhat irrelevant and disrespectful) administrative control. PMI volunteers are still involved, but their influence is considerably restricted.

2) On the specific example of conferences, in the last few years, potential speakers have been treated with much less respect than in the past: no justification is provided when a submission is rejected. If the paper is accepted, the presenter is required to spend additional time and effort to provide PMI staff with “story-board” versions of their presentation in a format that is unusable as a presentation. The effort on both sides would be better spent on encouraging each presenter to provide a formal paper on their topic as part of the review process and for subsequent publication on the Web. These proceedings would improve the credibility of the speaker and the congress, as well as providing longer-term value for PMI members.

3) I had considered invoking clause 4.2.1 from the PMI Code of Ethics – that every PMI member and certification-holder has to sign – to ensure that PMI provided this currently missing feedback to all rejected speakers: “as practitioners in the global project management community: We demonstrate transparency in our decision-making process.” However, it turns out that PMI staff do not sign the same code of ethics; they have a “code of behaviour”! This dichotomy raises a set of fascinating metaphysical questions and highlights a risk of double standards (the member Code of Ethics vs. the employee Code of Conduct) within a single community and does nothing to encourage effective teamwork.

4) PMI severely limits the reuse of any material published in the PMI standards, despite the fact that all of this material is the result of thousands of hours of unpaid volunteer creative work. These restrictions limit the right of course-developers to reproduce diagrams and figures or to use extracts from the text of the standards. Naturally, these restrictions do not apply to courses that PMI might choose to create and deliver in competition to commercial Registered Education Providers.

The solution to these issues is already available. As the Agile movement has taught us, placing your trust in the team and limiting interference and administrative overheads leads to increased creativity, motivation and commitment. As John Schlichter wrote in his first article in the series: PMI should recast its values in a way the prioritizes “institutionalizing project management by focusing exclusively on delivering only those products and services that PMI alone can furnish in its role as the premiere trade association for project management.” Growth should be used only as an indicator of success and not an end in itself: growth should arise from the value that PMI provides, and not from the power that it wields.

Yours,

Crispin (“Kik”) Piney, PMP, PgMP, PfMP

South of France

P.S. My critiques have been prompted by my abiding affection for PMI, reaching back over two decades and my aim to save PMI from becoming just yet another commercial organization. As the French say: ”qui aime bien châtie bien”. Kik

 

References

Schlichter, J.  (2019). Alexander and the Indian King: Part 3; PM World Journal, Vol. VIII, Issue VII, August.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/08/pmwj84-Aug2019-Schlichter-Alexander-and-the-Indian-King-Part3.pdf

Schlichter, J.  (2019). Alexander and the Indian King: Part 2; PM World Journal, Vol. VIII, Issue VI, July. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/07/pmwj83-Jul2019-Schlichter-Alexander-and-Indian-King-Part2-2.pdf

Schlichter, J.  (2019). Alexander and the Indian King: Part 1; PM World Journal, Vol. VIII, Issue V, June.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/07/pmwj82-Jun2019-Schlichter-Alexander-and-Indian-King-Part1-2.pdf

 

 

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