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The Secret to Project Cost Accounting in Agile | Part 1 of 3

Mar 28, 2019 5:13:43 PM

First of Three

If you've read my other blog posts or watched one of my webinars, you should be familiar with my tendency to intertwine somewhat unrelated concepts together. I like doing this because it gets folks thinking: thinking about serious business and process things in a totally different context. This is the first of a three series blog. Today's topic: The secret ingredient is nothing.

pandaSecret Ingredient

In DreamWorks Animation Kung Fu Panda, Po states to his dad, Mr. Ping (a goose), that he doubts he is his son. Mr. Ping looks at Po very seriously and announces he has something to tell Po. Po, at his most vulnerable, and by proxy, the audience, expects the Big Reveal: Po the Panda is not the son of Mr. Ping the Goose. Instead, Mr. Ping reveals the Secret Ingredient in his Secret Ingredient Soup: nothing. This leads to Po's epiphany that he in fact is worthy, is the Dragon Warrior, and, with the Furious Five, can defeat Tai Lung. Po has had the ability all along and nothing can stop him if he believes in himself.

Project Cost Accounting

Most organizations work with what is called a Project Cost Accounting model. If an effort provides the most value to a specific cost center, the cost center is responsible for estimating costs as well as the length of time for the project. While other costs such as rent, infrastructure, licensing, etc., are factored in, the most expensive resource is the people. The Project Cost Accounting model respects capacity management and resource leveling. If we need to release something in six months (26 weeks) and it will take 26,000 hours: 26,000 hours at 40 hours per week for 26 weeks is 25 people. Multiply the hours by the average cost rate ($50/hour) and the effort will cost $1,300,000 plus "other costs" such as infrastructure and the like. The Project Manager asks for the funding from the specific cost center and the project moves to execution mode (moving the Teams to the work). In reference to Kung Fu Panda, Master Oogway states that Po shall be the Dragon Warrior much to the dismay of the Furious Five and Master Shifu. No effort to dissuade him shall be heard. Raise your hand if you've ever started or managed a project that has left you feeling slightly dazed, incredulous, or rather disheartened.

Iron Triangle of Project Management

So you embark on your quest...er...project. Master Shifu tries to train Po using the traditional methods that were successful for the Furious Five. This leads to hilarious confrontations between the two as little progress is made and Master Shifu resents his time spent with Po. Much like Master Shifu tries to fit Po (and the team) into his model, the Project Cost accounting model adheres to the Iron Triangle of Project Management as well as several other assumptions. The other assumptions include: skill set is equal across resource types, resources are fully dedicated to the project, resources are in place on day one of the project, and work starts day one of the project. We know this is not how it plays out in the real world. Skill sets differ based on experience or technology, resources are usually split between multiple efforts, hiring and onboarding processes delay resource start dates, and work will start on the first day, but not everyone will have work to start on the first day.

An Agile Team is Fixed

The fact remains the Project Cost Accounting model is flawed when managing agile development teams. The strength of the agile Team is their ability to self-organize and create a predictable Velocity. Even before Po joined the Furious Five, Tigress, Mantis, Crane, Viper, and Monkey became legends throughout the Valley of Peace by working well together. An Agile Team is fixed: the number of resources should not change. Project cost Accounting comes into direct conflict with agile planning: because my team of six people is fixed, I will only ever be able to get 240 hours out of the team per week (40 hours per person per week). If the project is estimated at 26,000 hours, it will take 108 weeks to complete and exceeding the release timeline by over a year and a half. While an agile Team removes the assumptions of equal skill sets, dedicated resources, day one start, and day one work start, the 6-month deadline is still real.

Agile Team Dynamics

Tai Lung is headed to the Valley of Peace and he will arrive within a specific timeframe. The Furious Five (plus Po as a noob) then head off to defeat Tai Lung before he reaches the Valley of Peace. As we know, the confrontation does not go well. The team slinks back to the Valley of Peace bruised, broken, and defeated in more than the physical. In-fighting, blame, distrust: there's a reason as adults we relate to kids' movies. In this moment, Po is "that guy". Po's mistakes put Tai Lung's defeat at risk and prolonged the timeline. It also impacted the entire Valley of Peace and allowed danger to further encroach on the innocent. Raise your hand if you've ever felt the same during the course of a project.

If only we had thrown an army at Tai Lung! We could have easily defeated him before he arrived in the Valley of Peace. This incorrect assumption based on Project Cost Accounting then destroys the trust of the PMO in the agile organization. The dynamic of the team as it comes together only by playing off each others' strengths and weaknesses and acting as a team.

Don’t Disrupt the Team

Once the Team is set, it should not be changed based on Resource Leveling or Project Cost Accounting. Instead, moving smaller pieces of work to the Team results in greater throughput. Prioritizing the smaller pieces of work correctly to fit a deadline is critical as well. Po's training was very disruptive to the Furious Five and Master Shifu's Inner Peace. However, once the Team organized and defeated Tai Lung, they were able to save Kung Fu in Kung Fu Panda 2 and expand the lessons learned by Po to a whole village of pandas in Kung Fu Panda 3. The same can be said of Agile Teams or Teams of Teams. Adding a person to a Team to a Train or adding a Train to a Solution Stream based on Project Cost Accounting will disrupt the predictable velocity of the Team or Train and will likely discourage them from innovating or taking risks. The same goes for removing a Team or Train. Adding resources as dictated in Project Cost Accounting will cause disruption and will not allow you to vanquish your enemies...er...complete your project any sooner.

More Secrets

The Secret to Project Cost Accounting in Agile is this - There is no secret. If you follow the concept of an Agile Team, Project Cost Accounting and ROI in an agile framework is simple. If Teams are fixed and Agile Release Trains are fixed, resource costs are fixed. SAFe embraces this within Lean Budgets. It simply requires the organization to completely change how project financials are planned and reported. Stay tuned for next week’s blog, part 2 of 3, where I’ll share more secrets of Project Cost Accounting in Agile. 

Written by Amanda Babb

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