Ultimate Project Management Toolbox
Have you ever wanted to run a project like Elon Musk? What about the ability to predict a project's success like a financial analyst at Goldman Sachs? Here's the Ultimate Project Management Toolbox that every project lead needs in their toolbox to ensure success from the very start. You'll gain how to calculate internal rate of return, conduct Monte-Carlo analysis, manage teams with a RACI matrix, write a project charter, track project status with dashboards and Gantt charts and conduct a post mortem survey.
With this framework, you'll learn the various stages of project management, from how to evaluate your project's viability, manage your team, track your progress and successfully complete your project with valuable takeaways for your next one. We'll use real-world examples from companies like SpaceX, Instagram, Microsoft, and also share an often-forgotten project management fail from Amazon and how you can avoid similar mistakes.
RACI assignment framework
Once you know your project's risks and potential rewards, it's time to assign roles and responsibilities.
In 2015, Instagram's Head of Engineering had a problem — the company had a low transparency score in a survey of employee satisfaction. He discovered the issue was a lack of clarity behind how decisions were made. The issue wasn't communication about decisions, but communication about why decisions were made. So how did Instagram solve its clarity problem? A framework called RACI Team Roles & Responsibilities. (Slide 23)
RACI stands for Responsible, Accountable, Consulted and Informed. Under the RACI framework, roles are assigned based on who is responsible for a decision, who is accountable for that decision, who is consulted before the decision is finalized and who is informed of decisions when they are made. The purpose of RACI is to make sure all stakeholders know their responsibilities, confirm that resources are rightfully allocated, and create transparency so everyone is on the same page and be held accountable for what they are responsible for.
In Instagram's case, fewer decision-makers and more transparency around who made the decisions made it possible for the teams to move faster. Leaders were held more accountable and the RACI framework was scaled across the company.
You've assigned team roles and everyone knows their responsibility on the project — but how do you keep the team focused on the project's main goal, especially over long timelines?
In 2002, Elon Musk wanted to buy a rocket to begin his dream to send humans to Mars. However, the price to buy one cost as high as $65 million dollars. Musk used a concept called "first principles" to think about how he could reduce costs enough to solve the financing problem. It turns out the raw materials only cost around two percent of the price of a rocket, so he purchased the raw materials and built one himself. Musk was not only able to cut the cost to launch a rocket by 10x, but did it at a profit. As a result, SpaceX is now worth roughly $74 billion as of September 2021.
To apply the concept of first principles to your own projects, you can use a project charter to unite all internal and external stakeholders around a common purpose. A project charter is not only the "elevator pitch" for your project's goals but outlines the scope of the project as well as its technical requirements, risks, constraints, assumptions and dependencies. These core principles of a project set expectations as the project develops, and can be used as the source of truth that grounds all stakeholders to stick to the plan.
The project charter also outlines the project's timeline and budget, key stakeholders in charge, and criteria for success, so everyone involved knows who is responsible for what and what accomplishing the project should look like.(Slide 29-31)
Project dashboards and gantt charts
So now that you have a plan that's built on a strong foundation, how is that plan going?
Successful project managers need a project status dashboard tool to track their project's status across phases and key performance indicators. This dashboard helps communicate project updates to external stakeholders and internal team members. You can measure your time versus product phase and timeline versus resource capacity to measure your current status against goals outlined in the project charter. (Slide 39-43)
To follow your progress over time, use a Gantt chart to outline your activity's progress against multiple timelines, with different visualizations for monthly, quarterly, half-year or full-year views. (Slides 44-50)
With the tools to track progress and stay on schedule, you should have all the resources you need to complete your next project — so what do you do when the project is over?
In July of 2014, Amazon launched its own smartphone, called the Amazon Fire phone. But two months after launch, Amazon already began offering massive discounts to make the phone practically free with a contract. A month after that, Amazon wrote off nearly $170 million worth of Fire Phone inventory as a loss, eventually discontinuing the product completely. While Amazon's Kindle e-reader was a massive success that enabled on-the-go reading, the Fire Phone was dead-on-arrival. So where did Amazon go wrong? Amazon likely asked itself the same question in a boldpost mortem meeting.(Slide 54)
To ensure future success on your next project, make sure to conduct a post-mortem meeting where you can hold a team survey to learn insights on where your team felt the project succeeded or where there's room for improvement. You can survey the project as a whole or its individual achievements. You can also survey the team's collaboration and productivity, or even survey your own management style to learn how you can improve your project management. These post-mortem surveys gather feedback from everyone so you can turn your next project into an even greater success.
In Amazon's case, a post-mortem revealed that instead of Amazon's typical emphasis on what the consumer wants, they built a phone no one wanted when all the consumer needed was a new app or two.
Before a project begins, you need to figure out how much it's going to cost.
According to Goldman Sachs, over $504 billion dollars of stock buybacks were issued in 2021 — the most in over 22 years. Microsoft made headlines when it announced its own $60 billion dollar stock buyback program in September. So how do companies like Microsoft make the decision to deploy so much capital to stock buybacks? The answer is anIRR calculation.(Slide 8)
To calculate a project's cost, project managers use a tool called an internal rate of return, or IRR, formula. IRR calculations are used to weigh a project's expense against its potential gains. Corporations use IRR to evaluate stock buyback programs. In Microsoft's case, Microsoft used IRR calculations to determine owning more of their own stock would be a better investment in the long run than an acquisition of another company.
Typically, IRR is calculated via Microsoft Excel, as hand calculations require a lot of trial and error. To determine your project's IRR, estimate the initial cost of the investment and how much it will bring in future cash flows. You use these assumptions and plug them into the IRR formula to see if the cash inflows negate the initial investment's outflow to make the net present value of the project equal zero. (Slide 7)
As a project manager, you should always pick a project with the highest net present value, not the highest IRR. This is because the IRR is the lowest level of return to recoup an investment, while a higher net present value points to the long-term value of a project.
After you know the cost and benefit of a project, you will also need to calculate the associated risks. Many project managers need to conduct a project risk analysis to determine potential downside concerns before undertaking a massive new venture.
Goldman Sachs has a new technology it plans to use to conduct its risk analysis: near-quantum computers. The current risk analysis models used by Goldman analysts take a ton of computing power and are often done overnight. While a fully quantum computer could perform these simulations a thousand times faster, this technology is still ten years away. However, near-quantum computers could run these simulations 100x faster and could be ready in five years or less.
The formula these simulations run is called a Monte-Carlo analysis, which is used to predict the probability of different outcomes as random variables are added. To use a Monte-Carlo analysis, assign multiple values to an uncertain variable to get a range of results. Take the average to obtain an estimate, which usually takes the shape of a bell curve. The average return becomes the most likely outcome, with an equal chance that the return could be higher or lower.
Because of the way Monte-Carlo works, it can be assumed that there is a 95% chance the end result will wind up within two standard deviations from the average.(Slide 12)
For more tools on what makes project managers successful, download this framework. You'll gain additional tools like cost estimation tables, net present value calculators, project benefits maps, project design structure matrices, work breakdown structures, critical path diagrams, kanban boards, and so much more. Enjoy!