Adaptive Management

Intaver Institute Inc.303, 6707, Elbow Drive S.W, Calgary, AB, CanadaTel: +1(403)692-2252Fax: +1(403)459-4533www.intaver.com

Power of Adaptation

Will Polar Bears Be Extinct Because of Global Warming?

Hopefully not, as they are capable of adapting to changing conditions

Adaptive Management

Adaptive management is a structured and systematic process for continually improving decisions, management policies, and practices by learning from the outcomes of previous decisions.

Proposed by ecologists C.S. Holling and Carl J. Walters as a framework for managing ecological problems

Adaptive management of fish stocks

Agile Project Management

We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:

Individuals and interactions over processes and tools

Working software over comprehensive documentation

Customer collaboration over contract negotiation

Responding to change over following a plan

From the Agile Manifesto:

Main Principles of Adaptive Management

• Iterative decision-making: make choices based on learning from the outcomes of previous decisions

• Strategic flexibility: avoid irreversible decisions

• Continuous quantitative analysis: multi-model analysis and hypothesis testing

• Measurement of actual performance

Organizational Principles Quantitative Methods

PMBOK® Guide About Adaptive Management

The PMBOK® Guide (Project Management Institute, 2004) does not explicitly use the term adaptive management.

However, you will find important information related to adaptive management in two process groups: project execution and project monitoring and controlling.

• Monitor and control project work

• Integrated change control

• Quality Control

• Risk Monitoring and Control

The project monitoring and controlling process group includes the following project management processes:

Most Living Organisms Are Able to Adapt

Except one creature

This creature is the project manager

Why? - Human psychology

Tendency to Be Consistent

People tend to resist any inconsistencies for themselves and others

The ability to change direction based on external input is an important skill for project managers.

A police interrogation technique is based on an attempt to find inconsistency in the statements.

Sunk Cost Effect

X-33’s composite liquid hydrogen fuel tank failed during testing in November 1999.

Lockheed Martin proposed to complete the development of the X-33 by replacing its two composite liquid hydrogen tanks with aluminum tanks. But NASA concluded that the benefits of testing the X-33 in flight did not justify the cost.

X-33 investment: $912 million

NASA overcame the sunk cost effect: a cost incurred in the past that affects present or future decisions. Sunk costs should be ignored.

Good example

Bad example

Concord project

“Guilt of Indecisiveness”

Organizations expect managers to make decisions, even if managers do not have enough reliable information required to make these decisions.

Decisiveness is a clear plan that: outlines when, where, and how to collect missing information, and when and how to make decisions.

Active and Passive Adaptive Management

ProjectStrategy

ProjectExecution

ProjectMonitoring andControl

ProjectEvaluation andReview

ProjectPlanning andScheduling

Reevaluation if Strategy Failed

Adaptive Learning

IterationPlanning andScheduling

IterationStrategy Execution

Iteration

ReviewEvaluation andIteration

Monitoring andControl

Iteration

StrategyIteration Hypothesis

Generation

Modeling

Modeling

Modeling

Execution

Execution

IterationMonitoring andControl

IterationEvaluation andReview

Adaptive Learning

Hypothesis testing

Traditional Approach

Passive Adaptive Management

Active Adaptive Management

PMBOK@ Guide

Agile Approach

Should she kill her cow?

1

2

3

$2/lb

$3/lb

$5/lb

Or how people make irreversible decisions

Three irreversible decisions

Avoiding Irreversible Decisions

• Rule # 1: Always consider alternatives• Rule #2: Try to postpone the most important

decisions for as long as possible, so as to be able to collect new information

• Rule #3: Try to minimize the cost of decision reversals

Continuous Quantitative Analysis

• Use multiple models (project schedules) to plan and analyze the project

• Always perform project performance measurement; use reality checks at each project milestone

• Perform quantitative risk analysis to generate actual forecasts at each project milestone

Role of Project Metrics

Hypothesis testing

Adaptive Learning

ReviewEvaluation andIteration

ControlMonitoring andIteration

Execution

Execution

Modeling

Modeling

Modeling

GenerationHypothesisIteration

Strategy

Project Metrics are used as part of active learning and hypothesis testing

Quantitative Analysis: Practical ExampleProject schedule

What will happen with this schedule if certain

risks occur?

Risk Breakdown StructureIdentify risks with probabilities and

impacts

Track Actual Project PerformanceSome tasks are 100% complete

Other tasks are partially complete

or incomplete

What will happen if the project schedule is based on information about actual performance?

Adjust Your Forecast Based on Actual Data

Original (baseline) project duration Project is partially

done (actual data)

Forecast: Low, Most likely, and High estimates

Analyze and Forecast Your Cost With Risks and Uncertainties

Cost forecast (with risks)

Original cost estimate

Actual cash flow

Quantitative Analysis of Iterative Development Process

Risk20%

Risk20%

Risk20%

Risk60%

Scenario 1

Scenario 2

Why You Should Mitigate Risk As Soon As Possible

Is Your Company Ready for Adaptive Management?

The Role of the Business Environment

A small test will help determine the “adaptive management maturity” in your organization.

Test Question 1

• Dismiss the idea on the spot – 0 pts• Promise, but never actually perform a review – 1 pts• Conduct a detailed and serious review immediately – 4 pts

A young engineer comes to the senior manager with a proposal to save $10 million on a $50 million project. According to his plan, the project will be completed on time, but 20% of the work will need to be redone.

How would the manager respond?

Test Question 2

• The failure occurred because of weather, contractors, bad materials, Lord Voldemort, aliens, etc. – 0 pts

• Due to unpredictable and unexpected circumstances our team had some issues - 1 pts

• We screwed up badly, but we know how to fix it - 4 pts

A project manager and his team fail badly on a project. The project manager must explain what happened to senior management. Senior management does not understand the scope of the project. How would the project manager explain the situation?

Test Question 3When did your organization or team last have a meaningful project review or evaluation?

• During the last ice age or earlier – 0 pts• When something exploded, someone killed, etc. - 1 pts• When we completed our last project - 4 pts

Test Question 4Do you use an iterative project development process in your organization?

• What is an iterative project development process? – 0 pts• For some projects, if necessary - 1 pts• This is how we manage complex projects - 4 pts

Adaptive Management “Maturity Assessment”

• 0 – 8 – Your projects will benefit from adaptive management practices as soon as they are established in your organization

• 8 – 12 – Your organizational culture supports adaptive management, but there is opportunity for improvement

• 12 – 16 – You probably don’t need to be at this presentation: your organization already has good adaptive management processes.

Recommendations

1. Whenever possible, do not define a detailed project plan upfront, instead use an iterative project management approach.

2. Always identify multiple project alternatives or hypotheses; model these alternatives; and if it is deemed beneficial, start implementing a few alternatives at the same time.

3. Use quantitative risk analysis at each phase and iteration of the project.

Recommendations4. Integrate original assumptions and new learnings when planning next project iterations.

5. Try to minimize the cost of decision reversals; minimize risk by keeping the option to change project direction available.

6. Ensure that adaptive management is implemented within a creative business environment, which is characterized by a collaborative structure for stakeholder participation and learning.

Future Reading

Lev Virine and Michael Trumper

Project Decisions:

The Art and Science

Management Concepts, Vienna, VA, 2007

Questions?