Fundamentals of a Good Analysis and the Villain Called Perception

082615-Variance Analysis

Some five to ten years ago, a Project Controls colleague asked an interesting question. It is about the analysis/reports that our PC Group completes periodically. Some of the reports are “as required” but most times on a fixed cycle; e.g. bi-weekly, monthly, quarterly and annually.

He asked us, “What are the attributes of a good variance analysis?”

Reflecting on the questions, all which matter most, came pouring forth. While writing the bulleted central piece of what a good analysis/report is like, I felt strongly that most, if not all of what I’ve scribbled are also applicable to all types of analysis or report-type documentations. It is a pleasure to share these ideas, especially to all the management professionals out there.

Attributes of a good analysis/report

• Based from high quality data: aligned, categorized/grouped, layered, integrated, has levels, and properly scaled (analyst must be aware of Simpsons Paradox and the effect of central limit)
• Based on more complete information, the better (no information is much better than wrong information)
• Accurate data ‎correlations
• Concise and to the point (succinct)
• Objective and true
• Meets purpose (goal); has good value
• Unbiased
• Observes accepted rules on priorities
• Helps one make better decisions
• Based on less assumptions-more facts
• Based on mature data
• Logical (passes the good sense test)
• Has solid backup (references)
• Timely (This is very important because I believe that all useful analysis are time-bound)
• Tailored to the audience requirements (tied to objectives)
• Uses accepted/acceptable methodology
• Good quality data source-know how they were generated
• Right FORMAT

The Villain Called Perception

To test a theory that I was playing around earlier, I grabbed one analysis report from a very old file of yesteryears and looked at it. It is a schedule variance analysis/report, handwritten and legible, but lacks modern day esthetics. It is not the perfect engineering blocked lettering that many old-timers love. The report is excellent. The message is clear and to the point. Schedule delays presented through date’s variances against the baseline dates are credible and make sense. They are physically real and not a by-product of some scheduling magic trick. In brief, the analysis passed the common sense test. A veteran, old school, risk-based management practitioners would love it.

082615-Perception2Curious as to how others in the Construction team see the report, I brought the analysis to five managers (three Project Controls Managers and two Project Managers) and asked what they thought of the report. Three out of five managers (60%) said that the report is not valuable because it does not help them make the decision quickly. They explained what they are looking for in details. In response, I began to point to the information they are looking for on the various sections of the report. To their amazement, the analysis actually addressed their individual objectives almost point for point. Flabbergasted with the realization that they missed the information they were so intently looking for, they tried to explain themselves.

“I thought the information isn’t there,” said the first.
“My perception is that the report is just a draft,” said the second.
“Who does handwritten report these days? It is not presentable so I figured, it has nothing in there,” the third man said. “I did not even bother reading the second page.”

The two others said that it is confusing and added that the report would look better if it was computer/printer generated.

“The report is too long and it is handwritten,” Joe said.
“I do not accept any handwritten report. They are not professionally done so they usually do not have anything of value in them,” concludes the fifth.

The effect, presence, and influence of this relationship villain called perception became so glaring that even right information turned out unacceptable. To sum up the five manager’s comments, they are all saying that their perception of the schedule variance analysis is poor.

The problem with the word perception is that it lacks the base premise of properly identifying what a poor variance analysis or what a good variance analysis is. Whatever comes from within the influence of perception will not provide a useful indication of what any analysis should be. Perception is something one believes in as true regardless of what it really is. The report might be correct. It might be a sound analysis but someone perceived it to be erroneous! The perception is that it is wrong. If perception is poor, it does not really mean it is poor or lacks the quality of a good analysis. The perception might just be the result of the reader’s limited understanding. Perhaps, it is because of his personal biases and preferences.

“Perception is one of the reasons why analyst must exercise care in accepting and presenting values from various stakeholders without understanding their frame of mind (personal objectives). It is important to bring everyone to think within one frame of thoughts so that all perspectives are from the same footing. It prevents selective perception (Frago, R., 2015).

Selective perception refers to instances where you see what you want to see (Intaver, 2006). This occurs when one’s intention is to fit or influence the estimate to fit the mandated cost limitation when preparing the project’s budget (Frago, R., 2015.Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective).”
Important and relevant questions are answerable by an analytical report that has the above qualities. If someone asks, “What is the root cause of a particular schedule variance?” the answer should be in the report. All valid questions must be answerable by the analyst’s backup information.

There are questions that are just not properly phrased. The report’s inability to answer the question lies on the quality of the question and not the result of the analyses. Take this for example: “Should the schedule variance be corrected?”

I therefore conclude that the report format will help analyst get through the perception barrier a lot better. Using the right format brings the reader attention to the right spot very quickly. All companies have forms and templates covered by their individual standards and procedures. Employees have to follow these templates or risk the same situation described above.

Maybe not a good question because a variance is a variance. It is what it is. Only errors should be corrected and this is not an error. The context of the question lacks clarity and will likewise elicit a muddy answer. The question is probably asking if one should correct something given a variance (deviation to plan). One thing to note is this, a variance does not mean it is wrong or bad or something needs correction. A variance, even a big variance might be something we want. It might be something the project wants. Think about your goal. If a person wants to exceed expectations, he will end up with a variance; i.e. a positive variance. If he actually exceeds expectations several points over, it is an acceptable variance.

Is the analysis time-bound? All project management/risk-based management type analyses are time-bound. Can anyone think of a risk-based analysis that has no time component to it? There was a lot of discussion related to this topic in the past somewhere. Let us see if someone will bring the concluding thoughts of their discussions here.

Rufran C. Frago – Author (081915)

Note: Article was first published in Linkedin Pulse on August 27, 2015.

Other articles authored by Rufran Frago:

1. Risks Surrounding Canada’s TFW Part 1
2. Risks as a Function of Time
3. Project Schedule: P50, Anyone?
4. Changing the Culture of Your Organization
5. A Person Perceives Others Based on His Own Interest
6. How Can Management Motivate and Empower?
7. How Can Managers Increase Leadership Effectiveness
8. Risks Surrounding Canada’s TFW Part 2
9. Scaffolding Hours: What are they? Directs or Indirects? Part 2
10. Oil Price, Recession: Causes, Issues and Risks

ANNOUNCEMENT! The paperback and Kindle edition of the book “Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective” are now available. Please follow the hyperlinks for more information.

The book provides new/additional knowledge to project management practitioners (beginners to experts), risk management specialists, project controls people, estimators, cost managers, planners and schedulers, and for students of undergraduate courses in Risk Management. The sectional contents offer practical and common sense approach to identifying/managing risks. It is a must have for company managers, directors, supervisors, aspiring industry professionals, and even those students fresh from high school. The material is especially design to start with the foundational principles of risk gradually bringing the reader to deeper topics using a conversational style with simple terminologies. Check it out!

062215-Book Cover (Hero) Small 1

Source: Frago, R., 2015.Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective


About rcfrago

Rufran C. Frago is a practicing Professional Engineer (APEGA), a PMP (PMI), a CCP (AACE) and a RMP (PMI). He has published more than 100 articles. He is the author of the book Risk-based Management in the World of Threats and Opportunities: A Project Controls Perspective He studied at Batangas State University and University of Batangas graduating with a Diploma in Petroleum Refinery Maintenance Technician (1979), Bachelor of Science in Mechanical Engineering (1984), and Bachelor of Science in Management Engineering in 1987 respectively. He was in his senior year taking up Bachelor of Science in Electrical Engineering, needing only one semester to complete, when he took a break to concentrate on married life. Rufran has never stopped academic learning after getting his degrees in the University. He continues his education by taking up some MBA courses under the University of the Philippines-PBMIT Consortium (1987-1988). He completed Computer Technician Program at International Correspondence School, Pennsylvania, USA in 1994, Applied Project Management Certificate program at Southern Alberta Institute of Technology in 2009, and Professional Management Certificate program specializing in Construction Management in 2014. He is now completing the Professional Management Certificate program specializing in Risk Management. He was a recipient of the Gerry Roxas Leadership Award (1976) and the American Field Service (AFS) Scholarship in 1976-77, studying in America for a year. Upon his return in 1977, California-Texas Philippines (Caltex Philippines Inc.), one of Asia’s biggest oil and gas refineries at the time, awards him with a two-year national college scholarship, specializing in Petroleum Refinery Maintenance. He went on extensive training in various maintenance disciplines for the next two years. Caltex hired him upon his graduation in 1979. He has spent more than 38 years of his life working in the Oil & Gas, Petrochemicals, Oleo-chemicals, Sugar Refining/Manufacturing, Consultancy, High School and University Education industries in Asia, Middle East, Canada, and North Africa). Rufran has worked with Caltex, Uniman, Unichem (now Cocochem), ARAMCO-KSA, Central Azucarera de Tarlac, Arabian Gulf Oil Company-Libya, Batangas State University, St. Bridget’s College, JG Summit Petrochemicals, Halliburton-Kellogg, Brown and Root, and OPTI Canada. He works with Suncor Energy Inc at present. He has wide range of expertise that includes problem solving, project management, training and mentoring, programs and projects planning and scheduling, cost management, risk-based management, construction management, project review and auditing, estimating, engineering and design, fabrication and module management, maintenance, operation, material selection, warehousing, EH&S and reliability engineering (predictive and preventive maintenance). He wants to share his knowledge and leave behind some form of legacy to all specially his wife, children and grandchildren, Eva and Mia.
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2 Responses to Fundamentals of a Good Analysis and the Villain Called Perception

  1. Pingback: Fundamentals of a Good Analysis and the Villain Called Perception | Your World, Our Risk Universe

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