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Child Support Software a Victim of Scope Creep:

In March 2003, the United Kingdom’s Child Support Agency (CSA) started using their new £456 million ($860 million) software system for receiving and disbursing child support payments. However, by the end of 2004 only about 12 percent of all applications had received payments, and even those took about three times longer than normal to process CSA thus threatened to scrap the entire system and withhold £1 million ($2 million) per month in service payments to the software vendor. The problem was thought to be due to both scope creep and the lack of a risk management strategy. The vendor claimed that the project was disrupted constantly by CSA’s 2500 change requests, while CSA maintained there were only 50, but the contract did not include a scope management plan to help define what constituted scope change request. And the lack of a risk management strategy resulted in no contingency or fallback plans in case of trouble, so when project delays surfaced and inadequate training became apparent, there was no way to recover.

Questions:

(a) How might a Project Charter as described below have helped avoid these shortcomings?

(b) What would you suggest to recover the project

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The Current State of Agile Project Management:

VersionOne, an enterprise software development company with products to support agile project teams, has conducte an annual survey for the last 10 years to better understand usage and trends of APM in software development. For it tenth annual State of Agile survey, data was collected between July and November 2015 and included 3880 complete surveys. Because of the diversity of respondents including industries represented, size of the organizations, and experienc with agile, the survey provides many useful insights into the state of APM. For example, 44 percent of the respondent worked at organizations with less than 1000 people while 25 percent of the respondents worked at organization with more than 20,000 employees. Respondents also represented a variety of industries including software (26 percent of respondents), financial services (14 percent), and professional services (11 percent).

A number of other industries were also represented including healthcare, government, insurance, telecom, retail, manufacturing, media, Internet services, transportation, consumer products, and utilities. Likewise, the respondents represented a diverse group in terms of their experience with APM with 19 percent indicating they had less than year of experience, while 25 percent had more than 5 years of experience. Finally, it is worth pointing out that the percent of respondents coming from outside North America has been steadily increasing. In the tenth annual survey, 56 percent of the respondents were from North America while 26 percent were from Europe and 11 percent were from Asia.

A key insight from the survey relates to why organizations are adopting APM. For the last 3 years, the top two reasons for adopting APM were to accelerate product delivery (62 percent of respondents) and to enhance the ability to manage changing priorities (56 percent). The respondents also cited numerous additional reasons for adopting APM including to increase productivity (55 percent), enhance software quality (47 percent), and enhance delivery predictability (44 percent). Furthermore, the results of the survey suggest that APM is helping organizations achieve these goals. The top three benefits respondents cited stemming from their APM initiatives have been constant over the last five surveys: ability to manage changing priorities (87 percent), increased team productivity (85 percent), and improved product visibility (84 percent). Other key benefits cited by the respondents included increased team morale, better delivery predictability, faster time to market, enhanced software quality, and reduced project risk.

Related to the reasons why organizations adopt APM and the benefits of deploying it, the survey also provides insights into how success with APM is accessed. According to the survey, for the last several years, the top three ways organizations accessed the success of their APM initiatives were on-time delivery (58 percent), product quality (48 percent), and customer satisfaction (46 percent).

Of course, APM is not a panacea for all that is deficient in traditional project management approaches and there are ample examples of agile projects that have failed (although in the survey only 1 percent of respondents stated that overall their organization’s APM implementation was not successful). Some of the leading reasons cited by survey respondents for agile project failures included company culture not aligned with agile values (46 percent), lack of experience with APM (41 percent), and lack of management support (38 percent). In addition to providing insight into the leading causes of agile project failures, the respondents provided insights into the key barriers for expanding APM adoption. The key barriers cited by the respondents included organizational culture (55 percent), general resistance to change (42 percent), and the existence of more rigid project management frameworks (40 percent). To help ensure APM initiatives are successful, the respondents suggest the following:

Implement consistent processes and practices (43 percent)

Utilize a common tool across teams (40 percent)

Utilize the services of agile consultants and trainers (40 percent)

Obtain executive sponsorship (37 percent)

Finally, while specific agile tools and methodologies are beyond our scope, it is interesting to observe which agile techniques were most commonly employed by the survey respondents. The top three agile techniques the respondents reported using included daily stand-up meetings (83 percent), prioritized backlogs (82 percent), and short iterations (79 percent). The most common tools used to support agile projects included taskboards (82 percent), bug tracker (80 percent), and spreadsheets (74 percent).

Questions:

(a) What do the results of the survey suggest about the applicability of APM beyond software development?
(b) What is your reaction to the tips offered to help ensure APM initiatives are successful?

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Managing Costs at Massachusetts’ Neighborhood Health Plan:

In just a 2-year period, Medicaid reduced its rate of reimbursement by 20 percent while the State of Massachusetts imposed higher eligibility requirements for health subscribers, thereby significantly reducing Neighborhood Health Plan’s (NHP) revenues and threatening its viability. In the past, NHP had controlled costs by controlling hospital bed utilization and increasing preventive medicine. However, no matter how low hospital utilization is, if hospital contract rates are expensive, the cost to NHP will be high. Thus, NHP chartered a project team to help it manage costs through better selection and management of hospital contracts. More specifically, the team’s charter was to develop a method to examine hospital contracts to assure that proposed rates were financially viable to NHP but high-quality care would be available when needed.

The team first selected the top 10 to 20 hospitals based on total annual payments from NHP for analysis. From these, they determined that to control costs effectively, NHP’s contracting philosophy would have to change from the current 95 percent of all line items per episode to a fixed cost per episode or per day per type of stay. The team then constructed a spreadsheet that allowed cost comparisons to be made across hospitals, which allowed management to bargain for lower rates or, if hospitals were inflexible, suggest to health centers what alternative hospitals to refer patients to. This and later developments by the team significantly enhanced management’s ability to contain their costs while guaranteeing that quality care would be available when needed. It also allowed management to examine and respond to contracts and proposed contract changes in a timely and informed manner.

Questions:

(a) Explain the trade-off between hospital utilization and contract rates.
(b) How did changing from a line item pay plan to an episode plan allow comparisons and save costs?

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Facebook Risks Interruption to Move a Terabyte:

Working on the bleeding edge of innovation is standard procedure for Facebook. To do so, however, speed is critical to their operation, and the combination of speed and innovation brings with it high risk. But Facebook is accustomed to handling risk. For example, a recent project involved a multimillion dollar effort to move a terabyte of data from a near-capacity data center to a new, higher-capacity data warehouse by the end of the year, only 100 days away, at the time. A terabyte (that is, a trillion bytes, or a million megabytes) is equivalent to 250 billion “Likes” on Facebook—a lot of data!

The project involved two phases: building and outfitting the new warehouse and then transferring the data. The new data warehouse was designed so the servers could handle four times as much data as the current ones, and the processors and software were upgraded as well, with the result that the new data warehouse could hold eight times more data and move and manage it more efficiently, all of which represented a savings of millions of dollars in energy costs. Given the short timeline and the importance of the hardware and software working together without a hitch, the project team took many steps to reduce the risks. First, they set clear expectations with both the vendors and internal stakeholders up front so everyone could fit their objectives into those of Facebook’s. In additions, they conducted round-the-clock testing of the hardware, the software, and the ability of both to work together to deliver the speed, volume, and accuracy Facebook was depending on.

To transfer the data to the new warehouse, they had a choice between loading the data onto the equipment before physically moving it to the warehouse (but risking lost or damaged equipment in the move) and moving and checking the equipment first, and then flowing the data directly to the new site (but risking a network outage or a site crash disrupting their entire website). They took the risk of the latter, but planned multiple risk avoidance steps. First, they had to calculate how long it would take to flow the terabyte of data, assuming no network failures or power outages—3 weeks! But there was still a risk that the data flow would use too much network capacity and affect the website. To avoid this, the team built a customer application to throttle the data by limiting and monitoring the bandwidth throughout the entire 3-week data flow. They also performed constant error-checking and data-level corrections to keep the flow synchronized and alert the team if problems arose. Their up-front detailed planning, constant monitoring, and risk avoidance measures paid off in a successful data move to the new warehouse, on time with no delays or downtime.

Questions:

(a) Would you consider the completion of the first hardware phase a milestone or a phase-gate review?
(b) What type of risk responses did Facebook use?