www.I’mRight.com

If you have worked within a consulting role and have led organizational change, when you seek out to learn something new to ultimately teach or guide your client through understanding it, how do you obtain your information?  I have noticed that it is very easy to fall into the trap of simply researching something until we obtain the outcome or feedback we WANT to hear, rather than obtaining quality information to validate the scientific approach we have taken to derive our original hypothesis.  

Some project managers may argue that this may not be a topic contained within our normal tool bag and I would tend to agree, unless you plan to operate as a project management consultant that helps lead organizational change.  Currently that is the capacity that I operate in, and as I read more and more medical journals, studies, reports, dissect tables, charts, and graphs full of statistical information it is very noticeable the data values are not properly developed.

As I make my way through these documents, I find myself recalling a class I had when in school for my BA degree.  The specific class was management science, and to this day is one of the most influential classes I had.  The basic premise of the class was to introduce proper methodology for developing a process to define a problem, design a method to analyze the data, and then know how to view the findings to then make an informed decision.  

The first step seems relatively easy but the remaining two steps proved to be the most difficult.  Consider an example of something that I have recently faced:

In order to implement a specific operational structure, a family practice or health system asked what it would cost to undertake this effort outside of the direct costs paid to our company to help facilitate this effort.  Essentially asking the question, what is the cost of ownership?  The question had been derived, but the problem wasn’t answering it, the problem was to determine how to answer it.  The problem isn’t simply, “how much indirect cost will be incurred for a practice to implement a specific organizational structure change” because that would mean that the indirect cost incursion is static across all types of practices.  

The consideration needs to consider practice size, number of providers, panel composition, socioeconomic status of panel, number of support staff, and IT capabilities just to name a few.  People who have studied economics understand the basic principle of economies of scale.  Knowing that there are nuances to cost incursion based upon the scale at which services or products are produced or consumed.  This is no different in healthcare, as the support staff and providers are able to handle different ranges of capacity for specific demographics of patients.  Once the demand scales up to the next range, and implementation of a larger work force is created, capacity is then not set at that particular level, yet it is possible to increase even higher with the same amount of resources.

Another consideration may be the buying power or cost advantage of purchasing medical supplies and a host of other considerations that could affect the overall cost of providing the same service as a much smaller organization.  Note also that the study should include different types of practices to gain an understanding of the costs experienced in all types of settings. If data is collected considering all the classifications and categories that relate to practices, the results can then be presented in a way that makes them searchable across the fields considered.  

Having project managed in several different fields, I have noticed that each field fails to notice what it could learn from another.  Not a conscious error, but something that is missed as I have watched each industry.  The main issue I have encountered thus far in my current effort is that the desire is to create a systematic tool of measurement that can be applied to all entities rather than developing criteria specific measurements.  

As illustrated in this post, it is necessary to consider all of the nuances that make each entity different.  When they are considered, measured properly, and are applied accurately the view into the information could be extremely influential.  There isn’t one source for all the answers; “I’mRight.com” doesn’t exist just yet :-)

Chris Thompson PMP, SSYB

1 Cup or 1/2 Cup…

I managed a project in the past that required a detailed analysis of the demand curve encountered pertaining to demand for services.  The project was a consultant model utilizing SME (subject matter experts) resources and project management resources to help the business better manage its demand, properly utilize its supply, and increase revenues.  

The first step in determining current utilization was to determine the true demand for services.  In order to do this, the business measured statistics for current usage levels as shown in the graph below:

Notice in the graph that the utilization statistics were monitored for 3 different services offered considering the age ranges shown on the left.  While this does give them a view into the service utilization and does give some view into the demand for these services based upon certain demographic age ranges, it does not accurately develop a demand curve. 

Consider that the age categories are of different cross-sections.  The first is a span of 4 years; the second is a span of 13 years; the third is a span of 9 years and the last is a span of 24 years.  The input from the business regarding the choice for the demographics used is based upon the variances found within these age divisions.  It was determined that there is very little movement or variation in the 51-75 category, so they tend to analyze this as a single category since the 51 y/o chooses services very similarly to the 75 y/o.  

While this may be true, consider that to accurately chart a demand curve to show the true curve without affecting the elasticity of the demand curve, the incremental measurements must be congruent in size.  Also, the more incremental the measurements, meaning measuring at 1/2c instead of a 1c increment will allow you a better view into the nuances experienced with the curve.  

By analyzing congruent demographic measures, and the smaller these divisions are, the more accurate the curve will be, you can more precisely capture the behavior of demand.  This is simply the first step in capturing the demand.  Once you establish the congruent size of measure you want to obtain, you need also to consider the duration of data you wish to obtain.  Within every industry there are seasonal variations of demand, so capturing but a short window of service utilization will cause the results to not be an accurate depiction of the true demand.

When considering the length of time to consider for capture, determine the fluctuations of your industry or specific business’s experiences.  Consider that time line, and be sure to encompass this entire span.  In this measurement, just as with the demographic measure used, consider using smaller increments.  Plotting more incremental data will give a more specific measure and accurate measure to the demand curve through your timeline.  

Let’s look at the example provided below:

Service A

Service B

Service C

Referencing the above charts, imagine if you had only gathered statistics for any one month.  The fluctuations for each demographic throughout the year are significant.  It may even be necessary to then take the aggregate demand needs and use a smoothing method and even consider utilizing a multiplier to consider smoothing for seasonality depending upon the type of resourcing model or inventory management system you use.  

For this example however, we will remain basic and notice simply that the demand fluctuates month to month for these services.  This is significant when it comes to determine the supply needed and how to deliver it cost effectively.  For thoughts around this example, if it takes one employee to provide one instance of each service, imagine the labor force projections you can develop by accurately gathering the true demand curve.

If you are producing a good, consider that you can level your resources and produce more than the demand when demand is low and below the demand when the demand is high, maintain steady production, and fulfill the supply needs.  This is something accomplished through the use of the seasonality smoothing equation.  It helps you develop the demand calculation but it helps smooth fluctuations you may encounter throughout your product life cycle so you can better manage labor force projections to maintain a steady workforce. 

Similarly, if you do have an extremely accurate demand curve, and find that your work is extremely seasonal, once you have analyzed the cost of maintaining a steady workforce, paying the overhead that comes with it, and the cost to store materials and front the capital to make the product, it may be determined that you want to move the size of your workforce to match the demand on your good or service.  

Another key consideration in production of a good or offering of a service you should consider is, “do you want to operate at 100% capacity?”  This is an important consideration for several reasons:

•  Do you encounter “add-ons” to contracts from customers 
•  Do you encounter delays in production or deliver
• Do your employees take vacation or call in sick
• ·         Do you want the ability to accept last minute contracts 

Hopefully you get the point.  Having available capacity helps mitigate these risks encountered in all businesses, and provides you the capacity to help with client related issues or personnel fluctuations.  The amount of capacity to operate at is up to your specific business, however many industries utilize the 80% rule.  

Hopefully the thoughts offered in this brief post can help open up discussion within your organization around properly developing a demand and supply analysis.  These are instrumental in labor force projections, inventory projections, revenue cycles, and many other measures and should be something you do with precision to ensure your business the best tools to learn from.  

Chris Thompson PMP, SSYB

A Better Mousetrap…

Within my current role, I work with Health Systems, hospitals, and practices to improve patient care of their chronic patient population, increase organizational efficiency, develop and standardize clinical workflows, and several other areas.  The model for this project does not follow a typical flow or process and my role lends itself to being more of an organizational efficiency consultant mixed with project management tasks heavily related to scheduling, client management, and helping lead organizational change.  

I often find myself answering to the same objections; the processes in place already work well and I don’t want to change.  Does this sound familiar?  Leading change is difficult enough when you have support both from leadership and the rest of the project team, but when shackled with conscious objections from those involved with the change effort it can become a daunting task.  What would you do to handle this challenge?  What method would you use?  Thus far a statistical showcase has proven quite helpful.  

Within any health system or practice the main payment method or arrangement is a fee-for-service model.  Increasing revenue then becomes merely an act of efficiently utilizing the same resources, in the same allotted time to render more services thus increasing revenues.  I can think of numerous places to start but one area I chose to start with was analyzing cycle times.  In other words, from the time to patient walks through the front door, to the time they leave, how long did it take.  Choosing what to measure was the easy part, deciphering how to, and getting the staff to measure it correctly became the challenge.  

Within any process or cycle time, regardless of the in/out time, there are interior process or sub processes that make-up the overall process.  Each one of these is much like any other project plan you may develop over the years in that they all have a predecessor or successor activity, have lead and lag times, and a critical path of completion can be derived.  Knowing this, I asked the staff to monitor cycle time for patients.  Specifically I asked them to once the patient walks through the door, follow them recording exactly when they did something, and who performed the process.  I asked them to record wait times, durations of processes, specify if acute, chronic visit, and any other appointment type, appointment length, appointment time-of-day, and appointment day-of-week.  Essentially I wanted a statistical account of their entire visit so that data could then be charted and aggregated to look for trends.  

Components I was specifically looking for were bottlenecks or snags in the process flow.  One of the most important components to finding a bottleneck was the comparison of active process and wait times within a given function.  For example, if the actual time to draw labs upon entering the lab was 3 minutes, but the wait time was 12 minutes, then I can quickly deduce that there is a disproportionate amount of wait time in the lab.  Hopefully that helps illustrate the need for the detail I had asked for.  

Now once the data was recorded and aggregated and I could look for trending, and as data continued to stream in, I could then look at run charts to see trending based upon time.  Did I then have enough to determine both bottlenecks and causes?  I was able to uncover the bottlenecks; however I was only able to uncover the causes of a couple bottlenecks.  Even though I could statistically show disproportionate wait times, I was unable to show root cause of the issue.  This is exactly what I wanted to have happen.  

Imagine you had built a mousetrap.  It trapped mice, was easy to clean up, your customers were happy with the product, and you made a decent profit off the sale of them.  Do you have motivation to change?  That depends on several factors but would speculate that if the profit margin provided a return you were comfortable with it might deter you from spending the time, money, and effort trying to change.  

This is the objection I had received from most of the practices I asked to obtain these measures.  As I mentioned earlier all I wanted was the data and to be able to show bottlenecks.  Essentially I was able to extract inefficiencies and show exactly how much revenue they were missing simply from inefficient clinical workflows.  How?  Consider the data I obtained.

I had a measure of how long it took to perform every task, on average, across each person who performed that task for any given appointment type, time-of-day, and day-of-week.  I could then aggregate that data and extrapolate what an average cycle time in/out would be for an acute, chronic, wellness, physical, etc.  I then was able to extract the average wait or idle time and again pull together and aggregate the information to show averages for each type of appointment or patient.  Once the two different measures were calculated, finding the lost revenue amount was fairly easy. 

Once I had accomplished this, I created an environment that became focused on improving organizational efficiency and defining better clinical workflows.  Remember that even though something may be working, doesn’t necessarily mean you can’t help an organization build a better mousetrap.  

Chris Thompson PMP, SSYB

Herding Cats...

Very often a business will contract labor, or specific components of a project to be completed through the use of an outside vendor or subcontractor. If your business does this, the rest of this entry will be to explain the methods I have utilized that provided the needed control to properly manage the subcontractors.  Although some of you will begin reading this only to think to yourself, “this is common sense” and I too had this thought….early in my career.  Over the years however, it has become very noticeable to me that this is not as simplistic as it would seem and many companies seem to be unaware of the tools available to manage subcontractors and prevent needless exposure.  

When it comes time to apply resources to the scheduled activities (if you have been reading along with my blog over the past few days, you know the pre-work that has preceded this step), this refers to both internal and external resources.  Technically, if following the PMP standards, securing subcontracted labor is considered to be part of the procurement phase since it involves the negotiations and securing of contracted resources.  Although procurement is the technical classification, it is still resource allocation.  

For the work packages or activities that your company does not specialize in, you will contract the work through an outside vendor.  Although the preceding sentence makes it seem as a quick and uncomplicated process, there are several steps you should follow to protect yourself, and to make sure the work is done correctly, on time, and at or below budget.  

When estimating a project, it is your responsibility to follow the proper steps in developing an overall project management plan.  This should be no different for each contract level, however if you are the contractor and are hiring a subcontractor, it is your responsibility when taking responses to an RFP to get not just a price quote, but also a project management plan.  

How do you make sure you get a proper project management plan when sending out an RFP to bidders?  Your responsibility is to provide specific requirements, scope, and expectations to your subcontractor, but you must also provide verbiage that stipulates penalties for contract non-performance.  Many industries conduct these functions by requiring bid or performance bonds and liquidated damages.  Bid and performance bonds are specific types of insurance policies that protect the general contractor in the event a subcontractor is unable to perform the work for a bid that was submitted and a contract was awarded for; alternatively the performance bond provides assurance that in the event the subcontractor is unable to complete the scope of work, then monetary damages will be paid.  

Liquidated damages are not widely used, but are one way to help motivate a subcontractor to stay on or ahead of schedule.  In enforcing liquidated damages, the contract stipulates that if the completion date set forth in the contract is missed due to the lack of timely completion by the subcontractor, and it was not caused by changes or project delays out of their control, they are then responsible for paying a fine amount for each hour, day, or week that the schedule is missed by.  Essentially if they miss their agreed upon completion date, their contract amount starts to be diminished by a set and agreed upon rate (this will be a topic I will cover later in this post regarding managing your subcontractor).

Another way to provide a check and balance system is to include any specific requirements that are stipulated by the Client or governing bodies within your RFP to bidders.  There may be certain participation requirements for minority owned businesses, or Union considerations, worksite rules and regulations, and many other possibilities.  If you are awarding a subcontractor contract that is a rider to your contract, the same rules and regulations most likely will apply.  

Once you receive back the bids, the anticipation should be that each bid provided should closely match the others.  Meaning, if there is an outlier in regards to pricing (extremely low or high), then either they misunderstood the scope and came in low because they neglected to include portions of the work to be done, or are pricing themselves out of the market because they either lack the capacity or desire to complete the work.  At first impulse, you may want to eliminate the outliers.  I would offer though that you may be leaving money on the table if you toss out the low bidder, but if you take this path you need to conduct a scope review with the bidder prior to awarding the contract.  During the scope review, a representative from your company and the person responsible for the estimate from the bidder will cover each requirement, scope item, rule, and any other detail that would be the responsibility of the contract awardee.  

If they are utilizing vendors or suppliers it would also be wise to ask for business licenses, references, permits, and past projects that were completed for each supplier and vendor they may use.  You shouldn’t be afraid to use a vendor that is priced relatively low compared to others; they may simply be a smaller company with a lower overhead cost, lower cost to market because of a specific competitive advantage, or simply want to “buy” work for specific projects to gain experience in the particular type of work being completed.  Again, make sure to error on the side of caution and require, and provide an explanation as to why you are asking for the information that the bidder provide adequate information showing their ability to perform.  

If your contract requires you to obtain a performance or bid bond, I would suggest that you make your contract awardees do the same (it may even be stipulated in your contract that all subcontractors obtain them).  This is another way for the bidder to show good faith and their ability to complete the work.  Remember that the specific insurance policies are earned and based upon the insurance company researching the ability to financially and competently complete the work.  

Now you have done it.  You properly researched the winning bidder.  You conducted a scope review, verified the schedule, reviewed and covered their specific project management plan, obtained their bid and/ or performance bonds, and secured a contract that stipulates all details, scheduling, and liquidated damage constraints.  Now it is time to put them to work…now what?

Do you simply turn them loose and let them run free?  Maybe once you have developed a great working relationship through completion of many projects together, but this is where your work should really begin.  Remember that the controls you have put in place (bid and/ or performance bonds, liquidated damages) are only enforceable if you can prove negligence.  In order to properly manage your subcontractor there should be specific methods set forth in their contract that help you do so.  You will need to obtain regular updates (in writing) from your awardee.  In these updates you will want to have copies of all purchase orders and delivery tickets for any goods that they are storing or had delivered to the project site, specific completion updates, projected completion items, and any issues or details that may be pertinent.  

It would also be wise to take progress photos if building a tangible project, or host demonstrations for IT type projects to ensure the progress is being made.  This should fall in line with part of your quality assurance plan, but is also good practice in case you are required to provide documentation providing proof of non-performance.  

Please don’t mistake these efforts as treating a subcontractor as a non-performer that you need to micromanage, but rather means that provide you a way to protect your investment.  There are tactful ways each of these items can be done, and also help build trust.  As you move forward in developing your business, the need for this type of specific oversight will become less and less as you build relationships with vendors.  Make sure you don’t stop conducting these behaviors and practices, although you have a great working relationship, any business is subject to financial or competency hardships and you don’t want to find yourself vulnerable.

Chris Thompson PMP, SSYB