Pat O'Toole's Dos and Don'ts of Process Improvement: DO Your Level Best To Stay Under the Threshold
In the September 17, 2001 issue of BusinessWeek, in an article entitled, "America, This is Really Gonna Hurt", Joseph Weber writes,
If Tom Lerche or anyone else in his family falls seriously ill this year, he'll be paying a lot more of the bill. Under a new medical plan, his employer, Aon Consulting Corp., is providing up to $2,500 for routine doctor visits and medicine. But after that, he has to pay every dollar until company coverage kicks in again at $5,000. The company "is trying to get employees to behave as if they're spending their own money," says Lerche, a senior vice-president. People who reach into their own wallets, he says, "may be more cautious and conservative. They're more likely to consider a generic drug or ask a provider more about fees."
Imagine that Tom's medical expenses are reported to him on a quarterly basis, and in April he learns that his family has accumulated $1,000 of reimbursed medical expenses in the first quarter of the year. What would you expect Tom to do based on this information? What if the statement at the end of the second quarter indicated $1,700 had been spent to date? Forget about Tom what would YOU do?
Tom's company has set a $2,500 pain threshold literally! Their stated intention is to have the employees monitor and manage their own medical expenditures by implicitly answering the proverbial question, "What's in it for me?" Rational employees will track their medical expenditures and will initiate steps to curtail their discretionary spending early should they forecast that the threshold might be exceeded.
In the wonderful world of software, many organizations establish size, effort, cost, and schedule thresholds as suggested by Integrated Software Management (ISM) at CMM Level 3. However, many of these same organizations are under the mistaken impression that corrective action need not be initiated until a threshold is exceeded. For example, if the effort threshold is set at 10%, and this month's status report indicates that the project is only 7% over its effort estimate, there is no need to take corrective action, right? Would your answer change if the same project were 10% under the effort threshold last month? Although the current value is acceptable, the trend line clearly indicates trouble ahead.
Fortunately the CMM authors are better writers than most practitioners are readers. ISM actually states,
"An effort and cost threshold is established for each individually managed software task or stage, which, when projected to be exceeded, requires action."
In contrast, at CMM Level 2, Software Project Tracking and Oversight contains a goal that states,
"Corrective actions are taken and managed to closure when actual results and performance deviate significantly from the software plans."
By waiting until the 10% threshold is exceeded to initiate corrective action, the project has simply established a numeric definition for the word "significantly." If Tom were to wait until he exceeded the insurance threshold before he started curtailing his medical expenses, we'd likely characterize his behavior as "naïve" or even "irrational"; in CMM terms we'd tend to use the kinder, gentler term "Level 2."
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