Second Order Contracting

Last week I interviewed Michael Cavanagh, author of the recently released ‘2nd Order Project Management’.

Michael is a veteran of project management and has focused especially in the field of ‘complex projects’, by which he means situations fraught with uncertainty. He draws a distinction between these and projects that are merely ‘complicated’. To be complex, a project will be of high importance and is likely to have uncertain outcomes, or to lack clarity over how it will be achieved. As a result, it demands exceptional judgment and creativity – and the type of leadership that is ready to break rules.

For Michael, ‘1st order project management’ is a discipline that follows established methods and principles. It is conducted in accordance with a rigorous project plan, with extensive focus on meeting milestones and ensuring compliance. And it therefore requires a very different attitude and skill-set from the 2nd order project.

Michael’s research has led him to the conclusion that, while both types of project skill are of great importance, they are not interchangeable. Project managers with 1st order skills are not good at performing 2nd order projects. They are not able to deal with the uncertainty, ambiguity and rule-breaking modes of such tasks. Many outstanding 2nd order project managers may not have had formal project management training.

I spoke with Michael while his book was in preparation and provided my thoughts on the role of contracting and commercial skills in these two environments. Our thinking turned out to be closely aligned, with these skill challenges also applying to the contract management, procurement or legal professional. There are some who value discipline and certainty; there are others who flourish in environments fraught with risk and absence of definition. In general, those who are good at one are not especially good at the other.

This conclusion is important when we consider staff selection and functional organization and management. For example, how well do we consider the split of contracting and project activity when we design our organization and plan resources? How well do we analyze and recruit for the differing skill sets needed to perform against business needs? Managers tend to recruit in their own image; so how often do we finish up with a function full of first order or second order contracts professionals, and then proceed to complain that our team ‘lacks the right skills’?

To view a short video of Michael’s findings, click here