Manage Software Projects like a VC
Engineers are responsible for creating solutions to given problems; engineering managers (EM) are responsible for estimating, planning, and executing projects. Engineering project execution hence is the elusive process of turning resources into output or investment into returns. The quality of execution is directly related to the amount of return on investment. What drives the quality of execution? 1/ project parallelization, 2/ adapting to changing scope and complexity 3/ time to market.
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An engineering manager’s KPI isn’t the speed of output but the rate at which value is created for the stakeholders every quarter. In other words, the job is comparable to that of a venture capitalist: the project selection (portfolio companies), project runway (time to revenue), and the people allocated to projects (capital) matter a whole lot.
Like VCs, managers should strive to allocate resources in a way such that 1/ the portfolio is balanced, i.e. not having all eggs in one basket, 2/ reigning in scope and aligning with stakeholders on changing estimated ROI, 3/ delivering value to stakeholders every quarter. (Caveat: a VC fund has a much longer runway than an engineering team.)
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To balance the portfolio, select projects in terms of ROI and risk. The PM and EM should already have the potential projects planned and ranked in terms of ROI. It doesn’t mean the order of execution is top to bottom. If the highest ROI comes with a high cost (people, runway, etc), it carries a high risk (more likely for the runway to extend). It is thus best to choose a lower-risk project to accompany a riskier one.
Sometimes, while projects are in flight, upon realizing the quarterly value creation is at risk, EMs may have to negotiate with the PM to defer certain features to a later quarter.
In my experience as an EM, Gantt charts are often asked for but are rarely useful in isolation. Most EMs also create project runways to account for the staff-level time allocation by week. Aspiring EMs further add written project status updates. But all of these show different facets of the ever-changing beast of project execution.
It is best to write out a monthly work plan in which for each project list out:
- Plans (for the month): milestones and deliverables
- % Team allocation: # of staff out of the whole team
- % Capital allocation: Sum of staff salary levels out of the whole team’s salary levels.
- % Completion: granular task completion ratio for the project
- Estimated ROI: estimated OKR improvement divided by engineer-weeks
On #3, we recognize not all engineers are created equal and a staff level IC draws sometimes 5x as much as a junior level IC. See below as an example of total salary levels calculation:
A sample work plan for the month of December is tabulated below:
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The monthly work plan became the most effective report and communication tool with stakeholders and peer managers in my work experience. It captures the changing ROI which Gantts do not — if a project’s runway gets extended its ROI dwindles over time. It captures where the EM places their bets which Gantts also do not — does it make sense to wager a big chunk of salaries against a mediocre impact project? It captures a snapshot of the progress of value creation and it keeps the team accountable to how the budget is spent.
