When projects fail in your organization what happens? Is there a lot of drama and shaming of those involved? Does the project manager’s reputation suffer? Most likely the answers are yes with varying degrees of intensity. But what else happens? . . . Nothing?
If negative attention towards those involved in a failed project is all that happens then it’s a sign management really doesn’t care. I know this is a bold and provocative statement but there is reasoning behind it. If management really cared about failed projects they would be more focused on identifying the ultimate cost to the organization and the systemic reasons for the failure.
Why is this true? Take any natural or un-natural disaster in society. The focus of attention is first on how much damage is done, then what caused it, then who if anyone is to blame. Think about Hurricane Katrina, I-35W Mississippi River bridge collapse, the Financial Crisis of 2007, and the Valdez oil spill in Alaska.
While these are major disasters for society organizations have major project disasters too. Some of these project failures can cost organizations millions of dollars. So, if management truly cared about project failures in organizations they would follow a process similar to what is done for disasters. Let’s identify what that would look like.
Cost of Project Failure
All projects should start with an initial baseline for scope, time, and cost. Mature project organizations usually have Return on Investment (ROI) figures that incorporate these baseline values into the ROI. Once a project is complete the ROI is recalculated using the actual completion values for scope, time, and cost. Yes, all three.
If the project scope is less than what was initially requested then there is a loss in dollars due to the degraded capabilities. If the project duration was longer than initially estimated then there is a loss of dollars due to missed opportunity. Lastly, if the project costs were more than estimated then there is an extra cost for the project. All three of these figures have a negative effect on the ROI. They also negatively impact other projects because resources will need to be extended on the late project. All of this can be calculated into additional dollars expended and a delayed ROI.
One benefit that can come out of this ROI analysis is determining what is considered average acceptable overruns in time and cost for different sized projects. Just like the analysis of Major League baseball hitters has proven that anyone with a batting average of .300 is a good hitter the same can be established for time and cost overruns of different sized projects.
Root Causes of Project Failure
Poor project management most certainly causes project failures. Often, though, the major culprits of project failure come from the organization’s project environment. This includes:
- Starting more projects than the organizational resources can handle. If this happens then projects are going to end up late. This is very common. When resources are assigned to projects in less than 25% of an FTE run rate people are being spread too thin.
- Assigning too many projects to a project manager. Good project management takes time and when too many projects are assigned to project managers something else will suffer.
- Changing project priorities too frequently. When every new project is a higher priority than existing projects it results in projects never being completed or running very late.
- Not sufficiently knowing what a project is expected to produce and what the organizational benefits will be. We’re not talking about some back of the napkin scribble. Solid project charters lay this kind of information out before a project even begins detailed planning.
- Having no process consistency for how projects are initiated and managed. Also not providing the proper tools for managing projects. Consistency brings about efficiency.
Once your organization identifies what the root causes of project failure are you then need to begin minimizing or eliminating them. This will not only take time and money, it will also require sustained attention to make sure the changes stick around over the long haul.
A project office is the best place to house the resources to determine the cost and root causes of project failure. Most likely you will need dedicated resources to fulfill these functions. Take the financial crisis of 2007as an example. Now financial institutions are being required to pay a lot more attention to their positions and amount of leverage they’re carrying in their portfolios. Dedicated organizations within these institutions are responsible for doing this and at a significant cost to the organization. They do this because nobody wants something like the financial crisis to happen again.
Shaming a project manager for project failure is a form of consequence but it is a horrible motivator. It works for a while but when it is discovered it has no teeth – people become numb to it. It’s better to rally people around an organization’s project success, giving them something to strive for.