Partner Article

Time to stop the rot in project management by taking a portfolio approach

Cancelling a project early and saving money is a good thing. There should be more of it. Much more, argues David Walton, CEO of Bestoutcome, who believes that most large organisations are victims of compulsive, blinkered spending on failing projects on a grand scale.

Financial Directors with high blood pressures should look away now. Project management in most organisations is run by people who have no notion of pulling the plug on something that is certain to end in failure. In fact many of them suffer from what we call Project Mastermind Disorder: they’ve started, so they’ll finish. No matter what the cost.

The result is that within, say, the FTSE top 250, billions of pounds are wasted every year on projects that should have been stopped at a very early stage because they cannot deliver the business outcomes and business benefits they were originally designed to achieve. The worst thing is that planned costs tend to spiral out of control with these projects, as increasingly desperate but doomed attempts are made to get them ‘back on track.’ This ballooning effect within failed projects is especially prevalent in the public sector.

So, two big questions: why and how does this happen? Then there’s a third: what on earth are we going to do about this unbelievable waste of money and – more importantly perhaps – loss of business opportunity because every failure means a successful programme has gone undelivered.

The problem is that, in most cases, project management is still in the dark ages. It operates around an outdated silo culture of keeping your head down and watching your back, sorting out your problems behind the scenes and not admitting to failure. Spreadsheet reporting and an obsession with timesheets and short term issues are dominant. Thinking outside the box, putting projects in the context of other projects and spotting deep-rooted problems are counter-culture.

Project managers like to report that everything is OK and running smoothly. And they tend to dislike adopting technology and methodologies that challenge this. Hence the prevalence of large scale selffulfilling project management systems that demand lots of data input but don’t provide much of a lateral or helicopter view by way of return.

It’s all part of the old school insularity of project management which creates the opportunity for opacity when it comes to highlighting failure. It makes it easier to hide problems in the hope that they can be dealt with behind the scenes. Often these little problems fester unresolved or unseen and are allowed to develop into full scale crises before they come out in the open. And that’s when good money starts being showered after bad.

The solution isn’t that complicated and it does have the advantage of making blatantly obvious business and financial common sense.

All large programmes involve many different interdependent projects. Some of these are especially important because they have a direct impact on the success and timetable of others. There are also many issues, such as resource planning, that need to be monitored and managed across all projects.

Finally, it’s crucial that all projects are looked at from the perspective of the outcome they were originally established to achieve. This issue should be closely and constantly tested. Is this project or group of projects going to deliver the business outcome that’s required? If not, then it should be terminated immediately.

This helicopter, strategic view of projects should be run through a separate Portfolio Management Office. It should take responsibility for monitoring project inter-dependence, resource management and pouncing on problems before they are allowed to develop. It should also be there to enforce the adoption of a project management methodology across the portfolio that is totally transparent and focused on outcomes.

One of the key mechanisms within the Portfolio Management Office is a system of quality gates or checkpoints which every project should pass before it is allowed to proceed. In a nutshell, these gates are effectively tests to check the viability of projects. They are there to ensure that key deliverables have been produced on time before the project can be allowed to proceed.

So how many quality gates should there be? One of Bestoutcome’s automotive clients uses 18 toll gates to manage its complex engineering programmes. Other clients running IT projects tend to use between four and eight gates. Bestoutcome’s own outcome driven project management framework has seven gates for most programmes. The simple answer is that there should be as many gates as are needed to guarantee that failing projects will be spotted early and closed down or restructured.

Quality gates and the establishment of a Portfolio Management Office do not in themselves guarantee success. However, they do cut through the sub-culture of box ticking and opacity that pervades traditional project management. It shines a light through the whole process and in so doing massively reduces the risk of ongoing investment in certain failures. In other words, waste.

Financial Directors, you may resume reading now.

This was posted in Bdaily's Members' News section by Bestoutcome .