“The great tragedy of science: the slaying of a beautiful hypothesis with an ugly fact.” T.H. Huxley
EXQUISITELY EXECUTED MEDIOCRITY
Failure as an option. Everywhere, in every kinds of industries, projects tend to fail by default and succeed by exception. The larger the project, the higher the probability of failure. Global statistics on industrial and government projects are sobering. Root causes run the gamut from disjointed expectations and misinterpretations of the scope of work, ignorance of the process and absence of processes, to deficient management and inadequate funding. Edward Merrow, of Independent Project Analysis, points out that statistics on so-called mega-projects (valued at $1B or more) fail more than 65% of the time, the world over, without every becoming profitable. An overwhelming volume of published statistics proves the point. The Project Management Institute published in 2014 the results of a poll of 1100 members and credentials holders. They showed that 54% of projects finished on time; 54% finished on budget; 38% finished on time and on budget; 13% of those polled finished 80% of their projects on time and on budget; and 27% of those polled could finish 60% of their projects on time and on budget.
The reasons for these depressing statistics are variegated, and tend to follow three principal arcs:
- The practice of project management is interpreted in terms of tools and processes to meet the expectations of the stakeholders. This mindset translates into a management approach that is focused exclusively on the execution of the work against budget, at the expense of the performance of the future asset. The pursuit of cost control at all costs creates the illusion of cost effectiveness. The minimization of front-end expenditures now is favored over the long-term investment return of the operating asset later. But cost containment for the sake of budget preservation frequently leads to technical and procedural trade-offs with unforeseen ramifications that result in cost increases to the project and the future asset.
- Practitioners equate execution to deliverables at each phase. Each phase is carried out independently by contract, budget and schedule. Yet, deliverables will require multiple phases to reach completion. The project presumes that progress stems from the cumulative impact of these deliverables. This assumption is flawed, since asset performance is never assessed independently.
- Risk management is confused for risk registers and running checklists. Risks are regarded as external factors to be “managed”, instead of emergent features of the very process of execution. Multi-phase development is deemed sufficient to corral them. Unfortunately, not only does this approach fail to mitigate risks, it propitiates them through parallel work in the name of schedule efficiency. This is another assumption not borne out by facts. It is not possible to save execution time economically by trying to save time through concomitant efforts. Blown schedules are the inevitable outcome.
The state of the status quo. When confronted with these facts, the typical reaction of executives and senior managers is to defend vehemently their own project delivery frameworks. Such defensive posture is to be expected when confronted with the dichotomy between faith in TPM orthodoxy and project reality. Project organizations will go to great lengths to defend the large investments to develop their gargantuan governance holdings of processes, which are meant to corral, direct, govern and prescribe all aspects of a project. Things like policies, procedures, guidelines, templates, processes, regulations, codes, standards, go-bys and ISO 9001, to name but a few, tallying thousands of pages of documentation. These organizations will for sure deploy some form of project lifecycle schema, complete with decision gates and risk studies at each stage. They will demand the redaction of multitudinous plans and policies and procedures. Despite this level punctilious diligence, the probability of failure will not have been nullified.
The test. Even when executives are not directly associated with a failing project within their organization, they will continue to defend the status quo, on the strength of their beliefs in their own organizational sinews. Such a reaction is normal: dealing with cognitive dissonance is enormously difficult in most circumstances and harder still when one is emotionally invested. Fortunately, there is a simple and unbiased way to get to the truth of one’s project reality. Consider these three questions:
- Did the asset yield by the project achieving the original ROI targets?
- If no, was it possible to modify it to get there?
- If yes, did the modifications deliver the ROI targets?
If you answer “no” to any of them, the project delivery framework within which a project is executed, effectively left a whole lot of future earnings on the table, money that will never be recouped by the project owners. Clearly, the status quo is not an option for you.
The next set of questions asks:
- Was the project completed within budget and schedule (i.e. prior to turning over the plant to Operations)?
- If no, were you able to justify the actual execution performance (cost and time)?
- If yes, are you confident of executing the next project with at least 90% probability of success?
Again, if “no” was an answer, it is the execution strategy that failed the project. You are guaranteed to lose more money on the next project.
Which begs the question: who can afford to get on this train again?
Further insights can be gleaned from chapter 2 of Investment-Centric Project Management, available on Amazon.com.