Project Management 2.0

Project Management 2.0 (PM 2.0) seems to be going the same way some Agile anarchists are trying to take software development which is essentially not to do project management and hope a group of people with good will and good luck will create something useful.

Not doing ‘project management’ is a really good idea if you and your client have no idea what’s needed, when its required, or how much budget is available. Journeys of exploration can be fun and can be highly creative but are nothing to do with managing projects.

Wikipedia (retrieved 27/9/2009 from: http://en.wikipedia.org/wiki/Project_management_2.0) lists the following differences between PM 2.0 and ‘traditional’ project management.

PM 2.0 -v- Traditional PM

Whoever wrote this has absolutely no idea what good traditional project management looks like and has probably never worked on a successful major project. Good traditional project management differs from this highly subjective and biased list in many ways:

• Control is not centralised, authority and responsibility are devolved to the appropriate management levels.
• All good project management is based on collaboration.
• All good project management requires open access to the plan both as an input to its creation and to know what needs doing during delivery.
• Access to information is vial when and where needed.
• Open and effective communication is critical.
• Project are,  by definition, separate management entities – a holistic approach (ie, not doing projects) is called general management.
• Tools, see: A fool with a tool is still a fool, and you need the right tools for the right job. Amateurs try to do jobs with inappropriate tools. Easy to use and flexible are fine if you know exactly what you are doing, it is a recipe for wrong information and wrong decisions if you don’t.

The table is correct in so much as project management involves a degree of top down planning. Project management is about delivering a required output to the specifications requested by the client. The product or service is a failure if it does not meet the quality requirements set by the customer; which may include time, cost and scope parameters.

It is also correct in respect of the implied structure – projects work because there is an implied structure that sets a framework for collaboration. If you don’t know who is doing what it is nearly impossible to collaborate. Even Wikipedia and Linux have structure in their collaborative frameworks.

I have emphasised good project management throughout this post. Bad project management involves excessive attempts to ‘control the future’, lack of stakeholder involvement, excessive bureaucracy, and many other problems. These traits are bad management full stop.

One comment on the Wikipedia article is important though: PM 2.0 is good for small jobs. This is consistent with a survey of construction projects in the UK undertaken by the Chartered Institute of Building, focused on time management, which found that on ‘simple projects’ there was no difference in performance between those projects with a properly developed and managed schedule and those without. The same proportions finished early, on time and late.

However, as soon as the projects became ‘complex’; there was a marked difference in performance. Projects with effective schedule control performed significantly better than those without, and the bigger/more complex the project, the more significant the difference. ( I will put up a post on the CIOB’s work and its new practice standard for scheduling in a few days).

The CIOB’s findings and a closer look at many of the blogs and comments on both PM 2.0 and Agile seem to fit this trend. I would suggest two conclusions could be drawn:

1. If the work is small, simple and easy to understand there is no need for much in the way of traditional project controls. Knowledgeable people know what needs to be done and can just get on with the work.
2. If the required output is not capable of being determined by the client and the objective is to ‘create something wonderful’ it is very difficult to apply too many project management techniques – basically you don’t know what needs to be planned, costed and scheduled, etc. Time and cost are secondary to creativity and the exploration of problems.

In both of these circumstances traditional project management may not be appropriate. In fact I would question if either circumstance is actually a project given the definition of a project is to produce a defined product, service or result that meets the needs of a customer.

The challenge for senior organisational management is recognising the threshold where PM 2.0 and ‘free form Agile’ cease to be appropriate and more traditional forms of project management are needed. Traditional project management does not mean ridged control, the type of project influences what’s needed (see: Projects aren’t projects – Typology) but appropriate systems do help optimize cost, time and quality to deliver client satisfaction.

This does not mean dumping the new ideas, rather melding them into an improved project management process. Agile software development fits in nicely to ‘rolling wave’ planning. Similarly some aspects of PM 2.0 can really help enhance team communication and collaboration. Used wisely, these ideas and technologies simply help improve the way projects work to deliver quality outputs to their clients. This change is really no different to the shift from faxes and carbon copy paper to emails. Good project management has always adapted to use improvements in processes and technology to improve the quality of service provided to the project’s clients. This next wave of improved technologies should be no different.

However, be wary of the zealots suggesting the ‘old ways’ don’t work and should be abandoned and use examples of really bad project management to prove their point. This is even more important if the zealots also advocate employing them to solve all of your problems for a fee. Management fads come and go – modern project management has been generally successful in achieving positive outcomes for well over 50 years now and continues to evolve and improve. For further comment see Glen’s post on: Herding Cats

Short termism -v- long term survival

Since being elected a Fellow of the Australian Institute of Management earlier this month, I have been receiving an interesting flow of new information. Two items in today’s reading are the results of an AIM survey that indicates 51% of managers believe that ‘short termism’ is a major issue of concern, 63% thought companies had a relatively short life span and 15% of company board members and CEOs surveyed were not confident their organisation would be in existence in 5 years time (source: AIM Surveys).

Contrast these views with the approach taken by one of Australia’s largest and oldest companies, BHP Billiton. BHP is preparing to spend $15 billion in South Australia to add an open-cut phase to its existing Olympic Dam underground mine. This development will involve digging more than 1 million tonnes of dirt a day for six years, before getting a dollar back. Certainly the production capability at the completion of the development in 16 years time will be massive. The ultimate aim is to boost annual uranium production at the mine from 4,500 tonnes a year to 19,000, copper from 235,000 tonnes to 750,000 and gold from 100,000 ounces to 800,000. Silver, produced as a by-product, will rise from 800,000 ounces to 2.9 million a year. At current prices that works out to annual mineral production valued at $6.2 billion (source: Forbes Asia Magazine dated July 13, 2009).

This raises two interesting thoughts. Firstly BHP must have immense confidence in the ability of its project and program managers to consistently deliver over the next 16 years. There is no easy exit point in the project – the pit needs to be 300 meters deep before encountering any of the ore body (the first six years work) and then there is the need for a series of expansions over the following 10 years to reach maximum output.

The second is the relationship between BHP and its stakeholders. The level of trust needed to accept the investment of $15 billion over 6 years in anticipation of a payback in later years is enormous. The only way this level of trust can be developed is through a long term process of effective stakeholder management linked to a track record of successfully delivering value (ie, keeping your promises).

I would suggest there are some interesting lessons to be learned from juxtaposing these two items. What do you think?

The Scope of Change

This blog is going to try and link project and program management with change management and benefits realization.

As a start, the only point of undertaking a project or program is to realize some form of value. Benefit realization! To realize value, three elements need to be brought together:

1. There needs to be a new product or process created (an artifact);
2. People within the organization need to make effective use of the artifact to deliver a service;
3. The service as delivered needs to be accepted and used in the ‘market’.

The role of Strategic management and Portfolio management is to determine what services are likely to be accepted or needed by the market; a new shopping centre, an improved insurance package or simply a more efficient process to deliver information. These decisions will depend on the objectives of the organization, and is not the province of this blog.

The generally accepted role of project management is to create a unique product, service or result (an output) and the role of program management is to manage a group of related projects to achieve an outcome more efficiently than if the projects had been managed in isolation. Neither of these processes achieves real value in themselves. The realization of sustained value is achieved by the organization using the program’s outcome effectively over many months or years.

The Scope of Change Management

Projects and, to a greater extent, programs can realize some benefits, partially in the design and delivery of their respective outputs. Early benefits realization is frequently linked to ‘soft’ elements in the range of deliverables such as developing effective training, managing the transition to operations and ensuring a proper support framework is developed. Achieving these elements require the project/program team to really understand the requirements of their stakeholders. However, as demonstrated by the cost/benefit graph, benefits realization should continue for years after the program is finished and closed.

The extended timeline for value realization has important ramifications for organizational change management. Each project is an intense burst of change and the program absorbs these changes and has additional change effects of its own. These ‘activity related changes’ will include beneficial and negative impacts on a range of associated stakeholders. Some changes are disruptive caused by the execution of the work, learning curves, etc. Some changes positive caused by the improvements the projects and programs were initiated to deliver. Achieving a successful project/program outcome requires the effective management of these stakeholder communities, but the stakeolder management activity is essentially tactical.

The critical requirement to deliver sustained value is the organizational culture change needed to actively embrace the program’s outcomes and make valuable use of them. Embedding a culture change into an organization is a 2 to 3 year process as the change migrates from ‘new and threatening’, to ‘accepted (but the old way are still fondly remembered)’ to the ‘established old way’ things are done around here. This type of long term organizational change can only be accomplished by the organization’s line management supported by senior management. This is the realm of the program sponsor and executive management!

These ideas also have important ramifications for effective stakeholder management:

• Project level stakeholder management is relatively short term and focused on minimizing opposition to the work whilst ensuring necessary organizational support is in place to deliver the project’s outputs effectively. This is essentially tactical in nature.
• Program level stakeholder management has a wider view that needs to engage with the organizations strategic vision to ensure the program’s outcome is optimized to the changing circumstances within and around the organization. The key issue here is identifying and responding to changing stakeholder requirements, needs and expectations/perceptions over time; so as to optimize the value of the ‘outcome’ the project was established to deliver.
• Organizational level stakeholder management needs an even broader and longer term view focused on the strategic needs of the organization and its long term relationship with both internal and external stakeholders. Sustained value creation requires both the organizations internal staff and its external customers to jointly perceive the programs ‘output’ as valuable to them and also to perceive the organization favorably so they together maximize its use:
  • For a new shopping center with a 20 year lifespan this translates to retail tenants being willing to rent space and the ‘public’ seeing the shopping center as a ‘good place to shop’.
  • For a new call centre management system this translates into the call centre staff seeing the system as efficient and easy to use and clients of the business perceiving the system and staff as friendly, efficient and effective so they are happy to make repeated use of the system.

Conclusions

Change management and stakeholder management are closely aligned. Effective stakeholder management is essential for successful change management.

Change management and stakeholder management must start as soon as the project or program are initiated but should continue well after the project/program are completed.

The on-going organizational component of change management supported by strategic stakeholder management is critical if the real value of the outputs/outcomes created by the projects and program are to be realized.

Benefits realization is a line management responsibility starting with the project sponsor. All project and program managers can do is ensure their deliverables are crafted to facilitate and encourage benefits realization.

State of the Profession

The project management profession would appear to be in a confused state!

PMI’s 2008 Pulse of the Profession survey shows improved performance from 2006 with over 55% of project completing on time and over 58% on budget.  The survey also found a strong correlation between the project management maturity of the organisation and improved project outcomes.

Meanwhile, the new Standish Group report (April 23, 2009) shows a marked decrease in project success rates,

• 32%   Successful (On Time, On Budget, Fully Functional) – worst in 5 years
• 44%   Challenged (Late, Over Budget, And/Or Less than Promised Functionality)
• 24%   Failed (Canceled or never used) – worst in 10 years

These numbers represent a downturn in the success rates from previous studies, as well as a significant increase in the number of failures.

Around the same time as PMI, Human Systems International Ltd and the Association for Project Management (APM – UK) conducted a survey. The results of this survey reported in the May 2009 edition of Project Manager Today which showed that whilst value realisation is a long way from satisfactory it is not as bad as Standish would suggest. The survey showed 48% of organisations do not measure benefits realisation and of the remaining around half achieve more than 80% of the expected benefit and 22% less than 60%.

It’s hard to know what to make of the conflicting data – superficially, it would appear that organisations that employ professional project management staff (APM and PMI members) do better then organisations overall. But even then, the results are not that good. 

An alternative view may be the definition of a project with the APM & PMI membership being more focused than the Standish survey. For more on this see: What is a project?

The last alternative is IT projects (surveyed by Standish) are worse on average than projects in general.

Confused????  I certainly am. The real key seems to lie in the area of project management maturity. Maybe OPM3’s time has come at last?? (PMI’s Organizational Project Management Maturity Model).

Value is in the eye of the stakeholder

The only purpose of undertaking any business activity is to create value! If undertaking the work destroys value the activity should not be started.

The Value Chain

Any value proposition though is ‘in the eye of the stakeholder’ – this is rarely solely constrained by either time or cost. Effective value management requires an understanding of what is valuable to the organisation and the activity to create value should be focused on successfully delivering the anticipated value.

The chain of work starts with a project or similar activity initiated to create a new product, service or result. However, the new output by itself cannot deliver a benefit to the organisation and the project manager cannot be held responsible for the creation of value. The organisation’s management has to make effective use of the output to realise a benefit. It is the organisations management that manages the organisation and these people need to change the way the organisation works to realize the intended benefit. The role of the project team in value creation is to ensure their output has all of the necessary characteristics and components to allow the organisation to easily adopt the ‘new output’ into it’s overall way of working (eg, effective training materials).

The outcome from making effective use of the output is expected to create a benefit – however to realise a benefit, the outcome needs to support a strategic objective of the organisation. If the outcome is in conflict with the organisations strategy, value can still be destroyed. Strategic alignment is not an afterthought! The processes to initiate the project should have as a basic consideration its alignment with the organisations strategic objectives.

Assuming strategic alignment is achieved, the realised benefits should translate into real value. The challenge is often quantifying value – the concept of ‘value drivers’ helps. Value drivers allow the benefit to be quantified either financially or by other less tangible means.

In the current economic climate, organisations are finding operating capital in short supply. Therefore a new process to accelerate the billing cycle can be measured at several levels:

• The output from the activity to develop the new billing process is simply the new process – this has no value.
• Once the organisations management starts using the new process the measurable outcome is a reduction in the billing cycle from (say) 45 days to 32 days.
• The benefit of this reduction in the billing cycle could be a reduction in operating capital needs of $500,000.
• The value of this reduction is $500,000 at 12% interest = $60,000 per annum.
  The above example may also trigger additional value by allowing the capital to be redeployed into another profit generating activity, improving customer relationships, etc.

Once the whole organisation is aware of the value proposition, decisions to de-scope the initial work to meet time constraints and/or cost constraints can be made sensibly.

• A decision to de-scope the project to achieve a 2 week saving in time that results in a 6 week longer implementation period (eg, by reducing training development) is clearly counterproductive.
• Similarly a decision to de-scope the project to avoid a $5,000 cost overrun that changes the reduction in the billing cycle time from 13 days to 6 days will result in a halving of the capital saving and a cost increase to the organisation of $30,000.

The challenge is identifying and communicating the value drivers to all levels of management involved in the activity so that valuable decisions are made in preference to knee jerk gut reactions focused on short term, easy to measure metrics. Value is created by meeting the strategic needs of the organisation’s stakeholders – this requires careful analysis and understanding of who they are and what are their real requirements; ie, effective stakeholder management.

For more ideas on the realisation of value, see the work by Jed Simms at: http://www.valuedeliverymanagement.com/

For more on effective stakeholder management see: http://www.stakeholder-management.com

Success and Stakeholders

I have been putting the hard yards into finishing my new book on Stakeholder Relationship Management Maturity (SRMM®) over the holiday period and have been considering the relationship between success and stakeholders.

One potential conclusion is that success is gifted to you by your stakeholders, you have to earn the gift but there is no way of knowing for sure if it will be granted. This means as a project manager, sports person or business executive, you have to put the effort in to ‘win’ by delivering ‘on-time and on-budget’, finishing first or achieving the planned objective; but achievement on its own does not translate to success. Success is when your achievement is acknowledged by your key stakeholders and they declare it a ‘success’.

Some of the world’s most famous buildings were project management disasters, but they are now considered outstanding successes. The Sydney Opera House overran time, overran budget and the original scope not achieved. The London Eye needed an additional £48 million loan from British Airways to finance is construction in addition to the original capital raising and was months late in opening to the public (in 2005 BA sold its share of the project for £95m and waived £60m of unpaid interest).

Success seems to come from a combination of two factors. One is delivering something of real value to the stakeholder. The other is when a critical mass of key stakeholders recognises the value and appreciates it. Value is not a synonym for ‘on-time and on-budget’ these two factors only matter to the extent that they impact on the usefulness of the outcome when it’s actually used by the stakeholders. Certainly time and money may be important, more often they are not; particularly if a longer term view of benefits realisation is considered. Benefits are realised when the product is actually used and this requires the relevant stakeholder’s participation in actually using the product or output to achive the intended outcomes.

Another important factor in achieving success is meeting the stakeholder’s expectations. This involves identifying and managing their expectations (unrealistic expectations are unlikely to be fulfilled) which in turn requires effective two-way communication. But the stakeholder community for any business activity can be huge.

Three groups of Stakeholders

There are a vast number of potential stakeholders who you don’t know and can’t see. This group is often considered as ‘classes’ of stakeholder such as ‘the public’. The only way to reach individual people this group is through broadcasting messages in a similar way to a corporation advertising it brand image to a general audience. Businesses see this activity as Public Relations (PR) or Marketing. In project space, this is the casual audience for general project newsletters, headlines on a project web page and the corporations ‘rumour mill’.

A sub-set of the overall group are the people you know you need to positively influence. In business these groups are the focus of targeted advertising campaigns with specific ‘calls to action’. In project space they may be groups such as the end users of a new system. You need to ‘sell the benefits’ of the product or project to this group so they buy-in to the concept and appreciate the value of the outcome you are creating. There are still too many for one-on-one communication but a carefully planned ‘sales campaign’ associated with effective change management and similar initiatives are critical if you expect a successful outcome. Many of this group may be recipients of routine monthly reports and the like but more is needed; you need to create positive expectations and then deliver on them.

The smallest and most important group are the key stakeholders who wield significant influence or power. This group require targeted one-on-one communication to build and foster positive relationships. It’s a two way process, you need support from them, they need to appreciate the benefits your project or activity will deliver. The Stakeholder Circle® methodology and tools are focused on identifying the ‘right’ stakeholders at the ‘right’ time in a project for this critical communication activity. Failure with this group will generally cause your project to fail and before you can ‘win’ you first have to ‘not lose’!

However, the thought in this blog is these key people are probably not enough on their own to declare the final result of your efforts and outstanding success. Real success requires buy-in from a much larger group of stakeholders, such as the 30 million visitors who have ‘flown’ on the London Eye.  But is your organisation mature enough to support the type of structured communication needed to achieve this level of success?

My SRMM® construct addresses the maturity of an organisation to engage in effective stakeholder relationship management and this is a critical start. The bigger question is who’s responsible for the wider communication: the project team, the change manager, the sponsor or the organisation?  Achieving real success is definitely a lot more complex than just being on-time and on-budget….  Perhaps this could be the subject for another book?

PMI Proves the Value of Project Management (2)

Defining the Value of Project Management

The PMI study, ‘Researching the Value of Project Management’  [download the summary] has clearly demonstrated the value of effective project management but was unable to quantify a specific ‘Return On Investment’ (ROI).  The primary reasons for this were: organisations do not measure business results from project management and they do not measure the costs of PM implementations. Consequently, they are unable to calculate a financial ROI for their investment. But ROI is only one measure of ‘value’.

The ‘Researching the Value of Project Management’ study employed a ‘multi-methods’ approach to collect and analyse data from 65 case studies involving 418 project descriptions from organisations of all sizes, types and structures spread around the world. Of these, 95% of the case study organisations realised a range of valuable improvements including:

• Improvements in decision making
• Enhancement of communication and collaboration
• Improvements in effective work cultures
• Alignment of practices, terminology and values within the organisation
• Overall effectiveness of the organisation and its management approach
• Improved transparency, clarity of structure, roles and accountability.

The types of value realised by the organisations included:

• Revenue increases
• Greater market share
• Increased Competitive advantage
• Customer retention
• Increased customer share (more engagements per customer)
• Reduced write-offs and rework
• Cost savings

Given projects account for 21% of the world GDP or 1/5th of the world’s value generation improving the efficiency of the process of PM delivery should be a valuable wealth generating activity.  The

One Size does not ‘fit all’

One of the key findings of the study was that understanding the organisational context and selecting the ‘right project management’ processes to implement are essential for value realization.

The context of the organisation, its geographical location and industry dictate the type of PM implementation that will be most effective. Fitting the correct PM implementation to the needs of the organisation was repeatedly demonstrated in the case studies as critical for delivering value. Unfortunately, there is no simple formula where implementing ‘x’ amount or type of PM will deliver ‘y’ amount or type of value. Each organisation is unique as are its PM needs.

Three of the factors that determine the appropriate ‘fit’ between PM processes and the organisation identified in the study are:

• Maturity.  Even minor improvements in PM resulted in value realisation in some organizations. Values associated with internal efficiencies and productivity dramatically increased in more mature organisations.
• Culture. National, organisational and even the PM culture of the organisation affects value realisation. Understanding the culture is a contributing element to the correct fit of PM implementation.
• Sustainability.  Once implemented, ongoing value realisation needs to be sustained by nurturing the PM processes. Even the organisational fit of the PM implementation should be regularly assessed and changes made as appropriate. Overzealous/bureaucratic PM practices can actually destroy value.

One option to determine the current levels of maturity and capability in an organisation and then plan the optimum improvement strategy for the organisations current situation is to conduct an OPM3 analysis this was discussed in the first blog in this short series, Waking up the C Suite. 

For more on OPM3 see: http://www.mosaicprojects.com.au/OPM3.html

To buy ‘Researching the Value of Project Management’ visit the PMI MarketPlace

PMI Proves the Value of Project Management (1)

Waking up the C Suite

PMI are launching an on-going marketing campaign surrounding the release of its Value of Project Management research study. This groundbreaking study has clearly demonstrated the link between implementing good project management practice and a solid ROI [download the Research Overview]. PMI’s campaign through 2009 is designed to get C level executives and Boards of Management to recognise and support project management in their organisations by making a compelling case for project management’s ability to positively influence bottom-line drivers.

Increasing the awareness of the value of project management among the top organisational decision-makers is the vital first step in enabling organisations to introduce the capabilities they need to achieve well executed projects (as identified by OPM3 ProductSuite). Only when executives are actively thinking about, evaluating and seeking to improve their organisation’s project management practices, that the value of well executed project, program and portfolio management can  be fully realised.

Many organisations may already feel they have implemented effective project management processes and have an array of project, program and portfolio managers on staff. However, without an impartial measurement of their actual capabilities there is a high probability things are not as ‘rosy’ as senior management would like to think. There are several reasons for this:

• Taking a ‘top down’ view: Human nature tends towards optimism; experiments have shown most people feel they are ‘above average’ in any given situation. In the absence of effective benchmarking and an empirical measurement system some of the ideas in ‘prospect theory’ are likely to take over and senior management would ‘expect’ their business to be ‘above average’.
• From the opposite direction, it would require a very open culture to allow middle and junior managers to honestly inform their seniors ‘we are not very good’. In most organisations if this message is heard the messenger would be blamed.

As a consequence it is easy for senior management ‘think’ their business is in good shape and middle management is encouraged to support this view if they wish to preserve their position.  The antidote is hard data and benchmarking but the only way this type of assessment can be introduced successfully is from the very top.  The CEO and governing board must lead the initiative to assess the real situation with a view to investing in appropriate improvements.  To achieve this, the organization has to effectively assess its current level of maturity against an appropriate ‘maturity model’. Maturity models are not new, CMMI has been around in the systems engineering space for nearly 20 years and there are several newer models focused on project management.

PMI’s OPM3 (Organizational Project Management Maturity Model) offers a unique set of benefits including a focus on all levels of project governance from portfolio alignment through program management to project management. It also provides a benchmarking capability and an improvement planning capability that can be focused on the areas of ‘improvement’ that will deliver the maximum benefit to the organisation. In short, OPM3 is complete, comprehensive and customisable, particularly is the OPM3 ProductSuite is used.

The value of using OPM3 is not in the assessment; it is in the planned improvements to the organisations processes. Most organisations have a range of ‘low hanging fruits’ that are easy to pick for quick wins (and this is important). It is also true that the payback from increasing levels of maturity may reduce as the organisation’s maturity levels increase. However, as with the quality movement (TQM) the ultimate level in an OPM3 improvement process is the ability of the organisation to continually improve. This is an essential medium term objective, because if an organisation is not continually improving it will be going backwards compared to its competition. If you are not continually improving they will be with the inevitable consequences to your ‘bottom line’ over time (just ask General Motors!).

In my experience, the critical success factors for any organisational improvement initiative are:

• Firstly top level support from the CEO and governing board (it is impossible to initiate an effective OPM3 initiative at the middle management levels).
• Secondly the willingness to invest in improvements; over 95% of the cost of any initiative will be in developing and implementing the improved processes to achieve the desired benefits – doing the OPM3 assessment is the easy bit.
• Thirdly understanding real culture change takes time, investing in an OPM3 initiative can, and should, deliver quick wins but the real benefits come from the changed attitudes and culture within the organisation and this takes several years to really bed down. And until the culture of the organisation has changed, the CEO needs to keep focused on driving the improvements needed to make the organisation successful. 

The second part of this blog will provide an overview of the value proposition proved by PMI in its report Researching the Value of Project Management.

Defining Project Scope

If a project’s client cannot ask for what it needs, the project team is highly unlikely to deliver what’s wanted!  A key element in effective project stakeholder management has to be asking enough questions to ensure everyone understands what the project is to deliver.

On Thursday 20th November 2008, I was privileged to attend the launch of a new report,  ‘Scope for Improvement 2008’, focusing on the issues of scope definition in major Australian construction projects. The total value of projects surveyed was approximately AU$60 billion with an average project value of AU$360 million.

The 2008 survey has shown a slight deterioration from the initial 2006 survey, in the overall performance of the industry in developing adequate project scoping documents. The 2008 findings also show inadequate scope specification is now an endemic problem in Australia with a growing trail of budget blowouts, delays and disputes.

The worry is the construction and engineering industries are generally seen as being far more mature in their project management practices then most other sectors of the project management industry and Australia has one of the more advanced industries world-wide. The key findings from the report, outlined below, are a salient lesson for anyone involved in defining the scope for a project:

Key Findings and Recommendations of the report:

The present situation:

• There is a high prevalence of deficient scoping in Australian construction and infrastructure projects with over 50% of projects being inadequately scoped prior to going to market.
• Scoping inadequacies are being discovered far too late with 64% of deficiencies only being discovered during execution.
• The consequences of poor scoping are significant: 61% of project experienced cost overruns, 58% delays and 30% contractual disputes.

The main factors contributing to poor scoping:

• Lack of experienced and sufficiently competent personnel with 83% of projects reporting adverse effects. This is to an extent explainable by the construction boom of the last few years but compensating factors such as increased time and/or contingencies do not seem to have been allowed.
• Insufficient time to prepare the scope documents.
• Inadequate definition of project objectives by the principal resulting in subsequent changes to the scope and corrections to the scope documents.
• Lack of consultation with end users, insufficient clarity of objectives and a lack of understanding of why the project is required and the benefits the project will produce.
• Insufficient research to understand the environment the project will be executed within.

Practical steps for successful scoping:

• Industry needs to think and act differently.
• Clearly identify project objectives.
• Identify and bring together all relevant stakeholders and end users for the project and maintain their involvement in the scope definition process.
• Set realistic timeframes and budgets for developing the scope requirements (and the overall project).
• Interface the proposed project with related projects and existing infrastructure.
• Identify and establish a core project team early.
• Empower a project leader with appropriate and clear authority and accountability.
• Clearly describe the project objective and requirements once identified.
• Choose the right approach for scope description (performance criteria, detailed specification, etc) and choose the right contract delivery model that aligns with the scope – risk needs to be properly apportioned.
• Check the overall contract package for consistency.
• Involve the tenderers / project management team in getting the scope documents right.
• Capture the value from a successful bid in the final contract.
• Resolve scoping issues and disputes under a contract.

The research was conducted by partners at Blake Dawson with support from the Australian Constructors Association and Infrastructure Partnerships Australia. A full copy of the report can be downloaded from http://www.mosaicprojects.com.au/Resources.html#Construction

Achieving Real Project Success

A recent paper by Graeme Thomas and Walter Fernandez of the Australian National University*, has explored the dimensions of project ‘success’. Based on the findings of their in-depth survey of 36 Australian companies the researchers suggest:

There are at least three different criteria for success that can operate independently:

• Project Management Success
• Technical Success
• Business Success

Project management success includes the ‘iron triangle’ of time, cost and quality (measured by meeting the specification) plus ‘stakeholder satisfaction’ including sponsors, steering committees, the project team, clients and others.

Technical success includes elements of stakeholder satisfaction (primarily associated with satisfied customers) and extends into the areas of integration, requirements met, and system use. Essentially this is a ‘capability focus’; technical success means the project deliverable could work in the way it was intended and was useable.

Business success focuses on the delivery of the intended benefits, including meeting business objectives and the continued operation of the business through the implementation or change over. Business success is value focused and is only measurable some time after the project has been completed.

Interestingly, the study demonstrated that creating a clear definition of ‘success’ during the early phases of a project contributes to achieving a successful outcome. The act of defining success and measuring success in a consistent way becomes a ‘self fulfilling prophecy’ provided it is supported by an improvement driven culture (ie not a blame driven culture).

Understanding what is really important in achieving a successful outcome helps the project team work with its clients and sponsors in an open and effective way that maximises ‘success’ for the organisation. This is a value focused approach that allows informed decisions to be made based on what really matters rather than basing all decisions on the simplistic criteria of time and cost.

However, achieving the type of culture needed to allow a broad definition of success requires the involvement of Boards and top level management in the process. Everyone needs to recognise the limitations of ‘project management success’ and shift the focus to ‘project success’ (ie the realisation of benefits to create value for the organisation). This is a business focus and only the business can actually realise the benefits by using the project deliverables effectively. Without effective ‘top management support’ (TMS) the overall achievement of real success is unlikely because the key decisions needed to optimise value in the business are unlikely to be made without TMS involvement.

*International Journal of Project Management 26 (2008) 733 – 724