Do poor project sponsors drive failure?

I was speaking at a PMI conference early in Sweden in March, which gave me the opportunity to sit in on a number of other sessions. This one is all about programme and project sponsorship. It is a topic close to my heart and one I have blogged on before and no doubt will again . . . but is is a topic that business leaders actually care about?

In programmes and projects, sponsorship is not like sponsoring Tom to run a Marathon. Do too many business leaders believe it is someone else's job?

In programmes and projects, sponsorship is not like sponsoring Tom to run a Marathon. Do too many business leaders believe it is someone else’s job?

On the point of sponsorship, here are the key messages Peter Taylor gave out at his presentation on sposorship:

  • 85% of organisations had sponsors in place
  • 83% of organisations don’t train/support/guide sponsors
  • 100% of respondents believed that having a good sponsor was key to project success.

PMI’s recent Pulse of the profession showed that those organisations with active sponsors are more likely to have better project outcomes. This is supported by Colin Price’s research (McKinsey). Standish believes ‘The most important person in the project is the executive sponsor. The executive sponsor is ultimately responsible for the success and failure of the project’. I agree.
BUT most spend business leaders spend less than 5% of their time on sponsor related activity, yet this is all about making change happen – leading change. . . . and mismanaging change is the commonest reason CEOs get fired.
If you look at project failure, six reasons are cited and the top FOUR of those come under the accountability of the sponsor.

  • 40% Unrealistic goals
  • 38% Poor alignment of project and organisation objectives
  • 34% Inadequate human resources
  • 32% Lack of strong leadership
  • 21% Unwillingness of team members to identify Issues
  • 19% Ineffective risk management

So despite all this wealth of research and learning, many business leaders continue to ignore the issue or treat it informally. Everyone says they believe it is critical to project success and yet:

  • Sponsors are not ‘trained’ to be effective
  • Sponsors do not have the ‘time’ to be effective
  • Sponsors are just expected to ‘know’ how to do the job.

Is that right?
Is it even worth bothering about?

Peter then showed some broad-brush estimates of the value of good sponsorship:

  1. Meeting Project Goals +29% variance with good sponsorship in place
  2. Project Failure -13% variance without good project sponsorship in place

So if you have a £1bn portfolio, the range of benefits and costs is:
+ £290m
– £130m
Peter argues that those figures are certainly worth thinking about.I certainly agree. I also wonder that if senior leaders are only spending 5% of their time on sponsorship, what are they actually doing and who do they think is looking after the future of the business?

You can see Peter’s paper here – Project managers are from Mars, project sponsors from Venus

The secrets of successful programmes

CranfieldI recently went to the International Centre for Programme Management (at Cranfield) for a forum on learning and knowledge management  and as part of that we were given a white paper called “Beating the odds – the secrets of successful programmes”.

The white paper describes the findings from a recent two-year study of 21 major programmes of many types, with varying levels of success in a wide range of organisations in Europe. Those findings explain many of the causes of the differeing levels of programme performance and how business leaders can improve the success rate for their own organizations.

Seldom do I read an article or paper with the words “Yes, yes, yes” ringing in my head. It is packed with useful insights and wisdom, gleaned for the programme teams who took part in the study. The wisdom in this paper won’t be found in methods and processes, they are more about how experienced and skilled people apply them and the issues they face.

I recommend this to any person who considers themselves to be (or aspires to be) a business leader. As expected, there is lots about vision, strategic alignment, business readiness, foggy objectives, stakeholder engagement, business cases, planning and behaviours. If, as a business leaders, you believe you have a great strategy, then good for you. On its own, however, that is not enough. You need to be able to convert your vision and your strategy into action on the ground. Do you have the right mind set, tools, methods to do this?  Read this article and decide for yourself.

This is the executive summary:

  1. Strategic alignment. From the programmes studied, those identified as integral to the future business strategy were all at least partially successful. It could be concluded that the ‘positive’ nature of the programmes’ intentions meant that there was little stakeholder resistance to the initiative and hence the organisation was able to deploy its most capable resources. Senior management and executive involvement was sustained throughout the programme. Conversely those programmes that had primarily ‘reductionist’ intentions, e.g. restructuring to reduce costs or eliminate inefficiencies, were less successful. Executive involvement in the programmes was weak and stakeholders’ commitment quickly waned.
  2. Need and readiness. Interestingly and perhaps counter intuitively, in most of the successful programmes the need was ‘high’ – clearly recognised as a business priority – but initially the readiness was ‘low’. In these the argument for investment and change was endorsed at executive level and time and effort spent at the start to achieve the buy-in of the rest of the organisation and develop the ability to undertake the changes. In the majority of those that were partially successful the readiness appeared to be ‘high’ as well as the need. Why they were not entirely successful is best explained as over-ambition or even over-enthusiasm; rather too many optimistic assumptions were made at the start with little assessment of the potential risks involved.
  3. Value drivers,benefits and business cases. The more successful programmes were also based on a clear strategic driver plus a strong financial business case. Those with weaker strategic drivers but good financial cases gained less commitment and were usually less successful. Very often financial benefits were overestimated, while the risks and the problems in making the changes were underestimated, perhaps because realistic estimates might have made it difficult to secure funds and resources. During the programme, as the scope becomes clearer, this inevitably leads to changes to the costs involved and the benefits that can actually be delivered, but only a minority of organisations revisit the business cases as programmes evolve.
  4. Foggy objectives. Programmes cannot be fully planned in advance and have to adapt to both changing business conditions and programme achievements. This is not necessarily a comfortable position for senior management and requires a knowledgeable, accountable and empowered governance group to oversee and, where necessary, adapt the programme. Rather than decrease during the programme, uncertainty can often even increase, especially due to changes in the external environment.
  5. Planning. Some organisations thought they may have ‘over-planned’ things at the start, due largely to the demands of some stakeholders for detailed plans, which were then not really used. However, the planning activities were seen as essential to bring stakeholders together and for reconciling their different priorities and interests. The process of planning was more important than the plans produced and helped address many of the initial uncertainties.
  6. vision and stakeholders. Having a clear vision of the intended future business and organisational models and then allowing compromises and trade-offs in the detail of how they are implemented, is more likely to achieve stakeholder commitment than imposition. The successful transformation programmes usually addressed the organisational, people and capability aspects first, before dealing with the process and technology aspects. The less successful tried to do the reverse.
  7. Learning and un-learning. Most ‘strategic’ programmes require the development or acquisition of new capabilities and knowledge in order to be carried out successfully. Management generally underestimate how much has to be learned by the organisation and individuals to define, manage and implement a major programme. Introducing new ways of working may also require considerable ‘un-learning’ by large numbers of professional people – not easy to achieve without actually removing the old processes. If the programme relies heavily on the capabilities of suppliers (especially IT suppliers), they may exert undue influence over what is done – the scope and achievable benefits – rather than on how the programme can be successfully delivered.
  8. Realising the benefits. Most business change programmes involve at least two distinct and different phases – first to create a new capability and second to exploit it. In most of the cases the new capability, for example a global HR database or Finance & Accounting Service Centre, was created, but not always used effectively, hence the benefits achieved were often less than those originally envisaged. While creating a new capability can be done ‘off-line’, separately from business as usual, using and exploiting it often competes with other operational priorities or can have negative effects on other aspects of operational performance, as was observed in some of the cases.
  9. Organisation and governance. Programme governance structures and staffing profiles are likely to change significantly over the life cycle. There seem to be three basic approaches to organising programmes: (1) a separate task force, (2) as part of business-as-usual (BaU), or (3) a combination (matrix). Not surprisingly the last of these proves most problematic. Some programmes have dedicated change managers, others have senior managers assigned to the programme, but they can find it difficult to reconcile achieving change at the same time as sustaining performance. Running change programmes in parallel with BaU causes tensions within the organisation and a clear statement of priority for which takes precedence is essential.
  10. Portfolio management. Few organisations, as yet, have the capabilities in place to manage multiple concurrent programmes with varying levels of uncertainty, competing for the same resources over extended periods. No organisation in the study had an effective mechanism in place for managing a combined large portfolio of ‘strategic’ programmes and more traditional projects – although some are trying to address this issue. Managing multiple programmes (Programme Portfolio Management) requires an additional governance structure or regular strategic and operational review and reconciliation at executive level especially if there are programme inter-dependencies or contention for critical and scarce resources.

Do you want to know more?

Cranfield had very kindly let me make the full article available to you here

So why was I saying “yes, yes, yes,” to myself? Many of the lessons are embedded in the Project Workout:

  • vision, strategic alignment: are covered in the gated approach to projects, from the very beginning(Chapters 3 to 11)
  • portfolio management is covered in Project Workout as “Business Programmes” in Chapters14 to 17.
  • business readiness,is a prerequisite for Project Workout’s Ready for Service Gate (page 118)
  • foggy objectives,are discussed in Chapter 12, along with other types of “Eddie Obeng” projects
  • stakeholder engagement,is covered in Chapter 19 as well as threaded throughout the book
  • business case, is at the heart of the Project Workout’s business led approach
  • planning in Chapter 19
  • behaviours are covered in Chapter 18

Of course, in the “real world” these are not isolated activities but happen in a complex network of cause and effect and that is why it is all so difficult to do in practice.

What to do about ineffective sponsors

The sponsor's behaviours set the tone for everyone but are they always beneficial?

The sponsor’s behaviours set the tone for everyone but are they always beneficial?

Research from Scott Keller and Colin Price (McKinsey’s) in their book,”Beyond Performance: HowGreat Organizations Build Ultimate Competitive Advantage,” points to programme or project sponsorship as being the most critical factor in achieving project success. I agree with them. Unfortunately in organisations with low maturity in programme and project management, this role is often  totally missing, misunderstood or the behaviours promote the wrong outcomes. This doesn’t seem to be an uncommon problem. But what can you do about it? One writer, Peter Taylor, proposes that a PMO could act as a surrogate “sponsor” and be used to help senior executives understand and perform that role better.

Have a look at his full article here, and see what you think.

Now imagine, if sponsorship was done well, what a difference that would make: programmes and projects would link to strategy, be prioritised on the basis of business benefit and only done if the need or opportunity is compelling . . . even if money is left over in the annual budget!!! Perhaps we could even go as far as the funds being assigned to the projects themselves, rather than to departments (cost centres) doing the work; now there’s a thought. CFOs, pay attention! Also consider, how can “portfolio management” work, if the role of the sponsor is not understood?

Let me know your thoughts on this. Are the programme and project sponsors in your organisation effective? If so, how did you achieve that? If not, how are you tackling the problem? I think that this is one of the great challenges to improving programme and project performance; there is only so much the “middle” can do, the “top” needs to play their part too.

See also my blog, “Enemies within” in which I argue senior management get the peformance they deserve. Controversial, eh?

Enemies within – why it doesn’t work

Far too many projects fail.

Far too many projects fail.

Project management, in the modern sense, has been with us a long time now. Some people have spent most, if not all their careers engaged in it in one form or another. Research and anecdotal evidence, however, seems to indicate that we still don’t “get it”. Reports continue to be written on “causes of project failure”. Eminent committees are set up to “get to the root of the problem”, international and national standards are created and yet:

  • we still see failure.
  • we still see organisations which ignore the benefits.

Why is this? If I could answer that, then I would be able to charge massive consulting fees! The question is rather like that posed in “Hitchhikers guide to the galaxy” asking, “What is the meaning of life?”  As we all know, the answer is “42” – which doesn’t help us one jot. If I ever came across anyone who knew the solution to stopping “project failure”, I would be very skeptical.

So why can’t people grasp the significance and advantages of business-led project management? We have:

  • lots of good books – like the Project Workout!
  • National and international standards such as BS6079 and ISO21500
  • Leaned societies, like the APM and PMI
  • Conferences galore

Actually, when the Project Workout came out in 1997 it was probably the first to put project management in a business context; earlier books were focused on project management techniques.

Cover all four basesBack to the topic! Having good methods and process supported by good tools and systems with clear accountabilities is necessary but not enough. The critical difference comes from an organisation’s culture; how they behave and their values. Give me the right culture and mediocre process over poor culture and brilliant process, any day. Organisations where project management “doesn’t work”, are likely to have a culture which actively prevents it from working. For example, for project management to be effective, we need more than just good project managers; for example:

  • project sponsorship is vital if the projects are to be linked to strategy
  • portfolio management (called business programme management in the Project Workout) is necessary to balance risk and choose those projects which will get you towards your strategic intent faster
  • finance systems, which enable project sponsors, managers and teams to see, their operational figures “live”
  • resource management so you can take account of constraints in choosing and implementing your projects.

Hunter Thompson, in 1970, said “In a democracy, people usually get the kind of government they deserve and they deserve what they get.” In this he blames the people in a democracy. Organisations, however are not democracies and so I would turn that quotation on its head:

Senior teams get the project management performance they deserve“.

The CEO sets the culture and “the way they want to run their business” and the following list indicates where the culture and values promote failure, rather than success. Running a project is difficult enough, but we often make it more arduous than it need be by creating problems for ourselves. Here are a few examples:

  1. Reorganising – either the company or a part of it. Tinkering with your structure is usually NOT the solution to your problems, it just confuses people. If you are a senior executive, however, reorganising is a great way to hide non-delivery!
  2. Functional thinking – not taking the helicopter, the organisation-wide view. This often happens when executives’ or individuals’ bonuses are based on targets which are at odds with the organisation’s needs, e.g. sales bonus rewarded on revenue, regardless of profit or contribution.
  3. Having too many rules – the more rules you have, the more sinners you create and the less happy your people become. Have you ever met a happy bureaucrat?
  4. Disappearing and changing sponsors – without a sponsor there should be no project. Continual changing of the ‘driver’ will cause you to lose focus and forget WHY you are undertaking the project. Consider terminating such a project to see who really wants it!
  5. Ignoring the risks – risks don’t go away, so acknowledge them and manage them. If I said that a certain aeroplane is likely to crash, would you fly on it? And yet, every day executives approve projects when a simple risk analysis shows they are highly likely to fail.
  6. Dash in and get on with it! – if a project is that important, you haven’t the time NOT to plan your way ahead. High activity levels do not necessarily mean action or progress.
  7. Analysis paralysis – you need to investigate, but only enough to gain the confidence to move on. This is the opposite to dash in and ignore the risks. It is also a ploy used to delay projects: ‘. . . I haven’t quite enough information to make a decision, just do some more study work.’
  8. Untested assumptions – all assumptions are risks; treat them as such.
  9. Forgetting what the project is for – if this happens, terminate the project. If it is that useful, someone will scream and remember why it is being done.
  10. Executive’s ‘pet projects’ – have no exceptions. If an executive’s idea is really so good, it should stand up to the scrutiny that all the others go through. He or she may have a helicopter view, but might also have their head in the clouds.

I’m sure you can add to that list, so please do, by adding a comment. Over the next few months, I’ll investigate a number of the above symptoms.

In the meantime, you can find out more about these from The Project Workout (4th edition):

  • lessons on what works: Chapter 2
  • enemies within – page 41
  • sponsorship: Chapter 4
  • portfolio management: Chapters 14 and 15
  • resource management: Chapter 16
  • finances: Chapter 17

PPM but not as we know it – learn from the Romans

Emperor Sponsus - visionary and leaderI am sure you’ll want to go home, put your feet up and forget about your programmes and projects for a while . . . but what if withdrawal symptoms set in and you have that urge to peek at your Blackberry or just take a look at that last report . . . help is at hand with a book extolling the virtues of programme and project management on the scale of the Roman Empire. Follow Emperor Sponsus on his path to glory and the trials and tribulations of general Marcus Projex Magna as he struggles to turn Sponsus’ vision into a reality.

This is programme management that you won’t learn about at Saeed Business School’s BT Centre for Major Programme Management in Oxford, nor from PMI or APM or MSP, nor anywhere else, for that matter.

Click here to download your cartoon book: How Rome was lost

I thought you were doing that!

If you haven't got accountability right, you could look pretty stupid.

If you haven’t got accountability right, you could look pretty stupid.

Whenever I am called into a conversation on who’s accountable for this or responsible for that, things soon get out of hand as everyone starts to argue what “RACI” means and forgets about why they are there. By the way, it should be “ARCI”, but that doesn’t sound very nice.

Putting that aside, let’s look at this from a different angle, which looks at mind-set and behaviour. I came across this approach from a New Jersey company called London Peret Roche.

Accountable: what a person is accountable for; it includes WHO they are accountable to. If they aren’t accountable to anyone, they won’t be held to account and no-one will be counting on them.

Responsible: As a “grown-up”, I act responsibly. If I see a banana skin on the floor, I pick it up and put it in the bin, so no-one slips and breaks their neck. I wasn’t “accountable” for the banana skin; I merely acted responsibly i.e. as if I was the cause.

We all need to work together in programme and project teams and often are “counting on each other” to deliver or do certain things. If I spot something wrong in someone else’s area, I shouldn’t just ignore it, just because I’m not accountable. I should let the “accountable person” know and even offer to help them solve it, if I have the knowledge and skills needed. In programme and project teams we all succeed or fail together.

So let’s look at this in the context of a programme or project and see how this works.

The person who is accountable is not necessarily the person who does the work, but the one who sees that it is done. This is useful in planning projects. You should be familiar with the accountabilities of the project sponsor and project manager. The project manager is accountable to the project sponsor for managing the work on a day-to-day basis, ensuring the deliverables are in place at the required time, quality and cost. He or she cannot do it all, or in many cases manage it all. We all should also know how a project should deconstructed into life cycle stages. This decomposition can be followed through with major packages of work being made the accountability of a particular, named, team manager. These work packages may be divided into smaller work packages and ultimately into individual activities and tasks. This deconstruction is called a work breakdown structure. It is fundamental to good governance and planning and also forms the basis of reporting and escalations. So you see, accountability starts at the top and trckles down. If you aren’t clear on accountability, you have no governance in place.

In practice, single point accountability means every task, activity and work package at any level in the work breakdown structure has a person named as accountable for it. This has four advantages:
– It is clear what is expected of each person.
– Overlaps should be eliminated as no deliverable can be created within two different work packages.
– If a gap in accountability appears (due to loss of a team member, for example or a plain error), the next person up the tree is accountable to fix it.
– If scope, cost or time proves to be inadequate to create the deliverables, it is clear who is accountable for raising these issues.

In practice, accountability is shown in the way that project plans (bar charts) are designed. The examples given in the planning chapter (21) in the Project Workout, clearly show accountability.

In programmes and projects it is essential that accountabilities are clearly stated and are unambiguous so everyone knows who is called to account and who they are accountable to. Similarly, team commitment should be fostered, which promotes responsible and open behaviour by all team members. Knowing who is accountable is not about placing blame (blame games seldom achieve anything but angst), it should be about clarity over who is doing what and knowing who to talk to.

For more on tis see The Project Workout, Chapter 18, page 286.

Business change through effective sponsorship

Is leading from the front always right?

All organisations have to change at some time, some more frequently than others. Something, somewhere always needs to be created or improved. Many leading organisations are now directing and managing change by using business-led, programme and project management techniques. As organisations have become more integrated through the use of complex systems and processes, the effectiveness of managing change through the traditional functional hierarchy has diminished. Programmes and projects, in the modern sense, are now strategic management tools, ideally suited to the complex organisations of today. Business leaders ignore the newly reborn discipline of enterprise-wide programme and project management at their peril. It is no longer the preserve of specialists in the engineering or IT sectors, but something every director and manager should have in their ‘tool box’. Well directed and managed programmes and projects enable an organisation to react and adapt speedily to meet the challenges of the competitive environment, ensuring the organisation drives towards attainable and visible corporate goals. Effective business-led programme and project management will increase the likelihood of business success by ensuring visibility, accountability and control over business change activities. In particular by:

  • linking business needs directly to visible actions plans;
  • enabling you to manage across every department in your organisation;
  • ensuring accountability can be assigned, safe in the knowledge any gaps are covered;
  • providing a flexible and responsive method to respond to changing needs;
  • focusing on priorities;
  • enabling you to track progress toward your business objectives.

It is not just the “project geeks” saying this now, but also strategy consultants, like McKinsey & Co. All senior executives should be leaders of change within the organisation. For some this may be a new experience. They will be in the position of advocating a new order, acting in the interest of the wider company needs rather than those of the department or line director they serve. For the first time, they may be operating outside their own departmental or functional structure. They will have to work with people they don’t have direct authority over and this may require all their influencing and leadership skills if they are to achieve their aims.

To summarise, the sponsor is the business advocate accountable for directing a programme or project to ensure the business objectives are met and benefits realised. In simple terms the sponsor role can be referred, exactly as that:

  • Programme sponsor
  • Project sponsor.

The UK public sector calls the roles “Project Executive”, for a project and “Senior Responsible Owner” for a programme. These are derived from the MSP and PRINCE2 methodologies respectively.

If I am a programme or project manager, what can I expect of my sponsor?  And what can I do if he or she doesn’t meet those expectations? You should expect your sponsor to:

  • Take an interest – their interest! It’s their programme or project!
  • Communicate their vision;
  • Be clear on what outcomes they need;
  • Agree the governance;
  • Keep you informed of the business context;
  • Challenge you;
  • Be realistic;
  • Make decisions and give you direction; and
  • Accept that all risks are their risks!

If you don’t get what you need, try acting as if they are the perfect sponsor:

Remember it’s “their project”, not yours;

  • Make your “personal contract” with them;
  • Assume they want to undertake their role;
  • Make requests for direction and decisions;
  • Look at the world through their eyes – outcomes and benefits;
  • Make the risks plain – their risks;
  • Report the world through their eyes;
  • Don’t assume or expect them to understand your “jargon”; and
  • Don’t try to take over their role.

You can read the full article from the Project Workout Community, articles section. In the meantime, who do you think is accountable for “making change happen”? Is there a simple answer? Is a project manager a change manager? Is a change manager a project manager? I suspect it all depends on how you views those words.

Sponsors – ignore your stakeholders at your peril

Keeping stakeholders engaged can be challenging

As a programme or project sponsor, the formal and informal interactions with your project manager will probably form your primary linkage for directing a project. You should not, however, rely solely on this route for information gathering. Remember, benefits do not come from the project itself, but from using the deliverables and outputs the project produces – those who use the outputs are called stakeholders! Engage them and keep engaging them. Listen to what they are saying, how they say it, what they are not saying and observe what they are doing.

  • Are they walking the talk?
  • Are they saying one thing but doing the opposite?

Even a good project manager will not pick up all the ‘messages’ from stakeholders, so do not think you are undermining him or her by checking behind the scenes, especially with those all important, senior stakeholders.

Be particularly sensitive if people start withdrawing resources:

  •   for their “other” really important project’;
  •   because they have lost confidence in you;
  •   because another sponsor has leant on them.

Is this their way of blocking your project? Are their people really engaged and signed up to the solution, or merely paying lip service? Never underestimate stakeholders’ ability to ruin your best laid plans, especially in a “weak matrix” organisation! It is the project manager’s and project sponsor’s role to ensure all stakeholders are adequately briefed and engaged. Too much communication will drown them – they won’t bother with it. Not enough will mean your project will be lower down their priority list than you want it to be. Agree with your project manager which stakeholders each of you will target.

There is also a series of articles from Project Manager Today, on sponsorship, in the Project Workout community site.

Leaders influence success. What a surprise!

In PMI’s latest annual survey on trends in programme and project management there are a number of messages but I’ll draw out just one, which they describe as “interesting” and which they say has the greatest correlation to project success.

In programmes and projects, sponsorship is not like sponsoring Tom to run a Marathon.

Those organisations which have active project/programme sponsors on at least 80% of their projects have a success rate of 75%, eleven percentage points higher than the average.

Their survey sample included over 1000 PPM professionals with a wide range of experience and from many industries. This mirrors work by McKinsey & Co, who also point out that sponsors have an extraordinary influence on success.

So, the PMI is saying is that if we have programme and project sponsors, who do their role properly, the business is much more likely to succeed! Calling that “interesting” is rather understating it importance. This is a finding which we should be making “loud and clear” . . . . too many organisations are so tied to their functional hierarchies, that this “end to end”, leadership role is under-valued or even forgotten.

This finding mirrors my work in The Project Workout since 1997 and more recent findings from the UK’s Cabinet Office and National Audit Office. It does make you wonder that if this role is so vital, why it is outside the scope of PMBok and the latest ISO21500? However, it is very much integrated within BS6079 Part 1, MSP (equivalent to SRO) and PRINCE2 (equivalent to Executive), so we have some good foundations to build on. By the way, don’t get confused with sponsoring in the form of “sponsoring Tom to run a marathon”; that is an entirely different use of the word.

To find out more on leadership and sponsorship, look at Chapter 4 of The Project Workout; you’ll also find some articles in the Community section of my web site.

What is your experience? Let me know.

Business cases, lies and gambles

Earlier in the year, I was at an Isochron forum at which Simon Harris gave his personal perspective on “business cases”. His presentation didn’t pull any punches; he described most business cases as lies on the basis that most of them are constructed to “clear a hurdle”. A little bit of “optimism” or a smattering of “delusional thinking” was all it needed to create a great case and get a pat on the back . . . . and the funding. His recent article in Project Manager Today takes on the same topic but with slightly less colourful language. Basically, he is challenging organisations’ attitudes and values around deciding their futures. Looking at Simon’s list of “headlines”, it becomes apparent that a portfolio, programme and projects approach is a great vehicle for managing investments. Not only can they deal with capital efficiency, but also cash, risk, resourcing, cross-company working, capital efficency to name a few.
Here is my “listening” on Simon’s points. Do you agree? Do you take a different view?

Facts, not justification
Most business cases are written by the advocate to “justify” an already fixed view , rather than presenting an unbiased appraisal of the actors influencing the investment decision.

Investment, not gamble
When betting, you place a known amount of money with the bookie, for a known return, should you win. In business cases, you spend an unknown amount of money (it keeps changing!) for an uncertain return. It makes the business case sound worse than a gamble, doesn’t it? This is where good project governance comes in. In a gamble you spend all the money NOW.  A wise buiness leader (project sponsor), manages the risk by taking a staged approach and makes incremental decisions as he or she gains more information. That is what project lifecycles are for!

The place of portfolio management
The responsibility of those appraising business cases is to compare the return on this one, against everything else we are doing and could do. This requires a “portfolio management” approach. Without a portfolio approach, you have no context for the decisions – it is merely a “one at a time” game.

Sunk costs are really sunk
As a project progresses, the amount being spent decreases (unless you really have a disaster on your hands!). The money spent is “sunk”. What is important is the return on the “still to spend” amount and how it compares with other options. Of course, if you do not have a portfolio approach, you can’t do this. If the return is poorer than other options, then terminate the investment. Of course, the sunk costs will have to be written off (if they are capital) but risk provisions should take account of that.


Money is easier to deal with than people

Oddly, money is usually the easiest thing to deal with, if you have sufficient cash. You can store it and it is very simply what it says it is – money. Naturally, accountants like to treat some as “capital” and some as “opex” but that is another game. If money is all that is looked at when appraising business cases, then an organisation is in big trouble. Unless there is the right number of skilled people to work on the investment and operate/use its outputs, there will be no benefit, just a cost. It’s why the government business cases look at “achievability”.

Be sensitive to sensitivity
One thing is certain, the forecast of both costs and benefits will be wrong. This why it is better to think in terms of ranges and envelopes, within which an investment is still viable. This is where sensitivity and scenario analyses come in. As time progress, the future should become clearer and the return on the “still to spend” amount stabilising. It’s all about risk management.

Of course, you also need to keep track of costs on “project investments”, wherever they are spent. That is what modern matrix accounting is for.