If your organization is planning a major IT transformation project, the last thing you want is to achieve the same project performance levels of the Olympic Games. That venerable institution averages cost overruns of 219 percent every time the games are held. Large-scale projects are typically high-risk/high-reward propositions. But it doesn’t have to be that way says Alexander Budzier, senior researcher from the University of Oxford. I heard Budzier speak at last month’s SAP Global Business Transformation Summit in Washington, D.C., where he outlined five research tools companies can use to better manage the risk and complexity of mega-projects. His deceptively simple suggestions are based on research into over 4,200 IT projects totaling $85 billion from 28 companies:
- Benchmark against previous projects. If you know where past risks have bubbled up, you can prevent them from happening again. Take the time to thoroughly research similar large projects, not only internally, but in other organizations as well.
- Conduct due diligence around planning. Once you have past project performance data, use it to quantify project viability and risks in different scenarios. It’s crucial to understand the likelihood that estimated costs, benefits, and schedules will actually become reality.
- Adopt reference class forecasting. Reduce the front-end bias of your project by identifying and eliminating delusions and deceptions. Quantify unknowns to better understand potential risks. Define the benefits and integrate them early into the project plan.
- Carefully consider reducing scale. Identify organizational capabilities that will drive down costs. Find ways to reduce technical and social complexities, especially interdependencies across various aspects of the plan.
- Learn from master builders – be (or find) the charismatic leader. According to Budzier, there are a few master builders in every industry. Use lessons learned from project managers who have a consistent track record of being on-time and on-budget. It’s ineffective leadership, not technical issues that typically derail mega-projects.
Budzier’s talk was just one of the fascinating sessions that I attended at the Summit, which was co-sponsored by SAP Business Transformation Services and the SAP-affiliated Business Transformation Academy (BTA). What struck me as I sat through some of the most stimulating conversations I’ve had in a while was the degree of intellectual honesty required to realize business transformation. In response to someone’s question about how to identify and manage project risk, Budzier asked the audience semi-rhetorically, “Who has walked away from a project saying, I’m not convinced we can deliver against this number?” Only a few audience members raised their hands. That’s when Budzier brought up how the Olympic Games rack up astronomical cost overruns yet unfailingly begin on-time as planned. In other words, all projects are achievable. The objective is to gain agreement early on regarding what trade-offs can be made. Do the research up front to identify the risks, and anything is possible, even besting the organization that showcases the world’s greatest athletes.
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