How to avoid project management disasters
“If you want to make God laugh, tell him about your plans”
This quote from Woody Allen is a perfect headline for a blog about project management disasters, don´t you think?
Every day we see businesses respond to a challenging economic environment by deploying scarce investment funds in pursuit of a competitive edge. These initiatives, which are inevitably delivered via projects, represent significant investments for the organizations concerned.
As organizations struggle with the impact of downsizing, increasing complexity and global mobility, successful project management is becoming increasingly important. Executives in high-performing organizations recognize the imperative to identify, prioritize, coordinate and manage the projects that will turn their strategies into reality. In the global competitive environment, value-for-money is a priority. While many businesses have cut back optional spending in recent times, we see others that can no longer hold off essential projects. Effective project management practices help control the added risks that project activity introduces to normal business practice.
History is littered with project management disasters that show how painful the consequences of poor project management can be: huge time delays, excessive project costs and mockery that ruins the brand value these organizations have built up over years. Here is a recent example of a recent spectacular project management disaster in Germany:
Normally known for our efficiency, punctuality and engineering mastery, the new airport in Berlin is an embarrassing example of a troubled construction project from the Federal Republic of Germany. Having missed 5 target dates for its opening, the project is still underway and the final opening date still remains unclear. Original plans showed a target opening date of 30 October 2011. The original budget for this massive project was 1.7 billion Euros. To date, almost 5 billion Euros have been spent so far.
The causes for this huge project failure are not completely transparent to the public, but there is one important factor to consider: the public sector often struggles with such large-scale projects, because it’s not responsible to investors but to the people, the tax payers. Project leaders have to act transparently, involve citizens, manage the money and solve complex infrastructure tasks. Public building has reached a level of complexity that is apparently too much for the state to handle.
Slimmed-down administrations are hardly capable of controlling construction projects efficiently. It´s the old dilemma of poor project monitoring and mismanaging resources. In my opinion, there is another important rule organizations should not forget: don´t work in silos, don´t think in silos and set clear project goals. In the case of the Berlin airport, quality management and security experts were obviously not fully integrated in the development process. Also, there was a constant change of requirements and design ideas that made the whole project a disaster.
This is just one example of project failure, among the plethora in the news. For instance SNCF, the French Railway company, found out how one bad assumption can “derail” a project. Following the arrival of the first of its new fleet of regional trains, SNCF discovered that the newly designed trains are too wide to fit into many of the railway stations they were intended to serve. So, 2,000 new trains are too wide for the railway. I see this as a combined R&D and Project Management failure.
After concentrating on failures, let’s focus on what makes projects successful?
- See the entire picture and share the same project data: Project management software increases the speed and efficiency of program and project management by providing integrated information across project portfolios, human resources, and financial systems. Manage multiple projects cohesively and efficiently.
- Detailed financial planning: You have to consider every aspect of your finances from Human Resources, to material, production, supply chain costs, and so on. This is a true cross-organizational effort.
- Resource scheduling: Efficient resource management software enhances resource planning, allocation, and availability analysis, and this helps prevent understaffing and ensure the right staff members are assigned to the right job.
- Impact analysis: coming back to Woody Allen´s quote – unforeseen changes do happen! This happens on practically every project. You start with a clear concept or at least you thought it was clear when you started. Then one thing leads to another and before you know it you are involved in a different project. Structured, logical thinking and software with powerful analytics can help you analyze different possibilities.
- Cope with BIG project data: Analytics solutions based on SAP HANA give real-time insights into the health of the overall business portfolio as well as individual projects. For example, project teams can use analytics to compare a project’s capability demands, opportunities, and actuals against long-term financial plans.
Fortunately, a large percentage of projects are indeed successful, both in time and on budget. With the help of SAP Portfolio and Project Management, the South-Africa-based railway corporation Transnet experienced $62 million visible savings in two years’ time, increased project transparency and better financial reporting. Read their story.
Needless to say, there is always the risk that something unexpected may arise in your project that software cannot predict. But software can help you adjust your plan, make risk analyses and play what-if-scenarios. That way, you can at least try to outsmart fate… and if you want to impress God, plan with a software-supported process.
If you want to learn from more successful Project and Portfolio Management case studies, visit our International SAP Portfolio and Project Management Conference in Düsseldorf, November 17-18.