Thursday, May 16, 2019

Project managers deliver projects; project sponsors deliver business value!

Project managers deliver projects; project sponsors deliver business value!
As a project sponsor, you are ultimately accountable to the organization for the delivery of the business outcomes and benefits. The project team and steering committee exist to help you deliver the outcomes and realize the benefits.

You can take a passive role — attending your steering committee meetings, reviewing progress reports, meeting with the project manager — and not bother with the details or even really know what exactly is going on with your project.

Alternatively, you can take the project sponsor role seriously, and actively work to ensure the success of your project. For active project sponsors, here are some guiding principles:

1) Remember you’re not accountable for bringing in the project on time and on budget. That’s the project manager’s job. You’re accountable for delivering the business outcomes, benefits, and (net) value.

2) Project outcomes are not business outcomes. A project may deliver a system, but a system on its own doesn’t equal business value. The business wants to use the system to improve how it does business, competes, and makes money. This is a different outcome, one that delivers real business value. Look at what your project investment is going to deliver — is it a project outcome that the business hopes it will make work, or a business outcome that will deliver real, measurable business value?

3) Your project is set up to implement change, whereas the business is set up not to change. For the project to be successful it must interrupt business-as-usual and change it. To achieve this, it needs the help, support, and authority of you and your steering committee. No business change = no business benefits = you fail as project sponsor.

4) Who you have on your project determines the outcomes and results. Two project teams given the same problem will produce two different solutions. Choose your project team wisely and well. It is worth putting significant time into the project resourcing step. This is especially true for choosing your project manager.

5) You can’t focus on everything, so you should focus on three things in particular:

i) The project RAID lists (Risks, Assumptions, Issues and Decisions) : Unresolved issues that need to be resolved before implementation are an unknown, unplanned workload (and cost). If the issues log explodes, so can your project timeline and budget. And risks are the threats to the project and its successful delivery. A series of new risks late in the project can threaten the viability of the entire project.

ii) Your critical path (or chain): How you are tracking to this path will determine your likelihood of an on-time and on-budget delivery.

iii) Your project’s value: Value creep occurs when the benefits of a project progressively go down while the costs increase. The result is a net reduction in project value, often resulting in a move from positive to negative returns.

6) Be present. Visit the project team at least once a month. Visit the business areas being impacted by your project — what do they think about the project? Visit your key stakeholders regularly — are they still supportive? You need to be seen to be leading, committed and involved. If you are losing business support, you want to be the first to know so you can take action before it is too late.

7) Learn to do your job as a sponsor. Project sponsorship is not intuitive or a natural extension of line or operational management. It is a different set of skills and knowledge base, one that has to be learned. You wouldn’t want amateurs on your project, so why impose one at the top?

8) Watch for signs of trouble — the little changes that sneak up on you. These include unplanned employee turnover that loses cumulative project knowledge, cumulative scope changes that redirect the whole project, and poor quality outputs that indicate the project may be in trouble. With your broader perspective, you need to review these leading indicators of project failure.

Closing thoughts

A great executive sponsor is an active sponsor. It will take time and effort, but if your project is not worth doing this, then why do the project?

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Monday, May 13, 2019

How value creep is killing your project

How value creep is killing your project
As a project sponsor or steering committee member you are probably familiar with scope creep. Sometimes known as “requirement creep” or even “feature creep,” the term refers to how a project’s requirements tend to increase over the project lifecycle. For example, what once started out as a single deliverable becomes five, or a product that began with three essential features now must have ten.

Scope creep is typically caused by key project stakeholders (like yourselves) changing requirements, or sometimes from internal miscommunication and disagreements. But while scope creep is a problem for many projects, it is nothing compared to the far more devastating value creep.

Value creep is when the benefits of a project progressively go down while the costs increase. The result is a net reduction in project value, often resulting in a move from positive to negative returns.

And it’s pervasive. In fact, most projects are beset by scope changes, unforeseen events, and time and cost overruns that represent this value creep.

I have sat in numerous steering committee meetings and listened as decisions are made, usually on the recommendation of the project manager, that progressively reduce the value of the project.

For example, one project sponsor stated that one of his main goals was to ensure the new system was based on a platform that is industry standard, and much used in other industries as well. The reason behind this was to prevent having trouble finding skilled employees, as had been the case with the system it needed to replace.

He then went into his steering committee meeting and immediately acceded to his project manager’s statement that the new system should be based on a platform that was already in use in the organization. It was even harder to find skilled employees for this platform than for the system it needed to replace, but somehow this was ignored.

Not surprisingly, the project costs exploded, and it failed to deliver the benefits expected. The project manager didn’t mind; he had brought the project in on time and to (his) specification. The organization then had to put up with an ill-fitting solution for years.

As a sponsor or steering committee member you need to always be conscious of value creep. These decisions—often made piece-meal over time—cumulatively increase the cost and decrease the value.

The graph below (click to enlarge) visualizes a 10-month project that is fictional but is similar to real live projects I have witnessed. The project starts with a clear value proposition: $9M benefits and $4M costs.


For the first two months, everybody is convinced it will stay like this, and then a part is descoped to save costs and keep the project within budget. This reduces the benefits by $2M. Meanwhile, the costs start to go up (as it is with most technology projects). After five months it becomes clear that the system cannot automate a number of things that had been assumed/promised without putting in an additional two months of work. The sponsor and steering committee want to keep the timeline, so they decide against the extra work. Boom, another $2M reduction in benefits. And from this point on, the project has an actual negative value.

Loss of benefits is usually a far greater long-term loss than a (reasonable) cost overrun. One way of fighting value creep is to constantly focus on protecting the value, refusing to compromise or harm the project’s value proposition.

To do this you need to understand which parts of your project deliver the value; otherwise, you won’t know what value dimensions you are dealing with when you have to make decisions.

A good to ask yourself is: Do you know how each major element of promised business value is going to be delivered on your current project? If not, you’ve got some work to do.

Once you know the answer to this question, you’re one step ahead in eliminating value creep. While delivery costs on a project may rise, if you keep your focus on maintaining your project’s value, you will deliver business value in the end.

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