“28 ways to lose $1 million a day”
Do you know any more?
In our book THE CAPITAL CRIME we reveal that the average loss or wastage on capital investments can be computed as $1000 per working day for every $1 million per annum invested.
So, for a company that invests $100 million pa, that is $100,000 loss/wastage a day; and for those investing $1 billion a year, that is $1 million a day loss.
Executives’ reaction to this figure – which works out as about a 25% capital loss/wastage figure pa – is incredulous.
But it is true.
Here is a list of 28 ways costs are consistently increased over the optimum cost and the optimum value is consistently missed, lost or destroyed within and across projects, programs and portfolios – and ongoing operations.
The cumulative ‘cost’ of these 28 value loss drivers is at least $1000 per day per million pa invested. All of these ‘Value Loss Drivers’ are avoidable. Indeed, each Driver is addressed by one or more of the TOP Programs. It is precisely because TOP is specifically designed to address each of these Value Loss Drivers that it dramatically increases the business value, results and returns delivered – every time.
Do you have any more drivers?
Also, notice how few of these Drivers are directly addressed by current, orthodox project management tools and techniques.
The 28 Value Loss Drivers
- Over estimation of workload (and, therefore, of the necessary time and costs)
- Over priced resources
- Poor on-project productivity
- Poor individual productivity
- Unnecessary project rework
- Overly complex solution developed/implemented
- Vague/ambiguous/no specification
- Not delivering to the agreed specification
- Adaptation of a wrong/ inappropriate solution
- Adaptation to a wrong/ inappropriate solution
- Scope reductions
- Ineffective implementation
- Missed benefits
- Non-realized benefits
- Non-sustained benefits
- Delayed benefits realization
- Forced realization of no longer available benefits
- Realization of non-economic benefits
- Funding of projects with duplicated benefits
- Continuing to fund failing/ unviable/no longer relevant projects
- Funding non-strategic/ strategically irrelevant/ unnecessary projects
- Unnecessary extra project workload due to projects being done in the wrong order
- Unnecessary extra project workload due to the same tasks being done in multiple projects
- Funding of duplicative projects
- Funding of conflicting projects
- Missed alternative opportunities not funded
- Missed future opportunities unable to be realized
- The costs of cancelled projects
We have seen all of these causes in organizations — and they are not diminishing.
A full explanation of each Value Loss Driver plus how one or more TOP Programs address each one is on our new website www.TheCapitalCrime.com.
NB The standard ‘over time/over budget’ losses are not included as they are the results/symptoms of one or more of the above Drivers.
Do a quick check — how many can you find in your organization?