The Federal Government, major banks and other organizations have all recently announced they are investing heavily in IT systems. This begs the question, “Why will this time be different?” Why will these projects be different and actually be wholly successful?
One major bank recently commissioned 22 “Strategically Important Programs” but failed to deliver most of them successfully despite hundreds of millions being spent and expensive program directors being contracted.
Many a government project has disintegrated into a disaster.
Worldwide the success rate for projects is still poor. Depending on your measure it can be anywhere from around 50% to 5%. Yet, everyday, organizations commission new projects in the hope that “this time will be different”.
The actions commonly taken to increase the likelihood of success make sense—on the surface:
- Qualified project/program managers are assigned
- Business cases are scrutinized before approval
- Cost management is prioritized
- Risks are identified and mitigation plans are put in place
- Governance teams – sponsors/steering committees – are assigned
- Monthly (mostly cost-focused) reporting is established
- A Portfolio Office oversees the portfolio of projects.
These and other actions are intended to reduce the risks, control the costs and ensure the delivery of the project.
But there are major gaps in these approaches. The most critical gap is the failure to fully define a set of clear, specific set of measurable ‘desired business outcomes’ with their benefits and value. As the Cheshire Cat said in Alice in Wonderland, "If you don't know where you're going, any road will take you there." Unless these projects clearly define specific outcomes the achievement of which is measurable. this time will not be any different.
Defined, measurable desired business outcomes
Desired business outcomes are clear, specific, measurable definitions of the desired end states to be achieved in the business after the end of the project. They are rarely defined. Most projects target un-measurable goals or objectives or capabilities and deliverables.
Research on 59 major programs and projects across 27 large Australian organizations found that none (zero) had identified their project/program’s desired business outcomes. They had all identified what they had to ‘do’ but not what they were trying to ‘achieve’.
(Many projects/programs define ‘outcomes’ but these are actually benefits, bypassing the definition of business end state outcomes altogether. Then they know what they are doing and what the benefits will be, but not what the 'doing' will deliver or what will deliver the benefits.)
Another gap is the failure to identify ALL of the available benefits.
Because the primary focus of most projects is on costs and cost management, the number and value of the benefits are minimized to ‘just enough’ to cover the cost of delivery. Any other benefits remain ‘on the table’ unidentified and, therefore, unlikely to be undelivered. The idea that you can ‘build the project and the benefits will come’ is fallacious when many of the available benefits have not been identified and are therefore not planned to be delivered.
Only around 20% to 30% of the available benefits are automatically delivered by delivery of a project. The remaining 70% to 80% of benefits need to be actively targeted to be realized. But too often many of these remaining benefits have not been identified, are unknown and therefore neither targeted nor realized.
Full change plans
The third common gap is the lack of full business change plans.
Rarely is all of the change workload identified to fully deliver both the project and the desired business outcomes and their benefits. Instead it is hoped that any non-project delivered changes missed at the beginning of the project will be identified later by a change manager.
The current focus on costs encourages change activity minimization as additional project/change activities are seen to increase the costs that then need to be justified. However, if you fix the benefits identification process you can often double the identified number and value of the available benefits. This allows for all of the change activities to be identified and costed without jeopardizing the ability to justify the project.
NB Some of these change activities will be done by the business outside of the project and therefore don’t necessarily increase the project’s costs of delivery but are still necessary to successfully deliver the project and its business outcomes.So currently organizations have unclear outcomes, understated benefits and missed change activities—quite a recipe for failure. This time will NOT be different unless these gaps are addressed.
How to ensure this time will be different
To ensure this time will be different you need to ask some key questions:
Does everyone one of your projects have a set of clear, specific, measurable outcome statements (that are not benefit statements)?
- The desired business outcomes define what is to be delivered in the business – stated in clear, specific and measurable terms. Each outcome needs to be measurable by a true/false question: can we or can’t we? do we or don’t we? Each outcome is either fully achieved or not. This measurement discipline is vital to your project’s success.
Do you have a list of benefits linked to the specific outcome that will deliver it?
- The consequential business benefits to be delivered by each specific outcome. Not a general list but a separate list of benefits for each outcome. These are the benefits that will be realized when each specific outcome is delivered. Now you know both the value of each outcome and when each set of benefits will be delivered. You are in control of your benefits' delivery.
Do you have a clear financial model for each financial benefit that allows you to easily track any changes to the value drivers and measure the impact of these changes on the benefit’s value?
- Not all benefits are financial but all of them need to be measurable.
- The financial value of the financial benefits can legitimately change during the project. For each financial benefit the bases and assumptions (value drivers) need to be clear so they can be tracked throughout the project so that you can re-compute the available value when the benefit is being realized. It is not unusual for a benefit to lose half of its value due to external-to-the-project factors. This needs to be tracked and measured.
Do you have a series of ‘change plans’, one for each outcome, that identify the activities required to move you from your current to your (outcomes-defined) future state?
- ALL of the change activities required to move you from your current state to the desired/defined future state need to be identified—both project and non-project activities. Here you need to define ALL of the workload so you can assess the size and scale of the project and allocate the necessary resources and costs to deliver.
Do you have a roadmap of how your business outcomes will be delivered in the optimal sequence to minimize wasted effort and give you full control over the project, its value and its implementation?
- An outcomes dependency roadmap shows the optimal delivery sequence to minimize wasted time and effort (that can be up to 35% of a project’s actual workload) and ensure the available benefits are delivered as early as possible.
If you have all of these five elements you have a basis for delivering a successful project. This time, with a clearly defined Value Equation, it can be different.
But if you are missing any element, even if just one element, your project results will be compromised and the results will be diminished—often by over 50%.
So the question every government minister, CEO, CFO or Investment Committee needs to ask at the outset of any project/program is, “Where is the Value Equation?” For without it, nothing will be different. Your project results will not improve.
It really is that simple.