As you may have figured out the hard way, managing large projects is different than small ones. Not just in magnitude, but in character and processes too. For this article, we’ll define large projects as those that involve more than five people, six months, and a material amount of investment capital. Of course, material varies by organization, so you’ll have to use your own judgment for that. Typical large projects include entering a new market, acquiring a business, developing and launching a new product, opening a new location, building a new facility, buying significant capital equipment and of course, and large IT projects.
Project Risk Factors
Early research into large project and project management at my alma mater Ernst & Young identified several risk factors for project failure and like laws of physics these still apply today:
Project Size
The larger and more complicated the project, the more likely it is to fail.
Time
The longer a project is underway, the more likely something will change and have a bad effect on the project.
Team Size
Understaffing or staffing a project with people whose primary job lies elsewhere is an obvious risk. However, adding people to a complicated project only helps until critical mass is achieved. Like surgery, the first surgeon is critical, in some procedures a second surgeon could help, but four or five surgeons will simply get in each other’s way and require a lot of communication.
Rationale
A missing or slap dash project rationale suggests the project: may not support the organization’s strategy; may not be justified in the first place or may not be worth undertaking if it can’t complete its full potential perfectly.
Scope
Similarly, a poor defined project scope or faulty change management that allows scope to creep once the project is launched has the effect of moving the goal line so the project can never complete. Scope needs to be defined up front and the steering committee needs to actively resist scope changes unless demanded by the business strategy or uncontrollable forces.
Management
Project management is a discipline like sales, accounting, or operations. It requires a career path, training and even certification to keep talent sharp. Having a project management career path or function within an organization makes sure that disciplines such as estimating, risk management, project management and project measurement and reporting are integrated into all large projects. Optionally, it can be rented from firms that do this full time.
Phase Gates Are The Answer
The phase gate process is reputed to have come from the product development discipline. 75% of new product launches fail. Further, university research actually suggests there is nothing one can do about this. New products at the conceptual stage simply fail at a high rate before the adoption stage. There is a way, however, to make new product launches work. It is the phase gate process. I will outline this for new products, but it works for ANY large endeavor. It is, in fact, how we put man on the moon.
The phase gate process involves 5 phases. More can be used, but you need at least five. Each phase involves increased investment over prior phases and each phase brings the product one step closer to adoption or wide scale production. Phase I is the desk or conference room phase where a small number of people, perhaps just one, review a business case for the project under consideration. There is a prior phase, ideation, which we will ignore for this discussion, but ideation is where the new ideas come from. In phase I, a paper model for the project is developed with potential return and project costs outlined to the extent possible without expending any more capital than the time required by the team to develop and evaluate the model. Typically this is done in a spreadsheet and the outcome is expressed in a value proposition that defines the value of the project to the organization. Redbank uses the Single Frame Charter for this phase. At the end of phase I, the charter for the project is presented to a steering committee for disposition which can be go, no-go or defer for further information. Often no-go projects are not discarded out-of-hand, but they are put back in the ideation pool with clear instructions as to what might trigger a reconsideration, like a change in the cost of inputs, or entry into a new market etc.
Phase II begins where phase I leaves off and invests some minimal capital to explore the idea further. This might involve purchasing some research, having a model built, conducting a focus group with customers, producing a prototype, conducting a patent search, running a production experiment, developing a mock-up or some similar development of the idea. It will also include the next level of development of financial model. Where the first model may have some rough estimates, this model needs to be more complete. Typically, a business plan. If the project is an acquisition, the business plan would be for the combined organization including integration costs. If the project is a new product or service line, the model will include financial projections for the new offering including adoption rate assumptions. If the project is an IT project it must include an impact statement of how it will change the users’ environment and accomplish the process needs of the organization. Critically, the plan produced in this phase, typically a business plan, must include all assumptions that have been made so they can be tested in later phases.
Later phases proceed with increasing detail in the plans, increasing budgets for development and increasing exposure to the real world in which the project will be required to operate. The final phase is full scale implementation across the organization, across the market or across the affected customer segment(s).
As the end of each phase, there is a phase gate review which has the same three possible outcomes. The purpose of this process is to fail projects early that won’t make it. There should be no stigma attached to shutting down a project which will not meet the needed value proposition, otherwise project managers will be reluctant to report negative outcomes and project transparency will be lost. This is critical. It doesn’t take much suggestion at all to create a culture where project management is opaque.
The critical magic in this process and why it overcomes the problem of not being able to predict project outcomes is that it takes each phase as though that is the entire world. All one needs to do is be able to predict the cost of completing the current phase accurately, not the entire project. And if the current phase fails, that should be a reasonable outcome. All prior phases were successful, and the organization has removed as much of the risk as it could. This process is used by giants like P&G, Tesla etc. routinely to attack problems and products that have not been done before. And, if combined with proper project management discipline, is the cure for bad projects and fearful project managers.
Call To Action
Review the organization’s track record of project outcomes for opportunities to implement the following:
1. Short form (single frame) and long form (business plan) project plans.
2. Phased estimating setting the next phase in stone and estimating remaining phases. Then refining estimates during each phase gate review.
3. Project management discipline and career track.
4. Project tracking and monitoring methodology.
5. Phase gate processes for project approval and phase boundary reviews.
I hope you found something to apply to your business in this MBR. Let me know either way.
See us here on LinkedIn.