Cents and Sensibility
A hard line on the bottom line means projects better show value. But ROI can be spelled many ways.
No business goes to market with a product or service that it isn't confident will justify the time and resources spent developing it. Should project selection be any different? Most organizations answer with a resounding "No!" Understandably, they want to focus on initiatives that promise a solid return on investment (ROI). Indeed, for executives and customers—the stakeholders who ultimately decide the fate of projects—it sometimes seems that R-O-I are the only letters in the alphabet.
But making ROI the “Holy Grail” of project valuation and selection can backfire. A project's value is driven by many factors, and many of them can't be measured, or even imagined, by ROI alone. The challenge is to take into account all the important value drivers for ongoing and future projects.
Generally stated as the benefit divided by the cost, ROI seems straightforward enough. But simplified formulas are part of a complicated problem. Project ROI equations should consider many factors, including overall impact on the organization. ROI viewed at the departmental level may look great or disastrous, but the impact on other departments may be just the opposite, depending on what the project delivers.
In some industries, companies that seek rapid paybacks may tend to avoid long-term projects with big budgets. But exclusive emphasis on quick ROI can be unhealthyin the long run. By focusing solely on an ROI percentage calculation and ignoring qualitative metrics, companies shy away from projects that can lead to significant business advantages down the road.
It can be said, some projects run the business, some projects extend the business, and some projects transform the business. Because the latter group of projects are strategic in nature, they are often the “fuzziest” to assess, and they don't stand up well in ROI comparisons to easily quantifiable projects with clear numeric results. Unfortunately, when taken at face value, these projects tend to fall down the project selection list at an organization's own peril.
At the team level, an overemphasis on ROI can often negatively impact project management behavior as much as it does decision-making at the executive level. During project execution, team members are often pushed, or take it upon themselves, to act to improve ROI. Lacking clear understanding of the project's alignment with business goals, they can often have the opposite effect.
For example, a team may cut corners in attempts to reduce costs or decrease implementation time. These actions, in turn, can cause project risks to escalate. And when ROI is held over the head of project teams without a clear explanation of how it relates to the big picture, projects may actually lose value as team members miss or ignore opportunities to improve quality.
Just as organizations need to take many factors into account when selecting projects, the question of value must be revisited and re-evaluated during project execution. Project management performed in an "ROI vacuum" can hurt team morale, productivity and creativity-all human factors that contribute directly to project value.
Perhaps the greatest attraction to ROI is also its greatest myth—that ROI is all about hard numbers and, thus, objectivity. But the fact is, how an ROI study is conducted will determine what it finds. Even more subjectively: Who conducts and presents a particular ROI analysis will often influence the ROI result.
Project sponsors, for example, will often "back into" an ROI figure to arrive at a number they believe management needs to see in order to approve the project. A savvy proponent of a project can show what appears to be an acceptable ROI, but under scrutiny, the score may lack sufficient validity.
On the other side of the coin, upper management may mandate the use of complex or unrealistic ROI equations in order to have a means to cancel or reject projects that may deliver value but do not have political support for whatever reason.
Management must consider more than ROI scores, starting with the data's relevance—from collection methods and sample size, to variables that were or weren't included. Otherwise, they won't understand what the ROI really means.
For the ROI equation to be reliable, estimated costs and benefits must be scrutinized through comparison studies and take into account all possible issues, be they changing market conditions, corporate cultures or cost of capital. These factors may help to defend or dispute the ROI results, but they certainly ensure more accuracy.
In addition, project managers and stakeholders should never forget or underestimate the effectiveness of applying common sense to support a project worth defending, or to throw water on an ROI figure arrived at by incomplete or insincere means.
And post-project reviews should be used to get a final word on the ROI of every project. It is extremely important to revisit a project and evaluate the actual costs and benefits associated with projects. In addition to identifying lessons learned and areas for improvement, reviews show the accuracy of project estimates, paving the way for better ROI forecasting in the future.
New technologies, shifting business needs, flexible delivery approaches and the move to The Project Economy—all of these things are changing the profession of project management. And that shift is only going to accelerate in 2020.
In a recent episode of Projectified with hosts Tegan Jones and Stephen Maye, project and program management leaders shared their thoughts on emerging trends in the world of projects. Here are some edited highlights:
“I believe the future’s really bright for project and program managers,” said Narasimha Acharya, assistant director in the client technology practice at Ernst & Young in Atlanta. “But the role, the knowledge, the experience that we need to be successful is, of course, changing. And it will continue to change.”
But Palladino said we shouldn’t get overwhelmed by the pace of change and what it may or may not bring down the road. Instead, we should practice curiosity in the here and now. And an agile mindset helps, starting with the question: “What’s that one little thing we can do to improve what we’re doing?”
“And if we can build that [curiosity] into our lives, we build that into the way that we work, we incrementally keep looking for different opportunities to improve and discover new ideas and different ways of working,” Palladino said.
Developing a habit of curiosity can help you prepare for what’s ahead. And as things change, project managers will need new skills, including how they use data, said Fernando Antonio Oliveira, the E2 program director for Embraer in São José dos Campos, Brazil.
“We see a lot of change in the way we treat data, the way we collect data, the way we understand how the project or program is going,” Oliveira said. This data-centric approach is driven in large part by artificial intelligence (AI) and other tools that can help project managers better anticipate and prevent risks, rather than reacting to them after they happen, he added.
Kaustuv Bagchi, head of India operations for oil and gas offshore projects for LT Hydrocarbon Engineering in Mumbai, India, said he hopes disruptive technology like AI will help new project managers be more efficient and allow them to focus on different skills.
“Earlier the focus was on knowledge and experience; now…we have technology to support project management to an extent that experience is getting digitized, so the focus is going to be moving from knowledge to application of technology, and application of knowledge, and constant innovation.”
As a new generation enters the workplace, new approaches and ways of thinking are changing and challenging traditional project management approaches as well.
Olivier Schmitt, CEO of The Project Group France SAS in Lyon, said he sees organizations struggling to integrate those new points of view.
“The conflict at the moment in [many] organizations is it’s moving very fast at the delivery level, and it’s still very conservative at the top management level, which makes a real problem in decision-making.”
No doubt, it’s going to be a vastly different world for the next generation of project leaders. In addition to becoming comfortable with new technologies, we also will need to be OK with ambiguity, Palladino said.
“Life isn’t crisp and clear, the future’s not crisp and clear,” he said. “We’re going to have to deal with those ambiguities, and we have to figure out a way to change our thinking that it’s not just about finding the right answer, it’s finding an answer, and that’s okay, let’s develop it. Let’s further explore it and improve it and continually enhance it.”
Handling ambiguity is clearly a needed skill—and Maye noted that Deloitte recently found that leading through complexity and ambiguity was the top skill needed for today’s (and tomorrow’s) leaders.
What do you think?
One misconception many new project managers bring to their role is a belief (or is it a hope?) that a particular methodology, the latest tool or a popular template will bring them success in their work.
It’s understandable, but it’s a misguided, often doomed way of thinking about your very critical role.
Focusing exclusively on processes or systems is dangerous because it could mean other equally important factors in your project’s success are being relegated to bit players, if not swept off the stage entirely.
The fact is, there will always be plenty of rules and requirements that tell you what to do. The best project managers always allow room for asking why and how.
That’s not to suggest project management fundamentals aren’t important. But once you’ve moved out of the classroom and into the world of personalities and problems, projects quickly become more than budgeting and scheduling.
Methodologies don’t complete projects, teams and individuals do. That’s where leadership skills are so important, and yet they still get labeled as soft—as if the ability to resolve conflicts, influence team members and convince stakeholders isn’t hard!
This kind of leadership requires credibility—along with intuition and decision-making, instinct and risk-taking. These qualities might be considered intangibles, but they can and quite often do make the difference between a project that bogs down as soon as it encounters its first crisis, and a project that nimbly navigates those choppy waters until is delivers as promised.
So that’s why you should make your credibility a priority — and manage it as your most important project of all!
A major renovation project at Denver International Airport is sending out Mayday signals, with cost overruns that could exceed $350 million and delays measured in years. It’s déjà vu all over again.
I once did a story on an infamous project debacle—a complex baggage-handling system that had delayed the opening of Denver’s new airport back in the 90s. Years later, I focused on the project rescue that had finally got the system working. I can’t speak to the issues plaguing that same airport’s current renovation project in 2019, but revisiting the lessons shared in that 2002 case study just might help you get a troubled project back on track, too.
At the crux of Denver airport's baggage problem—as with so many projects gone wrong—were promises that couldn't be kept. Such a complex baggage system had never before been attempted, and the contractor originally estimated it would take four years to complete. But caving to political pressure to cut ribbons and craving a big commission. the contractor squeezed the schedule down to two years. About a year in, as problems began to multiply, airport officials called on a team of rescue specialists.
No two projects are alike, and few operate under the intense media glare that fell on the Denver airport, but the rescue team’s systematic approach to salvaging the situation is instructive. It shows that project recovery is not an exact science, but it is often rooted in a most eternal of quests: the truth. The recovery required rapid stabilizing, ongoing reprioritizing and team rebuilding. And at each step, some hard truths had to be told.
Unload the Baggage
On a failing project where finger pointing is as abundant as straight answers are scarce, separating the core problems from the distractions is a crucial first step. Everyone has opinions about what has gone wrong and why. In Denver, it took eight weeks of meetings to stabilize the situation and set a constructive tone that would guide the turnaround.
“It's imperative that you take time to take a balanced look at the overall situation," says Phil Veal, an infrastructure project turnaround specialist. "It doesn't happen overnight or in one meeting. You have a series of meetings that are tough for everyone. You slowly work on making people see the big picture."
For the picture to come into view, airport stakeholders had to come to grips with the fact that the original opening date had passed. "You need to put that to one side, and say, 'Here's where we need to be, here's the date and here's how we're going to get there.' This is where you need to establish trust by talking honestly and scientifically with all the stakeholders."
Only after taking stock of the situation could the project's requirements be renegotiated and, once agreed upon, a new strategy developed.
Team members have to acknowledge the need for project recovery, too. When consultants arrived, they were handed piles of reports on tests showing on-time delivery of bags was actually improving. Digging deeper, they found the numbers had to improve at a rate 10 times greater in order to declare the system ready. "By looking at this curve, there was no way they were going to meet the required metrics for opening the system," Veal says. "But they were still saying, 'We'll open it,' because they had to."
Team members were also fighting too many fires, or perhaps hearing too many alarms. "If one bag in every 1,000 was falling off the conveyor, they were sending a team to solve that issue," Veal says. "That sucks up valuable time and effort. You worry about that later and go figure out where 100 bags out of 1,000 are being lost. You need to focus on the real crisis points."
Unrealistic performance measurements and the inability to rank priorities had overwhelmed the team. "They had never dealt with anything quite this complex," Veal says. "There were so many problems unlike any of the other projects they had delivered. They couldn't see the woods for the trees."
They developed a "70 percent solution." It involved this question: What will keep the most people satisfied for six months until we can get the rest of the system running?
The answer may have seemed as cold as a jet's cargo area, but it was honest. "We could put up with travelers complaining that their bags were 15 minutes late to the carousel [on arrival]," Veal says. "But we had to get the outgoing bags through the gate in the target time, otherwise aircraft can't depart. It wasn't realistic to deliver the whole complex system, but if we got this significant part running to satisfactory levels, then we could declare this airport open."
Cut to the Chase
“It is easy to get confused between meaningful metrics and a sheet full of numbers that aren't germane to the issues," says Veal. "A misperception is that if you have an inch-thick report with a bunch of data, the team is on target. A concise report is much better for decision-making.
When managing projects, Veal circulates an executive report to facilitate what he calls the "elevator conversation." It summarizes the top issues so that if you run into a stakeholder, you can pinpoint in minutes what is going well and what needs improvement. If a project manager is talking for an hour about the issues, then they don't know where to focus energies.
Prepare for Turbulence
Once the system's requirements were adjusted, the team had to adjust its attitude and approach as well. As the project was broken into chunks of work that people could get their heads around, changes were made in who was assigned to do what.
"You need to realign the team and send the signal that things are different now," Veal says. "You don't do that by sweeping out the entire team. You put capable people in a couple of key roles."
Typically, a troubled project is lacking a technical expert or a delivery specialist, and sometimes both, Veal says. He developed "tiger teams" charged with resolving specific parts of the project. Then, as a project regains momentum, you might tweak the team again. "Over time, you start thinking about how you strengthen or refresh this team, and you reassign people who don't have the capabilities to match what you're trying to achieve."
It can be effective for the recovery specialists to "shadow" the project leaders and other key technical or delivery roles. It may be just a case that people got distracted by the detail and lost in the complexity of the system, so they need someone to make sure they have the correct perspective. There's no single way to strengthen a team. You need to be situational in your approach.
Create an Early Win
In addition to determining a project's crisis points, it helps to find a secondary issue that can be fixed fast to improve perceptions. For example, Denver airport visitors saw bags falling off carousels during tests, creating a poor impression that fed bad publicity.
"It's not a crisis point, but it may be something you artificially raise in your hierarchy of issues," Veal says. "If you can resolve it, you can use it as a public relations lever and a stepping stone to greater things.”
Cleared for Landing
In the heat of a project recovery effort, participants often lack the perspective that the passage of time can bring. If it feels like a war has been fought, victory is sometimes hard to recognize. Veal says the experience is not always as bad as it seems upon reflection.
A positive, supportive partnership with the project sponsor or client is not only helpful, but often essential to success. By the same token, success requires the project team to act with the urgency of a vested owner when red flags arise. From both sides, it comes down to insisting on the truth, however difficult that may be.
Team leaders and members must have the courage to speak out at the earliest signs of trouble. And they have to be brave enough to tell the project leaders what's going on.
"Human nature is to shy away; and then the problems build until it's patently obvious you're not going to deliver anything," Veal says. "You need to always confront the issues as they arise, in the open, with honesty and integrity."
Relationships take a lot of work. Are you working on your project relationships?
The importance of building productive working relationships with your team can't be overstated. It's a fundamental part of a project manager’s job—as time-consuming and critical as creating the project plan, managing risk, updating the schedule, monitoring the budget, and communicating to stakeholders.
So how do you know how well you're doing it? You might need to evaluate your project relationships if team members...
... voice concern that they don’t know where they stand in terms of roles or expectations.
... don't come directly to you with questions, issues or concerns about the project.
... resist participating in meetings and avoid the project's communication channels.
... seem unenthusiastic about collaborating on solutions to project challenges
WHAT YOU CAN DO
As the saying goes, “no man is an island,” and no project team should ever feel like it is working on an island. As the project manager, you should be the face and voice of the project. You need to make sure each team member can clearly “see” and “hear” you; likewise, they need to know that they will be seen and heard.
You must be fair and consistent in your dealings with the team, it should go without saying. But you also need to acknowledge that each team member is an individual, with different strengths and weaknesses, work styles and motivations. That means you want to try to be flexible and attentive to each relationship as it evolves. A formulaic approach will only garner formulaic relationships. You want more. You want the best that each team member has to offer.
The ultimate goal is to find how your team’s individual talents can best serve the project as a whole, and how you can help them make that happen. This requires honesty, respect and support from you. In return, you can rightfully expect, and should receive, the same from your team.
Define Your Role. Before you can define what you expect from team members, you need to describe what they can expect from you throughout the project. Make it clear that your eyes are always on “the prize.” From project kickoff to closeout, they should be completely confident that everything you say and do is in the name of project success.
Set Expectations. Once you’ve established your role, you need to set expectations for the team as a whole, and for each team member. Some of these expectations will be universal regardless of the project or team makeup—accountability for their work and effort, commitment to the goals of the project.
And some will need to be tailored to each individual’s skillset. This requires time for discussion, questions and clarification with each team member. Expectations can’t just be handed down “from on high.” Yes, you are ultimately in charge as the project manager, but to establish productive work relationships and generate buy-in, you want these expectations to serve as motivational tools, not emotionless dictates.
Be Available. From the get-go, some team members will have no qualms letting you know exactly what they think and how they feel. Others will be less inclined to speak out in the presence of their peers. Whether your preferred managing style is “open-door,” “walk the floor,” or something a bit more reserved, it is critical that you make yourself available to team members for private, one-on-one conversations. These talks can be much more informative than what surfaces in official settings.
Be Appreciative. Diligent team members are bound to bear down on their daily tasks and responsibilities. When they occasionally look up from the work at hand, they should feel that their contributions are being recognized and acknowledged in relation to the bigger picture.
Appreciation can’t really be conveyed in monthly status reports. Make it personally meaningful by thanking them face-to-face whenever possible. In addition, make their contributions visible to the rest of the team and sponsors by giving shout-outs to deserving team members in weekly meetings as well as informal group settings. Recognition is a powerful relationship-building tool.
Be Trustworthy. You can’t expect team members to openly share their concerns about the project if there is any apprehension that bad news will affect their standing or be shared in a detrimental way with peers or superiors. If a culture of fear has existed on other projects in the organization, make it clear that it won’t rule the day on your project. It might be difficult to convince an individual who has been burned before; others may prefer to play politics. But showing that you value honesty over calculation will eventually pay dividends, be it uncovering festering problems or encouraging more realistic estimates and assessments of current risks.
Be Congenial. It doesn’t hurt and can often help to show interest in your team members’ lives outside the workplace. This doesn’t mean you have to step outside of your comfort zone or try to feverishly form friendships with everyone, though that might happen naturally at times. The point is, professionalism and collegiality are not mutually exclusive. In the end, a team that knows you care about them beyond the spreadsheets and timelines is a team that will almost always work harder for you and the project.
Be Yourself. Finally, there is no substitute for authenticity. You don’t want a job that forces you to be someone else. That won’t bring you satisfaction, and it won’t be effective in leading others. Be yourself, and at the very least, your team will know who they are in the trenches with.
Whether you're an introvert or extrovert, building productive team relationships is part of the job. And like all relationships, it takes work. Get to it!