Rudi Burkhard posted a comment on a LinkedIn forum that caught my attention.
Rudi advocates for reducing the number of projects that an organisation does. His argument – which I completely buy on experiential grounds in the absence of systematic evidence one way or the other – is that when organisations cut down on the number of projects they do, it has a positive effect on their bottom line. It would be great to learn of some systematic research.
Why do so many Organisations Resist Rationalising their Project Portfolios?
I do not doubt that there are a myriad of reasons for this, so I will isolate just five.
Reason 1: Patronage
Rudi addresses the very real factor of senior people “sponsoring” a project with patronage and political pressure. Where they are unaware of the global resource constraints and the competing merits of alternative projects in terms of absolute and relative contributions to strategy or bottom line, this is nothing more than blind parochialism. It is a breach of good governance and needs to stop.
Human nature being what it is, however… it won’t.
Reason 2: It’s all too difficult
Set aside the very real inter-personal difficulties of tackling this head on with all of your senior managers, the rational task of gathering evidence and comparing very different projects across a large organisation can be monstrously complex, time consuming and costly. There are tools available and skilled facilitators ready and willing to help, but there is no published methodology that I am aware of and what tools there are are very much unfamiliar to board members.
Being difficult is no excuse whatsoever for tackling a business-essential problem.
Reason 3: Is it Really Essential?
Yes, it is. However, there is a tendency to perceive project activity as peripheral to your organisation’s principal operational activities. So here’s a challenge. Look at the capital and revenue forecasts for the biggest 20% of projects in your organisation . Double the figures to get a very crude estimate that includes the long tail (you’ve probably grossly under-estimated). Now express these as a percentage of your entire annual revenue and capital forecast across the organisation.
Does the time your top executives allocate to projects as a percentage of their work time reflect this figure? If anything, since projects are higher risk endeavours than operations, the time allocated to them should be disproportionately high.
Reason 4: Loss Aversion
risk aversion is a psychological observation that we a predisposed to act in a way that prevents us from losing what we already have. If we have an opportunity, or we have an idea, or we have an investment part-made, we will fight to protect it. This is an irrational response which can only be countered by compelling oursleves to look at all of the competing ideas and investments in the context of true resource constraints.
Psychology is against you.
Reason 5: Lessons Unlearned
This is the big one for me. Most lists of causes of project failure do not include project overload. There is a very good reason for this: they look at “proximate causes” – the immediate reasons for the failure, such as:
- Lack of clear links between the project and the organisation’s key strategic priorities, including agreed measures of success.
- Lack of clear senior management and Ministerial ownership and leadership.
- Lack of effective engagement with stakeholders.
- Lack of skills and proven approach to project management and risk management.
- Too little attention to breaking development and implementation into manageable steps.
- Evaluation of proposals driven by initial price rather than long-term value for money (especially securing delivery of business benefits).
- Lack of understanding of, and contact with the supply industry at senior levels in the organisation.
- Lack of effective project team integration between clients, the supplier team and the supply chain.
However, why do so many of these occur so frequently – especially when project managers know all about them? I believe that one common root cause is project overload. The problem is that we too often see immediate cause, accept it as a sufficient explanation, and look no further.
The “so what?”
Bring in outsiders. Not necessarily an objective voice, but certainly a skilled consultant who can guide you through the process and facilitate your strategic decision making. Done correctly, the cost can be a tiny fraction of the value at risk.