investiledysfunction

IT represents half of all capital spending and exceeds $500 billion annually.  So as CFO Magazine highlights “When times get tight, executives turn to their companies’ IT budgets and get out their red pencils.”  And although this sentiment seems to get expressed every couple of years, people still continue to crib about the lack of useful data around IT expenditures.

The problem is that IT budgets are rarely understood and often do not contain all the right information.  We’ve seen firsthand many instances where organizations only think about the money out of the door this year with regards to IT and they fail to consider maintenance, support, labor and other expenses.   And those expenses are no joke - they create a long tail for many IT projects.

And as the CFO Magazine article entitled “Less Bleeding, More Edge” notes “Companies are now concluding that in order to control costs, they must better understand them.”  (note:  This statement has been nominated for the master of the obvious award)

The article states that “gauging the return on investment of specific projects is an exercise fraught with peril”  as if to excuse this practice of not requiring IT investments to have solid business cases.  Unfortunately, this is a refrain heard all too often and is a cop out.  Rigorous business cases coupled with the threat of projects being killed or not funded would get at the total cost of ownership and also force project sponsors to understand and articulate the benefits and ROI of their projects and not allow them to hide behind scare tactics (”If we don’t do this, there will be a security risk” or “If we fail to do this, the reliability of XX could be impacted”) .

Unfortunately, most business case building exercises are bureaucratic romps that people go through to tick a box.  As a result, the soundness of the business case and its costs and ROI gets little real examination and projects that have no business being funded get funded.

Unfortunately, in the current climate, knee-jerk actions will be taken that will ask for cuts to IT spend.  These steps which may provide a short-term benefit do nothing for the long-term.  Organizations need to focus on getting the right data about IT initiatives and then be willing to kill poorly articulated or underperforming projects if we ever want to stop hearing about ‘out of control IT spending.’

I’ve previously written about the underwhelming success rates of multi-year projects whether they are managed by governments or the private sector (for example - Boeing’s well publicized snafus with their Dreamliner project).  This week, another multi-year project mess was highlighted that hits closer to home (literally and figuratively) and I’m talking about the World Trade Center rebuilding.

According to reports, the rebuilding of the WTC won’t be done until the middle of the next decade and will cost as much as $3 billion more than initially planned.  My wife and I live in Manhattan’s Financial District so personally, this is disappointing as the revitalization that would have accompanied the new WTC site would be great for the area.  Moreover, as someone who was at the WTC on 9/11, it would be nice if the memorial to the many victims was completed at least by the 10 year anniversary of the event.

But alas, as with virtually all other multi-year projects, the fate of this high profile project seems no different.   I fear the delays and budget overruns will only increase over time.  Despite the work of numerous smart people (and from the looks of it some not so smart ones as well), a likely army of project managers and the pressure of a city and country on the project planners to get this done, it seems nothing can save these gargantuan projects.

In virtually every post on multi year projects I’ve ever written, I always close asking people to provide me an example of one multi-year project that has gone well.  By gone well, I mean the project delivered on time and on budget.  I’ve yet to ever hear from anyone about such a project.  Despite all that is written about multi-year projects, is the success rate really zero percent.  Let’s hope not.

In the meantime, we’ll continue to wait and hope that the WTC site rebuilding is not delayed further.

So I recently spoke at a conference in Amsterdam where I heard an executive from Air France, (Marco Vd Poel), talk about their portfolio management effort. It was a refreshingly honest and well-articulated presentation. It was one of those presentations that only a practitioner can give because it was based in reality and showed the good and bad of their portfolio management efforts.

Marco had one line in his presentation that was simple, to the point and absolutely SPOT ON. I’m not sure if it’s a line he came up with, but he’s the first person I’ve heard say it so he gets the credit. He stated:

“Project Management is about doing projects right. Portfolio Management is about doing the right projects.”

Now let that sink in for a second.

How money is that line, eh? It is absolutely 100,000% correct and elegantly simple. So the next logical question is why are project managers running portfolio management efforts within their organizations if it is a different skillset altogether.  It’s a bit like having Eliot Spitzer teach a class on abstinence.  They don’t go together. 

Undertaking the right projects and investments is about measuring value, considering strategy, risk and financial returns, etc and optimizing the portfolio based on those inputs and factors.  Plain and simple - this is not what project managers know how to do nor what they are trained/supposed to do.

Portfolio management in the corporate setting especially IT has basically evolved like this. If you have enough projects, they roll up into a program. If you have enough programs, you all of a sudden have a portfolio. Somehow having a portfolio defined this way gives you the skills to do portfolio management. Wrong.

I’m not sure when folks will realize this. When they do, it will let project managers do their job better because they won’t have to do these portfolio exercises.  And it will let organizations get the right people to head up their portfolio management efforts and actually get the value they can from such an effort - instead of the glorified project management that it currently is.

This is not meant to disparage project managers. I just think they’re being asked to do things that they’re not best-suited to do. Picking the right projects as part of a portfolio is a strategic, financial and risk discipline and very different than the skills possessed by project managers. If you are in the handful of project managers who can do it all, please don’t write to tell me this. You are awesome and a rare gem. I’m talking about the average project manager who doesn’t have the project management + strategy, finance, risk, etc skills.

Thoughts? 

I’ve been watching the Boeing Dreamliner saga for the last many months and am amazed at how such a big project in terms of its scale, strategic importance, and financial implications can go so terribly of course. The delays hurt sales prospects and in the short term, they hurt share price performance as The Street’s skepticism of Boeing increases.  It is 9 months late right now and most folks expect that Boeing will delay it further for a variety of technical and non-technical reasons. A brief perspective from TheStreet.com is given for those interested.

But alas, Boeing is not alone with its multi year project debacle. It is very common. Surprisingly and frighteningly common. R&D, product development, IT, infrastructure, etc projects are all prone to significant and often spectacular project failures. Failure is often on multiple dimensions with projects coming in over budget, under scope and over time.

And there are plenty of helpful tips out there on how to prevent project failure. Various books, websites, conferences, etc. And yet, all these tips and tricks and “best practices” make for interesting reading but still project failure continues at alarming rates. This results in a great business for consultants and other ecosystem players who profess to have expertise in project management disciplines.

But what is most unnerving or perhaps a better word is perplexing are the numerous project management certifications and practices that are out there - PMP, PMBOK, PRINCE2, etc.  Here is why I’m perplexed, and I’d welcome comments from project managers out there or someone who can make sense of this.

1. Why is there a need for so many different certifications? Can’t we agree on a single standard? Or are all of these basically saying the same thing but because certifying people is such a good business, multiple folks have jumped in to become certifiers?
2. PRINCE2 was a project management discipline developed by a portion of the government. Would anyone argue that the government should be viewed as the authority on how to manage projects? I didn’t know the government does projects well especially multi-year ones? This seems to me a bit like asking an alcoholic to come up with a guide on staying sober - it makes no sense.
3. But I shouldn’t pick on PRINCE2. Why are any of these certifications or practices coveted when projects still fail at such an alarming rate. When someone has a certification, I assume they now have the capability to do something in a way that someone without that certification could not do. You goto a doctor or lawyer because they can help you with your medical or legal issue. They may not know the answer precisely but in my experience, they’re usually pretty close. But I’m not sure project management can brag of such a success rate.  I could probably find hundreds of people who can screw up a multi-year project without any certification at all.  It isn’t that hard.

So what I’m not arguing is that project management is not useful. Please don’t send me hate mail as that is not my intention.  Doing projects right is obviously important. What I am questioning, however, is the value of the standards that are established from these “accreditation bodies” if projects continue to fail as they do.  The value seems marginal at best. A certification is only valuable if it helps you do the thing you are accredited to do better, right? Someone enlighten me if I’m way off the mark.