Why do well run projects fail?

Projects fail. In fact, despite the statements of the majority of government and corporate communication to the contrary, studies show that most projects fail.

What is Project failure?

Firstly, let's look at what is meant by failure. A project fails when it has not delivered the benefits that justified it being sponsered at its inception. The benefits are usually either a forecast saving or an increased capacity at a specific cost and/or point in time in the future. A project is then often at risk in realising its benefit if it is late or never delivers, if it is more expensive to deliver, or both.

If the project is ill-conceived - that is, the product(s) of the project will not, once delivered, actually be capable of realising the expected benefit - then the project is destined to fail.

If the wrong resources are applied - that is, a project manager does not have the capacity or capability to manage the project of the type or scale, or is not empowered to obtain resources as required - then the project is destined to fail.

If the corporate culture does not integrate with the adopted project management
methodology - that is, the Key Performance Indicators for management do not provide consideration for matrix management of personnel and resourcing is governed only by line management consideration - then the project is destined to fail.

And so the list could continue. The point is that there are many framing charateristics of the organisations, personnel and projects that mean that projects are destined to fail before they have begun.

This is disheartening. If organisations were more honest regarding their performance in project delivery and applied their continuous improvement processes of their quality manual to projects (an often excluded scope to their quality certification), this situation may be given its due focus.

To quote the words of NASA following the return of Apollo 13, most projects are 'successful failure(s)'. Apollo 13 was the 1973 mission to the moon where an accident that should have resulted in the loss of craft and crew was rescued from disaster by the valiant effort of the entire mission team to return the three crew home safely. The mission did not achieve any of its original goals. NASA applied this political spin in a vain effort to harbour support for further funding for moon missions. As in most corporate projects, NASA sold the project for what it achieved, rather than it was targeted to achieve.

Studies since the 1960s have shown that even once the systemic causes for project failure are removed, many still fail. That is, even well conceived projects, that are empowered and appropriately resourced, which use a robust project management methodology that aligns with the corporate culture still fail. Why? Mostly because of a lack of project strategy.

What is a Project Strategy?

Project strategy is the design of how the benefits will be realised from the project processes. Just as driving at the speed limit does not necessarily mean safe driving, so too, complying with best practice in running a well framed project does not mean it will achieve the intended benefits.

Projects do not exist in isolation. They operate through and across an organisation, may involve the supply by external parties while the organisation operates in a market with customers or clients with changing needs. Management via the project strategy ensures the project keeps abreast of its context within the organisation and moves as it does. That is, as the organisation changes the project benefits required, the project via project strategy management responds.

Most projects are like the Titanic, large and near impossible to steer a new course fast enough to avoid disaster or at least failure. When a project is formed with a project strategy it is designed to be nimble and responsive to the changing context of the project within the organisation. It is the single most productive project formation task, yet one that is most often skipped in the rush to commence and one that often slips between the cracks of most project methodologies.

Risk of not facing risk

A lot has been said about risk and how it was or was not managed in the aftermath of the sub-prime mortgage failures. This discussion has centered on risk management in terms of financial risk - the risk due to market positions where a loss or profit can be made from something occuring or not.

The "mistakes" made that have brought about the Global Financial Crisis are specific to this time and relate to a financial system that does not exists in the same form anymore. However, the human behaviour that has made these obvious errors is still inherent in us and has a role to play in every endeavour and every project.

Humans are risk adverse. This is a valuable survival mechanism. It is a trait that is effective in addressing the immediate concerns of an individual. However since what is good for the many may not be good for the few or the one, it is a trait that often serves leaders poorly when addressing matters of those they lead. In the extreme, it is a trait that has destroyed civilisations from its most damaging effect - the tendency to overlook matters that are in the future.

Managing risk involves risk

A risk owner must balance their investment in risk management. The options to mitigate, monitor and/or develop response strategies all involve organisational capacity and increase the cost of delivery. Unfortunately, successful risk management means that nothing may happen. This is a difficult outcome to value. It is also an outcome that raises questions about the validity of the decisions taken to invest in risk management.

Performing risk management is therefore a risk - a personal and immediate risk. The risks to be managed are usually impersonal and rarely immediate. The result is that without processes to avoid it, human behaviour takes over and drives three typical responses:

1. It's someone else's problem
   
   In a formal and active risk management culture, a recognised risk is avoided through informally considering the risk as part of some else's scope. The informal transfer leaves the nominated risk owner completely unaware.



2. Head in the sand
   
   Regardless of whether or not a formal risk management framework exists, specific or even entire categories of risk are inappropriately set low likelihoods or ignored altogether.



3. Kill the messenger
   
   Irrespective of the policy and procedure insisting that risk be raised and analysed, the desire to avoid addressing what may be obvious leaves the risk unmanaged. Eventually, the proverbial 'elephant in the room' is identified by a team member, who subsequently is tarnished as the cause for all the resultig costs of the risk management.

A risk managed is a risk minimised, yet this not what human behaviour responds to. Instead of lowering stress from the rational evaluation that the risk is now minimised, a risk managed provides additional stress through the role playing of the negative outcomes of the risk.

Everything about corporate and project risk management is counter-intuitive on a personal level

Too often the process relies on the experience of the team or key people. Ironically, the people with the experience of managing the negative outcomes of risks, or in other words the people who had not managed the risk in the first place are often valued more highly than those who managed the risk. The reason? Nothing of note happened in the project where the risks where managed - with the notable exception of trouble-free projects.

Certainly, the experience of the team and its key people is important. However, having an experienced team is not synonyous to risk management. All the experience of the western financial system did not stop the GFC from happening. Time will tell if it assisted in minimising the impact, but the cost would have been far less had a response strategy been in place or mitigation in the form of the subsequently established regulation.

The most damaging impact of not truly managing risk is the poor metrics for project costing and the resulting impact to the decision processes. The over-inflated costs impact the benefit-cost-ratio and prevents viable projects from proceeding. Unfortunately, as the poor risk management persists in the delivery of the projects that survive, the whole process becomes self-justified.

The risk or not facing risk is the loss of opportunity. The projects do not progress, there are social impacts from the services delayed and considerable time is wasted in addressing negative outcomes that need never have occurred.