April 6, 2012 | Author: PM Hut | Filed under: Project Portfolio Management
The Success of Canceled Projects
By Steve Romero
This article was inspired by one of my favorite Project Governance cohorts on Twitter, Woody Williams, who once tweeted, “Canceling a project is often a highly “successful” outcome.”
Successful outcome?!? When was the last time your organization celebrated a project being canceled? The answer is likely never.
OK, how about this question: When was the last time your organization canceled a project - at all?
If you have canceled a project, do you recall the reason why? It was likely due to a funding cut. Either the money ran out for the specific effort or a department-level budget was reduced and the project was one of the “unlucky.” These reasons fall much more in the “We had no choice” category as opposed to the focus of this post - Killing projects as a specific outcome of sound Project and Portfolio Management (PPM).
That’s right - killing projects. I prefer the term “kill” over “cancel” because it connotes the act of a predator over that of prey. “Killing a project” sounds deliberate. “Canceling a project” sounds apologetic.
Semantic preferences aside, this topic is a critical imperative for every Enterprise. Many of my articles have been devoted to the subject of project failure rates - which have never been less than 50% in any study I have ever seen. Given the high rate of failure, the advantages of killing projects are obvious. I much prefer a $1M mistake over a $5M mistake. And rather than throwing good money after bad I could redirect my precious resources to an effort that yields promise.
As I mentioned earlier, killing/canceling projects is a function of PPM. Sound PPM continues beyond the project investment decision, it provides more than just go/no-go. Approved investments should be managed actively by Leadership on a continuing basis and not only considered when approval is sought. This involves continued analysis of the portfolio, monitoring each investment for its relative contribution to enterprise goals versus other portfolio investments. This oversight continually asks and answers the fundamental questions:
- Is the project performing below expectations? (schedule or cost overruns, benefit erosion)
Is the project still aligned to business objectives? (which constantly change)
With the timely fact-based project/portfolio data only good PPM can provide, Management must decide:
- To make the necessary project/portfolio adjustments to improve performance
To make the necessary project/portfolio adjustments to maintain alignment
To kill projects to eliminate further investment and redirect resources towards other projects that better fulfill enterprise strategy and business objectives
So the idea of killing projects is one I whole-heartedly advocate. Which is why I so enjoyed Woody’s tweet I referenced at the beginning of this article: “Canceling a project is often a highly ‘successful’ outcome. ” I like his statement because it sounded celebratory and unapologetic. To me, it implied a level of awareness born of the realization that investment decisions are sometimes wrong. This realization enables and fosters successful PPM by including the constructs and mechanisms for the “successful” cancelation of projects.
This positive-spin on project cancelation brings me to a related subject, the 2009 Standish Chaos Report. Their report (which I highly recommend - at the very least, the Summary) showed a recent decrease in project success rates, with 32% of all projects succeeding (delivered on time, on budget, with required features and functions); 44% were challenged (late, over budget, and/or with less than the required features and functions); and 24% failed (cancelled prior to completion or delivered and never used).
Notice they have 3 categories as opposed to my 2 categories (success and failure). The studies to which I earlier referred placing project failure rates at 50% also do so with a 2-category system. In fact, each of those studies considers the Standish “challenged” category of projects to be failures. In doing so, the 2009 Standish Chaos Report could be interpreted as exposing a 68% project failure rate (by combining the challenged and failed categories).
Not so fast. Before we simply combine the two categories, let’s first consider the Standish Chaos definition of failed projects - “cancelled prior to completion or delivered and never used.” “Canceled prior to completion”…a killed project. Given I obviously agree that a canceled project can be considered a successful outcome, I don’t necessarily agree with the Standish Group that it is a “failed project.” I suggest it may be or may not.
I can think of a number of reasons why a reasoned and rational investment decision (a good decision) may eventually turn into a bad decision. Unforeseen economic, business, or customer circumstances could alter an investment’s value proposition, especially when compared to competing alternatives. And I fully expect Enterprises accepting a reasonable amount of investment risk will occasionally be wrong.
Sure, even with good PPM we will eventually reflect on a go/no-go decision that was wrong for the wrong reasons, and it is fair to call this a “failure.” But good PPM increases the potential this will be the exception as opposed to the norm. Most killed projects will be the result of the effective oversight required to spot the variances and anomalies. This will then trigger the reasoned and rational decision-making born of the essential investment governance only PPM can provide. In these cases, I find it difficult to call this project failure. It means we’re watching. It means we know what’s going on. It means we have the courage and humility to ask the question, “Is the investment decision still valid?”
So if Martha Steward was a PMO Director I am sure she would say, “Excel at canceling projects. It’s a good thing.”
Steve Romero is a published and globally recognized IT governance evangelist and IT business value activist. His mission is to help enterprises realize the full potential of their IT investments for strategic and competitive advantage. He speaks around the world to companies in every business sector, federal and state government agencies, industry organizations, students, and information technology and business luminaries to identify and communicate leading advances in business governance and business management of IT. You can read more from Steve on http://www.itgevangelist.com/.