Project Management Institute

Generating value?

THE BUSINESS of Projects

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Project managers must think beyond the triple constraint.

BY GARY R. HEERKENS, MBA, CBM, PMP, CONTRIBUTING EDITOR

Which is better: a project that runs on time and budget and meets its objective, or a project that runs late and is over budget but overachieves on cost savings that have a “change for life” impact? When that question was posted on a recent discussion thread, it generated some controversy. But I think the question could serve as a wake-up call for today’s project managers.

This question is really asking whether it’s acceptable to overrun the original cost and schedule if that would result in a substantial increase in project benefits. Since this topic is in the sweet spot of my column, I followed it with great interest. As I continued to observe and occasionally comment, I became increasingly alarmed by what was stated in the more than 430 comments.

First let’s dismiss the outliers—about 130 respondents either didn’t appear to understand the question the same way the overall group did or they had an experiential bias that seemed to cloud their commentary.

That leaves around 300 responses. From this group, about 25 percent answered the question in an appropriate, business-based manner, suggesting that—in most cases—pursuing the option to cash a much larger benefits stream will justify exceeding the original cost and schedule targets. Further, most of those 75 respondents appropriately noted that a positive cash flow would have to be confirmed before any change was approved.

It’s critical to note that the original question did not mention—and made no particular assumption about—who was making the decision to “over-achieve.” In other words, the question was not asking whether a project manager has the authority to overrun project targets. It was a fairly straightforward business question, but sadly, most respondents (around 75 percent) failed to recognize it as such, unable to expand and elevate their perspective beyond the realm of the triple constraint.

A BIG CONCERN

To summarize their comments, this group was saying that nothing could justify a violation of original cost and schedule targets—absolutely nothing.

Many emphatically stated that cost and schedule compliance is the ultimate project success metric. This does not bode well for project managers seeking to function in a project environment that is increasingly business-focused. In a world where senior management correctly views projects as financial investments, metrics such as return on investment (a measure of project effectiveness) trump cost and schedule compliance (a measure of efficiency).

PATH FORWARD

If we wish to increase the respect afforded to project management, it is vital that today’s project managers understand the concepts and practices related to the business side of projects much, much better than this discussion thread demonstrated. If you are a project manager, I urge you to heed my wake-up call. PM

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Gary R. Heerkens, MBA, CBM, PMP, president of Management Solutions Group Inc., is a consultant, trainer, speaker, and author and has 25 years of project management experience. His latest book is The Business-Savvy Project Manager.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

DECEMBER 2014 PM NETWORK

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