Managing troubled projects
Although a project doesn't go from on track to fail overnight, but passes a period of transition, the number of troubled and failed projects is increasing every day. Estimates indicate that troubled projects and failed project cost the global economy billions of dollars annually (Sessions, 2009). Therefore, organizations intend to ensure the time and money invested in projects are worth investing, the required positive return is obtained, and this enduring question keeps coming up: “Is the project worth it or still worth it?”
It is an extremely challenging task that requires specific attention, management and leadership to manage troubled projects successfully before having one more failed project. Currently, there are many studies on project management tools, strategies and troubled project management. However, the reality of troubled projects needs to be brought into the mainstream and more closer in concept to A Guide to the Project Management Body of Knowledge (PMBOK® Guide).
Early identification, analyzing and management of troubled projects, are the main topics of the paper. The conclusion of this paper highlights some lessons learned with troubled projects.
Definition of Troubled Projects
The PMBOK® Guide defines the successful project as a project that meets its objective in terms of quality, schedule, budget and scope (or customer satisfaction) (PMI, 2008, p. 9) while a project is a temporary endeavor undertaken to create a unique product, service or result (PMI, 2008, p. 5). The PMBOK® Guide does not define the troubled project or the failed project but can still be applied and helpful.
Although Vargas states that the troubled project can be defined as a project where the difference between what it is expected to be and what has been accomplished exceeds the acceptable tolerance limits, pushing it into a course that will inevitably lead to failure (Vargas, 2007).
For the purpose of this paper, the PMBOK® Guide for successful project definition will be modified to define troubled project, to reach this definition:
A troubled project is the project with overrun in quality, schedule, budget and scope exceeds the acceptable tolerance limit and might be rescued.
Therefore, a specific effort is required to either define a possible recovery plan or even deciding for an early termination, as both options are considered as a way to manage troubled projects. A failed project, on the other hand, can be defined as following:
Failed project is the project with also overrun in quality, schedule, budget and scope exceeds the acceptable tolerance limit but cannot be rescued.
Not every problem arisen in the project is considered as significant enough for the project to be considered troubled. For example, a three-year project is scheduled to complete a week late, which is normally not a troubled project except if the project MUST be completed on that specific date, such as Hajj-related projects in Saudi Arabia that requires completion prior to Hajj days every year. Therefore, it is very important to understand the acceptable tolerance limit because the project may be over-budget or overdue but still in an acceptable range, although those might be early warning signs, as shown in Exhibit 1.
Variances are not acceptable but might be recoverable for troubled projects; however, they are neither acceptable nor recoverable for failed projects, as the higher level of achievable loss has been exceeded or is expected to be exceeded.
Throughout this paper, the term “recovery” indicates that there the project has a chance of recovery and not that the project recovery is achieved or granted. Additionally, the terms “Problem” and “Trouble” will be used interchangeably.
Exhibit 1 – Tolerance and Variances
While project success can be determined at the end of the project, a project can be troubled or failed at any phase of the project life cycle. Unrealistic business case, uncertain stakeholder influences or undefined project objectives will lead the project to fail at the earliest, while scope creep or lack of acceptance criteria can lead the project to fail at a later phase or even at the very latest stage.
Failing in managing the troubles of the project at the earliest will make the project tougher to complete. For example, many project managers, suddenly, tend either to ignore such projects or end up acting as “Firemen” trying to do rash actions to rescue the project and doing unplanned actions such as working extra time or firing the project's team to place blame; apparently, those actions are doing mostly more harm than good because they are not addressing the root cause of project troubles.
Project Troubles versus Project Risks
Risk is an uncertain even or condition that, if it occur, has a positive or negative effect on a project objective. Trouble is a certain event or condition that has only a negative effect and has already occurred or will inevitably occur. When a risk event occurs, it can potentially cause a project to be troubled, which is especially true when risks are unplanned or unknown (Munroe, 2010).
Identify/Assess of Troubled Projects
Hurry Up!! Identify Projects Problems Early or Your Project Budget Will Suffer
Previous study by NASA’s Johnson Space Center on how the cost to fix the problem increases as the project matures through various phases of project cycles, is shown in Exhibit 2. This study used three estimating approaches for accuracy: the bottom-up cost method, the total cost breakdown method, and the top-down hypothetical project method for hardware/software system having project characteristics similar to those used in the development of large complex projects. The cost of fixing a requirement problem discovered during the concept phase is defined to be 1 unit; the cost to fix the problem if found during the design phase increases to 3 to 8 units; at the implementation phase it is 7 to 16 units; at the integration and test phases it becomes 21to 78 units; and at the operation phase, it ranged from 29 units to more than 1500 units (NASA Johnson Space Center)
Exhibit 2 – Cost of Change through Project Life Cycle (Foreman, 2006) and (NASA Johnson Space Center)
Regardless of the aforementioned, it is typical that the cost of changes increases as the project progresses; however, the problem arises when the changes at later stages of the projects are increasing. The influence of stakeholder's influence, risk and uncertainty will be high at the beginning of the project when the cost of implementing the change is low. On other hand, as time progresses and the cost of change increases, the influence of stakeholder's influence, risk and uncertainty will be decreased for the project to be a healthy project. In summary, the longer you wait to declare trouble, the more effort and money will be required to recover the project and the higher risk that the project will be outright cancelled. The sooner you deal with problems, the easier it will be to have successful solutions (Munroe, 2010).
Signs of Troubles
In 1984, after spending fourteen years and US$140 million dollars, RCA declared its Selecta Vision product a failure and abandoned the marketplace. Although there were numerous and clear signs over the fourteen years that warned the engineers at RCA that they had a failure on their hands, they ignored them. As a result, they consumed fourteen years of engineering research and a staggering amount of money—time and money that could have been spent on other, more profitable, projects (Ward, 2003).
Those signs normally operate together and are not isolated. One or combination of them could lead the project to fail. Ignoring them will lead to several other problems and so instead of fixing one problem, multiple interrelated problems will arise, which may complicate the project or might lead the project to fail.
One example of those signs— accepting the unrealistic deadlines— and ignoring this problem will end up with problems in the morale of the team hitting rock bottom, over-budgeting and compromising quality. The following list highlights other signs:
- Delays in meeting milestones or completing deliverables
- Project is unacceptably behind the planned schedule
- High risk to the project's likelihood in delivering anticipated benefits
- Project is over-budget with no end in sight
- Critical and/or significantly growing technical issues with the project
- Team is working extra time
- Frequent intervention required by the management team
- Morale of the team has hit rock-bottom (Brian, 2010)
The “early” warning sign could rescue the project earlier if proper action is taken, but the dealing with “early” warning signs usually starts very late and in too many cases leaves no room for action. Ward (2003) linked the “early” warning sign with the American Heart Association finding, which stated that the first sign of heart trouble for 33% of the people suffering such problems is instant death. “Early” warning signs are god's gift to providing the time to change our behavior. So it is with the project.
Causes of Troubles
Following are a couple of causes I have gathered from different articles, which are the causes of troubled projects and show the top agreed-on signs of troubled projects. All authors selected the top causes from their perspectives/research and they did not intend to cover all causes. Some authors indicate them as “Signs” but I believe they are “Causes,” so they were added as such.
Exhibit 3 – Causes of Troubles (Munroe, 2010; Wu, 2010; Sarokin, 2005; Ward, 2003; TenStep)
It is obvious why poor requirement definition is at the top of project-troubled causes. No one can walk on water except if it is frozen; therefore, project manager shall make sure that every one understands that “scope frozen” means at a specific point in time the project scope is well-defined and any change afterward will have its effect on other project constraints, and they are willing to accept it.
Although the aforementioned problems seem to be straightforward, recognizing which problem exists, as a root cause for a specific project, is in itself a problem due to the project's complexity. Every project is unique and the specific details are different. Recovery strategy cannot be correctly implemented without knowing and eliminating the driver of project problems prior to moving forward with the recovery plan.
Another way to look at it is that the causes could be sorted into two categories:
- Out of Project Boundaries
- In Project Boundaries
The “Out of Project Boundaries” are referred in general to sponsor, stakeholders, enterprise, environment or top management mistakes in the project (e.g., refusing to approve required changes in a timely manner, imposing new stakeholders in an advance stage of the project, changes in organizational assets, changes in the business case, change the expected benefits or wanting the gold plating of the project). Sometimes it is purely the project manager's mistake; for example, the poor understanding of the host country's culture and politics. Project managers can mitigate this by proper planning from the early phase of the project and by following the PMSOK® Guide related to the stakeholders or the outsiders of the project, in general; still, however, the sponsor or whoever the decision maker is can overwrite all the project manager's efforts in this case.
The second type of mistake is “In Project Boundaries,” which result from poor project management and failure to follow the remaining principles as stated in the PMSOK® Guide.
Project Manager as the Captain in a Troubled Projects Ship
When the project manager is the captain, he or she is the last person to abandon ship, the key leader in steering the ship, and bringing to the job a “can do” attitude and being an action leader. Project managers should play the significant role in addressing the causes of troubled projects as well as in effectively managing the process to recover the project.
When the project becomes troubled, the usual reaction is either to ignore this or to rashly act, hoping to rescue the project. The project manager acts as “firefighter”; unfortunately, such actions most of the time are doing more harm than good and ends up taking more time to rescue the project than necessary or the project will be a failed project
It is one of the hardest challenges, from a psychological point of view, for the project manager to recognize and admit that he or she has a troubled project and to set forward the right course of actions accordingly. The course of action includes admitting and accepting with project management team, as well as the stakeholders and sponsors with project manager, responsibility for the real project situation; the project managers needs to sell his or her ability to rescue the project to them. If there is no buy-in, the task will be harder whereas trusting the project manager could turn the project around. Even if the project manager does not have the time to build trust, transparency, and a methodical approach may help in building it (Aziz, 2012).
Difficult to Admit Project Troubles
It is hard also for the project manager to admit to project troubles while he or she is in regular day-to-day operations and activities or for other reasons due to the following:
- People deny variances because they wish reality was different;
- People anchored in past decisions may feel reluctant to change opinions;
- People might suppress problems for fear of blame or penalty;
- People might delay the start of more complex and uncertain activities; and
- Lack of accountability may lead to situations in which everyone is feeling that it is not his or her problem (Moura, 2012).
Not to mention that some project managers feel that admitting to project troubles is affecting their career or will be the end of it (Aziz, 2012).
In reality, following good project management practices does not guarantee project success (Moura, 2012) but facing troubled projects from the earliest trigger is a major indicator of a project manager's confidence and success, whereas hiding the truth is basically snowballing the project into failure. When it comes to rescuing the failed project, not every project manager, even the experienced ones, are capable of doing so and when he or she succeeds, it should be the jewel in his or her crown.
The “Human” Factor
One of the main challenges of project managers in troubled projects is to integrate the team alignment and build a high performance team who moves in the same direction with a common understanding of the objective of the project. Whatever the project goal, and however perfect the plan, no matter the cost, at the heart of any project is the team (Goodman, 2012). The project manager shall perceive him or herself as the center of the-project-universe. Accordingly, the project manager needs to be concerned about the relationships between and among the various project stakeholders. Without solid working relationships between and among those players, the project's chance of success is questionable. Always highlight and celebrate achievements of small tasks as well as big ones, which will keep the team motivated and keep them always looking for more.
Managing Troubled Projects
Recovery from troubled projects is a project by itself, while going through the project process groups of initiation, planning, executing, monitoring and controlling, and closeout. It uses an “Issue-Breakdown-Structure” rather than the Work Breakdown Structure (WBS) (Aziz, 2012). It is hard to develop one recovery plan for all troubled projects because the recovery plan itself is based on the specific root causes, which depends on the unique project case.
Exhibit 4 highlights that a high level of works needs to be done by the project manager to manage troubled projects.
Exhibit 4 – Managing Troubled Projects
Project Recovery versus Project Termination
Project termination will always be a possible option. The main reason is that when the business case is not valid anymore, for example, when the business justification gets weaker as the project progresses. A general misconception is that when the money has already been spent, the money is considered as wasted when the project is terminated.
However, this money should be viewed as sunk cost. When the estimated cost plus the sunk cost exceeds the acceptable budget, it is better to stop the project and use that money in another field in alignment with Company Business Value, which can be explained as follows:
- Projects required by law, such as safety, health, and security or political projects. These types of projects have a different way of dealing with problems, which are not related to project management but depend, rather, on environmental and enterprise factors.
- Projects required due to their return to the organization. The common logic in term of cost is as follows: Sunk cost+ Expected to Completed Cost (ETC) ≥ Budgeted cost+ Acceptable Cost Tolerance
Success Stories/Lessons Learned
- Keep things simple and straightforward
- Work on details and overall picture
- Keep the team fueled with motivation
- Work in the shop floor
- To be forewarned is to be forearmed.
- Project Manager is the Captain of the Troubled Project Ship
- Failure per se is not the end, but getting back up on your feet and turning failure around is success.
- Those who fail to plan, plan to fail
- Failure can occur in any project life cycle phase; success occurs at the end of the project
- There are early warning sings, but they are ignored (overlooked or misunderstood)
- Not all project managers possess the skills to manage a troubled project
- The sooner you know about the future, the more time you have to change it.
Alsubai, R. (2012, October). Managing Troubled Projects: Analysis & Recovery. 14th Conference, Seminars & Exhibition, Bahrain
Aziz, E. E. (2012). Rescuing Troubled Projects A Step-by-Step Guide. PMI Global Congress –Vancouver, Canada.
Foreman, J. (2006). Troubled Project Recovery – A Fast Look. ESI International
Goodman, E. (2012). Rapid Team Building on Troubled Projects. PMI Global Congress-North America
Klakegg, O.J., William, T., Walker, D., Andersen, B., & Magnussen, O. M. (2011). Identifying and Acting on Early Warning Signs in Complex Project. PMI Global Congress-Duplin, Ireland
Moura, H. (2012). How to Deal with Troubled Project. PMI Global Congress–Marseille, France
Munroe, B. (2010). Rescue My Project: An Overview of Troubled Projects and How We Deal Them. 2010 PMI Global Congress Proceedings, Washington, DC.
NASA Johnson Space Center, Error Coast Escalation through the Project Life Cycle. Retrieved from http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20100036670_2010039922.pdf
Project Management Institute (2008). A guide to the project management body of knowledge (PMBOK® guide) – Fourth edition. Newtown Square, PA: Author
Sarokin, M. (2005). 10 Indicators of Troubled Project. Retrieved from http://h30507.www3.hp.com/t5/The-Next-Big-Thing/10-indicators-of-a-troubled-project/ba-p/60552#.UfZO9ssayK1
Session, R. (2009, November). The IT Complexity Crisis: Danger and Opporunity. Retrieved from http://sistemas.uniandes.edu.co/~isis4617/dokuwiki/lib/exe/fetch.php?media=principal:itcomplexitywhitepaper.pdf
TenStep (2007). Rescuing Troubled Projects, Retrieved from http://www.luc.edu/media/lucedu/pmo/pdfs/additionalreading/RescuingTroubledProjects.pdf
Vargas, R. V. (2007). Identifying And Recovering Troubled Projects: How To Rescue Your Projects From Its Failure. PMI Global Congress Asia Pacific, Hong Kong.
Ward, J. L. (2003). There is a Signpost up Ahead! Recognizing and Dealing with Project Warning Signs. Baltimore: PMI Global Congress North America
Wu, J. (2000). Top 10 Warning Signs of a Troubled BI Project. Retrieved on from http://www.information-management.com/news/2707-1.html
© 2013, Abdulrahman H. AlAskar, PMP, PMI-SP& PMI-RMP
Originally published as a part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana
This standard focuses on the “what” of risk management, including: core principles; fundamentals; and life cycle.