No one's going to argue this one: It was a spectacularly ugly year, marked by project flameouts that transcended sectors and borders.
Whether it was high-end construction megaprojects shut down in the Middle East or IT projects in the United States left in limbo after resources evaporated, the economic slump wreaked havoc on even the most carefully planned initiatives. Around the globe, funding dried up, people were laid off in droves, and projects were either stalled or killed altogether.
The damage is done. But now that the economy finally seems to be showing signs of a rebound, companies are dusting off shelved projects.
Still, no one wants a repeat of last year.
And the only way to avoid that is for executives and project managers alike to look back at 2009 and figure out what went right—and what went wrong.
A FUNNY THING HAPPENED ON THE WAY
Project management professionals have long touted the value of metrics to regularly assess project progress against expected outcomes. In healthier times, it could be awfully tempting to skip those steps, but as companies begin to sift through the rubble of failed projects, the value of ongoing measurement is becoming crystal-clear.
“During the recession, corporations needed to be measuring project performance while the project was underway, not just at the end,” says Vicki Smith-Daniels, PhD, professor of supply chain management at the W.P. Carey School of Business at Arizona State University in Tempe, Arizona, USA. “They needed to track projects from an earned value perspective to be sure they were still achievable and meeting their objectives.”
Many organizations simply didn't have those processes in place—and they paid the price.
“A lot of executives say their companies know how to do project management, but in the end they just weren't doing it,” she says.
As the economy soured, businesses discovered that many of the projects in progress could no longer deliver.
Some project managers saw the signs and tweaked processes to accommodate the shifting landscape.
As manager of project management at Laika Entertainment, Rick Campo, PMP, implemented a formal review process for all projects at the Portland, Oregon, USA-based animation studio. At every milestone, project leaders must now evaluate the goals, costs and resource allocations to determine whether or not they should continue.
“Before the recession, we didn't have a gate process,” he explains. “We just chose a project, approved the budget and proceeded.”
But with so much financial risk, he quickly realized the company's initiatives required more attention to avoid costly mistakes.
“The gate process lets us be much more careful,” he says. “We spend a lot more time now looking at projects and evaluating whether they are still beneficial.”
The process saved the company thousands of dollars and months of time on an in-house custom human resources software development project launched just prior to the recession. At one of the reviews, the project team determined it didn't have the resources or expertise onsite to properly manage the project. Laika cut its losses, stopping the initiative six months in and purchasing an off-the-shelf system instead.
“It was a quick lesson for us on being careful about what we try,” Mr. Campo says. “Without that gate, we would have sunk a lot more time and money into it before we realized it wasn't going to work.”
The “go-go” years of project management had come to a stop, or at least a pause.
“It's no secret that the financial crisis impacted budgets and resources,” says Farhan Liaquat, project management office consultant for the Entrepreneurship Center at King Saud University in Riyadh, Saudi Arabia.
Project managers were left increasingly vulnerable. Many companies laid off their most valuable—and expensive— team members. “If getting rid of one meant keeping six, it would seem to make sense,” Mr. Liaquat says.
The project managers who remained were often forced to take on greater responsibilities to prove their worth.
“Project managers couldn't just be seen as auditors,” Mr. Liaquat says. “They had to be part of the team and corporate culture.”
That meant playing the part of business analyst, trainer, mentor and negotiator. “Wearing all these hats was how project managers stayed successful and employed,” he says. “Otherwise, their positions were in jeopardy and they were often the first to go.”
And when projects didn't look so good, it fell to project managers to pick up the pieces.
Mr. Liaquat learned that lesson firsthand in his former job as the head of two project management offices at Mobilink, one of the largest telecom providers in Islamabad, Pakistan. In mid-2009, he was leading a major rollout of an IT system upgrade to sites across the country.
Right in the middle of the effort, the budget suffered a major cut and the project slammed to an abrupt halt.
“My pride was trimmed with that project since I had been leading the show and I had to shut it down,” he admits.
“Many companies radically changed their portfolio priorities to focus only on cost-reduction projects that could be accomplished with minimum personnel.”
—Renato Lourenço, PMP, Rencorp Consulting, São Paulo, Brazil
Although he was disappointed, Mr. Liaquat also had to communicate the business decision to the team and then deal with slumping morale.
“It was a good learning experience,” he says. “You have to remain professional no matter how you feel and set the stage for your team to move forward.”
Mr. Liaquat also discovered the value of long-term risk analysis and of building relationships with key people throughout the organization who may have inside knowledge.
“If you can gauge what could go wrong and you have good liaisons, you are more likely to know what's going to happen to your projects and resources so you have time to prepare for the worst,” he says.
THE ROI PANIC BEGINS
The stumbling economy set off a mad scramble to find the projects most likely to deliver within strict fiscal limitations.
The panic surrounding budgets and the need to show ROI led to some shortsighted decisions, says Renato Lourenço, PMP, executive director at Rencorp Consulting, São Paulo, Brazil.
“Many companies radically changed their portfolio priorities to focus only on cost-reduction projects that could be accomplished with minimum personnel,” he says.
Although the strategy made sense in the near term, it had major consequences for companies that neglected to consider the lasting impact of such decisions.
“When you have a company portfolio focusing only on cost-reduction projects, the contribution that project management can make as a strategic area to improve the competitive advantage of the company is drastically reduced,” Mr. Lourenço explains.
The primary result was that companies steered funds away from new product development and research and development—jeopardizing their post-recession ability to regain a competitive edge.
“In the future, if these companies have to reduce their budgets due to an economic crisis situation, they can look back at the lessons learned and create a project portfolio mixing cost reduction, new product launches and restructuring in which the project management discipline can contribute to the company strategy and support its operation,” Mr. Lourenço says.
Losing projects that once had the go-ahead was painful, but in many cases led to many valuable changes in the way companies choose and manage projects.
“We learned that we have to build a strong case to get support for any project,” says Karen Quagliata, PMP, senior information systems analyst at Edward Jones Investments, a brokerage and investment advisory firm in St. Louis, Missouri, USA.
With more scrutiny over which projects were approved, sponsors were expected to conduct greater due diligence by proving the value before they could secure funding. They were also required to clearly define metrics to demonstrate project success.
“It forced everyone to think like a businessperson, to look at the value proposition of the project, what problems it's trying to solve and what the benefits are to the company,” Ms. Quagliata says.
The changes also opened lines of communication between the company's governing board and individual project teams.
“The leaders listen to the needs of the branch offices more now,” she says. “The branches present their case and the governing board listens to what they need. It's not just directives from above.”
That two-way relationship—and the trust it fostered—helped her company weather the storm.
“As the economy got worse and budgets got tighter, we had to closely scrutinize every project,” Ms. Quagliata says.
Many good projects had to be delayed simply because the budget just wasn't there, but everyone was at least on the same page.
“When you have strong relationships in place, those conversations go smoother,” she says. “There is mutual respect and everyone is in the mindset of doing what's right for the firm.”
Now that the emphasis on communication has permeated the company, project teams prioritize information sharing on new initiatives. New intranet-based sites are used to present project data to the executive board and clients on larger initiatives. And every project plan now includes a clear description of team member roles and responsibilities, detailing precisely what's expected.
“It's all part of paying closer attention to what's happening on projects so we can help find solutions when problems arise,” Ms. Quagliata says.
The trials and tribulations of the last year have encouraged project managers in every corner of the globe to reevaluate the strategies they might have relied on during flush times.
Amidst all the drama, Dr. Smith-Daniels sees an opportunity.
“It's a chance for project managers to be leaders,” she says, “to reinforce the value proposition of strong project management and to help companies navigate the risks that lie ahead.” PM