Project management problems which can be avoided

R. Hal MacDonald

McDonnell Douglas Automation Company

Some of the many problems which crop up in every project are unique, a result of the peculiar mix of circumstance, people and resources involved. These are the problems which tax the decision making process for which Project Management is devised. Other problems, which can be avoided or minimized, are inherent weaknesses.

Stragetic considerations in running projects have had excellent coverage in an article by Larry Ben-nigson1. This is “must” reading for any individual contemplating the use of project management or one who is in need of stepping back from the trees and looking at the forest. Our concern here centers on a few of the tactical management deficiencies which can be corrected to increase PMS effectiveness. There is a synergistic relationship in eight specific areas, five of which are discussed herein. Five problem areas are:

- Poorly defined project management controls

- Insufficient work definition

- Unrealistic schedules

- Underestimated costs

- Inadequate cost control and accounting practices

These problems are common to almost all types of projects. They occur in the 100-hour programming job as well as the $800 million nuclear plant.

Three other areas, which are less general and relate to more specific types of projects, aren't covered here but are strong candidates for the spotlight. They are loose material control, inadequate management of the end product configuration and inadequate control of subcontractors.

Poorly Defined Project Mangement Controls

Symptoms

The symptoms to look for are weak and inflexible accounting which results in a lack of meaningful cost control information, project decisions either not being made in a timely fashion or not promptly implemented, decisions affecting the total project being made unilaterally by one interest group, confusion in the authority and responsibility relationships among project personnel or between project and functional (line) managers, and finally, an apparent lack of integrated project planning.

Causes

The causes can also be identified. The project manager may not have or doesn't exercise control over costs, schedules or decision making. The policies and practices of the parent organization may conflict with those of the project. Too, there may be duplication in responsibilities between line managers, some vested interest conflict, a breakdown in effective communications (a situation which isn't always apparent until it becomes serious) or a lack of procedural discipline in the project organization.

Action

An evident solution for the contractor/vendor is to clearly define the authority and responsibility relationships, and enforce policy and procedural discipline. This is easy to say, but difficult to do once the situation gets out of hand. For a client, there is a clear message: get the Project Management System clearly defined before awarding a contract.

Insufficient Work Definition

Symptoms

This problem has a more far-reaching effect than any other. Basic to reasonable performance on any project is enough detail for comprehensive scheduling, estimating and resource allocation. Lack of proper detail is an underlying cause of the subsequent problems we will discuss.

Deficiencies are evidenced by inability to closely relate resource expenditures to work performed; by inability in large organizations to segregate the project costs clearly from total costs; by lack of accountability measures; by gross estimating and scheduling.

Causes

The most obvious cause is an incomplete understanding of the objectives, design and implementation involved. Less obvious may be the organization's practice of not emphasizing definitive work statements, weak project or profit orientation of personnel, or a general lack of disciplined approach to management fundamentals. Finally, if the size of the project is small in relation to an organization's normal job, it may not receive the attention of management or be assigned enough high quality resources.

Action

A strong work definition policy is essential. There are only a few exceptions, such as pharmaceutical research where detail work definition may be practical only on near-term work items. An obvious improvement would be stronger use of project management tools coupled with, in client work, better contract definition. Fixed price or incentive contracts tend to encourage more definitive costing and scheduling, which require clear work definition.

Unrealistic Schedules

Symptoms

The subject of poor scheduling comes up frequently. Let's look first at the symptoms for a better perspective.

- Project costs are overrun

- Milestone dates are missed, sometimes by a wide margin

- The performance measurement methods are revised as schedules slip or the project control function is revamped each time there is a major crisis

Causes

Now to the causes. Seldom do we find just one cause, it's usually a combination that is responsible.

- Competitive situations may result in bidders proposing unrealistic schedules.

- The contract terms do not impose a penalty on poor schedule performance.

- Project changes which add requirements don't take into account possible adverse schedule effect.

- Planning is not based on past experience. Organizations that don't maintain a data base of schedule and cost performance are particularly at a disadvantage.

- Minimal, and therefore insufficient, time is spent developing schedules and analyzing the relevant factors influencing the realism of those schedules.

- Optimistic scheduling is used as a lever to force high personnel performance, a ploy which reduces the probability of meeting contract commitments rather than enhances it.

Action

There are steps which an organization can take to reduce the causes. For instance, using a strong project management concept coupled with a central data base for comparable estimates and actuals in both schedule and cost information; application of the resulting past experience on like projects when estimating initial schedules; using a network-based management approach to clearly identify the relevant factors influencing the project schedule. The use of performance-incentive type contracts by clients and proposing use of same by contractor/vendors will inject both realism into schedule commitments and a pragmatic approach to schedule planning.

Underestimated Costs

Symptoms

These are rather obvious and fall into several categories:

- Consistent underestimating, project by project

- Ill defined or obsolete estimating factors and procedures

- Frequent delay in estimating

- Lack of substantiating data

- Extended contract negotations after contractor/vendor selection

Causes

Here we can readily see the relationship of the five problems we're discussing and the thread of consistency in the causes of all five problems. It is evidenced by the lack of management attention and procedural control, improper work definition, incomplete schedules, inadequate estimating and cost data base, or insufficient time available to prepare estimates.

Action

More than any other factor, accurate estimating is the lifeblood of an organization. No new business or continual losses spell the demise of an organization or of its present managemnt. Strong attention to reviewing and revising estimating factors and techniques, developing standards and procedures and establishing an estimating data base is essential. Concurrently, sufficient work definition and compatible schedules must be provided for the revamped estimating operation to be successful.

Inadequate Cost Control and Accounting Practices

Symptoms

Some indicators of estimating and costing problems are alike, such as extended contract negotiations after selection and delays in preparing the cost proposal. Additionally, readily noticeable difficulty in identification and comparison of the proposed estimates and budgets with actual costs, inaccurate allocation of costs, and occasionally inclusion of unrelatable cost elements in the bid proposal are symptoms of the costing problem.

Causes

Imperfect management planning and control are reflected in a variety of causes:

- Lack of a planned multiproject information system

- Poor relationship among work definition, schedules, cost estimating and cost accumulation

- Project organization unfamiliar with cost control

- No strong formal estimating procedure with a central data base

- Weak or non-existing cost segregation and allocation methods

Action

Proper estimating and control of costs go hand-in-hand. Management must instill cost consciousness in the project organization, review and update the accounting methods and provide a system to measure performance by comparing budgets and costs aligned to the project work definitions and schedules. Formal controls should be established over allocated items of cost, such as overhead, G&A and direct level-of-effort or distributed costs. Implementing an estimating data base realted to historical values and current and project costs can be developed when the accounting and cost control deficiencies are corrected.

Summary

These problems which occur from inattention to basic management principles in planning, organization and control, evidence a breakdown in communications, discipline and judgement necessary to run a successful organization. They are more easily recognized in large projects because of their magnitude and visibility, but are just as prevalent in small projects. The degree of seriousness varies, and the writer knows of no generally accepted criteria to identify, quantify, or even understand the relationship of cause and effect between the problems. Specific conditions — different organizations, environment, types of projects and unique people — complicate problem solutions. Positive improvements can be made, have been made, and are being made by many organizations in the private and public sector. It all starts with recognition.

References

1 Lawrence Bennigson, “The Strategy of Running Temporary Projects,” Innovation Reprint 1971, available from Technology Communication, Inc., New York.

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 or any listed author.

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