Project Management Institute

First things first

start with the problem, not the project

img

Start with the problem, not the project.

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

When the time comes for organizations to identify new project opportunities, many tend to start with the solution rather than the problem, need or opportunity.

Quite a few organizations, for example, engage in the practice of soliciting responses from various people to this question—typically posed as budgets for the next year are being drafted: “What projects do you think we should pursue next year?” Even worse, they ask: “What projects would you like to work on next year?”

This approach tends to produce a list of projects that people in the organization want to work on rather than projects that they need to work on. This, in turn, can lead to significant waste. Time and money are spent investigating projects that might solve problems but are not financially justifiable—because the problem was not really important, or a cost-effective solution cannot be identified.

To prevent this, it's vital to first quantify the potential benefits stream of any particular project's effort.

START WITH BENEFITS

The chief objective of projects is to address the strategic and operational needs of the firm. Whenever needs are met, benefits will result. That's why it's such a logical starting point.

Many organizations, however, do not think about articulating and quantifying benefits until they have identified specific projects. Although I'm speculating, I believe that what they are thinking is: “Now that we have specified an action (a proposed project), we can begin building a case for the project by listing, then estimating, the benefits it brings to bear for our organization.”

In reality, you do not need to know the answer (a proposed project solution) to get started; you only need to understand how much it's worth to your organization to fix its problems.

LIST PROBLEMS, NOT PROJECTS

Although the temptation is to put together a list of projects to work on next year, I would suggest that you start by preparing a list of issues facing the organization.

Once the list has been prepared, go back through it, item by item, asking the following question: How much would it be worth to us to solve this problem, address this need, or pursue this opportunity? Construct a multiyear cash flow model of the benefits. By doing this, you have accomplished two things: (1) You are now able to fully understand the economic gain in addressing each problem; (2) You have constructed the benefits stream, which can be used to conduct a formal financial analysis, once a project solution has been identified (refer to my columns from May 2010 and August 2010 for a description of the financial analysis process).

This approach also has a third, and very useful, byproduct. By working backward through the financial analysis process, you will be able to prepare an estimate of how much you can afford to spend on fixing the problem. By doing this, you limit the number of frivolous project proposals found to be unjustifiable after a long and costly investigation. PM

img 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.

PM NETWORK DECEMBER 2015 WWW.PMI.ORG

Advertisement

Advertisement

Related Content

Advertisement