I did this interview for The Economist’s Intelligence Unit five years ago for an article on “Mitigating project portfolio risks in the financial services industry” on how companies track projects to mitigate risks, and how they identify projects that are failing to reduce the impact on the company, the team, and the bottom line.
Surprisingly many of the ideas then are still valid today.
Have you experienced similar situations? Do you have different views?
1. Do you believe that companies with mature project management disciplines are better able to identify failing projects, and thus minimize their impact? Why?
Identifying failing projects it is not the most difficult part. I would say that most of the companies today have a decent project monitoring and reporting systems. Most of them can identify whether a project is on track or not. For me, the crucial part, especially when talking about pm maturity is the ability (and the guts) of cancelling a project. Nobody likes to admit that they failed, and especially if it is a key strategic project. The future of many people are on the line. It is easier to keep going and let the project fade out. That way people think that they are reducing the damages. But that, according to me, is wrong. The courage to cancel a project, admitting the mistake and taking the lessons learned defines the highest level of maturity.
2. What happens when companies don’t have strong tracking strategies in place and projects fail? Can you give me an example?
Bad projects continue. With the time people forget about them. The team members move to other projects and the project manager is often left the last one on board. This happens very often when a project takes too long and management attention moves on to another more interesting project.
3. Many companies talk about the importance of innovation to staying competitive, and failure is an inevitable part of that process. Do you agree? How does a bank balance it’s appetite for risk to achieve innovative results and how does that play into your project governance process?
I totally agree with your statement about innovation and failure. However, in a bank risk management is one of the most important processes. They cannot innovate and take the same risks that a telecommunications company. Prior to the financial crisis, there were several banks who took very high risks. They stretched beyond their areas of expertise and wanted to grow too fast. In addition, the entire financial industry felt into one of the most important crisis in decades, which also had a huge influence for all these failures. And we know now how the story ends: the banks who played safe, survived. Shareholders need to understand that the way a bank grows is different than most of the other businesses. The main engine for growth is the trust of the people, the businesses and the public institutions.
4. What strategies / tools / metrics does a bank use to identify signs that projects are succeeding or failing? What do you think of that methodology and how, if at all, would improve it?
First, it is important to have a project selection and prioritization process in place. Second, you need to have a project life cycle or gate approval process. Best practice of course is to provide funding to the projects only until the next gate. In terms of methodologies, I like the one from PMI: it is a framework, which provides guidelines but at the same time is flexible.
For large organizations, it is critical to implement a project portfolio management (PPM) system: you cannot manage 100s of projects just using MS projects and powerpoint reports on a monthly basis. My vision is that real time information for project decision making should be the aim of all the organizations – but we are far from there.
5. Once a project is deemed to be failing, what steps do you take to shut it down? Why is this an important part of the project management process? How does this help you to be more successful?
If the decision is taken to terminate a project, it is important that is done fast. Normally you have a check list with items such as transfer of files, communication to stakeholders, appraisal of staff, capture of lessons learned, closing the books, … But speed is important, my recommendation is to do it within the week, to not make it too burocratic and to look at the positive aspects of the project, …. and there are always positive things to take away
Beside this process, is very important that a company has a lessons learned or knowledge management depository where all this information can be stored. A lot has been written on knowledge sharing, especially of lessons learned, but unfortunately I have seen very little use of it. I strongly believe that a blog or a social network type of application can be much more effective than the current knowledge management depository applications.
6. How important is strong leadership to minimising the impact of project failure?
Extremely important. By a strong leadership I understand also maturity and openness to failure. If the leadership is focusing on mistakes and penalizing the guilty ones, it will create a culture of fear, thus projects will not be cancel, even if they are deemed to fail.
7. Last, what advice would you offer other organisations about how to limit the impact of failure through the use of effective project management?
First, choose the right projects by having a strong project selection and prioritization process. In project management, like with many other things in live, less is more *. Companies should not try to do too many projects, but rather those projects which are close to their core competencies. This can be client services, or new products, …
Leaders should not be afraid of cancelling projects. It sends a very strong signal to the rest of organization. Focus, discipline, speed, are extremely important in today’s business world.
For financial services organizations I would add that they need to measure very cautiously the risks of each strategic project. And that they don’t select too many high risky projects at the same time.