Two recent posts (Predictability – by Lynda Bourne, and Are All Projects Doomed to Failure – by Paul Naybour) made me think (yes, once again) about the project management discipline and its ability to meet its own objectives; namely the ability to generate credibility, repeatability and predictability in the context of successful projects’ deliveries.

Paul Naybour brings from a published work by Bent Flyvbjerg*, that cost escalation (i.e. cost overruns) happens in almost nine out of 10 projects. Flyvbjerg (2003) work further suggests (based on a study examining 258 projects executed over a period of 70 years) that actual costs were on average 28% higher than the forecast costs. One poignant point identified in Flyvbjerg’s (2003) study is that the tendency for cost overruns has not decreased over the past 70 years and that no learning seems to have taken place over that extended period of time to demonstrate any improvement in that trend.

Which takes us back to the point about predictability; Lynda Bourne suggests in her post that “most of our project stakeholders expect predictability”. Contrast this with the fact that over a substantial period of time we see a statistical tendency for consistent cost overruns and you get a simple and unambiguous prediction that your next project will most likely result in cost overruns.

Now comes the interesting bit. According to Flyvbjerg (2003 & in more detail in 2010), given the clear trend, it is obvious that the cost overruns, or rather the low estimates / forecasts, are deliberate and are a simple manifestation of a widely used political tactic to achieve and obtain projects’ approval. And this is how the game works:

Order of eventsActorThinkingSaying
1BusinessI need this problem resolved
2Internal / External Solution ProviderThere’s no way I can do it for $XYZ but if I ask for more the project will not be approved. So I’d better keep quiet, for now, and ask for more in the futureI can solve this for you and it will only cost you $XYZ
3BusinessSurely they know what they are sayingOk, let's do it

With the above in mind it is not difficult to see that your project has failed even before it started. The issue is not quite with you but rather with the level and pervasiveness of misinformation in the corporate and public arena, and it goes down to the way power and greed is manifested across our corporate and public space.

Achieving a better success rate associated with lower cost overruns is predicated on changes in our corporate communication health system. It is about the impossible need to bring in honesty, truth and ethical responsibility to the way information is presented and consumed and it is not very likely to happen any time soon.

Think about it!

*See Bent Flyvbjerg’s in:

  1. How common and how large are cost overruns in transport infrastructure projects?“, TRANSPORT REVIEWS, 2003, VOL. 23, NO. 1, 71±88
  2. Cost Overruns in Large-scale Transportation Infrastructure Projects: Explanations and Their Theoretical Embeddedness“, EJTIR, Issue 10(1), March 2010.
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  11. a)That’s what I commented today to some post complaining for Olympic’s projects cost runoffs. That possibly the right estimate should have been closer to actual (run-offed) budget.
    Complex endeavors are a cornucopia of opportunities for crashing, but people will think: “what’s a 747 but a 100x version of a Piper Cub?”, Just because both have wings, cabin, wheels and comparable control systems.
    Those simplifications, Daniel Kahneman et al proved, are a trick of our so useful intuitive thinking system. It works for most of the problem, most of the time (remember PMBOK?) and avoids us taking care of checking every tile before stepping on them, for we *assume* the floor 1 seg before is more or less the same right now.
    b)And our most common tendency, when we don’t fully (that means almost never) grasp the real problem, is to map it in a more workable one.
    We’ll argue on scope limitation and scope creeping avoidance.
    We will actually be working on a *map* of the real problem, and our solution will be a solution for the map (and consequently the gap will refer to the map, no to the real problem)
    Ricardo

    Reply

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