Project Management

Don't measure project success by cost alone

Ignoring scope and time in favour of staying within budget can seriously undermine project success and team morale.

 

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Image: iStockphoto.com/frenchmen77
 In an ideal project world, only three constraints are imposed on a project – cost, scope, and time. And if we balance all three correctly, our project will be a success. If only project management were really that simple.

In the real world of business, project success is often determined by a skewed focus on just one constraint: cost. Over the past six or seven years of economic downturn, cost has been the overriding factor for many projects. Scope and time have been the areas where compromise has been necessary to keep the costs within budget.

So if the overriding pressure on a project is to stay within budget, how does that affect what should be a balanced approach? Can a project that is seen as successful only if the costs are tightly controlled -- regardless of how this affects what the customer actually wants and when they get it -- truly be successful?

When senior management continually focuses on tightening the budget and measures the status of a project by how much money has been spent, the project team will focus all its energies and ideas on saving money. This could be an opportunity for innovation. After all, there are often different, more economical, ways to achieve the same end. But it is equally likely to result in cutting corners and a poor quality outcome. Any pride the team may take in its achievements will soon dissipate if good work is valued less than keeping costs down. This can have a knock-on effect on the motivation within the team. And an unmotivated team, working under intense financial scrutiny, simply can't produce the best outcome.

So in organisations that have spent the last few years driving for budgetary restraint and measuring individual or team progress only with this yardstick, senior management should not be surprised that projects are not up to scratch. Their project managers and teams are probably not implementing good project management practises or even following the organisation's PM methodology.

Financial data is often so much easier to measure and scrutinise than, say, adherence to the original business requirements -- particularly since the requirements are likely to have changed and evolved over the course of the project and there is an inherent acceptance that project requirements can, and do, change. For this reason, it's easy to focus only on costs over a long period of time before the true effects of this approach are revealed.

Of course, that is not to say that focusing on only one of the three standard constraints of a project is the wrong approach for all projects. But always emphasising costs can lead to a culture of inferior work with a lack of regard for deadlines. There are times on individual projects when it is perfectly reasonable, from a business perspective, to focus much more on one constraint. For instance, a new product that must reach the marketplace within a certain timeframe to gain a competitive advantage will have to focus on the timescale to the possible detriment of cost and scope, but the advantages of this approach for a single project outweigh the disadvantages. It is the long-term effects of such an approach that are worrying.

The question, then, is this: How do you persuade senior management that focusing only on cost is not only detrimental to a single project but will encourage a culture where scope and time are not valued parts of the project whole, where project teams can become demotivated, and where, ultimately, projects will not be successful or fit-for-purpose even though they have stayed within budget?

This is not an easy thing to do. Let me know of you have had success with your powers of persuasion during the current economic climate and managed to deliver projects where scope and time – as well as quality -- have not been neglected in favour of keeping costs down.

About

Michelle Symonds has many years of experience in IT and IT Project Management in the oil industry and investment banking, working on complex global projects and managing overseas project teams. She is now a freelance consultant working with a Project...

6 comments
Watcheezy
Watcheezy

According to the Forbes study, employees are motivated, among other things, by the opportunity to create an impact in the work they perform. Only refering to the cost can restrain their motivation and their creativity ! (Cf http://urlz.fr/fhA)

mjacquet
mjacquet

I'm a bit surprised to see only three criteria for a project: "cost, scope, and time". What about quality, or; even better, custormer/user satisfaction. You can close projects within cost, scope, and time that will drive users crazy. Anyway, with a bit of negotiating talent, custormer:user satisfaction is a good argument to use in order to counterbalance the "cost  only" emphasis.

And I also agree that only emphasing cost or time can lead to demotivating project teams. People need also to be proud of what they have made...

msmoot
msmoot

Here's how we do it at my organization. We have implemented a standard through the EPMO where all projects are measured for success in delivery time, cost of project and quality of delivered scope. The beauty of the standard coming out of a central non-biased EPMO is that each project is held to the same standard and are reported on across the board so that we can understand our overall project success rate and determine common reasons why a project may be unsuccessful (and then work to eliminate those reasons). Appropriate thresholds have been put in place (e.g. is project cost within +/-10% of the planned cost?) to allow for some wiggle room. We also have an option for if the scope, cost or timeframe has changed outside of the original intent, AND a change control conversation has been had, AND the project was rebaselined and communicated, AND the project meets the goals set in the re-baseline, then the project is scored as a "success-recovered". Interested to hear how others are measuring success in projects!

David Moore
David Moore

ha ha... those gears will never turn. Slick move tech republic...

Francisco Granda
Francisco Granda

By not making gears which oppose each other.. That's a start :)

Nick Rodriquez
Nick Rodriquez

@mjacquet Quality and user satisfaction falls under scope. If a good requirements gathering process was carried out, and an effective Change Control Management strategy is implemented, the project scope pretty much takes care of everything.

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