On Wednesday 13th March Peter Langley, past chairman and current committee member of the Value Management SIG, made the long journey from Beverley in East Yorkshire to Reading to ask “Does the project manager stand a chance?”

1. Does the Project Manager Stand a
Chance?
Peter Langley
Value Management Specific Interest Group
peter.langley@hotmail.co.uk

2. Stakeholders
Business Case Requirements
(Benefits – sponsor) (quality,
functionality)
Satisfaction of Needs
Value =
Use of Resources
Money Time
BS EN 12973:2000

3. Business Risk Environment
Company strategy Value
Operational Project Benefits Cost & Resources
work Portfolio
Project risks
Programmes & Projects

4. Project & Product Life Cycles
Concept
Definition
Implementation
Business
Case Handover & Closeout
(Benefits)
PMP
Operation
(Success
Criteria) Product Benefits
Termination
Final reports
PPR
Success Criteria End of product life

5. Common Causes of Project Failure
NAO/ OGC (2005)
 1. Lack of clear link to strategy
 2. Lack of senior management ownership
 3. Lack of stakeholder engagement
 4. Lack of PM skills
 5. Lack of breaking into manageable steps
 6. Evaluation driven by initial price not value
 7. Lack of contact with suppliers
 8. Lack of wider team/supplier integration

6. Markus Bleier (Leeds Met Uni 2009)
 Brief 22% (of 233 responses)
– Unclear, incomplete, difficult to establish,
poor goal definition
 Stakeholder Management 12%
– Co-ordinating multiple, requirements
definitions, understanding stakeholders
 Early Involvement 11%
– All planners want to be involved earlier
 Communication 11%
– Communication plan, information flow,
decision maker needed

7. Alignment with Company Strategy
 Moorhouse 2009 “Many organisations
(44%) appear to determine required
benefits in a bottom up way rather than
through top down alignment with strategic
goals”

8. Delusions of Success
Dan Lovallo and Daniel Kahneman (2003)
 Issue of human cognition
 Managers make decisions based on
delusional optimism
– Over-estimate benefits
– Under-estimate costs
– Spin scenario’s of success
– Overlook potential risks

9. Conspiracy of Optimism
 Royal United Services Institute (2007)
“A conspiracy of optimism exists between MoD
and industry, each having a propensity, in
many cases knowingly, to strike agreements
that are so optimistic as to be unsustainable in
terms of cost, timescale or performance.”

10. Portsmouth City Council
 Paul Summers (PMT Jan 2013)
– Many projects failing TCQ
– Little consideration of benefits
– Business cases are purely financial
appraisals
– Early haste leads to a lack of clarity, vague
specifications and over optimistic time
forecasts

11. Obsession with TCQ
“The fundamental reason for beginning a
programme is to realise benefits”
Office of Government Commerce (OGC)
“There is little corporate pressure being applied
on benefits realisation – the focus remains on
delivery to a fixed cost irrespective of the
outcome”
Public sector Board level quote in Moorhouse / Financial Times 2009 survey “The
Benefits of Organisational Change”

12. Benefits Un-realisation
 “The project focus is on creating the business
case to get the budget approved, then emphasis
is on delivery on time and to budget”
 “Benefits identification is treated as a mechanism
to get funding, but there is no effort in the
realisation of these benefits”
 “Many gateway reviewers don’t understand
benefits so this is an area that is glossed over”
Active Benefits Realisation Survey – Steve Jenner 2009

13. Benefits and Business Case
 Moorhouse 2009 – “Only 20% of
respondents believe their organisations
succeed in consistently delivering the
planned benefits of change.”
 Standish Chaos report 2009 – “24% of
projects were cancelled prior to completion
or delivered and never used.”

14. Problems with Business Cases
 Moorhouse 2009 “Business cases are
normally used but only as a paper
exercise, they have very little substance.
Dashboards are skewed to demonstrate
success rather than used to drive
improvement” Executive, Telecoms

15. Why do Business Cases go
wrong?
 OGC 2009 “Over half of SRO’s are in their first
SRO role… Lack of relevant experience,
combined with regular turnover adds unnecessary
risk…”
 Moorhouse 2009 “Half of SRO’s surveyed do not
have clarity around their programme governance
accountabilities, delegated authorities and
responsibilities.”
“Only 10% of SRO’s feel business cases &
benefits realisation are adequately understood….”

16. Political Dimension
 Jenner 2009 “projects are started in response
to a political commitment so the task becomes
one of finding sufficient benefits to justify the
chosen solution”
– “Benefits Fraud”
 “Benefits .. seem to be plucked from the air”
 Flyvbjerg 2009 “… perverse incentives that
encourage promoters to underestimate costs
and overestimate benefits …” “Survival of the
Unfittest”

17. Norwegian research
Analysis of 25 major public investment projects
 16 Alternative concepts not scrutinised
 14 Lack of realistic objectives & justification
 14 Not relevant in relation to needs or market
 10 Tactical under estimation of costs
 9 Perverse incentives – benefits without liability
 7 Tactical splitting & sequencing of project
 6 Tactical over estimation of needs & benefits
 6 Under estimation of future operational costs
Knut Samset 2008 www.concept.ntnu.no

18. Your Turn!!
 What are your experiences in the early
phases of a project?
 Do you have any ideas for a way forward?
 Do you have any proposals for research
subjects?

19. A Portfolio Method
(water utility example)
 Assess risk to strategy before and after investment
 Assess cost of standard solution
 Calculate movement of risk per unit cost
 Agree any mitigating factors
 Place potential projects in priority order and
actively manage

20. Final word – Tim Banfield -NAO
(2012)
 It has become very clear that the quality of
project initiation is highly predictive of
project success.
 Our hero’s should be the people who start
projects right!

21. Thank you
Any Questions or Comments?

22. Next Steps - Ideas so far
 Research into Concept phase of projects to prove
case for action
 Encourage better use of Value, Risk and Benefits
Management at all levels in business within
context of good governance
 Joint SIG events (e.g. governance, benefits, programme, risk)
 Engaging corporate members of APM
 Organisational maturity models to provide
evidence of performance