Business Case Pratictioners Forum: Why projects fail to deliver, Jos Van Rozen, 22 April 2016
1. Most project failures can be traced back to the business case. Here are my best seven tips for consciously setting the project up for success using the business case. 2. The McKinsey study’s findings apply much wider. Most of my clients do very few post-project reviews, but their observations resonate with the report’s findings about the order of magnitude of overspends and delivery shortfalls, also outside IT. Said Business School: Mega Projects. 3. I have made it my mission to eliminate this gap for my clients. To that end, I read up on many research projects in this area and work with the findings that make a difference. 4. We all know 5xW (Who, What, Where, Why, When) + 2xH (How, How much), but the magic is in the 4Cs: Clear - Compelling - Credible – Comprehensive. Captured in book, Be Decisive Now. 5. Parable from India illustrates the limits of personal perspectives: six blind men want to learn what an elephant is like. They can each touch only one part of the animal. When they report back, they disagree about what an elephant is. Moral: integrate perspectives to come closer to the truth. 6. For 70% of strategic decisions, there’s just one alternative. Decisions are 6x more likely to turn out really well when just 2 alternatives are considered. The 5 Case Model (Green Book) offers a good structure for developing alternatives. 7. Do you have a good opportunity, but no funding? See what you could achieve without the money. Many projects I am involved with end up proposing the Optimised Base Case as a first course of action! 8. Many business cases are crafted by one individual as a desk exercise. This means many assumptions, poorly validated, and a limited perspective on problem and solutions. This also guarantees poor ownership by all other stakeholders. 9. My Credibility Goal for client business cases: the business case team is prepared to bet their pension fund on the project. Risk planning is critical here. Most business cases have a poor evidence base. Time pressure encourages shortcuts to evidence. These destroy value. Focus on the Right to Believe. 10. Most projects are not unique and lessons can be learned from other projects Most organizations have a policy to review completed projects, but don’t. Why pay tuition and not go to college? Make it a routine to integrate lessons from the past in business cases. 11. Chapter 6 in “Be Decisive Now” is dedicated to achieving Relevant Realism about Risk. Value Delivery: distinguish Implementation (= delivering the project) and Execution (= Value Extraction). Three warning flags: - These often focus on the implementation phase, but the value extraction phase is often more crucial, if only to validate the original problem and to ensure that the chosen solution is fit for purpose. The most obvious risks are often not addressed! 12. These findings resonate with most organisations. The role of decision coach is to make it happen.
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Business Case Pratictioners Forum: Why projects fail to deliver, Jos Van Rozen, 22 April 2016
- 1. Why projects fail to deliver - Leveraging Business Cases for Better Benefits Management Business Case Practitioner Forum
- 2. The Average Project Overspends and Under-Delivers In other words, actual ROI is: 30% of projected ROI(!) (*) IT Projects >$15m; Source: McKinsey Quarterly, October 2012
- 3. So, what happens with the balance? 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Project returns Optimism Excecute with Excellence Base
- 4. 4 Many Benefit Shortfalls Trace Back to the Business Case Process: 7 Critical Business Case Checks for Better Benefit Odds www.bedecisivenow.com
- 5. 1. Get the problem right
- 6. 2. Develop multiple alternatives
- 7. 3. Be clear about what you would do without the money.
- 8. 4. Actively involve stakeholders
- 9. 5. Challenge the “no doubts”
- 10. 6. Integrate lessons from past projects “An organization’s ability to learn and translate that learning into action rapidly is the ultimate competitive advantage.” - Former CEO of GE, Jack Welch
- 11. 7. Think beyond approval Value Delivery Plan Risk planning – be ready for a range of outcomes
- 12. 7 Critical Business Case Checks for Better Benefit Odds 1. Get the problem right 2. Develop multiple alternatives 3. Be clear about what you would do without the money 4. Actively involve stakeholders 5. Challenge the “no doubts” 6. Integrate lessons from past projects 7. Think beyond approval
- 13. Contact details Jos van Rozen @JosVanRozen uk.linkedin.com/in/josvanrozen @: jos.vanrozen@vanrozenconsulting.com +44 7775 924 989 Book site: www.bedecisivenow.com
- 14. This presentation was delivered at an APM event To find out more about upcoming events please visit our website www.apm.org.uk/events
Hinweis der Redaktion
- Most project failures can be traced back to the business case. And fortunately, there is a good deal that we can look out for and pro-actively address in the business case crafting process. Today I will share my best seven tips for consciously setting the project up for success with the business case.
- http://www.mckinsey.com/business-functions/business-technology/our-insights/delivering-large-scale-it-projects-on-time-on-budget-and-on-value Whilst this study speaks specifically to IT projects, its findings apply much wider. Like most businesses, most of my clients do very few post project reviews or audits, but anecdotally, their observations resonate with the reports findings about the order of magnitude of overspends and delivery shortfalls, also in business areas other than IT. Said Business School (Oxford University) also has a good body of research papers on success factors relating to Mega Projects. One trend appears to be: the bigger the project, the bigger the relative overspend.
- I have made it my mission to eliminate this gap for my clients. To that end, I read up on many research projects in this area and work with the findings that make a difference. Difficult to achieve in full, but happy when I see that clients are integrating project results into their annual business plans at a 10% discount prior to implementation, rather than not including results at all due to credibility issues. www.vanrozenconsulting.com
- We all know 5xW (Who, What, Where, Why, When) + 2xH (How, How much) , but rarely consider 4xC. Harder to check off. But the magic is in the 4Cs: Clear - Compelling - Credible – Comprehensive. To address this, I have condensed my best 49 tools, tips and tricks into a book, Be Decisive Now, published by Pearson in its 2-in-1 Manager series. To me, this innovative series concept is great for achieving a quick transition from Book to Benefit. www.bedecisivenow.com https://www.amazon.co.uk/Be-Decisive-2-1-Manager/dp/1292119772?ie=UTF8&n=266239&ref_=dp_return_2&s=books
- There’s an old parable from India that illustrates the limits of personal perspectives. The gist of it is that six blind men want to learn what an elephant is like, having never seen one. They are brought to an elephant and each touches a part of the animal, but only that one part (one feels the trunk, another a tusk, another a leg, another the tail, etc.). When they report back, they find that they completely disagree about what an elephant is. One says it’s like a snake, another like a spear, another like a pillar, and so on. The moral of the story is that each of our perspectives is valid, but no one is likely to have a complete picture of the situation. Only together, by integrating our perspectives, can we come closer to the truth. Closer, but still not perfect! Early cooperation between a wide group of stakeholders can help to get this right. Benefits of Getting the problem right: Address the right root cause. Get scope right, prevent scope creep (and costly changes and additions). – A big factor in explaining historical overspends.
- For 70% of strategic decisions considered by organizations, there’s just one alternative. Decisions are six (!) times more likely to turn out really well when (just) two alternatives are considered. Firstly, the more you look for alternatives, the more you might come up with a better answer. Secondly, value is added with switch from OR-OR to AND-AND. Thirdly, when you change your effort from justifying the solution to truly solving the problem at hand, this changes the discussion, and potentially the individuals involved. This leads to problems getting solved. The UK Government’s Five Case Model as encapsulated in the Green Book and offers a good structure for developing a holistic set of alternatives. (Free online version available - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220541/green_book_complete.pdf)
- Do you have a good opportunity, yet no incremental funding is available? See what you could achieve without the money. About half the projects I am involved with end up proposing the Optimised Base Case as a first course of action, with impressive results. Chapter 3 in “Be Decisive Now” is dedicated to how you can achieve quick, high return results with the Optimised Base Case. Identify slack. Optimise: Do less of something current to free up resources for something with more added value. Identify latent potential benefits – avoid double-counting. Justify timing and scope. Leverage AND-AND thinking
- Many business cases are crafted by one individual as a desk exercise. This means many assumptions, often poorly validated, and a limited perspective on problem, root causes and solutions. This also means ownership by all other stakeholders is guaranteed to be poor: “It’s not my business case.” Where business cases are the result of team work, this is often a virtual team or team-by-email. The BEST business cases are the result of teams that physically work together, challenge, debate and develop ideas. 4. Validate with stakeholders 1. For early alignment, guidance and buy-in. 2. Involve implementers with relevant experience in the business case crafting stage to: Double chances of success through realistic assessment of execution capabilities (http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-companies-make-good-decisions-mckinsey-global-survey-results ) Create ownership at implementation level.
- My Credibility Goal for client business cases: the business case team is prepared to bet their pension fund on the project. Most business cases have a questionable evidence base. Time pressure encourages shortcuts when it comes to providing a robust evidence base. These shortcuts destroy value. Big investments merit careful consideration to improve a typically poor track record. Turning this around, focus on a powerful concept, the Right to Believe. A Right to Believe is derived by crystallising the strength of evidence of an argument based on (in decreasing order of strength) the relevant facts, scientific proof, structured assessments, rationale, indications, assumptions and assertions used to build the argument.
- Most projects are not unique and lessons can be learned from other projects (in company, industry , beyond). Yet: Most organizations have a policy to review completed projects, but don’t. Why pay tuition and not go to college? Reasons for not completing reviews. (Low urgency, priority, business value; personal career risk…) For success, make it swift, painless and valuable. Make it a routine to integrate lessons from the past in your business case. Bonus: think ahead about what you want to learn from the post-completion review of your business case (pre-mortem). Then include this in the business case to (a) double-check uncertainties are addressed and (b) facilitate the review when it is done.
- Credibility Goal: business case team is prepared to bet their pension fund on the project. Risk planning is a critical tool to achieve this. Chapter 6 in “Be Decisive Now” is dedicated to achieving Relevant Realism about Risk. Value Delivery: distinguish between Implementation (= delivering the project) and Execution (= Value Extraction – delivering operational value to the business from the project, earning the money back). The more detail and clarity on deliverables, ownership, timing and cost, the better prepared and the more accurate the business case. Bake results into annual business planning! No VDP is complete with a good understanding of associated risks. Three warning flags: - These often focus on the implementation phase, but the value extraction phase is often more crucial, if only to validate the original problem and to ensure that the chosen solution is fit for purpose. The most obvious risks are often not addressed – implicit assumptions. (https://en.wikipedia.org/wiki/Philae_%28spacecraft%29) – World-class 20-year science project, missed out the basic assumption on access to sufficient sunlight to power equipment. Competitors will always react, yet this is rarely addressed. Even when addressed, competitor reaction is nearly always unjustifiably dismissed as a risk!
- This will resonate with most organisations. Role of decision coach is to make it happen. Most people don’t craft business cases often enough to get better at it over time. The tipping point for a chance to improve: crafting around 4-5 business cases per year. With the understanding of success factors spread across the organisation, business case experts can achieve better results a lot faster.