Preventing Project Failure through Early Warning Systems

Most of us have been involved in problem projects. Typical issues include delays in scheduling and delivery, cost overruns, scope creep, and so on. When a project gets to this stage, it usually results in dissatisfied customers and stakeholders.

Projects and programs often hit obstacles during various phases of their lifecycles that ultimately results in their derailment. Sometimes projects start slipping away in earlier stages of their existence, but because of the lack of an adequate warning system, the signs don’t become obvious until later. In some cases, the recovery isn’t straightforward and practical and leads to projects getting cancelled.

To prevent this type of situation, managers need to institute methods and controls that will alert the leadership and stakeholders long before recovery becomes an arduous task. An effective warning system can help in two ways:

1. by implementing corrective measures in sufficient time to get the project back on track
2. by canceling the project when it’s likely to fail to meet the business’s objectives and benefits.

The later a project is canceled, the more it will cost the organization, so if a project is likely to fail to meet business objectives, it’s better to cancel it sooner rather than later.

What follows are some of the controls that managers can institute for detecting early signs of project and program derailment:

The Business Case Document

It’s not uncommon for some projects to reach their planned milestones yet still fail to earn customer approval because of their failure to realize specific business benefits. Desired business benefits are typically identified and documented at the start of a project in a business case document.

It’s imperative to make a clear distinction between benefits and milestones, and to monitor them both throughout the project lifecycle to avoid any surprises later. As a simple example, if an organization decides to perform a major system upgrade to support an increased number of users and improve system performance, the different teams should stay focused on delivering the intended benefits (delivering better performance and supporting more users) rather than simply delivering the system to production.

Preparing a business case document at the beginning of the project outlines the potential business benefits along with the cost and justification for the investment. This ensures that the team’s overall strategy is aligned with delivering stakeholder benefits while staying focused to achieve the project deliverables and milestones identified in the Work Breakdown Structure (WBS) phase of the project’s life cycle.

In spite of the importance of preparing a business case document, not many projects complete one. If your in-progress projects don’t yet have a business case, you should still develop one by working closely with your project or business sponsor. In addition to the reasons stated above, a business case document can be useful in the event that the project runs into trouble, since it enables stakeholders to assess the likely risk versus benefit of their investment. If the expected business benefits no longer justify an ongoing investment, the business case document can facilitate deciding whether to cancel the project rather than continuing to waste the organization’s resources. On the contrary, when the expected business benefits are not clearly documented, the executives’ focus remains on completing the milestones and in saving the project even though the project is no longer viable.

Stage Gate Review System

A stage gate review process ensures the review of a project’s overall health and deliverables by the appropriate stakeholders at multiple phases of the project’s life cycle, before it’s allowed to continue on to the next phase. This periodic project review prevents significant deviations in project cost, schedule, and quality by dealing with problems sooner rather than later, before they become more acute.

For the system to be successful, the project manager should first identify the appropriate stakeholders and then decide on the specific stage gates and the review process. The project manager should also ensure that stakeholders are provided with the right metrics and dashboards during the review process that will give them the insight to make informed decisions regarding the project.

Metrics and Dashboards

Properly selected metrics and correctly designed progress dashboards are the foundation of a good early warning system for any project or a program. However, ineffectively employed metrics or no metrics at all can blind the project team to the project’s real progress, forcing team members to instead rely on gut feelings to steer the project.

Metrics can be simple or complex, depending on the project type as well as customer and stakeholder requirements. Among other things, they may include schedule or cost variance, milestone progress, earned value calculations, number of change requests for approved scope of work, resource utilization, and customer satisfaction. By reporting metrics frequently and accurately, the system can highlight any deviation from the original project plan early on, giving the team the opportunity to correct course before it’s too late.

Conclusion

No leader or manager wants to get the unexpected news of a project in trouble. Taking the time and effort to institute controls at the beginning of a project can help avoid such surprises. Executives also have the responsibility of ensuring that their PMs have in fact instituted an early warning system to keep the projects from slipping away out of control. Allowing critical projects to proceed without ensuring such controls is only asking for trouble.