From the Sponsor’s Desk – Pulling the Project Plug

In my last post, Building Project Management Maturity, we looked at a company that found itself at a competitive disadvantage because of their project management performance and the steps they took to improve their performance and capability and level the competitive playing field.

In this post, we’ll look at the value that a mid-project audit can provide by helping stakeholders confirm or rethink the motivations and rationale for an initiative. In this case, the audit helped avoid potentially costly enterprise wide conflicts through a change in corporate priorities.

The Situation

This Canadian based mining company had contracted with one of the “Big Four” accountancy firms to assess the organization’s readiness to implement the International Financial Reporting Standards (IFRS), determine the impact on their world-wide operations and recommend an appropriate plan of action.

While European public companies have been applying these standards since January 2005, in Canada, the Accounting Standards Board had proposed that Canadian GAAP for publicly accountable enterprises migrate to IFRS over a transition period. The move to IFRS would impact many areas of business including fundamental decision-making processes and would change the way companies presented their business results to analysts, investors and other stakeholders.

The Goal

The company planned to develop and implement IFRS compliant practices and procedures throughout its global operations in accordance with the targeted transition period.

The Project

The Finance organization launched the IFRS initiative and contracted with the accounting firm which assigned senior consultants who had extensive experience planning and implementing IFRS solutions in Europe. A working group was established to liaise with the consultants and included Finance department managers and staff with some consultation with the head office IT organization.

As the consultants were wrapping up their IFRS assessment, the head of the Internal Audit organization heard rumblings from the regions concerning the work being done, its complexity and the regions’ lack of involvement to that point. He proposed to the Finance VP that an audit be done to assess the performance of the project to date, identify gaps and target opportunities to provide the foundation for a successful implementation. His recommendation was approved.

Internal Audit launched the project audit using the Project Pre-Check’s Diagnostic process. The assessment started with the identification of key stakeholders from all global operations and involved interviews to solicit their views on progress to date and thoughts and suggestions on future plans.

The assessment process used a selected subset of Project Pre-Check’s Decision Areas (47 of the 125) covering the nature of the planned change, the environment within which the change would be implemented, organizational processes and practices that could be leveraged and the management of the project itself. The 47 Decision Areas were used to gauge three perspectives:

1. Stakeholder views from face to face and phone interviews, including stakeholders from the corporate office, from the regions and the consultants.
2. Review of deliverables from the project to date
3. Review of any project management methodologies, practices and templates used.

The interview results found that the IFRS project’s overall level of stakeholder agreement at this stage of the project was 2.4 on a scale from 1 to 5, based on the following definitions:

1 – Not addressed, don’t know or disagree with current decision

3 – Somewhat addressed

5 – Completely addressed

The interview results identified 7 of the 47 Decision Areas addressed in the assessment

(15%) as areas of divergence (at least one of the stakeholders was less than comfortable with how a best practice was applied). 40 Decision Areas (85%) where identified as gaps (where the majority of stakeholders expressed a lack of comfort). The results showed that these challenges needed to be addressed posthaste to avoid a less than successful outcome.  

Key areas of concern were those areas relating to the scope of the project, organizational priorities, the target dates, stakeholders (confusion over the sponsor and project manager), decision making responsibilities and ongoing governance.

The audit took about six weeks to complete. The Audit leader presented the findings and recommendations to the Finance VP. The recommendations included:

• Confirm the sponsor and project manager
• Form a stakeholder group including stakeholders from all affected organizations
• Establish the priority of the IFRS initiative relative to other competing projects
• Work towards full agreement on all 47 Decision Areas included in the audit.

The Results

The project was deferred! After reviewing the audit results and conferring with stakeholders in head office and the regions, the Finance VP acknowledged that the IFRS project would face significant risks trying to go head to head against other initiatives that were judged to have higher corporate priority.

The audit helped bring the disparate views of the stakeholders to the surface and escalate the concerns about corporate priorities to the executives who had the information and authority to make the right call. Prompt action by the Audit head and a comprehensive six week review focusing on the key project stakeholders helped this company make a timely decision and avoid the financial and operational risks of too many projects chasing too few critical resources.

How a Great PM Could Have Helped

The IFRS project was at a disadvantage from the moment it was launched – it had no internal project manager. Sure, the consultants managed their piece of the work. But no one from the company was formally responsible for managing the changes to the company’s practices and operations from inception to successful delivery.

Had a Great PM been assigned, undoubtedly he or she would have addressed the following fundamentals:  

1. Establish the project’s sponsor clearly and publicly. On the internal project documents and the report prepared by the consultants, three different sponsors were identified. That’s a recipe for chaos. Even co-sponsors can lead to muddled and circuitous decision-making. Pick one!

2. Identify and engage the other project stakeholders across the enterprise and around the globe and ensure that they understand their roles and responsibilities. All stakeholders – the sponsor, targets, change agents and champions – need to contribute according to their responsibilities on a multitude of fronts for the project to be successful.

3. Manage the level of stakeholder agreement on the relevant decision areas. Work to resolve the gaps and areas of divergence up front and on an ongoing basis as new issues and conflicts crop up. Early estimates of the cost of the IFRS project ran in the $8 million to $10 million range to be implemented over an 18 month period. That means navigating a mountain of mole hills. A Great PM would thrive on that challenge.

4. Managing stakeholder agreement on the relevant Decision Areas will help a Great PM ensure that critical questions about the planned change and the environment within which the change is being implemented are addressed. A Great PM will ensure that the impact on and/or use of appropriate company assets (methodologies, practices, resources, etc.) is fully articulated and endorsed by all. Finally, a Great PM will ensure the approach to planning organizing and controlling the project is fully supported by the other stakeholders and that project communications address their collective and individual needs.

If you find yourself in a similar situation, put these points on your checklist of things to do so you too can be a Great PM, and your sponsor’s best friend.

Next, we’ll look at the challenges a Great PM faced as he tried to guide the upgrade of extremely out of date but mission critical content management software through the demands of the business and the ineptitudes of two external contractors. In this case, the Great PM’s tough love approach won the day, and a successful project.

In the interim, if you have a project experience, either good or bad, past or present, that you’d like to have examined through the Project Pre-Check lens and published in this blog, send me the details and we’ll have a go.

Don’t forget to leave your comments below.