Tuesday, 06 July 2010 00:00

From the Sponsor’s Desk; You Get What You Pay For

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In my last post, I reviewed a most successful project, the Interface Initiative, and how the PM leveraged the Project Pre-Check fundamentals of stakeholders, defined processes and a best practice based decision framework to achieve great results and gain recognition from the stakeholders as a great PM.

Here’s an example of a project that could have used a great PM. Unfortunately, it was a challenged undertaking due, in part, to flawed incentive compensation. That’s way I call this post You Get What You Pay For!

The Situation

This organization provided pension administration services to clients and their employees. Its obsolete technology and obsolete application software along with a large manual work load resulted in high error rates and less than desirable service to its customers. There was about 150 staff at head office.

The Goal

To modernize the administrative and service processes including a technology upgrade to provide internet access for customers, improved quality, more automated function to reduce costs and improve responsiveness. Expected cost was $50 million.

The Project

The organization reviewed available alternatives and selected a vendor based on a comprehensive review of its capability. The company decided to co-source the operations, where the organization’s employees would use the application software operated by the vendor, rather than totally outsource administrative processes. A unique requirement was to be able to manage the pension records for staff that moved from one participating employer to another and could also work for more than one participating employer at the same time.

The organization had two managers in place to run the project, one from the internal IT organization and one from the vendor. They also contracted with an independent third party to provide oversight on an ongoing basis.

The Results

The project progressed well up to the planned implementation of the first release with costs of $20 million on target. Both the internal and vendor project managers reported solid progress and the external third party agreed with their findings. With these glad tidings, the organization planned a first release celebration to recognize the achievement.

In actual fact, the implementation was a disaster. Nothing worked. The changes were pulled out. There was no contingency plan so the reversion to the original systems was messy and time consuming. The review found the following factors contributed to the failure:

  • The product from the selected vendor had two major deficiencies – their systems needed major modifications to handle individual pension records across organizations and they had never co-sourced a solution before. The latter fact did not come to light until the first phase implementation failed.
  • The vendor and internal managers were to receive substantial bonuses based on making their delivery target. They covered up the problems, hoping that they could clean up the issues after implementation and still be entitled to their bonuses.
  • Why didn’t the third party consultant discover the problems and blow the whistle? The consultant used two sources for input to the periodic reports – the internal and vendor managers. Their definition of an independent review differed significantly from what was expected.
  • The estimated cost to complete the project ballooned to $70 million, 40% greater than originally forecast.

How a great PM would have helped!

There are a number of actions a great PM would have taken to ensure a successful outcome.

  • Formation of an effective and representative stakeholder group would have exposed the two project managers and the external consultant to decision makers representing the organizations and staff affected by the planned change. These stakeholders would have been very vocal in their demands for project results that demonstrated the integrity of ongoing operations.
  • It’s clear that this was a huge undertaking for such a small organization and the stakeholders lacked experience in this size of project. A great PM would have provided the stakeholders with the required insight or brought in additional help to provide the required oversight.
  • There are a number of best practices that would have undoubtedly been deemed relevant and given appropriate attention by stakeholders over the course of the project including risk management, quality management, performance management (including incentive compensation), and project tracking, control and communication.
  • The use of appropriate stakeholder processes would have provided senior management with a broad decision making foundation and an ongoing scorecard independent of the project managers’ reports.

I also expect a great PM would have negotiated an incentive contract that was based on the stakeholders real needs, not on hitting some arbitrary date. On your next project, 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 a project that just kept going, and going, and going. In the interim, if you have a project experience, either good or bad, that you’d like to have examined through the Project Pre-Check lens, send me the details and we’ll have a go.

Don’t forget to leave your comments below

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Drew Davison

Drew Davison is the owner and principal consultant at Davison Consulting and a former system development executive. He is the developer of Project Pre-Check, an innovative framework for launching projects and guiding successful project delivery, the author of Project Pre-Check - The Stakeholder Practice for Successful Business and Technology Change and Project Pre-Check FastPath - The Project Manager’s Guide to Stakeholder Management. He works with organizations that are undergoing major business and technology change to implement the empowered stakeholder groups critical to project success. Drew can be reached at drew.davison@projectprecheck.com

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