Three Dangerous Things IT Leaders Should Keep Doing
Think about the way your company handles IT projects—how many of these statements are true?
- There is an approval process for individual projects that requires a budget to be approved prior to starting any substantive work on the project.
- Managers despise going back to approval authorities for more funds and take great pains to avoid having to do so.
- Projects are prioritized based on the urgency and impact of the project.
I suspect that most or all of the above statements are true for your organization. If these did not apply to you, just move along to the next article.
Most companies do all of the above. There are excellent reasons for doing these things, and I am by no means suggesting that you should eliminate these practices. However, each one can lead to some highly counter-productive project management practices and less than ideal project outcomes.
Compliance with the corporate finance or accounting requirements does not mean that you are managing your project budget well.
Project budget approval and regular updates to project budget forecasts are a necessary process in managing IT projects. Companies need to plan and track to a budget for a host of reasons, most of them good. But if that’s where you stop, you are missing the boat. Generally, defining a business case or performing an ROI analysis are a part of project approvals. More often than not, project approval is the end of the business case’s useful life. From that point forward, projects are managed within the confines of the budget and schedule that were approved. While keeping the budget from running wild is essential, so is understanding the benefits to be gained from the project. Only by carefully monitoring the project’s success in achieving the goals that will lead to the projected benefits can a project manager ensure a truly successful project. Delivering something on-time and on budget might get you a pat on the back, but if what you’ve delivered fails to bring the benefits promised, then the project has failed.
The existence of an annual budget or project approval cycle makes managing individual project budgets LESS effective.
Not many people enjoy their periodic visits to the project approval authorities or budget committees. It’s a lot like going to the dentist in that you know you have to do it and it probably won’t be very pleasant. You’ll show up, but you’re probably not going to volunteer to go back again right away if you can avoid it, because that’s when the drilling will start.
While avoiding budget overruns is a good thing, staying within a budget that was 50% too large to begin with is just as damaging to the company as overrunning a proper budget by 50%. IT projects are inherently risky. There are a lot of unknowns and frequent changes to be considered. The best way to handle these unknowns (risks) is to identify them early, set aside budget as a contingency, and mitigate risks swiftly and effectively—NOT over budgeting. Budget aggressively, but be willing to adjust. If you end up needing the contingency, have a process by which the project can access it with notifications or consultation of the impacted stakeholders. Using this methodology, over time you end up with more efficiently run projects as people stick to their more aggressive budgets. Note that you’ll have to set reasonable parameters, a 100% contingency budget is not reasonable, but 40% might be. When contingency is not needed, it becomes available to other projects rather than having those over-budgeted amounts spent unnecessarily.
Treat your human resources as a portfolio.
When you choose the projects before choosing the people, you may be putting yourself in a bind. Each individual, team, and company has unique strengths, weaknesses, and experiences. Consider the resources before you lay out a project plan. One option is to have your best qualified and most experienced resources on the highest impact projects. In this scenario, you may have to delay a project for a few months in order to free up a rock star resource. However, allowing them to concentrate on one, high impact project as opposed to multiple concurrent projects may actually result in a positive impact on scheduling as they are able to utilize their time and effort more efficiently. On the contrary, other situations may call for certain resources to expand their reach across multiple projects, providing valuable insight and leadership while staying out of the details. It is the responsibility of those performing project management to take capacity, skill sets, and specific project needs into account to properly utilize their resource portfolio.
In summary, the next time your organization looks to undertake an IT initiative, remember how to approach these three dangerous actions:
- Engage in an approval process that clearly lays out the measures of success for a project: the budget, the schedule, and the benefits to the business—manage to all three.
- Create budgets for the project that are aggressive but allow for some contingency planning.
- Staff projects with resources based upon resource capacities, skills, and project needs.
Following these guidelines will allow you to better manage projects and, more importantly, provide value to the organization as a whole.