The project profession has a problem. Despite technological advances, new frameworks and access to more information than ever before, project success rates have barely increased in the past 70 years.
In one study of 11,000 bridge, road and rail projects by Oxford Global Projects, only 0.5% were delivered on time, to cost and producing the expected benefits. Portfolios are equally poor performers, too, with Bridges Consultancy identifying that only 52% of organisations successfully implement at least two-thirds of their strategic objectives.
When APM Governance SIG member Greg Krawczyk ChPP told me this, my jaw almost hit the floor. How can a profession so rich in knowledge, experience and capability continue to make the same mistakes?
In Krawczyk’s view, a big part of the problem comes down to a deficiency in upfront planning, a problem that can be solved by harnessing the power of reliable, structured project data. For the first of this series on data and effective governance in project management, I sat down with Krawczyk to discuss the three reasons he believes the profession has fallen into this 70-year slump.
Reason one: Our weakness to bias
We know from behavioural psychology that human beings are naturally and consistently optimistic when producing forecasts. We love to look at the world with a glass half full.
This also happens with projects and programmes, as Krawczyk explains: “Optimism bias can be found everywhere. In an example from His Majesty’s Treasury in the early 2000s, the findings on project and programme optimism within the Green Book show that, in some project classes, business case optimism is as high as 200%.
“The Eurotunnel project is another great example that cost a lot more and delivered a lot less benefit than expected, with Japan’s advanced Monju nuclear power plant a 30-year project that, with £12bn down the pan, still hasn’t generated a TWh of energy.”
Reason two: Strategic misrepresentation to get ahead
At some level, we all want to do well in our jobs, earn praise and get ahead. To do that, we present ourselves and our work in a way that appeals to those who matter. But when does an urge to get ahead cross the line?
“We can all imagine situations where people may want or need to get ahead,” says Krawczyk. “For example, what is to stop a business manager from low-balling a sales opportunity, only to labour the business with an unachievable project for the years ahead?”
This is the concept of strategic misrepresentation, defined by Nobel Prize winners Dan Lovallo and Daniel Kahneman as “where we overemphasise projects’ potential benefits and underestimate likely costs, spinning success scenarios while ignoring the possibility of mistakes”.
Krawczyk adds: “While some may say ‘strategic misrepresentation’, others would call it lying. Whichever term you use, every day this leads to new projects and programmes being set up to fail.”
Reason three: A lack of broader planning capability
But surely this lack of success can’t just be attributed to our flaws as human beings? After all, we have so many tools, frameworks and governance systems in place to help us make the right decisions. I finished up by asking Krawczyk what else he thinks contributes to our lack of success.
“I like to use the analogy of saddling a horse. If your project baseline is a horse, the quality of your investment decision decides whether it’s going to bolt or be saddled and ridden off into the sunset.
“We can’t blame it all on human error, so by default, the broader capability must also be ineffective. But I truly believe that by using reference class forecasting data and effective governance we can make better investment decisions. By deploying these frameworks, such as APM’s Dynamic Conditions for Project Success, we can ensure a competent capability exists to deliver successful outcomes.
“Did you know that before the 1950s it was common to refer to ‘object management’ as the act of planning, with ‘project management’ being the act of delivery? There is a lot to be said for this distinction – maybe it’s time we gave equal focus to being great object managers alongside being great project managers.”
To wrap up…
Studies show that total project success is an elusive prize reserved for the few. But in Krawczyk’s opinion, it doesn’t need to be that way. As we progress to the next article in this series, we’ll look at the data points you should be collecting, surfacing and actioning to enable you and your business to make better planning decisions and ultimately improve your chances of project success.
This article forms part of a series on data and effective governance in project management, led by the APM Governance SIG. Throughout 2023, the Governance SIG will be driving forward collective knowledge on this topic. Contact them via this survey form to register your interest.