By: David Hart
E AND H / Professional Membership Sector / Project Management
Can you accept the risk of your new initiative being more likely to go wrong than to succeed? Not everyone does – other industries and sectors take a different approach!
Last week I attended one of the regular monthly meetings of Britain’s Energy Coast Business Consortium (BECBC) in Cumbria, of which E AND H is a member. Most of our work however is in London, and in the not-for-profit and Membership sectors, and the contrast between the two couldn’t be greater. As a small project management consultancy, one of the biggest challenges we face is being able to convince potential clients of the value and benefits of adopting good project management practice. At a budget level, the cost of project management, which could amount to as much as 20% of a complex IT and business change project, is often seen as unjustifiable. When I speak to firms at BECBC the picture is totally different – no-one would dream of launching a project in the energy, gas or nuclear sectors without being sure that robust and effective project management is in place from the start. The need for, and value of, project management is taken as read. Why this difference in understanding?
The obvious answer is degree of risk, or rather the impact of something going wrong. The impact of a nuclear project going wrong could be catastrophic, so it’s comforting to know that effective management and control of risk has such a high priority. Similarly, in the oil and gas industries, the sums of money involved are huge and the potential for a disaster like BP’s Deepwater Horizon is always a possibility, however remote.
But is the relative degree of risk really that different? Certainly as a Membership organisation you are never going to irradiate the population or pollute the Gulf of Mexico, but are the sums of money involved really that different in terms of the relative threat it could pose to your organisation if things go wrong? A small membership association can easily spend £250k+ on introducing new CRM or membership systems and changing working practices – often it’s considerably more.
We regularly hear of organisations experiencing cost overruns and missed deadlines in their projects. The historical figure of something like 60% of all IT projects failing to achieve their objectives is unfortunately stubbornly consistent. Research has demonstrated that almost all causes of project failure are well-known – and most can be minimised with the application of good project management practice. How much does it actually cost you when your project overruns by 6 months? What is the total opportunity cost of this additional time, as well as the direct costs of paying suppliers and staff; and what about the impact on your management credibility and staff morale?
When you start looking at the risks of projects going wrong, and what it will cost you as an organisation if it does, then the additional budget up front for some effective project management seems to me to be a wise investment, whatever sector you’re in.