Project Success, Measuring Outcomes VS Outputs

Web polls and surveys are still showing a high number of projects defined as a failure. People responding in the recent Computing Technology Industry Association (CompTIA) poll listed communication as the number one cause of failure. The 2007 study by Dynamic Markets Limited shows that 62% of organizations experience IT projects that failed to meet their schedule, 41% failed to deliver the expected business value and ROI, and 47% had higher-than-expected maintenance costs. The Standish Group reports that 51% of IT projects are defined as “challenged”, where they had cost overruns, time overruns, and not supportable as delivered. They also reported that 31% were cancelled outright. Gartner studies suggest that 75% of all US IT projects are considered to be failures by those responsible for initiating them.

I believe a large chunk of these failures are traceable back to the project initiation and selection process. A number of projects start on the road to failure by not having a direct link to one or more specific business strategies and goals. Even when there is linkage, how you measure success is not always clear or practical. Too often the measurements are defined around outputs, such as schedule, resources, budgets, and artifacts like documentation and lines of code. The strategic goal and the people charged with accomplishing it are interested in the outcome. Simply stated, did the project result enable the company to meet or exceed the strategic goal?

Even those that do try to connect the project with the strategy and do define and track related information, they fall into the trap of focusing solely on the historic financial measurements, such as ROI (Return on Investment) and revenue. These are limited and faulty. First, these are backwards looking and the calculations occur long after the project finishes. Any lessons learned, corrections, or improvements are hard to collect, come too late to help the project succeed, and are too easy to ignore or dismiss in the rush to finish the next project.

While every company wants to make money, directly connecting the initial guest with any revenue is difficult for projects that are not strictly working on a customer deliverable. The projects that focus on improving how the company currently does business or transforming some aspect and creating something new are too removed for a direct and immediate connection with any revenue stream. A large number of companies can not even accurately track the number of hours each person worked on any specific project. To expect a “real time” accounting which enables management and the project manager to accurately track resource and costs, let alone connect those with any future revenue, is beyond almost all companies.

The answer to increasing project success is to select measurements that are forward looking and linked to the strategic goal. One example of a company that has done this well is Southwest Airlines. The airline does not make money if a plane is sitting on the ground. The strategic goal for this is to reduce the turn around time (interval between a plane landing and taking off on the next trip). Another strategic goal is customer satisfaction, since a happy customer is more likely to use them for their next trip. One type of project that supports both of these is improving and speeding up baggage handling. The forward focused metrics for this is turn around time and lost bags. Steps that shorten the time it takes to get the aircraft back into the air and does not increase the number of bags that are missing at the destination is successful. By measuring these during the project life cycle, you have the ability to adjust and correct. You will still have projects that fail, but measuring forward provides a method to detect and correct the failure before it becomes a catastrophe.



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