Transcript Slide 1

The Death of a Project: Can lessons from yesterday’s
catastrophe prevent tomorrow’s disaster?
Matthew Gillery
Project Manager
Hewlett-Packard
Agenda
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Overview/Purpose
What is a project?
What is project management?
Introducing Risk Management
Defining Project Success
Common Causes of Project Failure
Role of Risk Management in Reducing Failure Rates
Risk Classification: ABCD Methodology
Overview/Purpose
• Problem Statement
– The purpose of this presentation is to identify the
common causes of project failure, as suggested by
members of the academy and industry leaders.
– Clearly, there is no “one size fits all” approach/solution
to preventing project failure. However, the
presentation focuses on how risk management can
be used to reduce the likelihood/impact of project
failure.
– Key question: Are we learning from yesterday’s
mistakes?
Project Failure in the 70’s
•
In 1979, IEEE published an analysis on failed “Bankrupt” projects and
reported:
– “Bankrupt” projects are those that consistently missed target dates and
resulted in cost over-runs, or cancellations
– IEEE argued:
• By the time the paper was written, the project “bankruptcy”
phenomena hadn’t been analyzed successfully
• Occurrence of “bankruptcies” are rarely detected early in the
development stage. Most are identified during testing.
• Effective methods for preventing “bankruptcies” are still being
developed
An Analysis of Software Project Failure. IEEE, 1979.
Standish CHAOS Report 2009
Is Project Success Really that Rare?
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Specifically, 32 percent of IT projects
were considered successful, having
been completed on time, on budget
and with the required features and
functions.
Nearly one-in-four (24 percent) IT
projects were considered failures,
having been cancelled before they
were completed, or having been
delivered but never used.
The rest (44 percent) were
considered challenged: They were
finished late, over budget, or with
fewer than the required features and
functions.
http://www.cio.com/article/495306/Recession_Causes_Rising_IT_Project_Failure_Rates_
The Project Management Problem
The Standish Group has reported:
– IT project success rates rose steadily from 1994 until
2000, when they dipped, and then began rising again
from 2002 through 2006. Success rates decreased
between 2006 and 2009.
– Many projects experience governance issues:
• Project take so long to complete that stakeholders lose
interest and eventually decide to cancel it, or a project that
eventually gets delivered but doesn't get used because it's no
longer relevant to the business. In both situations, the project
is considered a failure.
http://www.cio.com/article/495306/Recession_Causes_Rising_IT_Project_Failure_Rates_
What is a project?
• Temporary endeavor with a beginning and an end.
– The end is reached when the objectives have (or cannot) be achieved.
– Temporary DOES NOT mean short in duration; many projects last for
several years but they do, eventually end.
• Creates a unique product, service or result.
– It’s unique in that it has not been attempted before by the organization.
– Creates a product or artifact, is quantifiable and can be either and end
item itself or a component of another item.
– Performs a service such as business functions that support shipping
and receiving.
– Delivers a result such as outcomes or documents like results from a
research project on drinking water conditions in mountainous regions of
Ecuador and Chile.
• Is progressively elaborated – distinguishing characteristics of each
unique project will be progressively detailed as the project is better
understood (matures).
• It is comprised of interrelated activities.
Crowe. The PMP Exam. p9. Mulcahy, PMP Exam Prep, p22 PMBOK p5-7.
What is Project Management?
• Project management is the application of knowledge, skills, tools
and techniques to project activities to meet project requirements.
– Project management is accomplished through the application and
integration of the project management processes of initiating, planning,
executing, monitoring and controlling, and closing.
– The project manager is the person responsible for accomplishing
the project objectives.
• Managing a project includes:
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Identifying requirements
Establishing clear and achievable objectives
Balancing the competing demands for quality, scope, time and cost
Adapting the specifications, plans, and approach to the different
concerns and expectations of the various stakeholders.
PMBOK p8.
Progressive Elaboration & Risk Management
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The term “progressive
elaboration” simply means that
you do not know all of the
characteristics about a product
when you begin the project.
– Instead, they may be revisited
often and refined.
– The characteristics of the
product emerge over time, or
“progressively.”
Moving forward on a project without
a proactive focus on risk
management increases the impact
that a realized risk can have on the
project and can potentially lead to
project failure.
Hig
h
Staffing, Resources &
Project Costs
Low
Earl
y
Conceptual
Crowe. The PMP Exam. p20. PMBOK p6 & 8.
PHASES
Planning
Construct
Testing
Late
Implement
Closure
Page 9
Defining the term “project”
“A project is a temporary
endeavor undertaken to
create a unique product,
service or result.”
In answer to the question, WHAT IS A PROJECT?
Temporary, Unique.
Crowe. The PMP Exam. p9. Mulcahy, PMP Exam Prep, p22 PMBOK p5-7.
Risk Management
What is Risk Management?
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Risk is an uncertain event or condition, that if it occurs, may have a positive or
negative effect on project objectives. Project risk is always in the future.
Risk management is the systematic process of planning how to manage, identify,
analyze, respond to, monitor and control project risks.
The objectives of Project Risk Management are to increase the probability and impact
of positive events and decrease the probability and impact of negative events on
project objectives.
A cause may be a requirement, an assumption, constraint or condition that creates
the possibility of negative or positive outcomes.
– Positive risks = Opportunities
– Negative risks = Threats
– Known Risks = those that have been identified, analyzed making it possible to
plan responses for those risks
– Unknown Risks = cannot be managed proactive, so need a contingency plan
– Risk Tolerance = varying degrees of risk that organizations and stakeholders are
willing to accept
NOTE: A project risk that has occurred can also be considered an issue
Project Risk
• Project risk is always in the future. Risk is an
uncertain event or condition that, if it occurs, has
an effect on at least one project objective.
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–
–
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Cost
Time
Scope
Quality
• A cause may be a requirement, assumption,
constraint, or condition that creates the
possibility of negative or positive outcomes.
Risk Management Objectives
• The objectives of Project Risk
Management are to:
– increase the probability and impact of
positive events
– decrease the probability and impact of
negative events in the project.
Risk Example
What risk(s) is/are evident in this example?
University of Toronto http://www.cdf.toronto.edu/~csc340h/summer/lectures/w6/L6-part2-risk.pdf
Risk Semantics
• Risks are typically expressed in the
form of conditional statements
– If A occurs, then B…..
• Technology company example:
– If project resources are not
trained in the application of
technology OO prior to project
start, then the project may be
delayed and experience cost
over-runs as a result of on-thejob training
Risk Management Problem
There are several reasons why risk management is
sometimes not undertaken including:
• There is an unwillingness to admit risks exists.
• There is a lack of understanding of the benefits.
• There is a natural tendency to postpone the hard parts of
a project. (i.e., Do the easy things first.)
• Some believe that it costs time up front without adding
value overall.
• It is difficult to prove that it’s necessary (e.g., like
insurance).
Risk Management
• Risk Management includes the processes of conducting:
– Risk management planning
– Identification
– Analysis
– Response Planning
– Monitoring and Control
Key Project Success Considerations
• How do we define project success?
• How do we get the project team engaged
in the risk management process?
What is success?
• Answering “yes” to the following questions:
– Did the project meet its objectives, requirements, budget and
schedule?
– Did the project meet the customer’s needs?
– Was the decision to proceed with the project correct at the time?
– Would we do the project again, knowing what we know now?
• A project is a success if it meets its objectives, requirements, budget
and schedule, and a failure otherwise
Society for Automotive Engineers International Conference on Environment Systems: Explaining Space Project Failures
A perspective on “Good” vs. “Bad” Projects
• A project that takes reasonable risks and fails by bad
luck is not a bad project, since rational decision makes
would repeat the attempt
• A project that takes an unreasonable risk and yet meets
goals by chance is, conversely, not a good project
• Key question: What is a “failed” project?
Society for Automotive Engineers International Conference on Environment Systems: Explaining Space Project Failures
Failed Project Defined
• A failed project does not successfully meet
requirements/objectives
Common Causes of Project Failure
Study conducted by KPMG found several risk factors that lead to project
failure. While focused on the IT industry, these risk factors are general.
Project managers were surveyed. Responses were grouped, based on the
experience level of the project manager.
Controlling Software Project Risks- an Empirical Study of Methods used by Experienced Project Managers. Addison & Vallabh. SAICSIT 2002, pp. 128-140
Anatomy of a Failed Project. 2008. http://blogs.zdnet.com/projectfailures/?p=1100
FBI Trilogy Project
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Goal
– Upgrade FBI’s technology infrastructure to speed up data entry and analysis
Scope
– Deployment of:
• An enterprise-wide upgrade if desktop hardware and software
• Modern network infrastructure
• An integrated suite of software for entering, finding, sharing, and analyzing
case information ($170M/$581M Trilogy project cost)
History
– In 2000, started as the UAC project to modernize the FBI’s Automated Case
System (ACS) and technological infrastructure, by “webifying” the system’s green
screens
• Problem: Updating the system’s screens didn’t fix the underlying business
process issues and architecture
– System was built on 1970’s standards and equipment from the late
1980’s
– In 2001, the FBI contracted with IT service providers (DynCorp and
SAIC) to upgrade the FBI’s after congress approved $379.8 million for
the FBI Technology Upgrade Project (FITUP)
http://www.infoworld.com/d/developer-world/anatomy-it-disaster-how-fbi-blew-it-243
FBI Trilogy Project
– In 2001, scope changed form beautifying mainframe screens to replacing them
with an web application for gathering and analyzing intelligence data. Created the
Virtual Case File Project (VCF)
• Requirements were difficult to “nail down,” since organizational processes
were constantly changing as a result of 9/11.
• Contractors were rated based on customer satisfaction, and continuously
accepted new requirements
– At least 30-31 changes were submitted each month
– Endless change resulted in communications issues
(misunderstandings)
– In December 2003, SAIC deployed an incomplete system. The FBI was
expecting the full version.
• Leadership at all levels was surprised. The FBI had undergone two CIO
changes.
– In 2004, FBI and Homeland Security began planning an inter-agency Federal
Investigative Case Management System (FICMS), which would make VCF
obsolete
• network infrastructure and desktop hardware/software upgrades were
completed.
– In 2005, the project was officially cancelled. The software development project
was not making progress, which continuously resulted in cost and schedule overruns
http://www.infoworld.com/d/developer-world/anatomy-it-disaster-how-fbi-blew-it-243
FBI Trilogy Project Issues
Issues
• Lack of internal IT expertise
– Management and IT support
• Scope Creep/Poor Change Management
– Key change in direction after one year: web application instead
of upgraded screens
• Leadership Changes
– Inconsistent IT leadership: FBI experiencd 5 CIO changes
between 2000 and 2005; each had their own vision for the
project
http://www.infoworld.com/d/developer-world/anatomy-it-disaster-how-fbi-blew-it-243
Trilogy Replaced by Sentinel
• As of 2006, a new contract was awarded to Lockheed Martin. The
Trilogy Project was renamed to become the “Sentinel Project”.
– At this point, the project was projected to be complete by May
2010, with an estimated cost of $425 million.
• This means that over $500 million would be spent on a
project that was estimated at $170 million in 2001.
http://www.govexec.com/dailyfed/0708/071608rb1.htm
Sentinel Status: November 2009
Following is in response to the Department of Justice’s Office of the Inspector General
(OIG) report, “Sentinel Audit V: Status of the FBI’s Case Management System.”
• “The FBI appreciates the Inspector General’s review of the FBI’s Sentinel Program
progress and recognition of the FBI’s efforts to resolve concerns identified in previous
Sentinel audits. As the OIG notes, the FBI estimates that Sentinel is scheduled to
deliver full capability within the $451 million budget in the fall of 2010. The FBI
already has implemented measures to resolve all six recommendations identified in
this report and has successfully closed 30 of the 31 recommendations from the four
prior OIG Sentinel audits.
• “The Sentinel program has steadily improved and refined its business
practices. During Phase 1 of this project, the FBI and its primary contractor,
Lockheed Martin, chose to redesign and re-baseline Phase 2 to be more efficient and
deliver additional capability to users earlier than originally planned. This approach
reduces overall program risk. It was carefully planned and incorporated a flexible
aspect to the design to further mitigate risk by shifting requirements forward in the
program’s development to meet user needs.
• “The FBI is pleased the report concluded the revised Sentinel schedule is more
realistic. By extending the completion of Phase 2 by three months, requirements
from the latter phases will be delivered earlier, providing capabilities to users sooner
than originally planned.
• “The FBI has begun user testing of Sentinel’s Administrative Case Management
system, including three electronic forms and automated workflows. Following a brief
pilot in the FBI’s Richmond, Tampa, and Chicago offices, the FBI will deliver these
capabilities across the FBI, marking the completion of Phase 2.”
http://www.fbi.gov/pressrel/pressrel09/oigsentinel111009.htm
Sentinel: Current Status
•
As of April 1, 2010:
– The Associated Press reports that the FBI's $451 million Sentinel case
management system is getting slower and costing more, according to a
Justice Department audit.
– The project was expected to be complete by September of this year, but FBI
Director Robert Mueller said it would be delayed until 2011. The bureau is
renegotiating the budget with Lockheed Martin, as well as the schedule and
some of the work to be performed.
•
As of April 16, 2010:
– FBI director reported, " When you have a project that was laid down in concrete
four or five years ago, [with] technology changes, business practice changes,
and complexity changes, one can expect some minor delays" – FBI Director
http://www.itbusinessedge.com/cm/community/news/gt/blog/audit-fbi-sentinel-system-facing-more-costsdelays/?cs=40450
http://www.informationweek.com/news/government/enterprise-apps/showArticle.jhtml?articleID=224400547
NASA Failed Missions (Projects)
• NASA has committed itself to organizational and
project management improvement, by analyzing
over-looked risk factors on the following space
programs:
Program
Physical Cause
During re-entry, there was a breach in thermal
protection shield resulted in the superheating of
insulation, which melted the left wing and destroyed
Columbia the orbiter.
O-ring failed in the right solid rocket booster and led
to a flare that reached the external fuel tank, which
disintegrated the shuttle. The cabin and crew hit the
ocen at an unsurvivable speed 2 minuted and 45
Challenger seconds into the flight.
Apollo
Apollo 1: Fire. Apollo 13: systems failure.
Date
2/1/2003
1/28/1986
2/21/1967
Society for Automotive Engineers International Conference on Environment Systems: Explaining Space Project Failures
NASA Project/Organization Problems
• Engineering quality/risk management error
– “None of us gave any serious consideration to a fire in the
spacecraft”
» Astronaut Frank Borman, Apollo 1 Review Board
• Lack of cross-functional coordination/informal work-arounds
– Process changes were made at the work group level, and not
considered during projects (Change
Management/Communication)
• Failed to ask basic questions
– Example: Challenger. Per NASA study, “No launch incident
escape system was provided because of the incorrect
assumption that the shuttle had high reliability” (SAE)
• Management failed to ask the question: What happens if the
flight crew needs to escape during a launch?
• Stated as a risk: If the flight is not able to escape during a
launch, then…..
Society for Automotive Engineers International Conference on Environment Systems: Explaining Space Project Failures
NASA: Recommended Remedies
Risk Management as remedy for NASA’s problems
Society for Automotive Engineers International Conference on Environment Systems: Explaining Space Project Failures
Risk Management
What is Risk Management?
•
•
•
•
•
Risk is an uncertain event or condition, that if it occurs, may have a positive or
negative effect on project objectives. Project risk is always in the future.
Risk management is the systematic process of planning how to manage, identify,
analyze, respond to, monitor and control project risks.
The objectives of Project Risk Management are to increase the probability and
impact of positive events and decrease the probability and impact of negative
events on project objectives.
A cause may be a requirement, an assumption, constraint or condition that creates
the possibility of negative or positive outcomes.
– Positive risks = Opportunities
– Negative risks = Threats
– Known Risks = those that have been identified, analyzed making it possible to
plan responses for those risks
– Unknown Risks = cannot be managed proactive, so need a contingency plan
– Risk Tolerance = varying degrees of risk that organizations and stakeholders are
willing to accept
NOTE: A project risk that has occurred can also be considered an issue
Role of Risk Management in Reducing Project Failure Rates
• Moving forward on a project without a proactive focus on
risk management increases the impact that a realized
risk can have on the project and can potentially lead to
project failure.
• The intent of risk management practices is to promote a
proactive stance towards reducing project failure
Risk Classification: ABCD
• Risk management must be a team effort!
• “Research suggests that a successful project
environment may be characterized as on in which all
systems professionals maintain a holistic view of
organizational risk….”
» Merrill Warkentin, Mississippi State
University
• The challenge for project managers is to get the
entire project team actively engaged in risk
management
Scope of Risk Management
No
Information
Partial
Information
(Unknown
unknowns)
TOTAL
UNCERTAINTY
Complete
Information
(Known
unknowns)
GENERAL
UNCERTAINTY
SPECIFIC
UNCERTAINTY
SCOPE OF PROJECT RISK MANAGEMENT
(Knowns)
TOTAL
CERTAINTY
Risk Management Processes
11.1 Plan Risk Management (P)
Major Inputs
Tools & Techniques
1. Project Scope Statement
2. Cost Mgmt, Schedule Mgmt
1. Planning Meetings & Analysis
Major Outputs
1. Risk Management Plan
Communications Mgmt Plans
3.Enterprise Environmental Factors
4.Organizational Process Assets
11.2 Identify Risks (P)
Major Inputs
Tools & Techniques
1.Risk Management Plan
2. Cost Mgmt, Schedule Mgmt,
Quality Mgmt Plans
3.Scope Baseline
4.Activity cost estimates
5.Activity duration estimates
6.Enterprise Environmental Factors
7.Organizational Process Assets
1. Documentation Reviews
2. Info Gathering Techniques
3. Checklist Analysis
4. Assumption Analysis
5.Expert Judgment
6.SWOT Analysis
7.Diagramming Techniques
Major Outputs
1. Risk Register
11.3 Perform Qualitative Risk Analysis (P)
Major Inputs
1. Risk Register
2. Risk Management Plan
3. Project Scope Statement
4.Organizational Process Assets
Tools & Techniques
1. Risk Probability and Impact
Assessment
2. Probability and Impact Matrix
3.Risk Data Quality Assessment
4. Risk Categorization
5.Risk Urgency Assessment
6.Expert Judgment
Major Outputs
1. Risk Register Updates
Risk Management Processes
11.4 Perform Quantitative Risk Analysis (P)
Major Inputs
Tools & Techniques
1.Risk Register
2.Risk Management Plan
3.Schedule Mgmt Plan
4.Cost Mgmt Plan
5.Organizational Process Assets
1. Data Gathering and
representation techniques
2. Quantitative Risk Analysis and
Modeling Techniques
3.Expert Judgment
Major Outputs
1. Risk Register Updates
11.5 Plan Risk Responses (P)
Major Inputs
Tools & Techniques
1. Risk Register
2.Risk Management Plan
1. Strategies for Negative Risks
(Threats)
2. Strategies for Pos Risks
(Opportunities)
3. Contingent Response Strategies
4. Expert Judgment
Major Outputs
1. Risk Register Updates
2.Risk-related Contract Decisions
3. Project Management Plan
Updates
4.Project Document Updates
11.6 Monitoring and Control Risks (M&C)
Major Inputs
1.Risk Register
2.Project Management Plan
3.Work Performance Information
4.Performance Reports
Tools & Techniques
1. Risk Reassessment
2. Risk Audits
3.Variance & Trend Analysis
4.Technical Performance
Measurement
5.Reserve Analysis
6.Status Meetings
Major Outputs
1. Risk Register Updates
2. Organizational Process Asset
Updates
3.Change Requests
4.Project Management Plan
Updates
5.Project Documentation Updates
Risk Breakdown Structure
• The RBS is a decomposition of the risk categorization
and the risks within those categories that could occur
on a project.
Risk Breakdown
Structure (RBS) for
Construction Project
Architecture
HVAC
(Climate
Control)
Plumbing
Electrical
Blueprints
Personnel
Materials
Materials
Electricity at
location
Materials
Customer
Confirms
Design
Personnel
doesn’t
change
Permits
Permits
Contractor
Selected
Permits
Classifying Risks
•Business risks vs. pure (insurable) risks
•Classified by uncertainty (business risks)
•Classified by impact on project elements
•Classified by their nature
•Classified by their source
•Classified by their probability to occur and amount at stake
Risk Register & ABCD Rating
Id
Description of Risk
Identify consequences [1]
Probabili
ty
Impact
Grade
Cha
nge
Mitigation Actions
Risk Owner
Cost
WBS
[2]
1.1
Inadequate funding to
complete the project
M
M
B
NE
W
Re-scope project,
focusing on time and
resourcing
Project Manager
NA
1.2
Lack of technical skills in
Client Business Unit
H
H
A
↑
Develop training plan
Consultant
$2000
[1]
In larger projects, the consequences of the threat may not be evident, and noting them under each risk, or in a separate column can be useful in identifying
appropriate mitigation actions.
[2] WBS = Work Breakdown Structure, this is to indicate that the identified mitigation action has been included in the WBS (workplan).
Source: PM 007 Project Risk Register Template and Guide:
www.egovernment.tas.gov.au/__data/assets/word_doc/18512/pman-temp-open-risk-register.doc

ABCD Risk Management Overview
http://www.de-risk.com/page.php?7
ABCD Framework
Sensitivity
Stability
How sensitive to the project
is the assumption?
How stable is the assumption?
Not sensitive / minimal impact
=A=
Not very sensitive / manageable
=B=
impact
Fairly sensitive / significant
=C=
impact
Very sensitive/ critical impact
http://www.de-risk.com/page.php?7
=D=
Very stable / confident
Fairly stable / confident
Fairly unstable / uncomfortable
Very unstable / not confident
Assumption Analysis
http://www.de-risk.com/page.php?7
Benefits of ABCD
• The key features and benefits of ABCD are:
– Communication - Provides a simple, common, language for the
communication of risk up, down and sideways within the
organization, while avoiding the normal problems of political
sensitivity and dislike of discussing risks.
– Control - Enhances project control by an exception management
approach and provides a simple overview of complex risks for
senior management to prompt decision making
– Flexibility - An adaptable process which, once tailored, is applied
to ensure that all significant risks to the projects are identified
and controlled at the appropriate time.
– Acceptable - The non-intrusive/non-bureaucratic management
process improves management discipline across the
organization and is readily accepted by project teams
http://www.de-risk.com/page.php?7
Discussion Question
• In your project management career, what
has been the most challenging element in
managing project risk?
• How do you intend to leverage risk
management practices, as you manage
projects now and in the future?
Recap
• Recent reports have shown that project failure
rates are rising
• Risk management practices have the potential to
reduce failure rates
• Research has found that there are
commonalities between projects that have failed
• Risk management requires leadership and
proactive thinking
Risk Management Requires Leadership
• Final thought from John C. Maxwell’s “The 360
Degree Leader: Developing Your Influence from
Anywhere in the Organization”
– Do More than Manage—Lead!
Thank You!