Turning Failure Into Success And Vice Versa
by Bud Baker
THE CEO ANNOUNCED THE PROJECT with great fanfare. It would be the biggest
construction effort they'd ever undertaken, costing billions of dollars and
taking 10 years or more to complete. But if the costs were great, so were the
potential benefits: greater efficiency enhanced safety even the saving of
countless human lives. Expectations were high.
But it didn't take long for those lofty ambitions to fade. Within a year-before
the first ground was broken on the project-estimated costs had doubled, and
then doubled again. The' 10 year schedule was already obsolete, and the
project's political support had nearly vanished.
A textbook project failure, you might think, one more example of a project
first overpromising, and then underdelivering. But the truth isn't nearly so
clear The CEO in this case was President Dwight Eisenhower and the year of his
announcement was 1954. The project: development of the United States' massive
interstate highway system.
..
While the project certainly failed to meet the original thresholds set for it,
few would argue today that our American interstate highways - the envy of the
rest of the world - epitomize project failure.
Whether or not a project is a success is seldom obvious, at least not for a
long time. It wasn't all that long ago that NASAs Hubble Space Telescope was
being held up as a model of project disaster - billions of dollars spent to
give scientists a hopelessly blurry view of outer space. Yet at this writing,
NASA astronauts have just completed another successful trip to Hubble, once
again enhancing its ability to see further into space and time than ever
before. So is Hubble really a failure? Or a stunning success?
..
Some define project failure as the inability to meet client expectations
regarding cost, schedule and technical performance. But those expectations are
often seriously flawed, especially at the beginning of a project. President
Eisenhower sold the American people on the interstate system largely because of
its benefits to national defense: fast, modern highways would help the United
States fight and then recover from a nuclear war. Four decades later, that
expectation seems pretty quaint, and nowhere near as compelling as the highway
systems benefits in terms of safety economic development and enhancement of
national commerce.
..
Further, limiting the definition of project success to the client's assessment
is a narrow view. First, the client is often - especially in government
projects - not the one paying the bills. Federal agencies, for example. often
spend billions of taxpayer dollars to meet their own needs. But if the Internal
Revenue Service's computers don t work, or if the Federal Aviation
Administration's air traffic control systems fail, the price is borne not by
those client organizations, but by all the rest of us as well.
..
Finally, our focus on cost, schedule and technical performance is incomplete.
We need to assess a fourth dimension of project success: politics. It is
possible for a project to succeed in terms of cost, schedule and tech- nical
performance, yet ultimately fail because of changing political realities. The
Air Forces vaunted F-22 Advanced Tactical Fighter may be the most capable
combat aircraft in histo- ry yet it may never take to the skies. The problem
won't be technical, or schedule-related, or even the $70 million-per-plane
cost. What may shoot down the F-22 after a decade of devel- opment may be the
same factor that dropped the B-2 bomber program from 132 aircraft to just 20:
the political disappearance of the very enemy the planes were designed to
combat.
..
With all this in mind, let us propose a different interpretation of project
failure, while recognizing that project success or failure is often not a
black-or-white matter. Projects succeed-or {at/-in direct proportion to how
well they meet-or fail to meet-the evolving expectations of significant project
stakeholders. in the areas of cost. schedule, technical performance and
politics.
..
There are at least six cost-related sources of project failures. First, early
overoptimism in cost, schedule. or technical areas will drive a project
toward cost failure. Note that this has little to do with how well the ongoing
project is managed. Rather the seeds of this trouble are sown in the
project planning phase. If the expectations in any area are overly optimistic,
mistic, the result will be seen as an inability to manage cost. For example,
the cost of a major aircraft program was estimated based on a pro auction rate
of 42 units per year This was de- spite the fact that many believed such a rate
to be highly unlikely given funding pressures. But 42 aircraft per year
produced the lowest total cost estimate, so that number continued to be used,
despite the reservations many had about its realism. Ultimate result:
Production rate nev- er exceeded five units per year. total costs went up as
the assembly line never reached efficient levels, and the project was seen as
having a ma- jor cost problem, when the real failure was in the setting of the
original expectations.
..
If overoptimism causes the perception of cost failure, so then does
underperformance in technical or schedule areas. A defense project was pushing
the state of the art in physics and in chemistry and problems arose again and
again. At a major performance review, the project manager began his talk by
saying that "Never has a project gone so far with so little of the basic
science understood." Ominous words, and he was right. When the project was
million of dollars over budget, the plug was finally pulled. But its cost
problems were the effect not the cause, of failure in other areas.
A third source of cost failure is simply error. Hard to believe, but one federal project came across a $100 million math error in a contractor proposal. When the contractor was shown the error, his response was not to correct it. but rather to go back and repropose. In their new effort, they fixed that S100 million mistake. And then they added S100 million to another part of their proposal.
Funding profiles change, resulting in a fourth cause of cost failure. A firm
allocates $5 million per year to Project X, for a period of seven years. But as
the corporations profits wax and wane that promised investment may not be
sustainable. Schedules slip, deliveries get stretched out, changes occur driven
by reduced funding. Before long, Project X is over cost, driven there not by
poor cost management but by funding shortfalls external to the project itself.
..
The fifth cause of cost failure is familiar to all project managers: scope
creep. Scope creep often involves the project teams desire to satisfy a client
by acceding to the clients requests for products or services beyond the
original project requirements. Clients can be devious here: One government
client, faced with a project manager determined to fight scope creep, offered
to give up feature "A" in return for gaining feature "B". The project manager
reluctantly agreed, and began the necessary engineering change proposals. New
feature "b" was fast-tracked at the clients request, while the ECP deleting "A"
languished. It languished for so long, in fact, that it ultimately was set
aside and forgotten. The project client received both A' and "B", and the
project manager got a cost overrun, along with a valuable lesson in organ-
izational politics.
..
"Perfect is the enemy of good enough;" and it brings us to our final cause of
project cost problems: "If 100 percent of requirement is good, then 110 percent
must be better" Or so the thinking goes. But sometimes, major investments are
made to achieve technical performance levels beyond the clients real needs. An
Air Force missile system had generally adequate performance characteristics but
age was cracking the missiles propellant, thus requiring a replacement missile.
The using command specified that the replacement missile exceed the performance
of the original, by a significant degree, despite the technical challenges all
knew to be involved. Result: After years of work, the new missile never did
reach the ambitious requirement. After numerous explosions, schedule delays and
cost overruns, the project was ended. The combat command had to give up its
decaying older missile, and never did receive a replacement system.
..
As with cost, early over-optimism is a major cause of schedule failure. This
doesn't mean that people don't know how to schedule, nor does it mean that
schedulers intentionally underestimate the time required for a project. Though
either of these things can certainly occur. Most schedule problems seem to be
generated by project managers' tendencies to be fundamentally optimistic,
especially in the early stages of their project.
..
Lets look further at the nature of this optimism. One project manager refers to
the early portion of a project as "the brochure phase." He means simply that
early in a projects life, before the laws of economics, science and human
nature have conspired to impede progress, all things seem possible. Relation-
ships among all the project participants tend to be good, and promises can be
easily made, in the knowledge that it may be years before those promises must
be kept.
..
A second cause of schedule failure is client appeasement. Reaching a balance
between trying to satisfy a client and just caving in is not an easy thing. In
one large project, the prime contractor told the client that they projected a
six-month schedule slip. The client said that was unacceptable. The con-
tractor repeated his estimate, and the client repeated his position, more
loudly this time. Finally the contractor said, "What do you want me to say?"
..
The client, under pressure from his own superiors, said he wanted to hear that
the contractor would manage to the original schedule, with no delay. The
contractor folded at that point, simply saying, "Fine."
..
And, of course, the project came in six months late, as the contractor had
warned, and then some.
As in the area of cost, some of the other sources of schedule failure can
include scope growth-more tasks just take more time-and the reach for technical
perfection.
..
A last area of schedule problems involves resource limits. This is especially
true in multiproject organizations, where scarce or narrowly focused resources
must be shared. Management guru Tom Pete,s has said that a key to successful
project management is to "avoid the shared resources trap." Easier said than
done, of course. When Project A's schedule changes put it into, say a crucial
test facility that had been allocated to Project B. both projects' schedules
will suffer
..
..
When projects fail in this area. the results in many cases tend to be
spectacular: Airplanes crash. buildings collapse, wayward missiles explode in
garish balls of fire. But no matter how stupendous the final result, the root
causes of technical failure tend to be more prosaic, and they have much in
common, regardless of the particular projects involved.
..
Again overoptimism is an issue. As one defense industry critic put it "To sell
a program to Congress, you have to lie about it first." While that may strike
some as a bit cynical, it's undeniably true that the same optimism that infects
cost and schedule planning affects the areas of technical performance. too.
Such optimism breeds high expectations, and these expectations then set the
stage for project failure.
..
Some projects fail technically because of simple error Since projects are by
their very nature unique undertakings, the likelihood of error is great - after
all. if projects were easy everyone could do them.
Often the errors are technical in origin. Engineering students have for decades
studied the tape of "Galloping Gertie" the Tacoma Narrows suspension bridge
that collapsed into Puget Sound due to a design miscalculation. A similar
mistake caused a Kansas City hotel disaster, where a design error caused an
atrium overlook to cave in, killing dozens.
..
In other cases, technical shortfalls are the result of business decisions. One
automaker put such severe constraints on the developers of a two-seat sports
car that the vehicle was probably doomed from the start. Even though studies
showed that women buyers would be a primary market for the car, features known
to be important to female drivers-like power steering-were omitted from the
cars early models due to budget limits. And engine compromises-again due to
fiscal constraints- -were implicated in a rash of fires, which plagued the car
through its brief life.
..
One more cause of technical failure is poor communication, both within project
teams and between the project team and the client. A defense project fielded a
highly capable weapon system, complete with its own sophisticated automatic
test equipment. But communication between the vehicles software designers and
their test equipment counterparts was imperfect at best. Result: The vehicle
and its test equipment were unable to communicate. The fix: software redesign,
at a cost reported to be in the tens of millions of dollars.
..
This particular incident had an interesting aspect to it. Some people on the
team apparently knew of, or at least suspected, the mis-communication problem.
But the level of distrust, even fear, within the project influenced those
people to hold their peace to avoid being the bearers of bad news.
..
..
Can a project succeed in cost. schedule and technical areas, and yet still be a
failure? As unlikely as that sounds, there are plenty of examples. The
American nuclear power industry is one, some would claim. Another is surely the
Northrop Corporation's F-20 Tigershark.
The Tigershark was a politically inspired airplane, a relatively low-budget
fighter aircraft. When President Jimmy Carter balked at selling top-of-the-line
F-15s and F-16s to Third World countries, Northrop developed the Tigershark for
the export market. The airplane was a technological success, but not one was
ever sold. When Ronald Reagan succeeded President Carter, he opened the
floodgates for American weapons exporters, and foreign nations opted not for
the Tigershark, but for its bigger, more capable, more prestigious competitors.
Result: The project remains the single biggest project failure in history,
costing stockholders a billion dollars.
..
Other cases are less clear, cases in which political failure provided the coup
de grace for proj- ects struggling in other areas. Ford's Edsel is one example:
Most people who know of the Edsel are aware of its unusual appearance and awk-
ward name. But the Edsel didn't fail because of those things alone. What people
often forget is that the Edsel hit the market at the start of the worst
recession since the end of the Great Depression. Nor do most people know that
the Edsel - a big-engine, high-performance car - came to the market just as the
federal government was leaning on carmakers to downplay such features as
horsepower, speed and acceleration.
..
Bad political management-failing to consider the needs and reactions of all
project stakeholders call kill an otherwise viable project. And the converse is
also true: Adept political management-as in the case of President Eisenhowers
interstate highway system-can save a project that might otherwise be consid-
ered a failure.
..
PROJECT FAILURE, THEN, is not always a clear proposition. Projects succeed-or
fail-to the extent that they meet the expectations of the project s
stakeholders. Those expectations are not fixed-they evolve as the project
evolves. And so its likely that todays failure could be tomorrows success
story.
..