Title: Challenging Classic Project Management: Turning Project Uncertainties into Business Opportunities (Fee or subscription required)
Authors: Thomas G. Lechler (Stevens Institute of Technology), Barbara H. Edington (St. Francis College), and Ting Gao (Stevens Institute of Technology)
Publisher: Project Management Journal, vol. 43, no. 6
Date Published: December 2012
When companies take on major projects, unexpected hitches are inevitable. But this paper finds there’s often a silver lining to surprises, even those that first appear to be setbacks. The trick is for managers to recognize their potential for opportunity. In fact, when firms exploit uncertainties during a project development cycle, they typically boost the end value of the initiative far beyond initial expectations.
Researchers and managers alike have long lumped together uncertainties and risks as pernicious threats to a project’s likelihood of success. But this traditional view of project management ignores the positive potential inherent in uncertainties—the “unknown unknowns” that aren’t anticipated prior to a project’s launch, as opposed to the known risks that can and should be gauged beforehand and factored in.
To better untangle the effects of the unknown from known risks, and to explore how companies can take advantage of the curveballs that come their way, the authors of this paper conducted in-depth interviews with the project managers responsible for 20 major initiatives. The projects were varied; target schedules ranged from eight months to three years and budgets were set between US$500,000 and $69 million. More than half centered on product development or IT; the others included construction, R&D, and business realignment projects, as well as the launch of clinical trials, market prediction models, and feasibility studies. And each of the projects was buffeted by as many as three troubling episodes caused by uncertainty.
During the 90-minute interviews, the managers assessed the impact of those episodes—whether or not they had been exploited positively—on the ultimate value of the project. With the benefit of hindsight, they described any missed opportunities that could have been turned to their advantage. The managers also provided information on the initiative’s complexity and scheduling, the project’s proposed and final budgets, and the company’s stakeholder structure.
In 12 of the 20 cases, the managers spotted the uncertainties and worked with them. And when they did, the results were positive. Exploited uncertainties “led to a redefinition of a project’s initial baseline,” the authors write, and resulted in the companies’ implementing new technologies and processes or identifying future projects.
To guide project managers to a “broader range of potential opportunities,” the authors identified four categories to look for.
The first involves technical innovation. As an example, the authors cite the experience of one company that faced a new regulatory requirement that would have raised the cost of an ongoing project by $2 million. The executive team got around this hitch by pushing for the development of an inexpensive testing solution. That innovation not only brought the company into compliance with the new rule, but also saved money and established a lower-cost platform for future projects.
The second type of opportunity involves implementation processes. One manager in the study described a project that suddenly faced constrained technological resources. Rather than abandon or scale back the project, the company created a less-specialized building process that saved time and money. It also cut down on post-implementation problems, which dropped from an average of three or four action items to one.
The third category is new business. When the original outside sponsor of one initiative retired and support for the project waned, the study recounts, the initiative’s managers engaged in widespread networking to find a new backer. The effort paid off with a replacement sponsor who not only provided funding to revive the project, but opened additional business avenues by appealing to an even larger audience.