by Ellen Pearlman
Strategic Thinker: Aaron Shenhar and Dov Dvir
Credentials: Shenhar is a prominent scholar in project management and a Professor of Management at the Stevens Institute of Technology; Dvir is head of the Management Department at Ben Gurion University School of Management in Israel and has managed projects and high-tech businesses for more than 20 years.
Big Idea: Projects need to be managed for business results, rather than just meeting time and budget goals.
Book: "Reinventing Project Management: The Diamond Approach to Successful Growth and Innovation" by Aaron Shenhar and Dov Dvir, published by Harvard Business School Press, August 2007
Much has been written over the years about how once ballyhooed projects have turned out badly. Denver International Airport is just one example of a project that was well-managed and yet still had extensive delays (sixteen months longer than planned) and enormous cost overruns ($1.5 billion). The problem, according to Aaron Shenhar and Dov Dvir in their book "Reinventing Project Management," was the automatic bag-handling system, one component of the complex project that was higher risk than the rest of the endeavor but was "treated as if it was a standard, well-proven subsystem."
Project management is not the sexiest business and technology subject. However, companies that learn to manage their projects to a successful conclusion have an advantage over their competition. Shenhar and Dvir believe that one of the common mistakes among the companies and management teams they studied is they "failed to appreciate upfront the extent of uncertainty and complexity involved (or failed to communicate this extent to each other) and failed to adapt their management style to the situation."
It probably won't surprise you that most project problems are managerial and not technical. But knowing that doesn't help managers come up with the right approach if they aren't asking the right questions before they put the systems in place to measure success. And if you're thinking that it's the occasional project that fails, think again. The Standish Group estimated that of the $382 billion spent in 2003 on IT projects in the U.S., $82 billion was a total waste. Moreover, one-third of the failed projects had overruns of 200 to 300 percent. And of the more than 600 projects that Shenhar and Dvir studied over 15 years, 85 percent failed to meet time and budget goals, with an average overrun of 70 percent in time and 60 percent in budget.
The authors contend that traditional project management guidelines are a good place to start for basic training in the art of project management. The standard approach for project management, they say, is "based on a predictable, fixed, relatively simple, and certain model." However, it is "decoupled from changes in the environment or in business needs."
The complex problems that projects face today require project managers to go beyond declaring success when a project is completed on time, within budget, and within performance goals. A new adaptive project management approach that is geared to the individual needs of a project is needed. The authors call for a business-focused, success-oriented project approach that takes into consideration strategic and tactical aspects of project performance in both the short and long term.
The new success criteria, according to the authors, should involve at least five metrics:
1. Project efficiency: meeting time and budget goals
2. Impact on the customer: meeting requirements and achieving customer satisfaction, benefits and loyalty
3. Impact on the team: satisfaction, retention and personal growth
4. Business results: return on investment, market share and growth
5. Preparation for the future: new technologies, new markets and new capabilities
Since projects differ in many ways, the authors also offer managers a way to distinguish and classify the type of project they are dealing with through a diamond-shaped framework. The framework has four dimensions that help alert managers to the type of project they have:
- Novelty—the uncertainty of the project's goal and/or market
- Technology—the level of technological uncertainty
- Complexity—the level of complexity of the product, task and project organization
- Pace—the urgency of the project
Each of the four dimensions affects different aspects of project management. The authors used this framework to analyze the successes and failures of the many projects they studied. In the unsuccessful projects they examined, they often found gaps between the projects required characteristics (based on the four dimensions of the diamond framework) and the actual management style that was used for the projects. What makes this new approach valuable is its focus on managing projects for business results and not just on meeting time and budget goals.
Excerpts reprinted by permission of Harvard Business School Press. Excerpted
from Reinventing Project Management: The Diamond Approach to Successful
Growth and Innovation. Copyright (c) 2007 Aaron J. Shenhar and Dov
Also of interest:
CIOZ Question: What makes a project succeed? Post your ideas on how to best manage a project below.
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