I don’t care if our project runs a little over time and over budget (as long as it delivers the benefits)

When monitoring change management or major project delivery, too many NEDs are primarily focused on the budget and timetable. And they are important. But the number one priority MUST always be the benefit – “is there actually change happening ?” “Are we actually going to see the outcomes?”.

When a company embarks on a big project – like replacing their financial systems, rejigging the supply chain or fundamentally rethinking HR – the board will usually focus in on the budget and how long the project will take. They request reporting that focuses on whether the project is being delivered against the budget and timetable that’s been set.

This is a dangerous approach because it encourages tick-box-style change management. Rather than ensuring the initiative fundamentally changes the way the organisation operates, this approach focuses on the budget. While budget and timelines are important issues, it’s much more important for the board to know whether the project is delivering the benefits it set out to.

Meeting budget isn’t as important as delivering value

It’s almost inevitable that a large project will go over budget, but this doesn’t always spell disaster. Obviously, the board will want to see that a new budget is set in place as soon as possible, but the most important thing is that the project will continue to deliver the outcomes it set out to. In five years’ time no one will remember that you were 10% over budget, but they will remember if it didn’t work.

The board needs to ensure that the project delivers new processes, systems, efficiencies or cost savings. To justify the expense it’s important for the Board to stay on the case and make sure that management keeps working hard to drive the outcomes. One way to do this is to perform a two-year check to ensure the project delivered the benefits it promised – it’s rare for a business to do this but everyone should. If the business can demonstrate the savings or the uptick in performance, then it’s less important if they didn’t meet the exact budget.

On the flipside, while it’s unusual for a large exercise to come in under budget, that’s only a cause for celebration if the project actually delivers its outcomes. Recently, I was pleased to be involved in the National Library Digital Library Infrastructure Replacement Program which was delivered flawlessly and under budget. But the real success came from the incredible value that it delivered to the National Library – it won the Australian Institute of Project Management’s Project of the Year Award in recognition of this.

In five years’ time no one will remember that you were 10% over budget, but they will remember if it didn’t work.

Intangibles need to be given priority

Boards typically focus on the schedule and cost of projects because it’s something they understand, and humans tend to focus on things they understand. Those who are delivering projects also do the same thing. They focus very well on tasks, technologies, deliverables and outputs, but don’t always consider the intangible aspects of the project like how people will be affected.

It’s not just the technology aspects of a project that need to be delivered. It’s also important to drive behavioural change through the organisation to make sure people realise the outcomes the project was designed to deliver.

These softer aspects need to be given priority. Look at the project from the perspective of the people on the receiving end. Your employees or customers need training, tools or other information so they can get value from the underlying change. In my experience change management and the user experience are almost always substantially undercooked in large projects, but it is these elements that are critical in actually delivering the benefits.

Big projects have traditionally been delivered in large chunks, and it’s only when you get to the end of that chunk that you realise that things have not been done properly. By that time it’s very difficult and painful to spend the time and effort required to do the change management that is required. Agile methodology somewhat addresses this issue because things are completed in shorter sprints. This means you learn much earlier on if you’ve undercooked something and you can then rectify it before completing subsequent sprints.

Rather than just discussing budgets and timelines, the board also needs to have more productive conversations about the value that should come out of the project and ensure that risks, and issues like sufficient change management, have been addressed. The board must focus its attention on the real game – are we seeing substantial and sustainable benefits.

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