There will be a significant change in how we define the success (and failure) of a project. This is one of the changes I discussed in previous years, and I am reiterating the need for this change again because some companies are still reluctant to make this change necessary for critical improvements in project management.
For years, the definition of project success was the creation of project deliverables within the constraints of time, cost, and scope. While this definition seemed relatively easy to use, and is still being used today, it created several headaches. First, companies can always create deliverables within time, cost, and scope, but there is no guarantee that customers would purchase the end results. Second, everyone seemed to agree that there should be a “business” component to project success but were unable to identify how to do it because of the lack of project-related business metrics and how to effectively use business metrics. Third, this definition of project success was restricted to traditional or operational projects. Functional managers that were responsible for the strategic projects were utilizing their own definitions of project success, and many of these strategic projects were being executed under the radar screen because of the competition in the company for funding for strategic projects.
Another headache with the traditional definition of success was that its basis was on the belief that time, cost, and scope are the only three constraints on a project. When PMI introduced the concept of competing constraints, the definition of success had to ultimately change because it may be impossible to complete a project within all the competing constraints.
What companies either did not realize, or failed to admit, was that every company for which they implement projects may have a unique definition of project success. The definition of success is not a company definition of success but varies from project to project. Although each project may include time, cost, and scope as part of the success definition, there are now components related to business value created, risks, safety, legal liability, alignment to strategic objectives, and other components. The components can also be broken down into short-term and long-term components of project success.
Because of the uniqueness in the definitions of success, project teams must communicate with customers at the start of the project, or even in the project’s conceptual phase, to understand the customer’s definition of success. Then, the project team and the customer will decide upon which metrics should be used to validate progress toward the client’s definition of success.
With the growth in new types of projects, especially strategic projects that require innovation and creativity, the chances of many of these projects failing is quite large. Executives and project governance personnel must provide project teams with the criteria for when to shut down a project. Without having failure criteria, project teams may spend excessive amounts of time on projects that may have no hope of creating the expected business value. By having failure or cancellation criteria, which may be different for each project, resources can be reassigned to more promising projects in a timely manner.
Identifying Metrics
There will be a significant growth in the number of metrics, especially business-related metrics, to be used on projects. When we discuss competing constraints, we must realize that every constraint will have a tracking metric and many of the new constraints are business-oriented constraints. The business side of projects will need to be understood much better than in the past. This will require significantly more metrics than just time, cost, and scope.
Today’s project managers are no longer viewed as simply managing a project. Instead, they are seen as managing part of a business and are expected to make business decisions as part of project execution. In the past, project managers made primarily technical decisions and business decisions were the responsibility of the governance personnel or senior management.
The growth in the number of metrics is also attributed to the new methodologies that are selected. Some methodologies make it easier to track certain metrics. As an example, Agile and Scrum are much better at tracking and reporting the creation of business value than the waterfall approach.
Companies will need to create metrics that can track benefits realization, value created from the benefits and how each project is aligned to strategic business objectives. To do this may require the creation of 20-30 new metrics. Some companies have metric libraries that contain more than 50 metrics. This will undoubtedly lead to major changes in the earned value measurement systems (EVMS) currently being used.
