What Is Project and Program Risk Costing You?

Do these numbers mean anything to you?
$74 million, 31.1 percent, or  7 out of 10These numbers alone probably don’t trigger a reaction. What if we said the average US company risks $74,000,000 per year because of project failure or underperformance? (According to Project Management Solutions.)  The Standish Group’s research shows a staggering 31.1% of projects will be canceled before they ever get completed, and the OASIG study says 7 out of 10 projects “fail” in some respect. Now, what’s your reaction?

The fact is that all projects contain risk. It may not be risk of complete failure but other risks lurk such as running over budget, not meeting set goals, and missing deadlines. The question we need to ask is why all these projects fail or do not meet expectations.

At NEOS, we have a project health model that uses five lenses to assess, diagnose, and fix projects.

  1. Leadership/Sponsorship – As we all know, the sponsor plays a critical role in a project’s success but is often given less importance than other project areas. When the power of a sponsor is underestimated, often faults such as ineffective communication to peers or visible support of the project are overlooked. Just as detrimental as a sponsor not preforming to the level the project demands is choosing the wrong sponsor or not clearly identifying a sponsor.
  2. Organizational Relevance – A project is doomed from kickoff if the significance to the organization has not been assessed and communicated. You can only predict possible problems if you are aware of impacted areas and let those affected have ample time to plan accordingly.
  3. Technology Fit – Technology is meant to be an asset but when the wrong technology is implemented, it can be a cost and resource burden. Many components affect whether technology will hinder the success of a project. A thorough software evaluation will ensure technology aligns with the project as well as the overall organization direction.
  4. Target Employee Engagement – All projects impact a group of employees.  Someone is going to have to do something different at the end of a project.  Many companies err when they overlook the need to engage the targeted group of affected employees. If they are engaged early and understand the project reasoning and implications, the rate of adoptions and support will significantly increase.
  5. Project Mechanics – All aspects of project management, deliverables creation, financials, and project communication fall into this dimension.  With so many moving parts, this dimension is a high-risk area. Keeping the project in small digestible bites helps reduce risk by limiting scale and resources needing management.

NEOS has highlighted 5 best practices for each dimension in the whitepaper – 74 Million Dollar Project Question.

How healthy is your project?

The ability to cure a project is dependent on diagnosing the root of the problem. At NEOS to diagnose a project, we score areas within each dimension of our project health model, giving them a numeric value in order to give an objective screening into each area. Totaling the numbers gives each dimension an overall health assessment.  Individual numbers lend detailed insight when developing a strategy for remediation.