PlanningfortheUnexpected

Projectsareplannedchange.Volatilityisunplannedchange.Yetinevitably,asallprojectmanagerswill
attest,everyprojectencounterssomeunplannedchange,orvolatility.Itcouldarisefromchangesto
targetssuchasschedule,budgetorscope;changesinkeygovernancepersonnel;orevenchanges
beyondtheproject,suchaschangesinorganizationalstrategy,technologyorindustry.

Whenprojectandvolatilitycollide,projectperformancecanbeaffected.Sohowmuchimpactdoes
volatilityhaveonprojectsandtheiroutcomes?

Morethanyouwouldimagine.Aftersurveyingalmost650experiencedprojectmanagersintheU.S.and
U.K.abouttheirmostrecentprojects,researchersdiscoveredanumberofsurprisingfactorsrelatedto
volatilityanditsimpactonprojectmanagement:
Projectswithnochangesinkeypersonnelfaceda22percentriskofunderperformingwhile
thosewithtwoormorepersonnelchangesfacedariskofmorethan50percent.
Projects,onaverage,experiencedatotalofeightchangestotargetssuchasschedule,
budgetandscope.Onaverage,thesechangestendedtoextendthescheduleapproximately
10percentlongerthanoriginalestimate.
Thelargertheproject,themorethevolatility.Also,higherlevelsofvolatilityledtolower
levelsofperformance.

Drs.AndrewGeminoandBlaizeReichoftheSegalGraduateSchoolofBusinessatSimonFraser
UniversityinVancouver,B.C.andDr.ChrisSauerofSadBusinessSchoolatOxfordUniversityinEngland
examinedthreedimensionsofvolatility:changesingovernance,suchaskeyprojectpersonnel;changes
intargets,suchasbudget,scheduleandscope;andexternalchangesrelatedtoorganizationalstrategy,
technologyandindustry.Ofthesethreedimensions,governancevolatility,orchangestokeypersonnel,
hadthelargestimpact.

OneofthemoststartlingfindingsintheU.K.portionofthestudywasthatasinglechangeofproject
managerisassociatedwithasevenpercentincreaseinschedule,saysGemino.Aswell,theproject
couldalsobeexpectedtounderdeliveritsscopeby3.5percentandcostfourpercentmore.

Andwhileasinglechangeinprojectsponsorhadnosignificanteffectonbudgetorschedulevariances,it
wasassociatedwitha5.6percentdecreaseinthepercentageofscopedelivered.

Soitsnotsurprisingthatwhentheexdirectorofamegaprojectworthsome2billionheardofthese
findings,shequipped,IfonlyIdknownbeforehandthatmydeparturewouldadd80milliontothe
budget,Idhaveofferedtostayforhalfthat!

Hercommentisntentirelyridiculous.Sincelosingaprojectmanagercancostaproject15percentof
targets,saysGemino,itmakessensetoinvestresourcesupfronttoavoidthisrisk,perhapsbyoffering
incentivesfortheprojectmanagertoremainonthejoborbyestablishingunderstudiesforkeyroles.

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Theresearchersofferseveralotherrecommendationstohelpplanfortheunexpected:
Sponsorsandprojectmanagersneedtokeeptrackofchanges.Increasedvolatilityisasignal
ofariskofunderperformance.
Whenpossible,spendmoreeffortinplanningtoreducenumberofsubsequenttarget
changes.
Ensurechangestoprojectstargetsarenecessary.Formalchangerequestsareamechanism
forlinkingvaluetoproposedchanges.

Geminosuggeststocreateachangerequestprocessandsticktoit.Thewordjustisthekey.hesays.
Ifaclientasksifyoucanjustaskthemiftheycanjustfilloutthislittlechangerequest,says
Gemino.Itsimportanttoberesponsive,butitsalsoimportanttomakesurethatrequestedchanges
arenecessary.Itisamazingwhatatwopagechangerequestformcanfilterout.

Finally,saysGemino,projectmanagersneedntworrytoomuchaboutplanningforexternalchange
relatedtoindustry,technologyorevenstrategicchangeswithintheorganization.Surprisingly,external
volatilitywasnotsignificantlyrelatedtoperformance,hesays.Werenotsurewhy.

Justbethankfulforsmallmercies.

Source:Sauer,C.,Gemino,A,andReich,B.H."ManagingProjectsforSuccess:TheImpactofSizeand
VolatilityonITProjectPerformance",CommunicationsoftheACM,50:11,Nov.2007,pp.7984.

PMPerspectives.orgisawebsitewhichconnectsprojectmanagersandsponsorswithproject
managementresearchers.Ourmissionistounderstandandimproveprojectmanagementpractices.The
researchteamcomprisesDr.BlaizeHornerReichandDr.AndrewGeminofromSimonFraserUniversity,
CanadaandDr.ChrisSauerfromOxfordUniversity,UK.

Reich,Gemino,Sauer(2007)

ThisPDFversionwasreproducedin2013withminortypographiccorrections.

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