Planning fallacy part III - project planning

Why do most projects end up beyond the planned time, budget, and quality?

The approach to completing project tasks is not fundamentally different from how we approach completing tasks in everyday life. In many cases, though not always, we are in the right habit of completing those tasks that are important and urgent first, as the failure to carry them out in a short time threatens more or less unpleasant consequences. Often in projects, however, such tasks are postponed to the so-called 'last minute'. Once the crisis is under control we are satisfied that we have managed, yet in most cases the cost of carrying out such tasks is significantly higher than if their execution had been planned, as this may mean a sudden need to reorganize or abandon some previously agreed project assumptions. Additionally, such sudden actions always have an impact on other projects and on the entire organization as well.

Wouldn't it be better to avoid an emergency altogether? Probably yes, but when there is a lot of time left until the task deadline, we think we will get it done quickly and without complications. However, we cannot predict everything that might happen. In project management such habits are often carried over from everyday life.

Regardless of the number of project management certificates you have, project planning, especially in the initial phase, requires utmost attention and a lot of commitment.

If this is not done at the beginning, errors, project problems, or unexplained issues will grow and accumulate in further phases and cause crises, and as a result, the quality and profitability of the project will decline, risks will materialize, and our image in the eyes of the client will suffer. The organization’s competitiveness and financial situation will also deteriorate since projects “on fire” are implemented much more expensively than expected.

What we often fail to realize is the profound influence of habits that lead us to prioritize important and urgent matters neglecting a strategic perspective. This is because the habits operating in the human subconsciousness are failing to recognize them while managing projects through the 'firefighting' technique risks disaster for both the project and the organization.

To better understand this issue, let us take a closer look at the case:

Fire in practice - lack of project planning

Let us take the example of Company X which manufactures modern and technically complex production lines mainly for the pharmaceutical industry on behalf of industrial clients. Each such line contains several technical solutions requiring solid experience, and each order for the construction of such a line is a separate project involving a variety of tasks - from establishing the technology to building and commissioning the production lines.

Company X is carrying out more and more such projects and is growing personally, but it is not increasing its project maturity, thus repeating the same mistakes. They trust their people, who have already been promoted and have been working here for years, and these people feel confident and see no need for further training in project management. They have been using "manual" methods for years, which might have worked well in a small organization on several projects, but do not work in an organization where many projects are being implemented at the same time. They do not use the knowledge of the entire company which is a direct result of poor level of internal communication and should not happen in an organization at this stage of development.

Let's take a closer look at the whole process at Company X:

The offer starts with the initial development of the operating principle and the selection of equipment for the production line. A quote is finished, and technical solutions are not fully thought through. The offer was also not thoroughly reviewed in terms of delivery times and there is not enough space to take advantage of the organization’s previously acquired knowledge. The client, in the course of negotiations, tries to establish the most favorable price. The contract is finally signed and the new project lands in the portfolio.

However, the design department does not have the time to deal with it as they are busy fixing bugs on other projects, ones that should have been finished long ago. Technical department managers, as the most experienced ones, are busy solving recurring technical problems of production lines already in operation at the customer, so they cannot verify what solutions less experienced designers apply in projects that are taking off. Time is running out...

Designers release insufficiently verified technical solutions into production. However, the production and assembly department do not have the resources to start building a new line, because they have to correct faults on lines currently in operation at the customer's site. And these do not reach the parameters required by the contract, because the wrong technical solutions have been applied. They also succumb to frequent breakdowns.

Designers come up with corrections, although they should already be dealing with a new design, but the equipment still does not work properly, and again it is necessary to go back to the designers and the assembly department. Again, corrections are needed. Customer satisfaction declines, and project costs are approaching payback. The next project acquired has been waiting for a long time to take off.

In the end, designers manage to get a new project off the ground. It has been a long time coming and the team is just getting started, so everyone is in a rush. The designers struggle to squeeze the tasks of the new project into their schedules. Upon closer examination, it turns out that the solutions offered to the client do not have a chance of working, that they need to be changed, and other solutions need to be adopted - but then the project will not fit into the budget!

At this stage budget cuts take place, often at the expense of the quality of solutions. The project quickly must go out for assembly because there is less and less time. It turns out that additional equipment needs to be ordered with long delivery times, and this holds up assembly and commissioning. There is a serious risk of missing the deadline. Projects go down for assembly without verification. Internal tests are skipped. The line must leave for the customer because the customer has already scheduled production, so the production line is shipped without a thorough operational check. Assembly problems arose because there was no time to carefully think through and verify the design. Now the best resources of the entire company are involved in the project to solve problems overlooked at the very beginning. There are tensions between the organization and the customer.

In the meantime, the bid department had won another contract to build a production line, largely different from the previous one. There was no time to consult the designers and use the knowledge available in the organization to avoid making the same mistakes. There are no resources to start work right away, as they are involved in the corrections of underdeveloped production lines already operating at the customer's site. The situation repeats itself. Projects cease to be profitable because they are carried out inefficiently, fail to make the projected margin, or end up at a loss and as a result financial problems arise in the organization and the situation becomes unnerving. In companies with a high degree of specialization there is a phenomenon of employee turnover and at the same time loss of experienced personnel who do not want to work under such stress and unpredictability takes place. The assumed development trends are not realized. As a result, the competitiveness of the organization in the industry market decreases.

What risk comes with the lack of strategic planning?

There are many cases of companies that are constantly putting out fires without having time to look holistically and act strategically. If they fail to do this, if they continue to act in this way, then even after winning new contracts the fireball will move on, becoming a style of working. Projects that are on fire set other projects and the entire organization on fire.

In the long run, this style of working causes general chaos, employee burnout, and the subsequent departure of qualified and experienced personnel and reduced profits or even the completion of projects at a loss. It also causes clients to leave as they no longer want to work with a company that is tripping over its shoelaces. Sustaining such a state in a company inevitably leads to collapse or at least a freeze on growth.

What can we do to avoid fires?

Above all, become aware of the danger and try to think strategically on new projects in parallel with the already necessary firefighting on earlier projects. This seems unfeasible as there is no space for any other activities when putting out fires, but getting organized is the key to getting out of this destructive management style. Otherwise, problems will grow and subsequent projects will also feed the fire consuming the organization.

Strategic thinking in this case means a change in management style. It is necessary to apply other methods of project management, focused primarily on maximizing the use of time and paying attention to the initial phase of the project. At the stage when the task list and schedule are being created, technological details are worked out, ambiguities need to be clarified with the client, purchases must be planned and the competencies of the project team are to be selected, it is necessary to implement new solutions in line with the specifics of the organization and the projects it carries out, and to apply proven practices derived from the experience of other companies.

And while it is a challenging task to design such a system, it is much more difficult to change the habits of employees associated with an already well-established way of 'managing' projects.

Keep in mind that most people like to walk the beaten path and are reluctant to change. It is this resistance that poses the greatest risk of this type of implementation project.

That is why, as in any project, such changes in the organization’s management style are also governed by a principle quoted by Howard E. Wasdin in his book 'Sniper: The Story of a Seal Team Six Commando': "The more sweat in training, the less blood in battle". The better and more thoroughly a management change implementation project - or any other - is planned and communicated within an organization, the better the chances of its success. The earlier intensive planning work begins, the better - by way of an iterative process - the way to reach the project goal will be worked out. This requires attention and maximum use of the organization’s knowledge.

This is why it is so important to use tools developed by specialists for:

- Portfolio Management, which is the selection, prioritization, and control of an organization’s programs and projects in line with its strategic objectives and ability to deliver.

- Continuous improvement of existing standards within the company.

- Knowledge Transfer, which is the process by which employees or employers share their skills, information, experience, or ideas with other departments or others in the company.

Project planning and management with PwC

So, if managing projects by putting out fires is familiar to you, remember that PwC is a company with huge, well-connected, and highly specialized teams also around project management. It combines the experience of many companies and the latest developments. It advises clients all over the world and in many industries, selecting the right project team with the highest level of qualifications tailored to the specifics of the project. PwC is a guarantor of the highest quality of service, which translates into efficient and competitive operation of the organization.