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Reporting.talent20.co.zaA Newsletter from Harvard Business School Publishing
Will Project Creep Cost You—or Create Value? by Loren Gary
For reprint and subscription information For customized and quantity orders of reprints: Call 617-783-7626 Fax 617-783-7658 Call 800-988-0866 or 617-783-7500 Will Project Creep Cost You—or Create Value? Strict rules that limit a project’s scope can be the key to its success. But you need a system flexible enough to recognize value. by Loren Gary
T’S A QUESTION THAT CAN BE THE BANE of a manager’s ex-
you treat every project as utterly unique, none of the learn- Iistence: When do you permit changes to a major project? ing from one project to another—which essentially has to Allow the wrong changes and the project you’re responsi- do with recognizing patterns—transfers over,” says Steven ble for can veer off course, run over budget, and miss key Wheelwright, a professor and senior associate dean at deadlines. Ignore the right change, and you fail to capital- Harvard Business School (HBS) whose research focuses Hence the dilemma: How to stay open to making mid- And just what is this relevant learning Wheelwright is stream changes that promise to improve your project’s referring to? Conversations with project managers who outcome without succumbing to the dangers of “creep,” in have a track record of success underscore the importance which small scope changes add up to irremediable budget- of adopting, in the initial planning phase, key frameworks, The answer lies in recognizing that while each project • The right people have defined the project’s scope.
has its own unique characteristics, you do not need tobring a unique perspective to each project you manage. “If • The project’s boundaries have been sharply • The impact of potential alterations or slippage can be A TALE OF TWO PROJECTS
When Dave Moffatt was overseeing the construction In the implementation phase, the challenge is to orga- of five supermarkets for Jewel Companies back in the nize the work so as to minimize the inherent uncertainties.
1970s, work came to a halt in the middle of construc- Whether you’re the manager or the executive sponsor of tion while plans were redrawn to incorporate flower any major project, a solid methodology that’s sensitive to shops into the supermarkets—a very new concept at creep can make it easier for you to decide, in the moment, the time. What justified the lost time and added ex- which project add-ons to say yes to and which to pass on.
pense? The vice president of marketing’s ROI analysisshowing that these costs would be more than offset by The planning phase
the revenue the flower shops would bring in.
A surprising number of projects get under way without a Midcourse scope adjustments to accommodate new thorough attempt to define their parameters, specs, and realities or incorporate new capabilities can pay off‚— but only when they’re done very intentionally and Haste is the chief culprit here, says Dave Moffatt, who with a hard-nosed insistence on demonstrating up brings 40 years of industry project management experi- front where the money is going to come from. Such ence to his role as senior operations adviser at HBS and vigilance doesn’t just happen, which is why for every project manager for the renovation of one of the school’s story like Moffatt’s, there’s probably three or four that main classroom buildings. “There’s a minimum lead time that all projects require,” says Moffatt, and it’s the respon- Need an example? Think of the Big Dig, the highway sibility of the project’s manager to know what that lead project to put Boston’s central artery underground, in time is and to ensure that it’s not squeezed.
which scope changes were all too casually agreed to Here are the key tasks of the planning phase: when they were noticed at all. Construction for thisproject began in 1991 and was supposed to take 10 Differentiate scope from purpose.
years and cost $4.9 billion. Current projections sug- As you define the parameters of a project, it’s critical to gest that more realistic figures are, at minimum, 14 separate its scope from its purpose. “A project’s purpose is the general benefit it will provide to the organization,” ex-plains Alex Walton, a Winter Park, Fla.–based project con- Copyright 2005 by Harvard Business School Publishing Corporation. All rights reserved. Project Creep (continued)
sultant who’s worked with computer, aerospace, financial, and better prepare for potential trouble spots in the IT and medical/nutritional companies. “Its scope comprises projects that are on the docket for the coming years.
the particular elements (or product attributes) that theproject team can control and has agreed to deliver.” Set the rules.
For example, a project’s purpose may be to create a new One last piece of work in the planning phase that can food item that will increase sales by $20 million. But the minimize the chances of project creep involves creating team developing the product needs to know what features buffers or rules that make it difficult for significant the product must have and what the budget for producing changes to occur without conscious discussion and ap- the product will be. This is the information that a three- to four-sentence document known as a scope statement pro- • Set up a change control board. In highly structured
vides; it spells out how the team intends to achieve success project environments, such a group is responsible for and, thus, the criteria on which it will be evaluated.
“gathering information about the impact that a pro-posed change will have on the schedule, budget, or Involve key stakeholders.
scope; voting on the proposed change; and then Make sure that you have the right people defining the sending a request-for-change document on for the project’s scope. “If you don’t have all the affected stake- project sponsors’ signature,” says Bob Tarne, a senior holders and sponsors at the table, either you won’t get an consultant who specializes in IT and telecommunica- accurate identification of the critical dependencies and tions projects for Havertown, Pa.–based PM Solu- functionalities or you won’t have the people who can en- tions. Thus, for an IT project affecting the sales, sure that the project hews to those critical dependencies marketing, and logistics departments, the change and functionalities,” says Brian Doby, a senior project control board would comprise senior managers manager for MedPlus, a Mason, Ohio–based subsidiary of from each of these units. Smaller projects—those QuestDiagnostics, who oversees the installation of elec- costing less than $1 million and lasting less than 12 tronics systems in health care facilities. months—can effectively function without such a for- For this reason, it’s crucial to include “the end user’s mal board, says Tarne. The project manager can sim- perspective and needs when you’re scoping out the func- ply solicit the advice of key stakeholders as needed.
tionality that’s required,” says Wheelwright. In the renova-tion of Baker Library at HBS, for example, project • Establish thresholds for additional work. Michele
planners solicited faculty members’ input about the proto- Reed, an independent project management consult- types of the new office spaces that were being designed for ant in Oysterville, Wash., says, “Any change entailing more than 5% of the original cost or hours budgeted for that particular line item in the project should trig- Plan in the aggregate.
ger a formal request for a scope change.” Getting the right people involved in defining the scope • Stipulate that projects be of a certain size. “In their
and devoting sufficient time to the project planning phase product development, software companies often say, aren’t enough to ensure that the project has clear bound- ‘Since the projects we do best are either $5 million or $1.5 million in size, we want to make sure that any “Organizations also need to do aggregate project plan- project we undertake fits into one of these two size ning,” says Wheelwright, “in which they develop a strategy that lays out a pattern and rhythm for when subsequentprojects will occur.” This is especially important for new • Limit the number of new features. Set guidelines for
product development. Without such a schedule for future how many new major and minor features can be in- projects, a product engineer with a new idea can grow con- cluded in a project of a certain size. This helps the cerned that it will never be implemented; as a result, project team control the inherent fuzziness of front- there’s a strong temptation for the engineer to try to slip end planning by forcing it to choose, from among all that idea into the product that’s currently in develop- the possible useful features, only the ones that are ment—regardless of its impact on the cost and schedule.
most important to customers right now.
The analysis of prior projects serves as a valuable ad- junct to aggregate planning. For example, study the past The execution phase
10 internal IT projects your company has undertaken— Once you’re into the actual implementation of the project, what patterns emerge? The findings can help you identify break it into smaller components with shorter time frames Project Creep (continued)
and focus first on work with the least uncertainty and vari- SCOPE CHANGES IN SERVICE PROJECTS
ability. For example, a software development team work-ing on a product with four new features—the fourth of A few words of caution about assessing scope change which it is not yet sure the market really wants—might requests to service or outsourcing projects. First, it’s choose to create the other three features first because it is difficult to make money in service projects without confident that the market wants them. The freeze date for the buffer and rules discussed in the article. The rea- the fourth feature would be set to occur later, after the son, explains project management consultant Michele team has been able to gather enough additional customer Reed, is that “service organizations are taught never to input to confirm that the feature is critical.
say no to a customer, so there’s a temptation to agree Operating in this manner helps a team “subdivide the to a client’s request to expand the project’s scope for areas of uncertainty,” says Wheelwright. It also helps the free without carefully calculating the cost.” With ser- team be more alert to the danger of creep because its atten- vice projects, it’s usually over the long term that you tion is concentrated on a few specific areas, instead of the make your money. So before you say yes to more work at no extra charge, make sure there’s a good chance But don’t wait until all subprojects are complete before that such a goodwill demonstration on your part will checking whether the whole project (or product) is going translate into a long-term contract with that client.
to be a success, says Wheelwright. Use a procedure knownas periodic system prototyping, he advises. “At regularintervals during the execution phase, link up all the When considering a scope change, make sure that the subprojects for a system test. This helps ensure that the change control board (or the informal group of stakehold- subprojects you’ve created are coming together as ers you rely on for advice) fully understands what the pur- pose of the change is. For example, have changing marketconditions made it important to accelerate the schedule so Should this add-on be approved?
that the product can ship earlier than originally planned? During construction of McArthur Hall, HBS’s residence Do new industry standards, adopted since the planning for students in executive education programs—some of phase, need to be accommodated? Or has the proposed which last as long as eight weeks—a scope-change deci- technological solution to one phase of the project not sion was made to create 10 rooms that would enable guests panned out, requiring a different approach? of the program attendees to visit for a few days at a time.
Next, guide the board through an examination of how To accommodate these new rooms, the initial thought was the proposed change affects everything: the scope state- to reduce the number of rooms for exec-ed students by 10.
ment, the work-breakdown structure, the available re- But doing that would have diminished the exec-ed pro- sources, the total cost, and the schedule. Finally, encourage gram’s long-term revenue potential by reducing the avail- the board to consider what will happen if the change is not able space for attendees; better to build 10 additional made. In these deliberations, says HBS’s Moffatt, the opin- rooms to accommodate guests, the project’s executive ions of board members who represent the end users sponsor argued, and to pay for the additional cost over should be given the greatest weight.
several years out of the larger income stream that would As the executive sponsor or project manager, if you’re result from keeping the number of exec-ed suites as origi- lobbying for the change to be approved, you’ve got to have nally planned. Careful ROI analysis, in other words, a plan for funding it once the earned-value calculation has helped the project’s overseers find the optimal way of deal- determined the cost. If the future revenue generated by the add-on is insufficient to cover the cost, then you’ve got to Similar near-term financial calculations should help find other places in the project where you can save money you determine whether to proceed with proposed changes and focus on things you can directly control—that is, ac- tivities along the critical path—that will occur within the Following the recommendations for the planning and next 30 to 90 days in the project schedule, advises Reed. ◆ execution phases will help you eliminate scope changesthat are not worthy of the kind of analysis that went into Loren Gary can be reached at . the McArthur Hall change. If you’re vigilant up front,change requests that make it past the initial hurdles arethus much more likely to be worth serious consideration.
• Child, Adolescent and Adult Psychiatry • Medical Director – The Child & Family • Voluntary Faculty – Virginia Commonwealth University (Psychiatry in Family Practice) • Voluntary Faculty – George Washington University School of Medicine (4th Year Medical Students) • Voluntary Faculty – Georgetown Medical School • To become familiar with the different classes of medi