March 21, 2001	Volume 1, Issue 12
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The Cheapest Way to Run a Project Is with Enough Resources

by Rick Brenner

Cost reduction is so common that nearly every project plan today should include budget and schedule for several rounds of reductions. Whenever we cut costs, we risk cutting too much, so it pays to ask, "If we do cut too much, what are the consequences?"

oston's Big Dig, the largest highway project in U.S. history, was originally projected to cost about $2 billion. The price now is over $14 billion. I don't know why they're over budget, but I do know that there has been intense pressure to hold costs down. Maybe part of their problem is the pressure to reduce costs.

Since the need to cut costs suggests that earlier estimates were off, why do we believe the new estimates? They're usually made under extreme time pressure, and with obvious bias. They might even be worse than the estimates they replace.

Yet, we do it and we do it again. Whenever we cut budgets, we risk cutting too much. And then we must deal with a hard truth: if we cut too much, the project will likely cost even more than if we hadn't cut at all.

When we cut too much, new mechanisms — many invisible — kick in, and all are beyond the control of project management. Uncontrolled processes lead to uncontrolled costs, and that's why cutting too much raises costs. Some examples:

Wishing

Responding to the call for cuts, people re-estimate their work, knowing that only the "right answers" can save their pieces of the project. Unaware, they bias their estimates. Overruns are inevitable.

Bootlegging

When we charge time to one project and work on another, or when we "borrow" equipment, we're bootlegging. It's widespread, and it's completely off the books.

Hoarding Excessive budget
cuts encourage
"underground" behavior,
which is hard
to control

If we believe that we won't gain approval for additional staff, we might be tempted to keep some people we have, even when we don't really need them, because we doubt that we can get them back when we do need them again. So when money is tight, we find some people sitting around.

Bingeing and purging

When an organization goes through a sequence of "freezes," it inevitably goes through a matching sequence of thaws. During thaws we grab whatever we can. Often, this grab goes beyond satisfying backlogged needs, and becomes a true binge. Like squirrels burying acorns, we acquire what we can whether we need it or not.

Deferring

When budgets are tight, we sometimes defer addressing problems. For example, if a project is late, we shorten testing. This defers discovery of problems, often until after the product ships, when resolving the problems is even more expensive. The project cost is reduced, but the cost to the enterprise climbs dramatically.

Find out if any of this stuff is happening in your organization. If it's increasing, perhaps you're trying to run projects with budgets that are too small.  Top    Next Issue

One symptom of resource starvation is the urge to make every effort "count" towards the ultimate deliverable. For a discussion of the downside of this approach, see "Trying to Do It Right the First Time Isn't Always Best," Point Lookout for March 14, 2007.

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Projects never go quite as planned. We expect that, but we don't expect disaster. How can we get better at spotting disaster when there's still time to prevent it? How to Spot a Troubled Project Before the Trouble Starts is filled with tips for executives, senior managers, managers of project managers, and sponsors of projects in project-oriented organizations. It helps readers learn the subtle cues that indicate that a project is at risk for wreckage in time to do something about it. It's an ebook, but it's about 15% larger than "Who Moved My Cheese?" Just USD 19.95. Order Now! .

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More articles on Project Management:

Geese Don't Land on Twigs

Since companies sometimes tackle projects that they have no hope of completing successfully, your project might be completely wrong for your company. How can you tell whether your project is a fit for your company?

Scheduling as Risk Management

When we schedule a complex project, we balance logical order, resource constraints, and even politics. Here are some techniques for using scheduling to manage risk and reduce costs.

Team Thrills

Occasionally we have the experience of belonging to a great team. Thrilling as it is, the experience is rare. How can we make it happen more often?

Emergency Problem Solving

In emergencies, group problem solving is unusually challenging, especially if lives, careers or companies depend on finding a solution immediately. Here are some tips for members of teams that are solving problems in emergencies.

Nine Positive Indicators of Negative Progress

Project status reports rarely acknowledge negative progress until after it becomes undeniable. But projects do sometimes move backwards, outside of our awareness. What are the warning signs that negative progress might be underway?

See also Project Management for more related articles.

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Public seminars

The Race to the South Pole: Ten Lessons for Project Managers

On 14 December 1911, four men led by Roald Amundsen reached the South Pole. Thirty-five days later, Robert F. Scott and four others followed. Amundsen had won the race to the pole. Amundsen's party returned to base on 26 January 1912. Scott's party perished. As historical drama, why this happened is interesting enough, but to project managers, the story is fascinating. Lessons abound. Read more about this program. Here are some upcoming dates for this program:

• Download to
  your calendarAppleton, Wisconsin: September 13, Monthly Meeting, Northeast Wisconsin Chapter of the Project Management Institute.
   
• Download to
  your calendarWeston, Wisconsin: September 14, Monthly Meeting, Northeast Wisconsin Chapter of the Project Management Institute.
   
• Download to
  your calendarCrowne Plaza Hotel, Cromwell, CT: September 15, Monthly Meeting, Southern New England Chapter of the Project Management Institute. Register now.
   
• Download to
  your calendarFort Wayne, IN: September 22, Monthly Meeting, Northeast Indiana Chapter of the Project Management Institute. Register now.
   
• Download to
  your calendarOverland Park Convention Center, 6000 College Blvd., Overland Park, KS 66211: October 4, Professional Development Day, Kansas City Chapter of the Project Management Institute. Register now.
   
• Download to
  your calendarMITRE, in Bedford, MA: February 15, 2011, Monthly Meeting, Boston SPIN.
   

Organizational Politics for People Who Hate Politics

Have you ever felt powerless to implement an important new idea? Have you ever been "blind-sided" at a meeting? Have you ever lost two good employees because you could find no way to keep them from attacking each other? These are some of the issues of organizational politics. Many of us have become enmeshed in them from time to time, but we've also known some people who seem to be able to engage and prosper. How is that done? We'll inventory the challenges of organizational politics, and provide tools for anticipating and addressing them. The focus of this program is practical — attendees learn concrete techniques for dealing with the problems that arise in workplace politics, while keeping their integrity intact. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarOverland Park Convention Center, 6000 College Blvd., Overland Park, KS 66211: October 5, Professional Development Day, Kansas City Chapter of the Project Management Institute. Register now.
   

Managing Virtual Teams for Real Results

Managing global or dispersed teams is challenging — miscommunications, misunderstandings, and interpersonal conflict all thrive in the typical environment of the distributed team. And they're even more common in global teams, because of time-zone offsets and language and cultural differences. We'll inventory the challenges distributed and global teams face, and provide tools for anticipating and addressing them. The focus of this program is practical — attendees will learn concrete techniques for preventing and dealing with the problems that accompany global and distributed teams. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarPortland World Trade Center: October 18, Conference, Pacific Northwest Software Quality Conference.
   

Person-to-Person Communications: Models and Applications

When we talk, listen, send or read emails, read or write memos, or when we leave or listen to voice mail messages, we're communicating person-to-person. And whenever we communicate person-to-person, we risk being misunderstood, offending others, feeling hurt, and being confused. There are so many ways for things to go wrong that we could never learn how to fix all the problems. A more effective approach avoids problems altogether, or at least minimizes their occurrence. In this very interactive program we'll explain — and show you how to use — a model of inter-personal communications that can help you stay out of the ditch. We'll place particular emphasis on a very tricky situation — saying no to power. In those moments of intense involvement, when we're most likely to slip, you'll have a new tool to use to keep things constructive. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarPortland World Trade Center: October 19, Conference, Pacific Northwest Software Quality Conference.
   

Person-to-Person Communication for Project Managers

When we talk, listen, send or read emails, read or write memos, or when we leave or listen to voice mail messages, we're communicating person-to-person. And whenever we communicate person-to-person, we risk being misunderstood, offending others, feeling hurt, and being confused. There are so many ways for things to go wrong that we could never learn how to fix all the problems. A more effective approach avoids problems altogether, or at least minimizes their occurrence. In this very interactive program you'll learn a model of inter-personal communications that can help you stay out of the ditch. In those moments of intense involvement, when we're most likely to slip, you'll have a new tool to use to keep things constructive. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarMarist College, 3399 North Road, Poughkeepsie, NY 12601: October 22, Professional Development Day, Hudson Valley Chapter of the Project Management Institute.
   

The Race to the South Pole: Lessons in Risk Management for Leaders

On 14 December 1911, four men led by Roald Amundsen reached the South Pole. Thirty-five days later, Robert F. Scott and four others followed. Amundsen had won the race to the pole. Amundsen's party returned to base on 26 January 1912. Scott's party perished. As historical drama, why this happened is interesting enough. But to organizational leaders and project managers, the story is fascinating. We'll use the history of this event to explore lessons in risk management and its application to organizational efforts. A fascinating and refreshing look at risk management from the vantage point of history. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarWherever you are: it's a teleseminar: February 2, 2011, Teleseminar, Computer Aid, Inc. (CAI).
   

The Organizational Politics of Risk Management

Organizational politics presents a risk not often accounted for by risk models. It creates one of the many components of risk management risk — the risk that the risk management process itself is inadequate. Political considerations can lead to risk products that seem acceptable but which are fatally flawed; or worse, the risk products are plainly unserviceable, but everyone chooses not to acknowledge the problem. In this program we'll examine how organizational politics influences risk management, and discuss several measures for mitigating its effects. Read more about this program. Here's an upcoming date for this program:

• Download to
  your calendarWherever you are: it's a teleseminar: September 1, 2011, Teleseminar, Computer Aid, Inc. (CAI).