People don't resist change. They resist being changed.
—Peter Senge
7 |
CHAPTER |
HABIT SEVEN
Limit surprises
DON'T WAIT TO ASK OR TELL
As identified earlier, the project leader has primary responsibility to three different stakeholder groups: the customer, senior management, and the core project team (see Figure 2). It is best not to surprise any one of these three groups. Whether it is good news or bad news, do not surprise your stakeholders with an untimely release. Make sure regular reporting addresses any issue in smaller doses as it happens. The project leader ensures realignment of all three stakeholder groups with any change/surprise.
On one large telecom project in Saudi Arabia, the project manager kept ignoring high-value adverse trends that dramatically changed the profitability of a lump sum multibillion-dollar contract. When he was finally forced to report the actual status of the project to executive management, it was too late to take any corrective measures. The customer refused the change order, as work had been mostly done without their knowledge or approval. The project manager was fired and the company lost several million dollars.
It is general human nature to hide bad information, but hiding information is never a good idea, as bad news almost never goes away with time. In many cultures, this behavior is very common. Reporting bad news too late leaves stakeholders with a feeling of helplessness and anger from not being able to influence the outcome. However, you must also be careful with reporting good news too early or that is exaggerated. Don't limit the flow of information unnecessarily. Be honest and open. Lack of information usually makes people guess wrong and that impacts cost and schedule.
Surprises → Realignment
The business strategy behind promoting this habit is to realign or resynchronize all stakeholders with any surprise as early as possible, such that corrective action can be taken and no group of stakeholder feels cheated. There will be surprises both big and small. A project leader will resynchronize all stakeholders with any surprises, no matter the size or impact, in a timely manner so that everyone is on the same page and can influence the outcome if desired. All surprises must be documented!
On one oil and gas project, the project manager was hiding good news of procuring equipment much cheaper than the budget on a lump-sum project. This change almost doubled the gross margin, but the project manager did not want to share this news with executive management until the end of the project. On a multiyear project, this resulted in late recognition of revenue, audit issues, and IRS penalties.
There are several examples of defense, IT, and energy projects where true capital cost estimate is revealed as a big surprise only after the project has started based on an optimistic cost estimate. Some of these projects have to be canceled after sinking a lot of funds. In one high technology coal gasification project, the capital expenditure more than doubled and the resulting benefits of the executed project were significantly reduced due to changing environmental regulations. It is important for people to ask or tell about potential surprises in a timely manner.
On one turnkey lump-sum engineering procurement construction (EPC) project, there was significant schedule improvement, resulting in handing over the facility to the customer two months ahead of schedule. But this change was not communicated to the customer in a timely manner. The customer could not expedite the operators’ training at the last minute to take advantage of early completion. Due to lack of communicating a positive surprise, no one could benefit from the gains of early completion.
There are always both positive and negative surprises lurking in a project. “Where did that come from?” is a feeling that management wants to avoid at all costs. But since “projects,” by definition, are unique, there are both known unknowns and unknown unknowns hiding in every element (technology, regulations, processes, people, weather, competitors, customer, suppliers, etc.). A project leader can develop an “alert culture” by following the proposed habits in this book. For example, getting the big picture right (Habit 4) can help avoid surprises relating to context, goals, and project objectives.