One of my favourite pastimes from years of experience in procurement is to “geek out” on project costs and cost management.  I love building spreadsheets, even if I’m the only one who ever sees them.  In our last few blog posts, we discussed the hidden costs of poorly written scopes of work and the hidden costs of poorly written Requests for Proposals (RFPs).  While we would like to preclude poorly written documents from getting into the marketplace, our firm is often asked to remedy projects that are confronted with the challenges brought on by not investing sufficient time up-front, which allows such documents to get into circulation.  Thinking about this topic reminded me of the tagline of one of my favourite Podcasts… Freakonomics: Exploring the Hidden Side of Everything. In this weekly podcast, the author dives deep into the causes of decisions and the effects of implementing those decisions.

One of the benefits of working on so many projects is that our firm gets a front-row seat to see the causes and effects of such practices.  For example, corporate executives often appoint successful operations professionals to lead capital projects.   Would you ask an airline pilot to build the airplane that you will fly in?  Would you hire a doctor to build the hospital?

Accordingly, why would an executive team hire someone from operations who needs to lead a capital project? Some justifications follow a line of reasoning, such as, “He / She is a powerful manager, leads well and gets things done.  They understand our business. This project will allow them to show us what they are made of, and we need this project to succeed.”  The natural tendency is to only look at the upside, but these executive teams often overlook or dismiss the downside:

• Who will backfill the role of such a significant operations person while they are managing the project?
• Once the project is finished, what do we do with that operations person who was seconded temporarily to lead?
• What happens if the project runs behind schedule? Can we afford to have this superstar out of the operations role for that long?
• What if this project fails? Have we defined what success looks like, and how will we measure if they were successful or not?
• Are we setting ourselves up to lose a great operations person?

We observe that appointing someone with project experience leads to a higher probability of success than appointing someone without project experience.

UP NEXT

• The Hidden Costs of Attorney-Client Privilege
• Does the Progressive Design Build Model Force Better Scopes?
• The Simplicity of a Responsibilities Matrix
• Musings About Angie’s List

Written by John F. Gravel