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Managing Project Risk the Easy Way Print
Question: How can you spot profitability leaks and cost overruns in IT projects before your peers – and then fix them?

 Answer: You can do it the hard way or the easy way. The path you choose depends to some degree on the consequences of failure and on your budget.

The Hard Way

Standard risk assessment methodology requires you to first identify threats – human, operational, “reputational,” financial, technical, political, etc. Then you have to come up with an estimate of likelihood for all those different threats and invent early warning systems that will notify you to launch your backup plans for each one.

That sounds really hard.

 Most of the projects I’ve been involved with would have been finished before we could have identified, estimated and planned for all of those risks. If your project is extremely large and complicated, that kind of planning probably makes sense. If, however, you’re hoping to get your next IT project delivered in the next six months or so, then there is an easier way.

An Easy Way Out

Journyx recently received survey responses from about 250 customers. Part of the questionnaire inquired about estimating project risk. Customers responded that about 12 percent of projects were broken, late or otherwise in the ditch.

The best way to measure that risk is to track employee time spent on projects, while simultaneously estimating how much of the project is complete. If the project budget is 1000 person-hours and 50 percent (i.e. 500 hours) is used up – but the project is only 15 percent complete – then you know you have a high risk project. And a problem.

Conversely, if the same project is 40 percent complete, but only 10 percent of the hours are used, then you have a low-risk project.

If you have real-time, accurate, per-project cost data available to your entire management team at all times, it provides a built-in alert system that notifies you early on that your project is broken. 

Now that you’ve detected the problem much earlier than you otherwise would have, you can take corrective action. You’ve discovered a hidden problem earlier than your peer managers who are not tracking time could have. Now, you can fix the problem more quickly and cheaply.

But, are out-of-control projects really common problems in IT shops?

Survey Says: You Have Out-of-Control Projects

You have probably heard the statistic that 70 percent of IT projects are out of control, over budget or broken. However, our customers reported a much lower number – 12 percent. That means 12 percent of our customers’ projects are broken in some way, shape or form.

If you have 1,000 people doing hundreds of projects with a $100 million budget, and 12 percent of their work is a waste of time, that’s $12 million a year wasted, right? That’s bad. It’s not nearly as bad, however, as the 70 percent failure rate other companies are experiencing based on the above statistic. Somewhere between 12 and 70 percent of IT workers are wasting money, time – even their life’s work. Life is short enough. Let’s not waste it, right?

Sometimes, when you find out a project is broken, you can do something about it – like cancel it, put different resources on it, or change the scope. But sometimes you can’t. In our customers’ cases, they could fix the problem 55 percent of the time. Fortunately, 55 percent of our customers’ projects were rescued, primarily because they had accurate cost data – accurate time data – which allowed them to find the problem early.

It is worth a lot – in time and money – to have this capability. You can be more confident that you are tracking the right data; and time sheets are not onerous to complete.

If your projects are short lived or technical, or if they’re based mostly on human labor or knowledge work, then tracking employee time is probably all you’ll ever need in terms of risk management. If you’re drilling for oil in a dangerous place or building bridges in the Congo (and some readers of this magazine are doing exactly that) then you may need to look at more esoteric assessments of risk.

Curt Finch (c) 2006

About the Author

Curt Finch is the CEO of Journyx ( http://pr.journyx.com  ) , a provider of Web-based software located in Austin, Texas, that automates billing, payroll & project management by tracking time, expenses and mileage. Finch is a software industry veteran. In 1997, Curt created the world's first Internet-based timesheet application and the foundation for the current Journyx product offering. Curt has managed development teams creating enterprise-level software solutions since 1985, with a focus on distributed workforce management.

 

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