CIS 554 Case Study

/

FEATURE

Budgetary black holes 10 mistakes that can suck the funds out of your IT project budget -- and how to avoid them

By Mary Brandel Contributing Writer, Computerworld

AUG 16, 2004 12:00 AM PST

IT projects are notorious for being over budget. In fact, Gopal Kapur, president of the Center for Project

Management in San Ramon, Calif., estimates that 77% of projects blow their budgets, with an average

cost overrun of 169%. As for the remaining 23%, Kapur doesn't have a lot of faith in those project

managers. "They just lie about it," he says.

Perhaps if project managers knew where the biggest money wasters were, these statistics would

improve. With that in mind, we spoke with experienced project managers and other experts to find out

where the black holes of project management are and how to avoid them.

1. Scope creep. It can begin early, at the requirements definition stage. "People say, 'We're spending the

time and money anyway, let's add this and this,' " says Mark Reilley, director of IT at the Corporation for

Public Broadcasting in Washington. "This expands the scope way beyond what you can accomplish or

really need."

[ Further reading: What is Asana? Task management tracking made easy ]

Even well-planned projects expand up to 2% on their own each month throughout a project's duration,

says Capers Jones, founder and chief scientist of Software Productivity Research LLC, a consultancy in

Marlboro, Mass. One reason is "technical gold-plating," explains Gregory Fouquet, a consultant at

Ouellette & Associates, a consulting firm in Bedford, N.H. "It's where well-intentioned programmers add

features and functionality that haven't been specified but are neat or slick," he says. "It eats away at

productivity and introduces difficulties in testing."

ADVERTISING

UNITED STATES 

/

Solution: Keep to core functionality by defining requirements as "must haves," "should haves" and

"nice to haves." To keep developers in check, Fouquet advises rigorously specifying must-have

requirements and tracking them through the development process. "This is trickier for project managers

who come from the business side and don't understand technical complexities," he says. For these

managers, enlist the help of a good, credible IT person. Reilley also suggests lowering user expectations

by releasing something small in scope that you can add to later. "Usually Version 1 is the prototype, and

when users see it, it's good enough," he says.

ADVERTISEMENT

2. Building a too-sophisticated GUI too early in the project. Most graphical user interfaces change

dramatically from the requirements definition stage to the final release, says Johanna Rothman,

president of Rothman Consulting Group Inc. in Arlington, Mass. And yet developers are always tempted

to perfect the GUI in electronic form at early stages in the project.

HPE Anthem

/

Solution: Start with low-tech GUI prototypes. Rothman suggests representing the user interface with

either a paper prototype, using colored pens and yellow stickies, or through a drawing program or

software such as Photoshop. "If you start off with an electronic representation of the GUI, it's incredibly

expensive," she says. Don't do it until you've frozen the final plan.

RECOMMENDED WHITEPAPERS

2019 Gartner Market Guide for AIOps Platforms

2019 Gartner Market Guide for IT Infrastructure Monitoring Tools

5 Big Myths of AI and Machine Learning Debunked

3. Lack of negotiation skills. Few project managers get formal education in how to negotiate the best

prices for software or contract labor. "They are like lambs waiting to be fleeced," Kapur says.

Solution: Develop basic skills. At the Center for Project Management, Kapur asks project managers to

give him an offer for a new and a used car. He checks to see if they use the Web to research accident

histories and Kelley Blue Book values, as well as how many dealers they contact and how much they find

out about financing terms. "I like to see the process they've gone through, and most have just not

learned it," he says.

Negotiation skills are also communication skills. For instance, after you've made an offer, Kapur says,

don't say a word. "Instead, [silently] count or recite the names of people you know," he says. "Most

people can't handle that." Kapur also suggests that project managers spend a week in the procurement

department to learn how negotiations are handled. For instance, purchasing software at the last minute

can be three to five times more expensive than buying it in advance.

4. Not understanding project finance, which is different from project accounting. "People just don't

understand what money meansÑlike if I add money to this project, another project can't be done,"

Kapur says.

SponsoredPost Sponsored by Veracode 10 Years In: Still Combatting the Same Software Security Vulnerabilities

/

Solution: A short course in financial concepts and terminology. Particularly for complex projects that

last longer than six months, Kapur advises project managers to educate themselves and their teams on

concepts such as internal rate of return and net present value. "We're not making people experts, but

they should have enough knowledge to recognize both the problem and the solution," he says.

5. Implementing large, big-bang projects. Research shows that per-person productivity decreases as

the project size goes up, says William Roetzheim, founder of Cost Xpert Group Inc. in Rancho San Diego,

Calif. Additional communication overhead, more formal requirements, more detailed design and the

increased number of meetings all add expense. With small projects, Roetzheim says, the time spent

implementing the project is 60% of the total versus 8% to 10% on very large projects. "The rest of the

time is spent on coordinating, communicating and additional testing," he says.

Solution: Break up projects into smaller, more manageable pieces. Studies have shown a correlation

between high failure rates and large projects, Roetzheim says, but smaller projects are also more cost-

effective.

6. Overtesting. We've all heard of analysis paralysis. Reilley suggests that there's also a phenomenon

called testing paralysis. "Maybe it's because you've had a bad experience in the past with bugs popping

up at the last moment, so you keep testing and testing," he says. Or developers could just be playing

with fonts to impress users. The result: overshot deadlines and a waste of resources.

Solution: Accept it: There are going to be bugs. At some point, you have to say, "Enough is enough,"

Reilley says. Tell the users that there will be bugs and that the team will work them out. Shoot for 80%

perfection, not 100%.

7. Duplicate or overlapping tasks. Particularly in large, dispersed companies with no central IT

department, you might not know that you could borrow ideas or perhaps even a system from another

group that already addressed the same challenge you're facing.

Solution: A searchable project library. Kapur suggests building a simple word-processor-based system

that tracks all projects undertaken in the company, with standard naming conventions and keyword

searches.

8. Poor estimating. If costs and schedules aren't well understood in the beginning of the project, when

problems arise, it's often too late to reallocate IT resources effectively, Roetzheim says. The worst-case

scenario is when a manager realizes halfway into a project that it's behind schedule, and he throws more

developers or testers on the job, Rothman says. These latecomers don't understand the problems or

how the application works, so they can't come up to speed quickly. "That's completely a waste of

money," she says.

/

Solution: Cut your losses, and next time, use an estimating tool. The best thing to do when you

realize that you didn't estimate resources properly, Rothman says, is to figure out the minimum

requirements for finishing the current project and immediately begin planning another project in which

you can use your money more effectively. Roetzheim also suggests estimating tools as a means to

predict costs and schedules.

9. Lack of cost-to-date and estimate-to-complete data.Too often, team members are completely

unaware of whether they're on track with the project budget. At Comdex one year, Kapur asked 160

people in one of his sessions to tell the people seated next to them what their project budgets were and

the costs to date, rounded to the nearest thousand dollars. Only 7% were able to do it.

Solution: Develop and monitor cost vital-sign thresholds. Kapur uses a process where the sponsor

and the project manager jointly define cost thresholds. He also recommends telling the sponsor that

cost overruns will come out of his own budget or even his paycheck as a wake-up call to track costs.

10. The project should never have been authorized. Projects can get assigned that have little business

justification or just don't pass the "smell test," as Ouellette's Fouquet puts it. How do you avoid setting

something in motion that's destined to be a true money pit?

Solution: Forget the politics; stop the project. At the very least, says Reilley, "everyone should be able

to answer, 'The purpose of the system is blank.' If you can't describe it in a few words, maybe your focus

is too broad."

It's the project manager's obligation to validate a project's legitimacy, Fouquet says. "It's what

distinguishes a professional project manager from a hack," he adds. For instance, if you realize halfway

through the project that there's no business-side commitment to a training plan, stop the project,

advises Bob Benson, a senior consultant at Cutter Consortium in Arlington, Mass. Adds Benson, "Project

managers have to be willing to call it bad news when it's bad."

Brandel is a Computerworld contributing writer in Grand Rapids, Mich. Contact her at

[email protected].

CLUELESS COSTING

How often do your actual effort and cost data match the estimated effort and cost data?

Do your project managers have the appropriate skills to develop accurate estimates?

Copyright © 2004 IDG Communications, Inc.

Follow 👤 ✉ 

Mary Brandel is a contributing writer for Computerworld, covering a variety of IT technology and management issues.

SPONSORED STORIES

/

Base: 198 individuals representing 148 corporations

Source: Center for Project Management, 2003

Read This Before You Renew Amazon Prime Again Wikibuy

If Your Dog Eats Dry Food, Do This Everyday Ultimate Pet Nutrition

Randy Jackson Credits "New Body" to 1 Simple Change yourhealthygut.com

Free Governments Grants That Don't Require Any Repayment Money Grants | Sponsored Links

Florida: Say Bye To Expensive Solar If You Own A home In Gulf Breeze Energy Bill Cruncher

The Cost of a Plumber in Gulf Breeze Might Surprise You! Search For Emergency Plumbing Service In Gulf Breeze Yahoo! Search

Windows 10 quick tips: 13 ways to speed up your PC Homepage

The Zebra lets you compare car insurance rates without hassle or commitment Homepage

Apple’s tried and tested approach to crisis: Innovate Homepage

/

Copyright © 2020 IDG Communications, Inc.

SHOP TECH PRODUCTS AT AMAZON

Plastic Surgeon Tells: “Doing This Every Morning Can Snap Back Sagging Skin (No Creams Needed)” Beverly Hills MD

Top U.S. Economist George Gilder Makes New Prediction InternetReboot2020.com

10,000 new VPN connections, 1 solution to secure them. NETSCOUT, get protected.

When the lifeline of your company depends on staying connected, trust NETSCOUT

As business changes, your VPN performance doesn’t have to. Learn how NETSCOUT can help

Online Master of Science in Information Systems at Northwestern University

dtSearch® instantly searches terabytes of files, emails, databases, web data. See site for hundreds of reviews; enterprise & developer evaluations

SPONSORED LINKS