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What Are the Key Failures With the Business Dimension of Managing a Project?

January 19, 2014

This is my fifth post in this series on managing projects and programs. In my last post, I wrote mainly about the shortcoming of project managers in handling the IT project. In this post, I will focus specifically on what can go wrong with the business aspects of IT projects. Examples of the business aspects of a project are project internal rate of return (IRR), payback period, risk and business alignment.

Consider the three focus areas below.

IRR and payback: The project manager should work closely with a finance team representative to understand the financial success criteria and measures. Before thousands or millions of dollars are spent, the project team needs to know what rate of return is expected from the company. 

A common measure is the IRR, which is the rate used in capital budgeting to measure and compare the profitability of investments.  The team needs to understand the IRR that is expected and timeliness measures like how quickly the projects will pay back the investment made to carry it out.

These finance exercises can be challenging for the team, as the input needed can be hard to obtain or require knowledge of past projects. If there is no representation from the finance department on the project team, the project manager should request one because specialized financial skills are likely be needed (and appreciated).  

Risk: Are risk-assessment steps part of the project plan? If not, is there an internal risk-assessment tool that can be used? Some organizations recommend the use of a risk register for this purpose.  The Project Management Institute Body of Knowledge (PMBOK) suggests that the register contain a description of the risk, the impact should this event actually occur and the probability of its occurrence. These are just a few examples of what it should contain.   

If there is no internal tool or the internal tool is not deep enough, then seek a software product to help with the task. Assessments using commercial tools can be very beneficial for the project manager particularly if the tool used contains industry domain knowledge.  For example, IBM* OpenPages software contains a body of governance, risk and compliance information that would be very useful for the project manager and team and hard to come up with on your own or within a single organization.

Alignment: Is the project and its outcomes aligned with company and constituent goals? If not, what can be done to ensure alignment? How is it possible for a project to be out of line with the organization?  Do you have some experiences with this situation?  

Posted January 19, 2014| Permalink

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