As the economy continues to recover and access to capital is expanding, many organizations are seizing the opportunity to launch long-planned major projects that were put on the back burner until more favorable market conditions arrived. These initiatives often involve vast resources and multiple teams within an organization coordinating efforts, and if they are not deployed correctly, it can have serious negative consequence on market standing and consumer perception.
However, because most of these projects have been in the works for an extended period of time, there can be a rush to execute them quickly and start seeing some form of ROI. This is an understandable – but possibly ill-advised trend. Large and complex projects warrant a thorough evaluation of risks – internal, external – before they can be executed well.
The arguably near-infamous Healthcare.gov project is presently evidence of this. The project originally was built around a two year schedule and $94 million budget, bold aspirations for an unprecedented effort. As many now know, the project met extreme criticism upon arrival, including the firing of the of the primary IT company involved. End-user purchases through the system were about 90 percent lower than projected, and the final budget tallied over $319 million.
This type of scenario is not confined to the federal realm, as CFO.com is quick to point out. An average Fortune 500 company, for example, spends nearly 6 percent of revenue on capital projects, 40 to 60 percent of which fail to meet their schedules, budgets or both, according to the source.
One of the major reasons for failure is that organizations approach large, capital projects in the same manner as they approach smaller, more commonly seen initiatives. Estimating the costs and challenges of a large project is much more difficult than budgeting a smaller project, as there are significantly more moving parts and unknowns that make large projects more prone to uncertainty and unplanned events. This makes traditional estimating processes and budgeting less certain, leading to frustration when project budgets reach the ceiling well before launch.
Having access to a program management consultant that holds first-hand knowledge of the challenges involved and budgeting practices for large-scale projects can save an organization significant frustration as well as capital resources. Unfortunately, many organizations' experience with small-to-mid-size projects may not translate perfectly to a large project. To protect a project's value and accelerate its completion, organizations would be well-advised to include experienced leaders with a proven track record of bringing projects successfully to market.