PROJECTS - LOSS MAKERS BEFORE THEY START
Have you ever noticed how many projects are doomed to failure before they even start.
Classic fundimental mistakes are made which hamper the project manager and team as they are handed the contract and pre-award tender files thinking that sound business practice and sharp negotiating skills have delivered them a highly lucrative and challenging project.
Not so, only a small number of projects commence with expertly negotiated and contractually sound agreements in place.
Let me take you through some of the classic tales of woe which have been brought to my attention.
Classic fundimental mistakes are made which hamper the project manager and team as they are handed the contract and pre-award tender files thinking that sound business practice and sharp negotiating skills have delivered them a highly lucrative and challenging project.
Not so, only a small number of projects commence with expertly negotiated and contractually sound agreements in place.
Let me take you through some of the classic tales of woe which have been brought to my attention.
BEST DEAL
Firstly, there is the "Best deal" scenario where the contracts or sales manager has achieved the best deal possible for the company. What they really mean is that they were so keen to get the project that they gave all the potential porfit margins away just to win the project.
Don't happen, you bet it does. I was one of those who was handed a "Best Deal" project; won against stiff competition.
Hoes does it get like this? Easy; the client starts a bidding war between the front leaders offering each one in term the contract if they come down in price; and then goes to the opposing bidder and does the same. The two bidders even know that the clinet is employing this tactic but is so determined to win they reduce the price, erode the profit margins and give away any concessions.
The result is a disaster.
BETWEEN THE LINES
The second type of project is one were nobody read the contractual terms and conditions properly before signing the contract. A typical example is a project delivery terms based upon the submittal of deliverables (approved by the client) against milestones. The project is awarded late by the client who then issues the project manager with liquidated damages for not meeting the milestone dates. This is then compounded when all your project deliverables are rejected over and over again, because "they do not meet client expectations".
The project is a loss maker before you submit your first invoice.
PROJECT TEAM WOT PROJECT TEAM?
The third type is the ubiquetous ghost team approach. The project manager is presented with the commercial files and contract document; ready to do battle. First question the client asks where is the project tema and when do I get my first traunch of deliverables?
When indeed? Who will produce them; the project team! Wot project team; no budget for a project team; no one available from the corporate matrix organisation to support the beleagued project manager.
The other scenario of the "Wot project team" has to be believed; but it does and has occurred believe me.
The project manager holds the budget and is told that his bonus is dependant upon the success of the project including the expenditure. Blinded by the though of bonus maximisation the project manager decides to trim the manpower budget. Working his / her way through the organisation chart he / she cuts and slashes away the superfluous functions efficiently removing the overindulgent growth ending up with the lean and keen project organisation.
One month goes by; no problem so far, budget looks health everyones happy. The client is impressed with the tight knit project team beavering away at all hours to produce the eagerly awaited deliverables.
Two months go by, no problem; the project team beaver away; one's has gone off sick no problem, some deliverables are not produced but the client seems to understand.
Three months go by, clinet seems to be a little aggitated because the promised deliverables are not on their desk. All sympathy for the tight knit project team has been replaced by a disgruntled client who cannot comprehend why sufficient support is being provided to the project manager by his / her bosses!
Complaints are made by the clients to the corporate hierarchy about the under-manning on the project; threats on the none performance of the team and late deliveries abound. Naturally, shaken but not stirred the corporate directors stir into action to resolve this shortcoming and find out that the under-resourcing is the result of the project manager's misinterpretation of their strategies!
posted by Veros Consultants @ 8:33 AM
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