project management

Case Study – What Happens When Corruption Meets Incompetence - Krestovsky Stadium

 

Some time in 2005 as part of preparations for a (highly controversial but nevertheless successful) bid for the 2018 FIFA World Cup the government of Russia decided to build a brand-new soccer stadium in Saint Petersburg. The building phase started in 2007 with the government allocating US$268 million for the construction of the stadium.

Interestingly enough the construction that was initially supposed to end in March of 2009 continues until now, with “some cosmetic changes to be finished soon”. As of right now the stadium is astonishing 518% late and 548% over budget (see Tables 1 and 2).

Table 1 - Timeline

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Table 2 – Budget

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Unfortunately there are no official reliable sources of information regarding the root causes of these failures. However, based on the reports of various newspapers there were two major causes of delays, cost overruns and quality issues: poor planning and rampant corruption.

Some of the issues encountered during the construction of the Krestovsky Stadium.

Article - How to Explain Quality to Your Project Stakeholders?

 

There comes a time in a life of a project manager when he (or she) has to sit down with his stakeholders – who are not necessarily well-versed in the art of project management – and discuss the touchy subject of the future product’s quality.

 

Correct me if I am wrong, but usually they happen in the following fashion:

PM: (sighing heavily) OK, we have discussed the budget and the duration of the project. Let us now talk about your expectations about the quality …

S: Oh, only the best of the best would work for us!

PM: (sighing even more heavily) But you see, we have a fairly moderate budget and an aggressive timeline. Some flexibility with quality would most definitely be welcome …

S: You don’t understand! At this company we don’t just settle for mediocre products or services. Look! It is in our mission statement!

In my humble opinion the root cause of this problem is that in the untrained minds of the stakeholders there are only two options for quality: good and bad (e.g. fixed or broken, working or not working, etc.). In reality, however quality can be described as:

  • Basic - Something simple and cheap that will do the job required
  • Premium - Something a bit more sophisticated that will do the job, but will also provide additional attributes.
  • Luxury - Something very sophisticated that will not only do the job required, but will also provide a multitude of additional options.

If this description seems vague or ambiguous, let us use another example:

  • Honda Civic – Basic, but very reliable car that is guaranteed to get you from point A to point B. Cheaper and requires only basic maintenance.
  • Lexus – Also a very reliable car. Also will get you from point A to point B. Has some cool gadgets and widgets that will make any owner happy.
  • Ferrari – Very expensive vehicle. Looks amazing and costs a lot of money. Has a plethora of cool features. Maintenance will cost you an arm and a leg.

What is the conclusion of this story? When talking to customers, don’t ask them whether Feature A should be of “low” or “high” quality. Instead ask them:

If this feature was a car, what model would you pick: a Honda Civic, a Lexus or a Ferrari?

 

Infographic - Top 10 Amazing Facts about Megaprojects

 

Fact #8 just blew me away!

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About the Author

Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East.  Read Jamal’s Blog @ www.thinktankconsulting.ca

Jamal is an author of three very popular books: 

Infographic - 30 Impacts of a Change Request

 

Use this when assessing your next change request!

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About the Author

Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East.  Read Jamal’s Blog @ www.thinktankconsulting.ca

Jamal is an author of three very popular books: 

Joke of the Day - Somewhere in a Parallel Universe...

 

This is too funny. I am sure most project managers can relate :)

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About the Author

Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East.  Read Jamal’s Blog @ www.thinktankconsulting.ca

Jamal is an author of three very popular books: 

Found on the Web - 15 Project Management Terms you Should Know Infographic

 

Found this on eLearningInfographics.com. Very useful info to share with your project stakeholders!

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About the Author

Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East.  Read Jamal’s Blog @ www.thinktankconsulting.ca

Jamal is an author of three very popular books: 

Article - Top 10 Ways Human Psychology Screws Up Our Projects

 

Way #1 - We Force Ourselves to Make Estimation Ranges Narrower

Ask anyone to estimate something. Anything, really. For example, ask them what is the distance between New York and Paris (5,839 km or 3,628 miles), and request that they provide you with a range that they are 90% confident in. Rather than saying, “Well, If you need a 90% confidence, then I would go with something like 5,000 km and 15,000 km”, they will provide you instead with very narrow ranges (say, 6,000 – 6,500 km) that are very close to the actual number but yet miss the target.  As a result, “90% confident” usually translates to “20-40% confident”.

Way #2 - We Suffer from the Optimism Bias

Humans constantly underestimate the complexity of the tasks assigned to them and chronically overestimate their ability to accomplish the said tasks (read more about this topic here and here).

Way #3 - We Fail to See the Connection Between Estimates and Probabilities

We have a very hard time understanding that as soon as someone asked us to estimate the duration of the project, we – whether we like it or not – have entered the realm of probabilities. Some of the questions that will affect the answer to the request above are:

  • Will the customer want Feature X?
  • Will the customer want the “Honda Civic” or “Ferrari” version of Feature X?
  • If you implement the “Honda Civic” version of Feature X, will the customer later change his mind and demand the “Ferrari” version after all?
  • How will Feature X be designed?
  • How long will it take to debug and correct mistakes made in implementing Feature X?

Way #4 - We Tend to Think of Projects as One-Dimensional Entities

We tend to focus on just one dimension of the project. Usually it is either the time or money, e.g. “can you finish by next Friday?” or “my budget is capped at $10,000”.

What we neglect to see that every project has (at least) five dimensions:

Article - Project Negotiations Conundrum - What Would You Do?

 

One of the most important lessons I learned after spending close to 20 years in the project management profession is that the underlying interests, constraints and risk tolerances of the project team and other stakeholders – especially customers - are never identical. As a result of this proposition we can derive the following project management axiom:

Good project manager can increase the size of the pie by looking for things that are of low cost to him and his team and high value to the customers (and vice versa).

One of the best examples of this technique is demonstrated in the so-called “Orange Fable”:

Two kids (a boy and a girl) are quarrelling over an orange. Their father enters the room and, operating under the “fixed pie” assumption, cuts the orange in two equal halves. And then he notices that the brother ate the orange and threw away the peel, while his daughter used the peel from her half as an ingredient in pastry while disposing of the fruit. At that point of time the father realizes that had he asked the question “What do you need this orange for?”, he would have doubled the size of the pie for both parties involved!

Here is another example of this technique used on a real project. A relatively small construction company lands a very lucrative deal to build a shopping mall for a large and established real estate management company. All the contracts have been discussed and signed when a project manager from the construction company receives a call from a representative of the real estate management organization…

Customer: “I would like to add another clause to our contract. If the work is on the new mall not finished by the deadline in the contract, I want your company to pay a penalty of $5,000,000”

PM: “Hmm, we have already signed the contract without the late penalty clause; I am not sure how our management would react to that …”

Customer: “I am sorry, but I have been instructed by my boss not to proceed ahead without this modification to the contract”

PM: “And may I ask you why do you, guys, feel the need to add this clause?”

Article - The Project Management Perspective: Why Do Technology Startups Really Fail?

Introduction

If one googles this question, he will find the following reasons at the top of the list:

  1. Market Problems
  2. Business Model Failure
  3. Poor Management Team
  4. Running out of Cash
  5. Product Problems

I have to agree that these root causes could be attributed to the early-stage startups, but in this article I want to talk about the scenarios where venture capital companies have already examined the company and its product(s), checked for points (1), (2), (3) and (4) and still chose to finance these enterprises. Since VCs are the most experienced organizations out there in the startup assessment business, we have to assume the best vetting process possible.

My Experiences

I have worked with a lot of tech startups around the world over the course of last twenty years. All of these companies have been in the “post VC financing” stages and here are the somber facts:

  • The vast majority of them failed (roughly 9 out of 10 which aligns with scientific data)
  • In almost all of the cases the product, business model and cash situations were in a reasonably good shape

So, what happened?

Company grew getting more and more customers. Customers were getting bigger in size. Contracts they signed were getting larger and larger. Companies were becoming more and more profitable. And at one point of time (usually when the said organizations reached approximately US$10 million in revenues threshold) the company just couldn’t handle one of the two (and frequently both) things:

  • Product development that was sophisticated enough to handle the demands of the markets
  • Professional services: ability to deploy their software/hardware at the client’s site

Reason? Complete disregard to all aspects of project management and requirements engineering

And no matter how many times you would tell the C-level people  

“Guys, roll up your sleeves and work harder approach does not work any more! You need to invest in project managers, business analysts and proper project management methodologies”

no one was willing to listen.