Traditional Models

There are a lot of rating models out there that attempt to define project success or failure. There is the traditional one:

• Success: Finished (more or less) on time, within budget and met all requirements
• Challenged:  Reaches conclusion, but with cost overruns and schedule slippages; possibly not all specifications are met
• Failure: Project was abandoned or cancelled due to project management failure

I can’t say that I am a big fan of it, because it fails to incorporate the value (i.e. the project portfolio management) perspective into the model. Recently I came across the one I really liked – a model that considers both project management (PM) and project portfolio management (PPM) sides proposed by Harold Kerzner:

• Complete Success: Project met success criteria, value was created and all constraints were adhered to
• Partial Success: Project met the success criteria, the client accepted the deliverables, value was created, not all of the constraints were met
• Partial Failure: Project was cancelled. But some IP was created that can be used on other projects
• Complete Failure: The project was abandoned and nothing was learned

Proposed Model

My view of a successful project is slightly different. I basically like to (1) add word “reasonably” to the “adhering to constraints” sentence and (2) include the recoverability variable into the equation:

• Project success is a function of:
  • Business value is realized
  • Project is delivered reasonably on-budget
  • Project is delivered reasonably on time
  • Project scope is delivered within reasonable limits
  • NOTE: “reasonable” = “does not negate the business value”
• Projects should also be differentiated by their recoverability

Regarding the first point, let us examine the following famous examples:

Introduction

Have you ever been involved in a project that was in a bad shape? By “bad shape” I mean the following two scenarios:

• The project is so late and over the budget, that there is no point in continuing it
• The project was a dumb idea from the inception

Have you ever asked yourself a question:

“Why the heck is the management continuing to support this ignominy?”

These projects have been called “runaway trains” and “black swans”. They destroy reputations and companies. So, why is it so difficult to kill them? And yes, I do understand such concepts as sense of attachment, pride and egotism. But if you are a rational, intelligent individual, don’t you have to realize what exactly is at stake (i.e. your company, your shareholders and their money)?

The Kahneman Phenomenon

Enter Daniel Kahneman, a psychologist who won the 2002 Nobel Prize in Economics. In his article titled “Prospect Theory: An Analysis of Decision under Risk” he and his co-author Amos Tversky described the following exercise, that I encourage you to do as well as I describe it.

Imagine that I offer you the following two gambles:

Gamble A: A 100% chance of losing $3,000 (i.e. you have $4,000 in your pocket, I threaten you with a gun and walk away with three thousand of your hard-earned money)

Gamble B: An 80% chance of losing $4,000, and a 20% chance of losing nothing (i.e. we throw some kind of dice and there is a 20% that I would leave you alone with your money).

Don’t try to use any statistical or other techniques to answer this question; just go with your gut feel. There is no “right” or “wrong” answer to this question. Which one of these choices would you pick?

Now, let us try a very similar exercise, but instead of robbing you, I am giving you money this time.

Gamble C: A 100% chance of receiving $3000 (i.e. I just give you three thousand dollars)