Many decisions are made during the life of a project, but the decision that has the greatest impact of all is the first; this is the decision to execute the project. Here we explore the analysis in the project initiation phase that should proceed this most important of project decisions.
Yes, careful analysis of a potential project’s benefits, resource requirements, costs, and organizational portfolio and strategic congruity should proceed every decision to commence or launch a project. As project initiation efforts normally begin informally, they sometimes are not performed as rigorously as required.
The potential project analysis, however, is packaged in a formal project initiation proposal. A proposal in fact is the output or deliverable of the project initiation process. The successful ‘go or no-go’ decision relies on a disciplined and thorough analysis that culminates in the project initiation proposal. And, yes, as mentioned, the potential project must be considered in light of the organization’s other projects and over-arching strategy. Though projects may vary in size or complexity there are common principles that should be employed before deciding on every project implementation.
This article describes foundational principles to support the project initiation launch approval decision.
It’s essential to maintain stakeholder communication throughout the lifecycle of the project, but stakeholder involvement is especially important in the project initiation phase. In order to include and engage the right stakeholders you want your stakeholder research to consider the following:
- Every person that may interface with your product or service. This not only includes the end user, but also the manufacturer and maintenance repairmen. Understand the problem or opportunity from the perspective of everyone it directly affects.
- Change advocates and opponents. Some advocates encourage change while others seek to maintain the status quo. What are the motives behind both sides of the change argument?
- The customer is definitely impacted by the project and the importance of hearing input from the customer cannot be over emphasized.
- Federal, state, and local governments. Yes, the laws and regulations of government agencies makes them a stakeholder.
- Existing system integration. Your new software application needs compatibility with old and new existing operating systems.
- Culture and values. Support or disapproval response may be deeply seated in core beliefs, which may supersede the proposed benefits. A classic example are gambling casino projects that could increase tax revenue, but stakeholders may believe gambling is immoral.
The intent here in mentioning this stakeholder study process is not to encourage you to dredge the world of stakeholders, but to recognize the importance of a thorough stakeholder analysis. The value of frontend stakeholder input is to provide early detection of requirements and constraints. The earlier issues are exposed, the cheaper they are to manage. A quote from Mike Leavitt is helpful “there is a time in the life of every problem when it is big enough to see, yet small enough to solve.”
Not truly understanding the problem you need to solve is a more common mistake than one would think. An emphasis on proactive, decisive, and, possibly, preemptive action apart from rigid analysis is often the culprit here. So spend time defining the problem, and employ “gap analysis”, which explains the problem as the gap between the current and ideal state.
Understanding the ideal state establishes a framework for evaluating alternatives. Disciplining ourselves to properly define the problem provides better and, possibly, more plausible solutions. If you truly understand the problem you’ll be able to develop a better range of viable solutions.
Analyze Several Alternatives
If you thoroughly identified the problem then you will have multiple solutions to explore. And considering other alternative approaches inspires even more new ideas for solving the problem. The goal now is to rank the solutions according to their benefits and costs.
The challenge in alternative analysis is that we typically are comparing apples and oranges, options with differing advantages and disadvantages. Quantifying costs and benefits allows us to see the differences among alternatives. Benefits are either tangible or intangible. Tangible benefits are measureable. Describe and quantify each tangible benefit, and list your assumptions. Although intangible benefits are difficult to measure they are still important. Again, describe the benefit, your assumptions, and the probability of success. Also, consider and compare resource requirements for each approach.
Finding ways to quantify and compare costs and benefits allows us to perceive why pursuing a lower-cost and lesser-scope option is better than a more expensive option that comes with all the scope, i.e. “all the bells and whistles.”
Consider Portfolio & Strategy
At this point you have not only defined your problem, but you have a proposed solution, your project. Before your company plunges in to execute this project they first want to consider how your project matches their selection criteria. Most companies categorize projects in support of defining a portfolio of projects. The driving factors or benefits for projects generally fall into the following categories:
- Compliance/regulatory. Project requirements are directed by a need to meet certain laws and/or regulations.
- Efficiency/cost reduction. The goal here is to lower operating costs.
- Increased revenue. These projects tend to be high risk, but have very desirable/favorable results.
Companies typically will allocate resources and risk among these categories much like a stock investor distributes money among fixed income and equity investments. The investor’s goal is to diversify their investments to reduce risk and increase potential gains. Companies diversify projects among project categories to minimize risk and to obtain leverage for maximum gain. In addition to categorizing your project, state how your project aligns with other company projects and your company’s overall strategy.
The predecessors to your project’s initiation decision include, consulting a wide variety of stakeholders, clarifying the problem, analyzing alternatives, and considering company portfolio and strategy. The outcome of these project initiation efforts is a project initiation proposal that is suitable for your company’s selection process.
The project’s ‘go no-go’ decision may be part of a project portfolio management process or an executive’s personal decision. Performing groundwork in support of a successful launch decision is important. Again, the decision to execute the project has the greatest impact. You may not have the authority to make that decision, but you can lay the foundation for a successful commitment decision. And sometimes the best decision is to not pursue the project.