08.06.16
Why failure shouldn’t be a dirty word in project management
Source: PSE Jun/Jul 16
Graeme Swan, a partner in EY’s Government and Public Sector team, explains why a ‘fail fast and learn’ method approach to government project delivery is often unachievable in the public sector.
Recent weeks have seen the spotlight intensify on government project delivery, with a report from the Public Accounts Committee assessing value for money, accountability and the relative success of some public sector projects. So what are the lessons that can be learned?
The single biggest reason that programmes fail – in both the public and private sector – is because the ambition or scope of a project exceeds the capability over a sustained period of time. This can include people, technology and budget. Programmes nearly always look achievable at the beginning but then the reality takes over, unexpected events can occur, and plans quickly become out of date. In my experience this is when great programme leaders come into their own. They change the ambition, increase capability, delay start dates if necessary and sometimes they even have to declare failure and cancel the programme.
Few would deny that delivering programmes is hard, and achieving a consistent delivery balance over time to achieve a positive outcome requires strong and resilient leaders, teams and sponsors. There are many examples of great public sector programmes where this balance has been found. There are also many examples of programmes that have continued for many years after they should arguably have been stopped. There are far fewer examples where programmes were stopped in the early stages or before too much money had been spent. Why is this the case?
The business case
The first reason is linked to an area where the public sector usually outperforms the private sector: the original business case.
These can be incredibly rigorous, having undergone reviews at many levels, including Treasury, possibly Cabinet Office and maybe independent advisors. Since so much effort has gone into this approval process, it takes a very brave programme leader or board to declare serious issues early on in a programme. Often money continues to be spent over several months, but there can sometimes be little incentive to stop (or even go for a cut in scope).
In the private sector, programmes are driven almost entirely by a business case which impacts shareholders and the programme will try to increase revenue, reduce costs or protect the company against risks. When something changes, which affects the impact meaning the business case no longer has merit, the work is generally stopped.
Delivery takes over and scrutiny decreases
Secondly, having gone through so much scrutiny to gain funding, programmes can often be left alone for a significant period before a further external review occurs. When scrutiny is then applied to a struggling programme, it can often focus on apportioning blame rather than working out the best way forward and learning from mistakes. This can sometimes result in programme leaders trying to avoid failure at all costs.
There is nothing to be gained from a write-off
In the private sector there is a quarterly opportunity and, indeed, an accounting necessity to declare write-offs. This creates an appropriate tension between the needs to continue with a programme and the potential for a bigger write-off to occur in the next quarter.
Shareholders and the stock markets don’t like surprises, but look more favourably on open, transparent reporting. In the public sector there isn’t the same quarterly reporting rhythm and writing off capital expenditure and starting again is often associated with wasting taxpayer money.
These current processes can sometimes engender a defensive approach (consciously or unconsciously) rather than a ‘fail fast and learn’ method.
There is always a need for better monitoring of progress, especially as we move to a world with increased suppliers working to complex commercial models and often in a complex technology environment.
As government and the wider public sector pushes to deliver more innovative approaches to deliver public services, the level of risk may also increase.
All parties need to accept that failure on a certain number of projects is inevitable, part of the life cycle of delivery, and for learning purposes can sometimes be useful. But this is a challenge when it is taxpayers’ money that is involved.
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