Why projects overrun… and what clients can do to help stop it
By Kat Anastasiou, Sophia Brammer, Tracy de l’Orme, Emma Major, Elena Mosley
OK, let’s start by saying that it’s the job of any good Project Manager to make sure a client is aware of when a project is about to overrun and to anticipate what can be done to stop that. That said, there are things that clients can do, and things we should all be aware of before we embark on a project.
History is littered with projects that overran. The Rio Olympics budget over-ran by a staggering 51%. It’s not alone, as pretty much every Olympics budget has overrun. Joining them are the Empire State Building; Sydney Opera House; the BBC Website; and the US Federal Healthcare website which went from $464 million to $824 million. We could go on.
These overruns are not just down to project management. There are age-old reasons: under-estimating costs; under-estimating time required; scope changes; more iterations than expected, but why does it continue to happen? After all, the Empire State was completed in 1931. Have we learned nothing in 90-odd years?
At The Team, we work hard at project management. We are ISO 9001 accredited which means that we deliver the highest quality for all our clients, but even with that accreditation we are aware our clients and Project Managers have to work hard together as one team to avoid or minimise any overruns (and together we do a great job of doing so!)
More often than not, it’s not just one reason that leads to unnecessary budget burn. So, here are the things that we, as Project Managers, suggest you, the client, need to think through and discuss with your Project Manager to avoid any difficult commercial conversations down the line.
1. Do some chunking and be open to the right investment route and project approach relevant to your brief
Instincts drive us to want to know a total cost of a budget up front but that often can be counter-productive and very hard for an agency to provide, especially where there are high levels of complexity, uncertainty and volatility around your project. It is important, as a client, that you are clear of the nature of the work being undertaken. Different types of projects need a different type of approach and it’s all dependent on how certain you are around the ‘what’ and the ‘how’.
For example, simple projects, where you are working with a clear understanding of what is required and how it will be delivered, can be commissioned in a more traditional way. This means a total cost can be provided upfront, and a logical delivery plan adopted.
Where there are many moving parts, the world is so changeable. You might have a rough idea of what you want but you aren’t completely sure, things change frequently, and you don’t know exactly what the solution will look like ahead of time. In these instances, commissioning an agile approach will be more competitively advantageous, minimising risk and facilitating faster feedback to help drive out uncertainty and control costs in the longer term.
The latter approach can be very uncomfortable for procurement teams but is extremely valuable when there is so much complexity and the project requires collaboration and iterative exploration to deliver solutions to large-scale business challenges.
Do some chunking of your project. Chunk it down into as many component parts as possible and then work out what you think the best allowances are for each part of the project and then release the work one phase at a time.
2. Engage all key stakeholders upfront and throughout project delivery
Most Project Managers will have some (horror) stories of getting deep into a project, everything seemingly going well, when a new key senior stakeholder will suddenly have a view of the project and throw out work that has been done. This can – and should be avoided – by the client ensuring that all key stakeholders are engaged upfront and throughout the duration of a project. As Project Managers, we will always ask for a gatekeeper from the client’s side, but when we invite feedback and/or approval, we request consolidated comments from all key decision makers.
Make sure you have a strong gatekeeper in place on your team – a mirror to the PM at the agency. This is not a junior role. It is someone who can hold your own team to account for getting feedback and sign off back to the agency.
Make sure you have a strong gatekeeper in place on your team – a mirror to the PM at the agency. This is not a junior role. It is someone who can hold your own team to account for getting feedback and sign off back to the agency.
It’s a cliched term but one that holds true in the delivery of all projects: you need to take people on the journey with you. Done with, not done to. If everyone is in agreement from the start and engaged throughout, there should be no cause for anybody to feel that they have been excluded and become unnecessarily disruptive.
3. Be realistic about where you are as a business when commissioning a new agency
In a new business scenario where we have little insight into a client’s organisation and audience, we have to work on the information provided to us at an RFP stage in order to provide an approach, cost and assumptions during a pitch scenario.
When appointed, the reality compared to the new business brief can be very different, requiring the approach and commercials to be revisited. Providing as much transparency into your organisation and the real state of affairs during a formal pitch process is extremely beneficial to prevent any budget overrun when the project commences.
4. Keep project delivery focused
Now we know this is easier said than done, especially when you and your business are juggling 101 projects which means there can be a pull on key stakeholders time, resulting in project delays. Your agency should always encourage focused momentum, working together to keep not just the project moving, but people engaged in a concentrated time frame. It’s the most efficient and effective way to control budgets and also achieve maximum buy-in, but will require a prioritisation exercise within your organisation to give the project dedicated time from the right people.
Your agency should always encourage focused momentum, working together to keep not just the project moving, but people engaged in a concentrated time frame. It’s the most efficient and effective way to control budgets and also achieve maximum buy-in.
5. Align what you actually need and what you have budget for
Let’s give you a clear example: If you, as the client, think that you want and need an animation but once you see the full budget against the scope and realise it is twice as much as you have to spend, please stop and rethink the deliverable.
Let the agency come up with an idea that could help deliver what you need for a budget that works for both parties. It may even suit your requirements more than the original request. Trust us, this happens. A lot.
6. Keep an eye on the ‘just one more change’ or ‘just one more thing’ requests or factor these into your budget
Because they can incrementally spiral… especially if the changes are requested by senior stakeholders. Transparency of pricing is essential to building trust with our clients and is an integral part of our project management processes. Proposals not only contain an understanding of deliverables, stages of project activity, budget and resources, but there are project specific assumptions associated with most proposals that have been included for a good reason. They are there to protect both parties and you should read and ensure you are in agreement before you sign off on a new piece of work.
Proposals back up the agreed scope. For example, if the scope reads that there are only two rounds of amends included and as a client you have best intentions to keep to this scope, however you cannot account for unexpected feedback or additional requests, factor a contingency into your budget planning and keep that as your secret weapon to surprise and delight your stakeholders and keep project spend on track.
7. Embrace the power of collaboration
Software or finance reports can break down projects to show exactly where cost overruns occur and help you to collaborate with Project Managers in tracking budgets. Don’t be a stranger. Project management is not a dark art and we’d encourage clients to collaborate on this level as much as they wish to collaborate with the creatives.
We’ve included 7 reasons as a starter to think about based on our experience. The key to staying on budget is open, honest conversations between all parties involved in delivering a project. Your project management team is there to help and will always strive to work towards a solution for everyone. Because, let’s face facts, nobody enjoys overburn less than a Project Manager.
