In the fast-paced world of disruption, trade liberalisation, technology innovation and the availability of cheap capital competition faced by business is unprecedented in scope, scale and speed. This has driven management and Boards towards larger and more transformational projects to remain relevant in this new world. The following are my starting 10 questions when faced with the difficult task of approving such complicated projects.
1. How does this project fulfil our strategy?
This assumes that the organisation has a well-considered, articulated and up to date strategy. Without this, there is precious little criteria that a project’s merits can be tested against except basic financial measures. Management have a myriad of projects it could consider and are entitled to rely on an agreed strategy to guide the priorities.
Management has mastered the art of presenting the positive case and linking it to the business strategy. There is a tendency to be overly optimistic of the business case and the ability of management to deliver on it. (Read Thinking, fast and slow by Daniel Kahneman). This is not being deceptive but part of human psychology. It is up to the Board to recognise this, listen more deeply and rationalise more clearly the response to overcome the biases.
2. What process and whose expertise was brought to bear on this proposal?
The Board needs to test if can rely on the information presented. Do the people involved have the requisite skill, knowledge, qualifications and experience to plan and execute the project? Is the process robust with external and internal due diligence? These are not superficial questions. Management needs to understand that they must preempt these questions to ensure the process and expertise applied is appropriate for the nature of the project. From the Board’s perspective explicitly asking this question and applying appropriate consideration to the answer enables it to fulfil one of the basic director duties. It is more desirable to address this upfront rather than make regrettable assumptions. More mature organisations have documented and well-tested processes for project preparation and execution including the incorporation of lessons from previous projects.
3. Is this a good deal?
This is the initial question of assessing the business case. Does this project meet the financial hurdles? Is the potential reward adequate to cover the potential risk? Has the cost and time been adequately assessed? What risks has the contingency covered and what risks it has not? Are the benefits real and have management signed up to deliver them? Which contractors will deliver the project? What due diligence has been done on the contractors that give you confidence they can and will deliver? How is it funded? These are some of the questions to test the efficacy of the proposal.
4. What alternative outcomes are possible and how likely are they?
Projects by their very nature are uncertain beasts. Although management is likely to present a preferred outcome the Board must cast its attention to alternative outcomes that may be less desirable? Management typically use scenario planning or risk matrix tools to respond to this question. It is important that the work is robust and that management and the Board use their projection skills to experience what it would be like in the ‘alternative outcome world’. It is easy to overlook a critical scenario or underplay the effects of the realisation of an undesirable outcome. A clear appreciation of alternative outcomes is necessary to address the next question.
5. What deviation from the parameters outlined in the business case is the Board prepared to accept?
With an appreciation of the response to question 4 the Board is in a position to address what is and is not an acceptable outcome. This could be in time, cost, quality, benefits or reputation terms. It is better to know at the beginning of the project what is tolerable to the Board and set up an option to ‘review and shutdown’ the project at the point it is forecast that the tolerances will be breached. The objective here is to keep it objective. It is much harder to address these questions in an unemotional way when a project has drifted off the business case parameters.
6. How have the interests of the stakeholders (both internal and external) been considered and aligned?
Friction or misalignment costs are mostly hidden, unestimated and a huge burden on most projects mainly because the misalignment is not adequately addressed prior to commencement. Just because someone says it is aligned does not make it so. Words are cheap. What actions, resources, structures have management put in place to ensure alignment? Wherever possible, with external contractors, make that alignment contractual.
7. What external factors will influence the success of this project and how will these be monitored?
Not everything is in the control of the project. A change in legislation, competitor landscape, technological change or even geopolitical dynamics can alter the success of the project. These need to be tabled and actively monitored to ensure that the project remains relevant. It’s not about project failure but that the world has changed.
8. What is the organisation’s speed of learning?
The speed of learning is the pace at which the organisation can understand, absorb and adapt to change. It varies greatly by organisation. It may be a constraint, enabler or a cause to rethink the project or at least how the project is implemented. Most organisations fail to deal with this question appropriately. The consequences for some projects can be catastrophic. In Post Implementation Reviews (PIR’s) it is often described as high resistance to change, poor leadership from the top or the project was inconsistent with the prevailing culture. In my experience, it is a failure in understanding how a particular organisation learns and at what pace. Drawing this out allows the sponsor to restructure the project in a way that raises its likelihood of success.
9. What is the one question you were hoping we would not ask?
This is an excellent catchall question that I use every time I review a project. Look for incongruence between what is said and the body language of management. You will be handed strong indicators as to where to probe further.
10. What reporting and monitoring of the project does the Board require?
The answer will vary depending on the scale of the project, delegations, capability of management, trust in management and the inherent risks in the project. As a minimum I would require management to forecast and report against the tolerance parameters addressed in question 5, a schedule of future Board decisions for the project (a good way to measure progress against the plan), monitoring of the external factors from question 7 and the other critical risks identified in the proposal.
Feel free to add to the list!