If you are a senior executive or a board member in the role of executive sponsor, project sponsor, or steering committee member it is key to recognize potential issues before they become critical.
Recognizing early warning signs can make the difference between a project’s success and failure.
Whilst lagging indicators are metrics that reflect past performance, leading indicators are metrics that predict future performance.
They provide early signs of what is likely to happen, helping you and your organization to make proactive decisions.
Here are the top ten leading indicators of project trouble that every executive should be aware of:
#1 Definition of Done
Project failure starts when you can’t tell what “done” looks like in any meaningful way. Without some agreement on your vision of “done,” you’ll never recognize it when it arrives, except when you’ve run out of time or money or both.
Constant changes in project requirements are a red flag and a leading indicator for trouble.
While some changes are inevitable, frequent and significant alterations indicate poor initial planning or external pressures.
Both will disrupt your timelines and budgets.
And if your scope gets reduced to meet budgets and timelines you can be sure your business case will be impacted as there will be less benefits.
#2 Definition of Success
A project can only be successful if its success criteria are defined and agreed upon. Therefore the lack of clear objectives is one of the earliest signs of trouble.
Every project has multiple success criteria related to business results, product/service results, and project delivery results (cost, schedule, scope, and quality).
Some criteria are absolute, meaning they must be completed on or before the original planned date, and some are relative, meaning they must be completed by a date acceptable to the client.
Project success is determined by how many of your success criteria are satisfied, and how well.
Whether or not a project is successful also depends on who you ask;
> The very happy project manager that implemented the SAP project as scoped on time and below budget (I know, this will NEVER happen).
> The end users who absolutely hate the complexity and slowness of the new system.
> The COO that has seen IT costs double whilst none of the expected savings materialized.
They may all have very different opinions on the success of the project.
Project success also depends on when you ask.
Twelve months after the go-live, the users will have a better grasp of the system and initial performance problems will have been solved. And slowly but steadily, the expected savings will often start to materialize as well.
So in order to define success of your project you should;
1) Define all the criteria relevant to your project.
2) Define how you will measure them.
3) Define when you will measure them.
The lack of these definitions is a great leading indicator for trouble.
#3 Financial Runway
The burn rate of a project is a lagging indicator as it describes how much money is spent (or lost) for any period of time.
The financial runway of a project refers to the length of time a project can continue to operate before it runs out of funding, based on its current expenditure rate.
It is a crucial leading indicator for executives, as it helps ensure that the project remains financially viable.
An example:
If a project has a total budget of $10 million and has already spent $4 million, the remaining Current Funding is $6 million.
If this project spends $500,000 per month, the monthly Burn Rate is $500,000.
The Financial Runway (in months) = Current Funding / Burn Rate = $6 million / $0.5 million = 12 months.
This means the project can continue to operate for 12 months before it runs out of funds, assuming the burn rate remains constant and no additional funding is received.
If the runway is shorter than your planned duration you know you are in for some trouble.
#4 Missing Milestones
Missing or achieving the deadline on a milestone is a lagging indicator. But it is also a leading indicator for future trouble.
Missing initial milestones or deadlines signal deeper issues. It might indicate that the project plan was unrealistic, there are problems with team productivity, or unforeseen obstacles are impacting progress.
And if missing milestones is combined with keeping the go-live date the same it rarely ends well for your project.
Unfortunately, I see it again and again. Multiple important milestones are missed. Sometimes by months. And the ones that are marked as completed have their original scope reduced.
For example system integration tests (SIT) without all interfaces being completed and no production like data.
Or user acceptance testing (UAT) with systems that are not ready or contain so many bugs that end-to-end testing is not possible.
Astonishing is that in most cases both the project sponsor and project manager seem to be convinced all is “green” and it will work out until the project folds like a house of cards.
When you look at a typical large system implementation project it is still largely implemented like a waterfall. This includes ERP systems, CRM systems, Core Banking, etc.
And this has not changed with the rise of software as a service (SaaS) offerings like Salesforce, SAP S/4HANA, Workday, etc.
Yes, the design and build phases are now iterative, but at a certain point your full solution needs to be tested end-to-end. This means one or more SIT phases and an UAT phase that includes all upstream and downstream systems and processes.
You also need time to fix all the findings of your testing, and to do re-testing. If you are lucky one cycle is enough. Usually it is not.
You also need to train all your users and your support teams on the new solution and processes. Ideally on a solution that actually works.
And when you are ready to go, you have a cutover phase from your old solution to your new solution.
So yes, you design and build iteratively, but the rest is still shaped like a waterfall.
And this means that if you miss important milestones and you don’t change the go-live date you will steal time from the very important phases that come at the end of such a project.
Starting these late phases without having completed the previous phase just does not make sense and will drive your test team and end users crazy.
Missing milestones does not mean your project team is doing a bad job, but they obviously underestimated the time it takes to do certain things.
Chances are this is a pattern that is repeated for the later phases of the project.
So you will probably need more time for these phases as planned. Not less.
In my experience there are only two probable outcomes of such projects:
1) They never go live
2) They go live too early
The latter can be even worse than the first.
#5 Issue Resolution Time
A very simple metric for determining the health of your project is the age of issues.
Issues are like fish; when they get old, they stink.
A sure sign of a lack of leadership and upcoming trouble is old issues or issues that take longer than necessary to resolve.
Issues are obstacles that get in the way of execution. It is the project manager’s role to resolve and eliminate these issues as quickly as possible regardless of the owner or the cause.
If the project owner cannot solve it (or doesn’t try) it is up to the executive sponsor and the steering committee.
If an issue stands in the way of executing project objectives or makes it difficult for project managers to perform, it’s your responsibility as an executive to resolve it.
If the project manager is the problem, it is also your responsibility to solve this.
Fix the root causes of problems and fix them early.
What you want to avoid is a form of collective project amnesia where issues come up and never get resolved.
Issues have a funny way of resurfacing when they don’t get resolved.
Old issues and/or issues that take too long to resolve are an indicator of poor leadership and a great leading indicator for trouble in the future.
#6 Risk Management
The presence or lack of risk management is a great leading indicator for the impact of negative surprises. Or as Tim Lister states it “Risk management is project management for adults”.
Effective risk management involves identifying, assessing, and mitigating risks.
Signs of trouble include a lack of a risk management plan, unidentified risks emerging frequently, or failure to address known risks adequately.
Poor risk management can, and usually will, lead to significant setbacks.
#7 Team Situation
Stability, quality, availability, and collaboration of your project team is a good leading indicator for trouble.
Stability: a high turnover rate among project team members will disrupt continuity and momentum. It often reflects broader issues such as poor project management, low morale, or inadequate support, which will compromise project success.
Availability: are all approved team positions staffed? If not, for how long have unstaffed positions been empty? Is the project manager constantly looking for new people to fill empty positions? Are the right people in the right roles? Are positions part-time staffed that should be full time staffed?
Quality: look at the skill set necessary to deliver the project: Does the team have these skills? Does the team have the necessary experience or are they learning on the job? Of course you should use your project to let juniors grow and learn, but you will need experience as well.
Collaboration: look at the project team’s relationships with other external groups and teams. How well do they work with the other teams and stakeholders? Are there any internal or external team conflicts or tensions that could disrupt the project? How long have they existed? How severe are they? Have there been attempts to resolve them? How did this go? Are there issues/opportunities the team isn't discussing because they're too uncomfortable?
#8 Stakeholder and Leadership Engagement
Successful projects depend on the active involvement of stakeholders and leadership.
Signs of trouble include stakeholders and leaders who are disengaged, unavailable for key meetings, or not providing necessary feedback.
Poor engagement, whether it’s informal or formal, is a red flag.
When your stakeholders and leaders do not care about your project, then why would anybody else?
#9 Progress Reports
Or better said, non-progress reports are a leading indicator for trouble.
Watermelon projects which come across as green on our project dashboards but are deep red on the inside seem to have a thing in common.
There’s minimal activity associated with it.
You don’t see tangible results, you don’t hear the organization talking about the project, the reports state the same activities over and over, the only meetings you are invited to are the monthly SteerCo meeting, and your project manager is avoiding you.
Without hard work a large project will not come to fruition. And hard work leaves trails.
The absence of these predict trouble.
#10 Gut Feeling
Trust your gut.
If your intuition is telling you that something is wrong, ask questions. Don’t stop until you get an answer that makes sense to you.
Ask the same question to multiple people close to the project. If you get conflicting answers you know something is not right.
If your project team, project manager, and your stakeholders all have a different opinion on the status and chances of success of your project, order an independent project review.
They are your best insurance against a multi million dollar failure.
Posted on Monday, August 05, 2024 by Henrico Dolfing