Why This Book
Despite significant project and program management advancements, far too many projects fail. They do not meet cost, schedule, or content commitments or do not deliver the intended value even when meeting them. This book addresses some root causes of these shortcomings and principles and practices for delivering valuable development efforts.
Throughout the book, we address both project and program management:
-
Project management is focused on delivering specific deliverables within a defined scope, timeline, and budget.
-
Program management coordinates and oversees multiple related projects to achieve broader strategic goals and business outcomes.
Program management operates at a higher level and is more strategic, while project management is more tactical and focused on executing individual projects.
The book will refer to Project and Portfolio Management as ‘PPM.’
Project and Program Shortcomings is Still All Too Prevalent
Despite significant project and program management attention (Project Management Institute, 2023), the inability to meet stakeholder commitment remains notably high. This includes falling short of objectives in one or more dimensions:
-
Cost
-
Schedule
-
Technical performance/requirements
There is no shortage of examples of projects that were abandoned due to overruns:
-
Airbus A380 Freighter Program
The Airbus A380 Freighter variant was launched in the early 2000s to compete in the large cargo aircraft market. Major logistics companies, including UPS and FedEx, initially placed orders. However, production delays and escalating costs plagued the program. By 2006, FedEx canceled its order, citing delivery delays, followed by UPS in 2007. With no remaining orders, Airbus officially canceled the A380 Freighter program (Leh 2021).
-
NHS National Programme for IT (Dolfing 2019; “National Health Service – UK” 2008)
Initiated in 2002, the National Programme for IT aimed to revolutionize healthcare delivery in the UK through comprehensive digitization. The program encountered significant challenges, including escalating costs (from an initial £6.4 billion to nearly £10 billion), missed deadlines, and technical and managerial issues. Vendors like Accenture and Fujitsu withdrew, citing difficulties in delivering the required systems. By 2011, the UK government discontinued the program, leaving the NHS without the anticipated integrated digital infrastructure.
-
Future Combat Systems (FCS) Program (Feickert 2006; Gates 2014; “Defense Acquisitions: Key Decisions to Be Made on Future Combat System” 2007)
The Future Combat Systems (FCS) program was initiated by the U.S. Army in 2003 and canceled in 2009. It was intended to be a revolutionary modernization effort to create a fully integrated, networked battlefield. It encompassed 18 individual systems, including manned and unmanned vehicles, advanced communications, surveillance sensors, and precision weaponry, all tied together by an overarching information network—the ambitious program aimed to enable rapid response and superior situational awareness for U.S. military forces. Initially budgeted at $92 billion, estimates eventually grew to over $200 billion. Meanwhile, the system engineers did not achieve interoperability and reliability across systems to provide sufficient value to continue the program.
There is also no lack of examples of projects that were delivered but had disappointing value:
-
Concorde Supersonic Airliner (1976-2003)
Developed collaboratively by British and French aerospace companies, the Concorde was delivered on time and within budget. Despite being a technological marvel, its high operational costs, limited passenger capacity, and environmental concerns rendered it commercially unviable. The aircraft was retired in 2003, marking it as an iconic but economically ineffective project. (“Why Concorde Was a Failure” 2003; Bremmer 2003).
-
Google Glass (2013-2015)
Google Glass, a wearable technology innovation, was delivered on time and within budget. However, privacy concerns, limited functionality, and high costs led to poor consumer adoption. Google eventually discontinued the consumer version, although it continues to explore enterprise applications in the technology field (Metz 2019; Kovach 2015).
-
US Navy Ship (Smart 2020)
"Littoral” means the area near the shore. The Littoral Combat Ship was planned to be cheap and have modular capability, allowing for various applications, including minesweeping and above- and below-surface warfare, all of which had reduced crew sizes.
The initial plan was to purchase 55 ships at $220 million each, but the cost of the first 32 is now expected to be $655 million each. Operating costs also increased due to increased crew sizes. In addition to the significant cost overruns, the development schedule tripled from three years to nine. Technical requirements, including minimal crew size, were cut to contain cost growth, leading to performance shortfalls. The primary surface vehicle missile was canceled, and the modular approach also had to be abandoned.
The Fundamental Principles
There are myriad practices and processes that can lead to stovepiped organizations, such as earned value management, cost and schedule estimation, budget formulation and execution, risk management, agile development, portfolio management, and so on. We show in this book how these can be both unified and evolved by applying two fundamental principles:
1. Think like an investor: A development project is a capital-intensive initiative designed to generate planned benefits. It is successful when it receives the desired return.
2. Embrace Uncertainty: The project and portfolio parameters are almost always uncertain and should be managed using applied probability.
These potential benefits are often called a return on investment (ROI). In other words, project sponsors commit resources to projects with the expectation of receiving the anticipated ROI.
PPM investments are more complicated than financial investments because:
-
The benefits, costs, and schedules are uncertain.
-
Actions can be taken throughout the project’s and program’s lifetime to improve the probability of achieving the desired ROI.
We believe a root cause of these poor outcomes is the inability to effectively account for and apply the two fundamental principles.
This book addresses this root cause by equipping readers with the proper perspective, mental models, and practical techniques to address the uncertainties and risks arising in development efforts. This book also provides rigorous and consumable tools for applying these principles. It includes setting project and program value and intuitively discusses the relationship between uncertainty, probability, risk management, analysis, and quality economics.