The ROI on a Project Assessment, or "If you know more, you need less"Submitted by Hans Lodder on Sat, 27/06/2009 - 09:09
Recently I came across a company that ordered an assessment of all currently running and planned projects as part of a company wide program. You need guts to take such a decision, and carry it out. Easily, this could be seen as a sign of severe problems. However, the question came to my mind of what the Return On Investment (ROI) of such an assessment program is.
If you know more, you need less
This is a saying of the Australian Aboriginals. They mean that if you have an in depth knowledge of what to expect on your journey through the extremely dangerous Australian countryside, there is no need to carry with all sorts of equipment you might need to cope with surprises. Because you already know what to expect, and where. Therefore, a wise man does not wait until he is in big trouble, but he issues in time a sanity check. Then he knows he is on the right track, and he is in time to take effective measures without any chance of disrupting his project.
Obvious Advantages of an Assessment
Some advantages of an assessment are obvious:
- It is a way to get premature warnings on possible issues.
- It is a sanity check.
- It is a way to get ideas on cost reduction and rework prevention.
- It drastically increases transparency.
- It makes projects better comparable.
- It enables the reuse of common solutions.
- It is a way of executing Quality Assurance (QA).
This list is good start, and for more suggestions check benefits of requirements management. But to be able to talk of ROI we need quantitative arguments.
What Kind of Assessment: Process or Content?
For the sake of argument we take for granted that the project uses standards, and that those standards are common to all projects of a program or of a company. The subject of the assessment can be process or content. Process means assessing the way the project uses its own development process, and content in the sense that what result exactly the project is delivering.
The Process Assessment
A process assessment is the easiest one. If the project uses a serious project methodology like Prince-II, we could check whether this method is used as the generally available best practices suggest. This means we check if all general and specialist products are available. An example of a 'general' product is Project Initiation Document (PID), and and exmaple of a specialized product is the delivered solution.
Those deliverables should meet 'normal' content standards with a reasonable content like:
- Are 'best practices' chapters are available, and does the content make sense?
- Is there a reasonably detailed planning available, which contains project phasing and project streams?
- Are all 'best practices' documents available, and do they have versions?
This is all about "doing things right".
Although important I would advocate that the process assessment only caters for 20% on the project assessment: A perfectly "Princetized" project can still be a waste of time and money.
The Content Assessment
The content assessment is quite a different thing, and will set 80% of the project ranking. This implies we have to go into detail reagarding what the project is delivering, and why, and how. The consequence is that you need:
- to know quite a lot of the content domain;
- have knowledge of common issues in that domain
- have business acumen and business process knowledge;
- are familiar with important relevant methodologies;
- and last but not least, exercise common sense.
This is all about "doing the right things".
Example health care
What Assessment Can You Do Yourself, and What Should Be Outsourced
A QA check on whether the project development process was followed, is something you can easily do yourself. Get a 'best practices' checklist from the Internet, and check all mentioned points. Such an assessment could be executed by a senior qualified project manager, not to closely related to the project. A content or "fit for purpose check" should be executed by someone who is sufficiently knowledgeable in the content domain, has a business view, and should not be connected to the project.
The ROI on an Assessment
We should now return to our subject of this blog: The ROI on and assessement. Literature says that about 25% of the project cost should be related to project management. About 22% for administration, analysis of deliverables, and planning and control. About 3% of the project cost should be spent on what-if questions, and alternative scenarios. Process assesments are included in the 22% budget. Content assessments must be paid from this 3%.
To make things less free format, you should ask the QA assessor on top of the already mentioned stuff to deliver cost reduction suggestions for 10% of the project costs. I know this is a difficult question. This is caused because it is not easy to exercise an unbiased approach. In my opinion the only way to do it is to compare project results with the original project launching business case.
The Content Assessment should answer at first the question that "given the business requirements and the knowledge we have today, the project and its remaining associated cost should be re-approved and spend". If answered positively, deliver cost reduction suggestions for another 20% of the project costs.
Note: Expect to use about half of the total suggestions for actual reductions, and the other half to solve issues brought to light by the assessment.
And you? How do you manage your projects? And how do you overcome your challenges? Please let me know, and share your assessment experiences with the Results2Match Community!
This blog is part of a series, discussing the Results2Match viewpoint onquality. Read also:
- Quality is King!
- Quality Is King (The Pizza restaurant Example)
- The ROI on a Project Assessment, or "If you know more, you need less" (this blog)
This blog is also part of series on project management. Other issues:
- My Project Checklist
- Driving change: On how to drive safely!
- The Dutch General Accounting Agency reports project execution factors
- The ROI on a project assessment, or if you know more, you need less
- Where did I do wrong, and mess up my project
- 8 (Eight!) Ways To Reduce Your ICT Management Costs, But Where Is the Low Hanging Fruit
Results2Match has a strong vision on successful quality management and result driven implementations.
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