Gary R. Heerkens, MBA, CBM, PMP, president of
Management Solutions Group Inc., is a consultant,
trainer, speaker, and author and has 25 years of
project management experience. His latest book is
The Business-Savvy Project Manager.
When the time comes for organizations to identify new project opportunities, many tend to start
with the solution rather than the problem, need or
Quite a few organizations, for example, engage
in the practice of soliciting responses from various
people to this question—typically posed as budgets
for the next year are being drafted: “What projects
do you think we should pursue next year?” Even
worse, they ask: “What projects would you like to
work on next year?”
This approach tends to produce a list of
projects that people in the organization want
to work on rather than projects that they need
to work on. This, in turn, can lead to significant
waste. Time and money are spent investigating
projects that might solve problems but are not
financially justifiable—because the problem was
not really important, or a cost-effective solution
cannot be identified.
To prevent this, it’s vital to first quantify the
potential benefits stream of any particular project’s effort.
START WITH BENEFITS
The chief objective of projects is to address the
strategic and operational needs of the firm. Whenever needs are met, benefits will result. That’s why
it’s such a logical starting point.
Many organizations, however, do not think
LIST PROBLEMS, NOT PROJECTS
about articulating and quantifying benefits until
they have identified specific projects. Although I’m
speculating, I believe that what they are thinking is:
“Now that we have specified an action (a proposed
project), we can begin building a case for the proj-
ect by listing, then estimating, the benefits it brings to
bear for our organization.”
In reality, you do not need to know the answer (a
proposed project solution) to get started; you only
need to understand how much it’s worth to your
organization to fix its problems.
Although the temptation is to put together a list of
projects to work on next year, I would suggest that you
start by preparing a list of issues facing the organization.
Once the list has been prepared, go back through it,
item by item, asking the following question: How much
would it be worth to us to solve this problem, address
this need, or pursue this opportunity? Construct a
multiyear cash flow model of the benefits. By doing this,
you have accomplished two things: ( 1) You are now able
to fully understand the economic gain in addressing
each problem; ( 2) You have constructed the benefits
stream, which can be used to conduct a formal financial
analysis, once a project solution has been identified
(refer to my columns from May 2010 and August 2010
for a description of the financial analysis process).
This approach also has a third, and very useful,
byproduct. By working backward through the financial analysis process, you will be able to prepare an estimate of how much you can afford to spend on fixing
the problem. By doing this, you limit the number of
frivolous project proposals found to be unjustifiable
after a long and costly investigation. PM
Start with the problem, not the project.
BY GARY R. HEERKENS, MBA, CBM, PMP, CONTRIBUTING EDITOR