Cost reduction is so common that nearly every project plan today should include budget and schedule for several rounds of reductions. Whenever we cut costs, we risk cutting too much, so it pays to ask, "If we do cut too much, what are the consequences?"
oston's Big Dig, the largest highway project in U.S. history, was originally projected to cost about $2 billion. The price now is over $14 billion. I don't know why they're over budget, but I do know that there has been intense pressure to hold costs down. Maybe part of their problem is the pressure to reduce costs.
The Leonard P. Zakim Bunker Hill Bridge, part of Boston's Big Dig, while it was still under construction. Defects directly traceable to budget cuts led to numerous problems in the project's tunnels, and probably are tied to the death of one tunnel user. Photo courtesy the Big Dig.
Since the need to cut costs suggests that earlier estimates were off, why do we believe the new estimates? They're usually made under extreme time pressure, and with obvious bias. They might even be worse than the estimates they replace.
Yet, we do it and we do it again. Whenever we cut budgets, we risk cutting too much. And then we must deal with a hard truth: if we cut too much, the project will likely cost even more than if we hadn't cut at all.
When we cut too much, new mechanisms — many invisible — kick in, and all are beyond the control of project management. Uncontrolled processes lead to uncontrolled costs, and that's why cutting too much raises costs. Some examples:
Wishing
Responding to the call for cuts, people re-estimate their work, knowing that only the "right answers" can save their pieces of the project. Unaware, they bias their estimates. Overruns are inevitable.
Bootlegging
When we charge time to one project and work on another, or when we "borrow" equipment, we're bootlegging. It's widespread, and it's completely off the books.
Hoarding
Excessive budget cuts encourage "underground" behavior, which is hard to control
If we believe that we won't gain approval for additional staff, we might be tempted to keep some people we have, even when we don't really need them, because we doubt that we can get them back when we do need them again. So when money is tight, we find some people sitting around.
Bingeing and purging
When an organization goes through a sequence of "freezes," it inevitably goes through a matching sequence of thaws. During thaws we grab whatever we can. Often, this grab goes beyond satisfying backlogged needs, and becomes a true binge. Like squirrels burying acorns, we acquire what we can whether we need it or not.
Deferring
When budgets are tight, we sometimes defer addressing problems. For example, if a project is late, we shorten testing. This defers discovery of problems, often until after the product ships, when resolving the problems is even more expensive. The project cost is reduced, but the cost to the enterprise climbs dramatically.
Find out if any of this stuff is happening in your organization. If it's increasing, perhaps you're trying to run projects with budgets that are too small. TopNext Issue
One symptom of resource starvation is the urge to make every effort "count" towards the ultimate deliverable. For a discussion of the downside of this approach, see "Trying to Do It Right the First Time Isn't Always Best," Point Lookout for March 14, 2007.
Projects never go quite as planned. We expect that, but we don't expect disaster. How can we get better at spotting disaster when there's still time to prevent it? How to Spot a Troubled Project Before the Trouble Starts is filled with tips for executives, senior managers, managers of project managers, and sponsors of projects in project-oriented organizations. It helps readers learn the subtle cues that indicate that a project is at risk for wreckage in time to do something about it. It's an ebook, but it's about 15% larger than "Who Moved My Cheese?" Just , a special price now through April 30. Order Now! .
Like a traditional family album, a project family album has pictures of people, places and events. It builds connections, helps tie the team together, and it can be as much fun to look through as it is to create.
When we schedule a complex project, we balance logical order, resource constraints, and even politics. Here are some techniques for using scheduling to manage risk and reduce costs.
Here's part one of a list of films and videos about project teams that weren't necessarily meant to be about project teams. Most are available to borrow from the public library, and all are great fun.
When your current approach isn't working, you can scrap whatever you're doing and start again — if you have enough time and money. There's a less radical solution, and if it works, it's usually both cheaper and faster.
Project status reports rarely acknowledge negative progress until after it becomes undeniable. But projects do sometimes move backwards, outside of our awareness. What are the warning signs that negative progress might be underway?
I offer email and telephone coaching at both corporate and individual rates.
Contact me for details at rbrenner@ChacoCanyon.com
or (617) 491-6289, or toll-free in the continental US at (866) 378-5470.
Get the e-book!
Past issues of Point Lookout are available in four e-books:
Are you a writer, editor or publisher on deadline?
Are you looking for an article that will get people talking and get compliments flying your way? You can have 500 words in your inbox in one hour. License any article from this Web site. More info
Public seminars
Managing Virtual Teams for Real Results
Managing global or dispersed teams is challenging — miscommunications, misunderstandings, and interpersonal conflict all thrive in the typical environment of the distributed team. And they're even more common in global teams, because of time-zone offsets and language and cultural differences. We'll inventory the challenges distributed and global teams face, and provide tools for anticipating and addressing them. The focus of this program is practical — attendees will learn concrete techniques for preventing and dealing with the problems that accompany global and distributed teams. Read more about this program. Here are some upcoming dates for this program:
Organizational Politics for People Who Hate Politics
Have you ever felt powerless to implement an important new idea? Have you ever been "blind-sided" at a meeting? Have you ever lost two good employees because you could find no way to keep them from attacking each other? These are some of the issues of organizational politics. Many of us have become enmeshed in them from time to time, but we've also known some people who seem to be able to engage and prosper. How is that done? We'll inventory the challenges of organizational politics, and provide tools for anticipating and addressing them. The focus of this program is practical — attendees learn concrete techniques for dealing with the problems that arise in workplace politics, while keeping their integrity intact. Read more about this program. Here are some upcoming dates for this program:
The Politics of Meetings for People Who Hate Politics
There's a lot more to running an effective meeting than having the right room, the right equipment, and the right people. With meetings, the whole really is more than the sum of its parts. How the parts interact with each other and with external elements is as important as the parts themselves. And those interactions are the essence of politics for meetings. This program explores techniques for leading meetings that are based on understanding political interactions, and using that knowledge effectively to meet organizational goals. Read more about this program. Here's an upcoming date for this program:
Person-to-Person Communication for Project Managers
When we talk, listen, send or read emails, read or write memos, or when we leave or listen to voice mail messages, we're communicating person-to-person. And whenever we communicate person-to-person, we risk being misunderstood, offending others, feeling hurt, and being confused. There are so many ways for things to go wrong that we could never learn how to fix all the problems. A more effective approach avoids problems altogether, or at least minimizes their occurrence. In this very interactive program you'll learn a model of inter-personal communications that can help you stay out of the ditch. In those moments of intense involvement, when we're most likely to slip, you'll have a new tool to use to keep things constructive. Read more about this program. Here are some upcoming dates for this program:
Ever wonder if there isn't a better way to travel? Travel is essential, but the hassles of travel aren't. Read 202 Tips for Business Travel to learn how to convert business travel from a time-wasting hassle to a breeze. Revised and updated for 2008 with 101 new tips! Check it out!
Projects never go quite as planned. We expect that, but we don't expect disaster. How can we get better at spotting disaster when there's still time to prevent it? How to Spot a Troubled Project Before the Trouble Starts is filled with tips for executives, senior managers, managers of project managers, and sponsors of projects in project-oriented organizations. Check it out!
Are you fed up with tense, explosive meetings? Are you or a colleague targets of a bully? Read 101 Tips for Managing Conflict to learn how to make peace with conflict. Check it out!
Are your projects always late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips & techniques for organizational leaders. Check it out!
A Tip a Day arrives by email each business day. It's 20 to 30 words at most, and gives you a new perspective on the hassles and rewards of work life. Most tips also contain links to related articles. Free!
Save a bundle and even more important save time! Order the Combo Package and download all 21 ebooks and tips books at once, for one low price of USD 161.95 vs. USD 332.15, a savings of over 51% compared to ordering them separately.
oston's Big Dig, the largest highway project in U.S. history, was originally projected to cost about $2 billion. The price now is over $14 billion. I don't know why they're over budget, but I do know that there has been intense pressure to hold costs down. Maybe part of their problem is the pressure to reduce costs.
Top 
Next IssueProjects never go quite as planned. We expect that, but we don't expect disaster. How can we get better at spotting disaster when there's still time to prevent it? How to Spot a Troubled Project Before the Trouble Starts is filled with tips for executives, senior managers, managers of project managers, and sponsors of projects in project-oriented organizations. It helps readers learn the subtle cues that indicate that a project is at risk for wreckage in time to do something about it. It's an ebook, but it's about 15% larger than "Who Moved My Cheese?" Just , a special price now through April 30. Order Now! .
Make a Project Family Album
Scheduling as Risk Management
Films Not About Project Teams: Part I
Bois Sec!
Nine Positive Indicators of Negative Progress
Download to
Ever wonder if there isn't a better way to travel? Travel is essential, but the hassles of travel aren't. Read 202 Tips for Business Travel to learn how to convert business travel from a time-wasting hassle to a breeze. Revised and updated for 2008 with 101 new tips! Check it out!
Projects never go quite as planned. We expect that, but we don't expect disaster. How can we get better at spotting disaster when there's still time to prevent it? How to Spot a Troubled Project Before the Trouble Starts is filled with tips for executives, senior managers, managers of project managers, and sponsors of projects in project-oriented organizations. Check it out!
add value to your Web sites quickly and easily. Pick up the HTML to link to this article in a choice of formats.
Are you fed up with tense, explosive meetings? Are you or a colleague targets of a bully? Read 101 Tips for Managing Conflict to learn how to make peace with conflict. Check it out!
Are your projects always late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips & techniques for organizational leaders. Check it out!
A Tip a Day arrives by email each business day. It's 20 to 30 words at most, and gives you a new perspective on the hassles and rewards of work life. Most tips also contain links to related articles. Free!
Save a bundle and even more important save time! Order the Combo Package and download all 21 ebooks and tips books at once, for one low price of USD 161.95 vs. USD 332.15, a savings of over 51% compared to ordering them separately.
