BBoston'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. Top
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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 . Order Now! .
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.
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Related articles
More articles on Project Management:
Restarting Projects
- When a project gets off track, we sometimes cancel it. But since canceling projects takes a lot of courage,
we look for ways to save them if we can. Often, things do turn out OK, and at other times they don't.
There's a third choice, between pressing on with a project and canceling it. We can restart.
Team Thrills
- Occasionally we have the experience of belonging to a great team. Thrilling as it is, the experience
is rare. How can we make it happen more often?
Films Not About Project Teams: II
- Here's Part II 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.
Mitigating Risk Resistance Risk
- Project managers are responsible for managing risks, but they're often stymied by insufficient resources.
Here's a proposal for making risk management more effective at an organizational scale.
False Summits: I
- Mountaineers often experience "false summits," when just as they thought they were nearing
the summit, it turns out that there is much more climbing to do. So it is in project work.
See also Project Management and Project Management for more related articles.
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