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:
The Weaver's Pathway
- When projects near completion, we sometimes have difficulty letting go. We want what we've made to be
perfect, sometimes beyond the real needs of customers. Comfort with imperfection can help us meet budget
and schedule targets.
Emergency Problem Solving
- In emergencies, group problem solving is unusually challenging, especially if lives, careers, or companies
depend on finding a solution immediately. Here are some tips for members of teams that are solving problems
in emergencies.
Missing the Obvious: II
- With hindsight, we sometimes recognize that we could have predicted the very thing that just now surprised
us. Somehow, we missed the obvious. Why does this happen?
Seven More Planning Pitfalls: III
- Planning teams, like all teams, are vulnerable to several patterns of interaction that can lead to counter-productive
results. Two of these relevant to planners are a cognitive bias called the IKEA Effect, and a systemic
bias against realistic estimates of cost and schedule.
Anticipating Absence: Passings
- In times more normal than ours, co-workers who pass on tend to do so one at a time. Disease or accidents
rarely strike many co-workers in the same week, month, or year. There are exceptions — 9/11 was
one such. This pandemic is another.
See also Project Management for more related articles.
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And on June 1: Mental Accounting and Technical Debt
- In many organizations, technical debt has resisted efforts to control it. We've made important technical advances, but full control might require applying some results of the behavioral economics community, including a concept they call mental accounting. Available here and by RSS on June 1.
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