Effective
Engineering e-Newsletter
– 11/21/2002
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eN-021121:
Late Projects Kill Companies!
By Tom Dennis – President, Effective Engineering [
tdennis@effectiveeng.com ]
When most engineers start a project, they put together
their best estimate of how long it should take to complete their part of the
project. They then pass that estimate along to their manager who then
collects
and consolidates similar estimates from other engineers regarding their
portions of the overall project. This
may get passed through one or more levels of management until someone puts
together a consolidated project plan. A typical plan includes the overall structure of
the project (requirements, planning, implementing, testing, documenting, phase
reviews, costs, etc.), all of the separate pieces from the individual engineers and
where they fit in to the overall plan, the relationships and dependencies
among the various pieces, and typically some degree of contingency planning
for the unknown. This overall
project plan then gets reviewed by all involved, modified as required, and
ultimately gets signed-off as the “official project plan”.
The high-level summary of this “officially blessed” project plan, with
certain key milestones and schedule dates, is then used by senior management
in the company to establish overall corporate plans and objectives.
It will drive marketing plans, sales plans, field support plans,
financial plans and projections, budget assumptions, and much more.
It serves as a basis for significant future planning for the company.
While individual engineers
understand this conceptually, they generally don’t really understand the
full implications of what they’ve signed up for.
Their typical view is “I’ve given you my schedule, and you’ve
shown me how my part fits into the overall schedule; I’ll do everything in
my power to deliver on this schedule, but if I run into unforeseen problems,
it will just take more time than I thought”.
Another typical view of engineers is “I’ll do my part, but if Joe
Blow (or QA, or Build Eng, or Tech Docs, or any other person/function I
don’t control) doesn’t do his/her/their part, then it’s not my problem
if the schedule gets delayed”. They
understand that the “project plan” and the “schedule” are important,
but don’t understand just how important they really are to the overall
corporate commitments.
When projects are delivered late, companies get killed!
They may get killed either figuratively (as in, “You’re killing us
by being late; now our board is upset, the financial analysts are peeved, and
our customers are downright rebellious.”), literally (as in, “Without this
project now we can’t make our revenue targets, and therefore can’t meet
our payroll, and now have to close and lock the doors to the company.”), or
both.
Company reputations get badly damaged (sometimes they get killed) when
they don’t deliver on their commitments.
►
First, it is critical that management be viewed as credible,
reputable, and trustworthy by their customers, investors, shareholders,
analysts, suppliers, and any others with a vested interest in the company.
When the company commits to deliver a product on a certain date, the
company’s credibility is on the line. Miss
that date, and the company’s stakeholders lose trust.
Lose too much trust, and the company is dead.
►
Second, many of the company’s customers base their plans and
assumptions on the company meeting its commitment.
Now, if delivery is late, not only is the reputation of the company
itself damaged, but the reputation of the company’s customers is also
damaged to their stakeholders. Customers
must then decide whether to stick with the company and delay their commitments
as well, or whether to find another company and take their business elsewhere.
The same holds true for suppliers (who have based their projections on
supplies to be delivered to the company), and other stakeholders. While it is tough to build up a good reputation, it is easy
to destroy one, and missing your commitments is a surefire way to do so.
Company finances also suffer
(sometimes they can’t recover) when delivery commitments are not met.
A look at the graph at www.effectiveeng.com/the_problem.htm
(also shown here) shows graphically the business impact of missing delivery
commitments. The red portions of
this graph show the triple impact that occurs when a project is late.
(1) Additional development costs are incurred, since more people must stay on
a project longer.
(2) The revenues that would have been gained from the time
the product should have been delivered until it actually is delivered are lost
forever.
(3) Ongoing revenues are lost because some customers will choose to
go elsewhere rather than wait for the company’s product.
The net of this triple financial impact of late delivery may be minor,
or it may be fatal. In any case,
it is intolerable.
Every effort must be made to deliver on what has been committed! And all
must be held accountable.
Copyright © 2002
Effective Engineering Consulting Services, All Rights Reserved
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