Let Future Projects Pay Future Project Costs

14 Nov 2023 10:33 AM | Ali Kucukozyigit (Administrator)

by Dr. Donald Kennedy, Ph.D., P.Eng., IntPE, CPEM, FASEM

Scope Management is a big part of project management success. A few decades ago, I went around trying to make money giving Tom Peters style presentations to big companies but charging around 1% of what Tom charges. I was able to get a few nibbles. One presentation I gave was called Don’s Rules of Thumb for Project Management Success. I could probably still find the material but I do remember one of the rules: Let Future Projects Pay Future Project Costs.

There is a lot of pressure when running a sizable project for various stakeholders to come forward with scope change requests for things they cannot currently get approved. There is often a fallacy they propose that says that since you are there anyway, it would not cost much to add this thing or dig this hole. The ideas often make sense from any sort of payback calculation but in my experience more often than not, unintended consequences show the extra work was basically a mistake. I know a few project managers who were grilled for exceeding the original budget even when they had all the proper paper work completed to add the scope to their job. The original budget is often fixed in the minds of the observers.

Scope Change Examples

Here are a few examples to illustrate this.

A) In one case, a Project Manager was doing some piping installation in a new building. A stakeholder came along and said there was a potential plan to change the use that would require installing some rather large valves where the main pipes entered and exited the building. The Project Manager (PM) spent a few $100,000 to extend the building to accommodate the proposed future valves. The PM was fired a short time later. A few years pass and the PM met the same stakeholder in a social setting. The PM asked about the piping change. The stakeholder was a bit annoyed and said that they had to spend a lot of money modifying the piping outside the building to accommodate the new valves. The former PM explained how there was room inside to complete the planned work, but since he was not there, the extra work was done. In this case the money was spent for the future work and was wasted.

B) In another case when I was the PM, another stakeholder wanted me to spend a few million dollars to install some infrastructure to test the facility after 5 years of use. Since 5 years is longer than I ever worked anywhere, I decided to put in some connections to allow the infrastructure to be connected in 5 years time and saved the few million dollars. After I had been fired, I went back in 5 years just to ask the stakeholder about the proposed infrastructure. He stated that the advances in electronic equipment had been unforeseen and if we had spent the millions, it would have been obsolete for what they wanted.

Of course, there will always be exceptions to a rule of thumb. But in general, this one has served me well.

About the Author

Dr. Donald Kennedy, Ph.D., P.Eng., IntPE, CPEM, FASEM is a regular contributor to the ASEM Practice Periodical. He has celebrated a lengthy career in heavy industrial operations and construction.

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