About a year ago I bumped into a former work colleague who I hadn’t seen in about 6 years. It prompted us to go have lunch to get caught up on life, family, business and everything else. His name was Dan. And since leaving our former employer, he went on to become CFO at a large construction & fabrication company. It was quite fortuitous for us to have reconnected because he was having a lot of struggles with his company’s construction projects suffering disastrous cost overruns & delays.
“I get so frustrated,” he said as he knifed his steak sandwich. “it’s like they [the project managers] deliberately leave it to the end to figure out where things are at with their projects.” He was referring to how information flows to his financial group about the status of the various projects on the go in his company.
“What’s the point in that? Why can’t we have those conversations six months earlier?” He waved his hands dismissively in the air as though he was at a complete loss as to what to do.
“I used to think they were avoiding me.” He continued. “I figured they knew all along that it was bad news, and they didn’t want to have to face telling me. But now I know that they simply have no idea what’s going on until pretty late in the project. Essentially, until all the invoices have come in. Then it’s like, they just add up all the invoices and figure out what we owe. Then they come tell me. Is that normal?”
Sensing that he was waiting for an answer at this point, I told him that it really isn’t all that uncommon for projects to struggle with information delays and reporting practices that frustrate outside stakeholders.
Dan’s a money guy. He didn’t know that much about construction, construction projects, or the complexities of managing them. And understandably, It completely baffled him that “in this day and age”, they still couldn’t manage their projects right. It’s a fair point really. And eventually we got around to pinpointing how exactly they could fix this problem, but first I had to let him vent a little steam.
“I call it the ‘Walk of Shame’,” he said.
“What’s the walk of shame?” I asked.
“I can see them walking down the hall to my office. They’re coming to brief me on the bad financial state of their completed projects. They walk slowly, with their heads hung low and shoulders slumped. Their faces are red with the fear that they’re going to get sacked because they just lost the company $8million in cost overruns.”
“Wow.” I said
“Ya, wow. And this happens once or twice a year. It just happened last month. I was furious. All I could think about was how I was going to report this loss to my superiors. To be honest, I’d like to fire the whole lot of them, but I can’t help wondering if the problem is more systemic than a problem with the individuals.”
I was happy to hear him say that. As soon as he let that out, I was able to suggest to him that maybe they didn’t have the right tools to do their job properly. I described the scenario a bit for him. I simply said that in order for his projects teams to succeed with better accuracy, they need to be able to collect and analyze all kinds of information about their projects. And they need to do that daily. So, in order for them to do that, they’d need the systems in place, along with the diligence to use those systems, so that they can proactively manage their projects. Instead, as he accurately pointed out, of waiting till the end and adding up the invoices. With daily – or at least weekly – information, they could report up to him and his team long before any ‘events’ become ‘issues’ and ‘issues’ become ‘problems’ and ‘problems’ become ‘disasters’.
Dan caught on quickly and it suddenly made sense to him. He’s an amazingly smart guy who’s an absolute wizard when it comes to cash flow, M&As, valuations and reporting to the BOD. But, understandably, he leaves the details of the projects to his expert staff of project managers and program managers. “Huh,” he said, “we’ve sort of failed them, haven’t we?”
“Well, not really,” I said, “it’s a shared responsibility between yourselves at the top and the project management team to all figure out when you need to improve your systems.”
“No, I mean, our shareholders. We’ve failed them.”
“Well, maybe, I don’t know, I can’t really say.” I said a bit weakly since I wasn’t eager to take sides, even though he was right. “But the thing to do, is to do something about it. It’s a very common problem with organizations like yours and many others have put systems in place to fix it, and have succeeded in eliminating these pervasive issues. Like with overruns, delays, information deficits, reporting issues and saved, as you say, millions every year in unnecessary costs.”
At the end of that lunch meeting, we made plans to meet again, but I didn’t really expect much to happen. I also didn’t want to push my business onto him, even though more than anything, I just wanted to help him out. But I have to hand it to him, he took our conversation seriously and attacked that problem with a vengeance. He arranged meetings between his project leaders and our solutions team and together they designed a plan and implemented a solution. That solution was put into place about 8 months ago, and since then the struggles they’d been experiencing have almost completely vanished.