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Project ROI, Yes. What about Project ROF?
Did the title of this blog stump you?
Well, it was purely intentional and not a coincidence!
As professionals, we all understand what ROI or Return on Investment is. What is ROF? Well, we will come to that in a while.
Allow me to set the context.
Organizations, both in private as well as government sectors, undertake a host of initiatives as programs or projects with a fond hope that they will be successful. They plan to execute these projects thereby expect to reap the rewards in the form of better financial performance. Return on Investment or ROI is one of the popular metrics, while the others being Payback Period, Net Present Value and Internal Rate of Return. We will discuss ROI and save the rest for another day!
On any program or project, ROI is a measure of the net profit made as a percent of the investment that has gone into it. Common sense will tell us that higher the ROI, better it is for the enterprise.
So far, so good!
Different studies in project management have highlighted the poor state of project success worldwide. The unpleasant project success statistic simply proves that a majority of projects and programs don’t deliver planned value or in plain terms ‘failure.’
Now did you get any clue to ROF? Not yet?
Ok, I will let the cat out – ROF stands for Return on Failure!
How do companies usually deal with failed projects or programs?
Most organizations conduct a standard Lessons Learned session and document:
Now for the not-so-nice part: the lessons learned session ends with ‘plain documentation’!
Just to ensure they are well-covered in the case of an audit!
Some stronger reactions to projects gone bust include:
What do the above symptoms tell about the organization?
An indication of an enterprise not yet on the path of greatness!
Would you disagree?
So what should be an ideal approach to deal with failed projects or programs?
Borrowing insights from a recent Harvard Research by Julian Birkinshaw and Martine Haas, companies need to conduct reviews that are:
Now, what should a good project review consider?
Create your Project Balance Sheet and evaluate the Assets and Liabilities that arise out of a failed project.
Some of the Assets could include insights into:
Some of the Liabilities could include:
The Bottom Line: What are the key insights and takeaways for the business?
In addition to the above analysis, it is equally important to look for patterns of failure.
REMEMBER: It’s not ‘Are we making good decisions?’ but ‘Do we have a process for making decisions that is statistically working?’
In the above context, organizations MUST enhance their project management maturity that facilitate relevant processes leading to better business outcomes.
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About Author :
Srikanth PV comes with two decades of global corporate and consulting background across industries with diverse roles including Strategy, Leadership, and Management. Currently, he focuses on driving and creating customer value by building and enhancing organizational portfolio, program, and project management maturity by his impactful consulting and coaching engagements. He is also a former member of the Board of Directors of PMI Bangalore Chapter.
View his detailed profile on LinkedIn at https://in.linkedin.com/in/srikanthpvpmp