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Unmanaged risks would be the biggest contributor to unexpected expenses.
Normally a project is conducted to drive efficiencies, increase productivity, increase automation or reduce headcount and this in turn will increase profitability by decreasing operational cost. Increase profitability is rarely the primary reason why a project is implemented as the return on investment could take many years to be realised. Projects are implemented based on long term objective and increased profitability can be an expected outcome if the original objectives of the project are realised. Also locking in profitability on a balance sheet before a project is implemented could doom the project before its started and set unrealistic goals.
Un-managed risk could be in the form of relying on one inexperienced personnel to provide the project cost estimate.The estimate is not shared with the group for independent evaluation.
Such an estimate will not be a budget quality estimate and as such is not credible.
Another example of un-managed risk could be that after preparation of the project schedule, No Schedule Risk Assessment (SRA) is conducted to verify if scheduling best practices has been followed. The critical path is not checked for validity.
And so many others
In my experience, projects without proper accountability and aligned objectives are the ones that float sideways both from the financial and strategic objective perspectives. You can have initial alignment in your core team (driven from your charter), but if the sponsors and executive stakeholders do not have the same mission at the same priority from their management chain, then you are sideways from the beginning – although you may not notice it, until you are halfway through the project.
One of the signs of accountability and alignment issues is “Avoidance”. Essentially, when the team and other stakeholders start to see the effect of the alignment issues in their personal work-areas, they will have visions of “failure”, leaving them two choices; 1) push through and do the best they can or 2) avoid personal injury. Unfortunately, many will take the avoidance route which is the signal to the PM that the project-ship is entering Bermuda’s Triangle.
Prematurely committing to the budget or using the wrong lifecycle for the context of the project
There is a big mistake here. A project must not be profitable. The product/service/result created by the project coud or not could be profitable but that is outside the project scope.
Depending on what you mean by profitable - it can mean being under budget in a fixed price project for a service organization.
One of the biggest challenges is to track project status accurately throughout execution, instead of getting surprised towards the end. A good task breakdown and honest reporting of earned value metrics (perhaps with the 0/100 rule) are the keys to success...
I have an article on the topic:
If we are speaking in terms of going over budget, then I'd go with unforeseen complexities (integration!) and high optimism (resource availability, timeline, dependencies, etc.)
If we are speaking of the outcome of the project, i.e., product value realization, then I'd go toward a misalignment with org strategy, either through lack of due diligence upfront or a change during.
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