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Eduard -
This is a fairly common failing of many project sponsors, hence it is our job to "keep them honest" by providing evidence-based rationale as to why things are not as easy as they seem to be. The challenge is preventing them from publicly making delivery commitments or promises before some planning work has taken place. Kiron ...
1 reply by Eduard Hernandez
Oct 11, 2024 6:26 AM
Eduard Hernandez
...
Thanks for your feedback. I have witnessed cases in which the sponsor or executive leaders have committed unrealistic timelines to external parties and become "grumpy" after the PM confronted him with reality.
Sergio Luis Conte
Helping to create solutions for everyone| Worldwide based Organizations
Buenos Aires, Argentina
It is not a problem. It is intrinsic of human being. The key point is to understand what planning really is and mainly what to estimate really is. Estimations have an inherent error always then people has to adjust estimation along the life cycle and mainly to publish the estimations using a range of making visible the estimated deviation or error.
One of the contributors to estimating incorrectly and raising unrealistic expectations is the budgeting process. This happens when those who set (often annual) budgets are required to come up with a number for budget approval before enough is known about the work to be done. Of necessity, it ends up being more of a guesstimate than an estimate. But when a project spins up, we need be careful that the planning budget does not become the defacto project budget.
I ask project managers in my PMO to create a project budget based upon the work breakdown structure they design, the activities required to create the deliverables it contains, and the cost of effort estimated by the skilled resources to create them. We add to that a cushion required by delays inherent in any project caused by dependencies that can create lag, stretching the duration of the project. Then we add overhead and contingency to arrive at a project budget to be approved by the Project Sponsor. This project budget may look nothing like the planning budget, nor should it. Clearly the more one knows, the more accurate the project budget. So what do you do when the project budget is different than the planning budget? If is is lower, the happy situation exists where there is extra money to do more great work or to put into a pool to be used for projects that require more money. If it is higher, then the situation is less glorius, since more money must be found (hopfully in the aformentioned pool), or the project is stalled or even cancelled. Of course, this process is a bottom up approach for predictive projects as opposed to an approach used for an adaptive project, where one might very well use the planned budget to work one's way through the product backlog (Scrum speak), deliveriing the items deemed by the product owner to be highest priority, or by the architect as being necessarily first, until the money runs out, or the product backlog is finished, whichever comes first. Whatever the case, I always emphasize that estimates by the very nature of the meaning of the word are just that - more refined guesses than are made at budget planning time, as opposed to project planning time. But they are still estimates, not actuals. Beware the project manager who in predictive projects always manages to end up with actual project expenditures at the end of the project that exactly match the project budget. It might be time to have a look under the covers. At the LA Summit last month, one of the speaker's father is a project manager, and she asked him for some project manager jokes she could tell to a room full of thousands of project managers. The two she bravely told that I remember that were related to the project budget were, "Here is my project budget. Think of it as a down payment." and, "Now that the project is over, I can give you an accurate project estimate.", or something of that nature. Tongue in cheek, of course, but ... maybe a funny way to end a discussion response. ;) Or is it? ...
1 reply by Eduard Hernandez
Oct 11, 2024 6:34 AM
Eduard Hernandez
...
Thanks for sharing your thoughts and the joke. I had to think of the building of the Scottish Parliament project, that went from a budgeted £40M to a staggering £400M actual cost.
That's what we should experience for, right?
Anecdote: we moved in our house 3 years ago. I made a project plan for the rennovation that showed a total of 3 months of work of 2 people (my and my partner). The expected ETA was August 2021... 3 years down the road, he is literally still rennovating the bathroom as we speak! ...
2 replies by Eduard Hernandez and Mike Frenette
Oct 10, 2024 4:29 PM
Mike Frenette
...
Lol..😉
Oct 11, 2024 6:30 AM
Eduard Hernandez
...
Good story, Simona Dimitrova. The house renovation budget should be updated, inflation over the last 3 years has skyrocketed :-)
Oct 10, 2024 4:27 PM
Replying to Simona Dimitrova
...
That's what we should experience for, right?
Anecdote: we moved in our house 3 years ago. I made a project plan for the rennovation that showed a total of 3 months of work of 2 people (my and my partner). The expected ETA was August 2021... 3 years down the road, he is literally still rennovating the bathroom as we speak! 
Eduard,
In larger enterprises, shaping a project is often a corporate-political exercise as the executive mandate is, first and foremost, the declarative device for a project’s existence, regardless of concerns one may have regarding feasibility or cost-effectiveness. In other words, the PMO and/or project manager become “negotiating artisans” who accept the mandate (as if their job depends on it—because it does) and broker a charter, otherwise known as, if brokered under compromising conditions, the “CYA charter.” Bottom line: As project managers, our principled processes are often challenging to execute in the real world due to corporate-political concerns. In these situations, we use our expertise to find a balance, a way forward that is navigatable. Hence, the appearance of a “planning fallacy” often reflects a necessary negotiated balance. George 
Many reasons can contribute to a plan that misses the target.
Politics, as George mentions, biases and fallacies (there is a difference), approval priority (create high ROI by reducing the cost to get approval, priority in the portfolio), sales (marketable price), lack of risk management/contingencies, team inefficiency and overall wisdom of "no plan survives the first contact with reality". 
Eduard Hernandez
 Community Champion
Oct 10, 2024 7:11 AM
Replying to Kiron Bondale
...
Eduard -
This is a fairly common failing of many project sponsors, hence it is our job to "keep them honest" by providing evidence-based rationale as to why things are not as easy as they seem to be. The challenge is preventing them from publicly making delivery commitments or promises before some planning work has taken place. Kiron
Eduard Hernandez
Community Champion
Oct 10, 2024 4:27 PM
Replying to Simona Dimitrova
...
That's what we should experience for, right?
Anecdote: we moved in our house 3 years ago. I made a project plan for the rennovation that showed a total of 3 months of work of 2 people (my and my partner). The expected ETA was August 2021... 3 years down the road, he is literally still rennovating the bathroom as we speak!
Eduard Hernandez
Community Champion
Oct 10, 2024 4:01 PM
Replying to Mike Frenette
...
One of the contributors to estimating incorrectly and raising unrealistic expectations is the budgeting process. This happens when those who set (often annual) budgets are required to come up with a number for budget approval before enough is known about the work to be done. Of necessity, it ends up being more of a guesstimate than an estimate. But when a project spins up, we need be careful that the planning budget does not become the defacto project budget.I ask project managers in my PMO to create a project budget based upon the work breakdown structure they design, the activities required to create the deliverables it contains, and the cost of effort estimated by the skilled resources to create them. We add to that a cushion required by delays inherent in any project caused by dependencies that can create lag, stretching the duration of the project. Then we add overhead and contingency to arrive at a project budget to be approved by the Project Sponsor. This project budget may look nothing like the planning budget, nor should it. Clearly the more one knows, the more accurate the project budget. So what do you do when the project budget is different than the planning budget? If is is lower, the happy situation exists where there is extra money to do more great work or to put into a pool to be used for projects that require more money. If it is higher, then the situation is less glorius, since more money must be found (hopfully in the aformentioned pool), or the project is stalled or even cancelled. Of course, this process is a bottom up approach for predictive projects as opposed to an approach used for an adaptive project, where one might very well use the planned budget to work one's way through the product backlog (Scrum speak), deliveriing the items deemed by the product owner to be highest priority, or by the architect as being necessarily first, until the money runs out, or the product backlog is finished, whichever comes first. Whatever the case, I always emphasize that estimates by the very nature of the meaning of the word are just that - more refined guesses than are made at budget planning time, as opposed to project planning time. But they are still estimates, not actuals. Beware the project manager who in predictive projects always manages to end up with actual project expenditures at the end of the project that exactly match the project budget. It might be time to have a look under the covers. At the LA Summit last month, one of the speaker's father is a project manager, and she asked him for some project manager jokes she could tell to a room full of thousands of project managers. The two she bravely told that I remember that were related to the project budget were, "Here is my project budget. Think of it as a down payment." and, "Now that the project is over, I can give you an accurate project estimate.", or something of that nature. Tongue in cheek, of course, but ... maybe a funny way to end a discussion response. ;) Or is it? ...
1 reply by Mike Frenette
Oct 11, 2024 8:33 AM
Mike Frenette
...
It has been said, and I believe it to be true, that a project will cost what it must cost, regardless of the budgets that surround it. Sometimes we are near the mark, sometimes we are not.And that is how a €40 budget becomes a €400m actual spend. A 10% down payment is really quite reasonable, isn't it? 😉 |
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