The “political reality” is compromising realistic estimates

Stakeholders who want more, faster, cheaper, without rational argumentation.

Look for arguments like these, which are often heard at the beginning of disaster projects:

“… this is a strategically important customer…”

“… we need this contract to fill the calendar….”

“…we need the turnover for the next fiscal period…”

These arguments have one thing in common. They all motivate and support what is known to be the mother of all cost over-run. Please consider which! (answer follows)

In general, look for political power play, where power prevails over rational arguments.

During the project initiation, the political reality prevails. Scope, budget, and deadlines are discussed between stakeholders, and compromises are made. There is a common drive to start this project, because important people have invested enough intellectual capital to give it momentum. The expected fiscal benefits are beginning to show up in the organization’s budgets. All discussions conclude based on the most optimistic forecast, which becomes the budget and deadline.  Valid argumentation in the political reality includes:

“.. but the customer will not pay more than….”

“… they will never agree to this…”

“… our competitor is ready to do it for $xxx…”

“… we have to do it for $xxx…”

“… we have to deliver before xxx…”

Some of these arguments have very rational arguments behind them. Most are just a greedy human  “I need more, faster, and cheaper” reaction.

The problem in complex projects is that every step away from rational argumentation will eventually turn into a cost overrun because irrational arguments lead to poor design decisions and technical debt, that again will introduce ripple effects beyond imagination.

“Beyond imagination” is important here due to the development of actual cost over time. Only because the impact of a political-based poor decision is unknown when it is made, it seems like a low-risk decision. If the stakeholders knew the impact, they would not have made the decision. This is why you, as the project sponsor, must move the argumentation from the expected cost in the political reality to the actual cost in the engineering reality, because at the end of the game, you have paid. Maybe not all, but too much.

The political reality is very strong and real when establishing the project, but at the end of the project, the engineering reality has prevailed.

An organization with internal IT development was suffering from the malpractice of the management board routinely cutting all estimates to an impossible level. At the same time, the business executives coined “unpredictability“ as their greatest pain. These “political estimates” vanished when they had the three most senior project managers relevant to the domain to establish the project estimates together. The project predictability improved significantly.

The consequence of realistic estimates may well be that the project never starts, which is not bad at all. Many projects should never have started!

The cost overrun destroyed the business case

The technical debt will be costly for years to come

They create stress-related health problems among your employees

The team could have been working on a more profitable project.

At the end it is not about some personal preferences, it’s cool business.

Keep the battle in the rational arena.

Remove all incentives for underestimation and other biases, the mother of all cost over-runs.

The engineering reality will prevail.

The cost of political(irrational) decisions is out of control.

There will be other project opportunities; the team will not go idle. And even if, considering the cost of a bad project, you could properly send the entire team on a paid vacation to Greece for a few months, if only they were ready to start full speed ahead when the next profitable opportunity come along.

Always challenge the engineer's estimate with rational arguments.

Realistic estimates!

Ask for reasons to believe they are realistic.

Test that all stakeholders, namely the project team and engineers, find them realistic.