In the latter half of the ill-fated year 2020, ING announced a €140 million write-off on “Project Maggie,” which was intended to create a common platform for countries where ING operates exclusively online. Just a few months earlier, the Belgian railways had revealed the staggering final cost of the new station in Mons. Initially estimated at €37 million in 2007 with a target completion date of 2013, it ended up with a cost of approximately €480 million. It seems that completely derailing an ICT or construction project is the rule rather than the exception in both the private and public sectors. While we may not personally be responsible, in our own careers, we have all been players in this game, whether actively or passively.
Why does this keep happening, and what can we do about it?
CAUSES
The reasons why budgets and deadlines are frequently missed are always a complex interplay of various factors. However, scientific literature can offer significant insight into the causes of these overly theoretical calculations.
There are individual pitfalls, such as our natural tendency toward excessive optimism, a well-known behavioral psychology concept called the optimism bias. Combined with other ideas from the field, such as the illusion of control and the planning fallacy, this forms a basis for incorrect, overly optimistic calculations.
These phenomena are amplified by group dynamics, especially within management teams. A common issue is concurrence seeking, a phenomenon where a group, often after concurrent discussions, quickly seeks a comfortable consensus and marginalizes conflicting parties. People seek conformity out of mental laziness. Disagreeing with a dominant opinion can be perceived as a lack of loyalty, a political maneuver, or a lack of insight. This often creates a club-like atmosphere—us against the rest of the world—that encourages superficial, “boyish” discussions with overly friendly interactions but without true critical thinking or clashing ideas.
Projects and investments in expansion are thus approved with excessive optimism, both at the outset and during implementation. The business case, along with the subsequent estimates and schedules, goes unchallenged, leading to a lack of urgency, and a failure to adequately respond to the need for active management to keep the project on track.
STARTING POINTS FOR SOLUTIONS
Fortunately, research also provides directives and starting points for solutions. Gary Klein’s pre-mortem technique, Delphi estimates, increased diversity in management teams, and the use of a devil’s advocate or a “red team“. It also helps to recognize a project’s context as a Complex Adaptive System (CAS) and apply all the possible mitigation strategies that come with that understanding.
As always, there are no miracles, but recognizing and formally managing risks gets results. A solid understanding of what can go wrong during projectmanagement is already more than half the solution. Comprehending the underlying problems that behavioral science has uncovered in recent decades (through the work of Kahneman, Bazerman, Sunstein, Thaler, Schiller, Simon, and others) also provides a strong foundation for actively managing the inherent uncertainty of CAS systems.
This is the essence of Balanced Management: What have managers and companies worldwide already learned from facing project failures? What does academia tell us about the issues and challanges? Are there methodologies that can help? How can we mitigate risks and maximize investment returns, or simply avoid catastrophe?
Don’t “reinvent the wheel”. Use and leverage expertise from the past. Balanced Management offers genuine support for navigating these challenges.