With so much money tied up in projects and initiatives, they are key target for cost-cutting and efficiency. But where exactly to look for savings?
Our data points to 11 areas where leaders are finding savings within their portfolios of projects or initiatives. Shown in the video and listed below, these areas will guide you in your quest for economies and efficiencies within your portfolio.
What projects are prime candidates for cuts?
What are the tell-tale signs of project waste? Well, here are the factors that could make a project a prime candidate for cost-cutting, or worse.
1. Projects that are struggling to deliver:
- Projects that have missed a deadline or are running over on budget.
- Projects that have failed to successfully engage stakeholders and address their needs / expectations
- So called ‘waterfall’ projects or initiatives – those that have not delivered (or will not deliver) results for some time.
- A project that is having a ‘wobbly moment’ – a crisis of confidence or have reached a critical inflection point.
- Projects that depend on effective cross-functional collaboration, but are struggling to get interdepartmental buy-in.
2. Projects that are not strategic (i.e. not clearly linked to success)
Leaders may care little about the majority of projects. They can only be expected to care about those projects, programs and initiatives that are clearly linked to success. That is, those projects and initiatives that are directly linked to the performance of the business, the success of the strategy and the realization of the vision. It is this subset of important projects and initiatives is worthy of the title ‘strategic portfolio’.
In cutting or consolidating projects it is important to separate the strategic portfolio, from the greater mass of projects and initiatives. Deep cuts to strategic projects and initiatives could actually damage performance. A simple rule of thumb is – you consolidate the strategic portfolio, but you cut the rest of the project portfolio.
3. Projects that are not clearly connected to today’s changed business needs & priorities.
Whether a project is an IT project, a HR project or anything else, what matters most is business performance / success.
Hockey stick projects (with highly ambitious projections) look particularly shaky in a time of slower growth and economic uncertainty. The appetite for risk has changed, as growth ambitions have shrunk.
Remember the No. 1 reasons for failed or scrapped projects is a failure to adapt to changing business needs / priorities. The changing business climate presents both opportunities and challenges for projects if they can adapt.
4. Project that lack solid business fundamentals – where there is a lack of clarity or alignment in respect of:
- Business Need(s)
- Market Reality
- Strategic Ambition
- Project Confidence
- Business Impact
- Business Investment
- Business Urgency
- Business Unusual/Complexity
5. Lack of political support. The most worthy projects get supported, right? Well, not necessarily so.
Of course, projects must compete on their merits, but all projects need political support if they are to succeed. This can be a blind spot for projects where people have been busy doing the work but have had little time to communicate the progress being made.
Projects without a powerful and committed sponsor are an easy target also – the sponsor may have moved within the organization or elsewhere. Also, projects without a dedicated project leader. Ensuring that your project is not in the hands of a skilled and experienced project leader is the first test of organizational commitment.
6. Projects that are considered to have ‘a lot of fat’. Where there is the suspicion of inefficiency or waste. This includes areas of potential duplication. Also, where there is the appears of lack of budget control/discipline.
Own a project, rather than a portfolio? Find out if your project is at risk of cuts using this research.
7. Projects that are looking for more funding. For example:
- Projects that don’t have a longer term / rolling budget in place but need to regularly go in search of funding to stay alive.
- Projects that don’t have a clearly costed budget and rely on indirect subvention by various departments/budgets.
- Projects with a lot of contractors and high levels of variable costs that are easy to cut.
- A project that is coming to the end of one phase and requires approval for the next phase to begin.
Need help optimizing or consolidating your portfolio of projects & initiatives? Talk to us.
Our analytics, tools and frameworks provide leaders with a new level of visibility and control in respect of their projects and portfolios. We help leaders to balance the need for savings and efficiency with the need to accelerate those projects and initiatives most critical to business success.
8. Projects that don’t seem to fit with the present more cautious mood and the changed economic climate:
- Projects that (in the context of slower growth) might be seen as overly ambitious. For example, where the forecast results are in the form of a ‘hockey stick’.
- High risk projects, where the tolerance for risk has now fallen.
- A project that is seen as extravagant, wasteful or ‘a nice to have’ in the light of the changed climate.
- Projects that have been over-hyped. So called ‘Potemkin Projects’ that have little substance. This includes yesterday’s projects that may have gone out of fashion.
9. Speculative ‘business unusual’ projects that address longer term opportunities / challenges and adjacent or new products/markets are vulnerable to cuts in a time when the focus is on short term performance. Take care however, this is an area where financial expediency must be balanced with longer term strategy.
10. Obviously, the easiest projects to target for savings are those that have not yet started. For example, delaying the start by 6 or 9 months is easier than stalling a project that is in full flight. Thus, projects that are still in the planning stage or have been slow to get off the ground are at greater risk.
11. Peripheral projects—projects that are taking place on the margins—have largely been operating ‘beneath the radar’—sometimes called ‘skunk work’, as well as pet projects and legacy commitments.