Project Reporting Blind Spots

Project Oversight: Costs and Progress

A project management consultant I interviewed outlined a common problem with project reporting:

‘Tracking the costs of a project, and understanding how these might evolve, is often more challenging than monitoring business‐as‐usual costs because it takes discipline and skill to “match” expenditure incurred to the relevant stages of the project. You cannot simply track project costs against a monthly budget. Many business reporting systems are set up to do this, but it's likely to be meaningless because the work you have done on a project, month by month, invariably won't exactly match what you first planned and budgeted.

And even more challenging is anticipating the future cost outturn as well as the benefits that are forecast to be delivered from a project. In the latter case, it must be recognised that benefits forecasts often involve making estimates regarding how much money or time others might save in the future because of what the project delivers (e.g. because of what a new system should be able to do). Thus, benefits forecasts involve making inferences about the functionality of any new system. So, these estimates can quickly get “out of sync” with what will be delivered. In the light of all of this, forecast cost and benefits for a project are often worth checking independently from time to time.’

Damian Finio, identified in the source as CFO of Phibro Animal Healthcare Corporation, also emphasizes direct information from the team:

‘As a Finance Director, I have learned the importance of getting “direct assurance” from project and product leads and key team members. If something is potentially important or costly, you should get a formal update on progress, the current key challenges being worked on and the key risks that may arise in the future. If you do this, you can judge whether the team properly understands what is going on. After all, if someone doesn't flag a risk upfront and then three months later, it becomes an issue, it should raise some concerns.

It's not about expecting progress updates to be perfect; it's quite the reverse of that. So, if someone says they are “worrying” about key details, that puts me at ease. But, paradoxically, if they try to give me a picture that everything is fine or the only challenges they foresee are the ones that are being worked on, I get concerned. The aim should always be to avoid an environment where things are reported as fine until they aren't.

In this context, it's essential to hear from different team members beyond the team lead, with the chance to listen to what they think on critical points. Looking at their body language when questions are addressed can also be informative, and you can also start to get an impression, albeit a partial one, of how different risks, and even other teams, compare.

It's also useful because it can help “bring to life” what is happening with critical products and projects in a portfolio. Discussing the colour of traffic lights on a piece of paper or percentage completed statistics risks becoming detached from the real issues on the ground. As a Chief Financial Officer of a publicly traded company, I know this must be avoided at all costs.’

More reporting does not necessarily provide better oversight. Ask whether the measures show completed work, whether forecasts reflect the scope now being delivered, and whether team members can raise concerns without having to defend a green status.

In ‘It Should Never Happen Again’, Mike Lauder 21 provides a useful list of types of signals to consider, including routine, weak, messy, mixed, decoy, misinterpreted, etc. He also discusses other challenges associated with the way information flows, including ‘loss of salience’ (when a warning sign becomes normalised) and missing crucial early warning signals.22

Even a well-received dashboard deserves occasional scrutiny. Trace a few indicators back to the work and ask what important developments they would fail to reveal.