28 Jan Ten Leading Indicators of Troubled Projects
In project management, we often talk about “lagging” and “leading” indicators.
Let me illustrate this with a simple example. Let’s imagine you are responsible for managing a customer support team, and your goal is to resolve any high priority incidents within 48 hours. Currently, you only succeed in 70% of such incidents.
The output is easy to measure: You either solve these incidents in 48 hours or not. But how do you influence the outcome? What are the activities you must undertake to achieve the desired outcome?
For instance: Make sure your team starts working on such incidents immediately when they occur. Make sure that incidents are assigned to the right people with the right skillset and that this person isn’t already overloaded with other work.
This could be translated into the following “leading” indicators
> % of incidents not worked on for 2 hours.
> % of open incidents older than 1 day.
> % of incidents dispatched more then 3 times.
> Average backlog of incidents per agent
When you would start measuring these indicators on a daily basis and focus on improving these, I would think it is extremely likely to see an improvement in reaching your goal.
Lagging Indicators for Projects
As I have written many times before, it’s essential to work actively with the organization that owns a project to define success across three levels before you start a project.
1) Project Delivery Success is about defining the criteria by which the process of delivering the project is successful.
Essentially this addresses the classic triangle “scope, time, budget”. It is limited to the duration of the project and success can be measured as soon as the project is officially completed (with intermediary measures being taken of course as part of project control processes).
2) Product or Service Success is about defining the criteria by which the product or service delivered is deemed successful.
For example, the system is used by all users in scope, uptime is 99.99%, customer satisfaction has increased by 25%, operational costs have decreased by 15%, and so on.
These criteria need to be measured once the product/service is implemented and over a defined period of time. This means it cannot be measured immediately at the end of the project itself.
3) Business Success is about defining the criteria by which the product or service delivered brings value to the overall organization, and how it contributes financially and/or strategically to the business.
For example, financial value contribution (increased turnover, profit, etc.) or competitive advantage (market share won, technology advantage).
All these measures are so-called lagging indicators. A lagging indicator is a measurable fact that records the actual performance of a project. They all represent facts about the project, the resulting product/service and the benefits of it to the organization.
But things can start to go wrong in a project well before the performance measure turns the traffic light on the scorecard red.
‘Using metrics that measure past events is like driving while looking through the rear window. It’s easy to miss an opportunity or threat on the road ahead until you hit it’
Leading Indicators for Projects
A leading indicator is a measurable factor that changes before the project starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the project, but they are not always accurate.
Examples of leading indicators for a project’s success:
1) Poorly defined (or undefined) done: Project failure starts when we can’t tell what “done” looks like in any meaningful way. Without some agreement on our vision of “done,” we’ll never recognize it when it arrives, except when we’ve run out of time or money or both.
2) Poorly defined (or undefined) success: A project can only be successful if the success criteria are defined, ideally upfront. Therefore the lack of these definitions on the three levels as described above is a great leading indicator for project trouble.
3) Stability, quality, and availability of project team: a lot of change in the project team is a good leading indicator for trouble. The same for missing skills and experience. Also, team atmosphere is a great leading indicator.
4) Engineering practices: the practices that are implemented are a good leading indicator of engineering quality.
5) Risk management: the presence or lack of risk management is a great leading indicator of the impact of negative surprises.
8) Runway: the burn rate of a project is a lagging indicator as it describes how many money is spent (or lost) for any period of time. The runway is a leading indicator as it predicts how long the budget would last with a specific burn rate.
9) Milestones: missing or achieving the deadline on a milestone is a lagging indicator. But it is also a leading indicator for following milestones.
10) Project size: the bigger the project, the higher the probability it fails.
All leading indicators can be used for identifying troubled projects before it is too late to do something about it. Just be aware that because a leading indicator is positive, it does not mean the final outcome will be positive. Nor will a negative leading indicator means automatically a negative outcome.
In a nutshell: Using metrics that measure past events is like driving while looking through the rear window. It’s easy to miss an opportunity or threat on the road ahead until you hit it.
Author Henrico Dolfing 11th December 2018