There is an excellent research article in MITSloan’s Management Review on the Pitfalls of Project Status Reporting. The article starts with recounting the launch of the federal health exchange healthcare.gov where many of the stakeholders thought the project was on track right before go-live. (I recently wrote about the Oregon health exchange where the project manager said two weeks before launch: “Bottom line: We are on track to launch.” The Oregon site never launched and after six months, Oregon abandoned the effort and is joining the federal site.)
The point of the article is that leaders can be surprised when IT projects run into trouble. The authors go through five “inconvenient truths.”
- Executives can’t rely on project staff and other employees to accurately report project status information and to speak up when they see problems. Their research shows that PMs write biased status reports 60% of the time and the bias is twice as likely to be positive as negative. For obvious reasons, PMs feel that personal success is related to project success so they are incentivized to paint a brighter picture. This tendency to hide bad news increases in organizational cultures that are not receptive to bad news and where the PM may feel personally responsible for the bad news (as opposed to, say, a contractor being responsible).
- A variety of reasons can cause people to misreport about project status; individual personality traits, work climate and cultural norms can all play a role. Within traits, the authors cite risk-takers and optimists as more likely to misreport status. A work climate that is based on professional rules of conduct is less likely to produce misreporting. And collective cultural norms, such as those found in the Far East ( as opposed to individualistic cultures such as the U.S.), are more likely to produce misreporting.
- An aggressive audit team can’t counter the effects of project status misreporting and withholding of information by project staff. Basically, it is possible for PMs and project teams to hide information from auditors, which is no surprise. Project teams do this when there is distrust of the auditors. This lack of trust also impacts internal reporting structures. If a PM does not trust the senior executive they report to, they are more likely to misreport.
- Putting a senior executive in charge of a project may increase misreporting. The greater the power distance between the person giving the status and the person receiving the status, the greater likelihood of misreporting.
- Executives often ignore bad news if they receive it. The authors found that in many cases, issues were identified and elevated to executives who had the power to resolve them but the executives did not act. Partially because the pressure on executives for the project to be successful can be the same, or greater, as the pressure on PMs. This is what happened in the Maryland health exchange project. The QA auditor wrote to the Executive Director two weeks before launch warning her of eight serious risks of going-live. The Executive Director downplayed the risks and the project continued towards its disastrous launch.
The article includes recommendations for each inconvenient truth and three useful attachments: 1) a survey to determine your risk of misreporting, 2) the cycle of mistrust that occurs between teams and auditors and 3) a list of common misreporting tactics (including selective highlighting and redefining deliverables).
Project (and portfolio) status reporting is a must-have for project-based organizations. This article provides valuable insight on how to make it effective.
An excellent article, the best in PM this year!