Of Projects and Men

From the monde to the mundane
Wealth, in the broadest sense, is in large part generated by the successful operation of profitable assets.  Assets are so ubiquitous as to be invisible.  If you are sitting in a coffee shop right now, just take a look around you, starting with the space itself: everything that you see, touch and hear was made by someone, at some time, after the project underwriting it was completed.  There is the shoppe, the table, the chair, the cup, the light fixtures, the electricity flowing through them, the cash register, the parking outside, the washrooms in the back, the painted lines on the pavement; the list is endless.  The next time you go an airport, try to imagine the unfathomable complexity of the work that went into its construction.  And once you are seated in the airplane, remember that you are about to be transported safely by hundreds of thousand of parts working homogeneously, despite coming from thousands of suppliers scattered across the globe.  Each and every one of these parts also came to life as an outcome of a project designed to birth it.  Lest you are still not convinced, try to figure out exactly what’s going on electronically, when you pay for those peanuts, by credit card, 30 000 feet above an ocean.  The magnitude of all of these things is staggering.   So staggering, in fact, that it is effectively invisible to the casual observer.  The technological underpinnings of our modern world is its very air supply: invisible, omnipresent and guarantor of death six minutes after it has been cut-off.

Taken for granted
Projects are themselves underpinnings of technological underpinnings.  People regard them (at last for those fewer of us who pay heed to such matters) as they would, gravity: it’s always there and therefore ignored (unless you need brakes), and working in mysterious ways.  Most people define gravity in terms of what it does: pull masses together. Far fewer will speak in terms of spacetime warping predicted by general relativity.  Rarer still are those who can dwell in its mathematics.  Having worked in the trenches of project delivery and management for the better part of three decades, I am still surprised when I query project professionals about a definition of a project.  The answer is usually couched in terms nurtured by traditional project management (TPM) orthodoxy.  Here is one from the Project Management Institute:

Projects mean change. By definition, a temporary endeavor, undertaken to create a unique product, service or result.

Few people, include myself, would disagree with this framing of the matter.  It is sufficiently generic to allow myriad interpretations that would remain true to its spirit.  Nevertheless, this definition (along with its many variants) is also sufficiently inchoate as to be useless.  It also explains why 30% of $20M projects, 50% of $100M projects and 70% of $1B projects will fail.  So, what is a better definition?  I have developed this concept expansively in my book The Point, to posit the following definition, derived explicitly from the perspective of the entity that will foot the bill: 

A project is the development of a profitably performant asset (aka the PPA). 

The asset is the revenue-generating entity to be operated commercially for the benefits of its shareholders.  An asset can be an industrial plant, a pipeline, an airport, a workers’ camp, a cultural event, or a piece of equipment.  The asset exists to deliver sustained returns on investment (ROI) to shareholders, throughout its economic life.  The causality is irreversible: the asset is wanted; therefore, the project is initiated to transform the initial concept into a revenue stream.  However, it is not enough for the asset to generate revenues.  It must do so profitably, such that its shareholders will maximize their ROI over the economic life of the asset.  That life spans the entire existence of the asset, from concept to development, from start-up to full operations, to modifications and de-commissioning, or to its sale.  Once again, the causality must be grasped unequivocally: shareholders will agree to foot the bill for the asset if and only if it designed to maximize shareholder value over the long term.  Nothing else matters. 

If the case can be made to invest in this asset, it follows that the sole, and indeed the ultimate purpose of the ensuing actions will be to configure this asset in such a way that it will deliver the promised ROIs.  The maximization of the ROI rests on three vectors: the volume of revenues generated by the asset; the cost incurred to generate them; and the profits resulting from the combined effects of revenues and costs. 

In this context, the project is never an end unto itself.  It is merely the means to the end sought: the profitably performing asset.  The project is no longer ended when commissioning is completed.  If you insist on living by this tradition, you miss completely the purpose of the asset, since you have no clue whether the asset is profitably performing or not.  If, on the other hand, you agree that the PPA is the purpose of the project, it stands to reason that the project ends when the profitability has been proven.  Which could be several months after operational start-up occurred.  Defining the end point in this manner has profound implications on the management of the project, one of which being the abandonment of the cherished constraint trifecta (budget-schedule-quality), which forces the project manager to control two and let the third land where it will.  You cannot achieve a profitably performing asset if you manage by this triangle.  You are guaranteed to spend your budget, for sure; and you may finish in time.  But you will leave the entire matter of profitability undefined, unknown and unpredictable.