Sunday, November 18, 2007

November 19, 2007 – Automotive Sponsor Problems

It is never good when your mechanic calls and asks, "How attached are you to this vehicle?" Friday was not one of my better days from that perspective. I drive a ten-year old Plymouth Neon and normally it gets me where I need to be. Sure it leaks oil and steering fluid but the AM radio still works and three of the four door locks are still automatic. But Friday it decided to die on the way to work.

The mechanic said it would take about $900 to get it back up and running. Then there was the list of things that "need" to be done totaling another $1000. I just checked and my car is only worth about $2500. I felt like the sponsor of a project that has gone bad. Actually there were three things that drove that feeling home.

Return on Investment. The mechanic was the first to bring it up with his opening question about my love for the Neon. He could tell the cost of fixing it wasn’t going to be cheap. Prior to undertaking a project, a company needs to understand the ROI, both the costs and the returns. The projected costs are more than the expenses to complete the project. Don’t forget to include training, maintenance, licensing and other life cycle pieces.

These costs should be balanced by the expected returns from the endeavor. Savings are usual the first thing considered. How many people will I replace? How much time and money will it save. Add to these benefits forecasted increases in projected sales because staff can spend less time fiddling with the system and more time with customers. Consider that the new online experience may lead to more purchases. Customer satisfaction may net more repeat business. Think through the project purpose and project the positive results of success.

Lack of Information. Friday morning I certainly didn’t have enough information to decide whether or not to give up on my car. I needed a multiple choice question and was handed only a true / false option. How much was my car actually worth? What would it cost to get an comparable vehicle? Was it worth more as scrap metal? What could I really afford? Would there be additional expenses I didn’t anticipate? If I bought a different car, would it have more problems than this one?

When deviating from or adding to the project scope, a Change Request documents the final decision, but the discussion starts by answering questions. Sponsors expect project manager to supply them with the information to answer those questions. Why wasn’t it in scope to begin with? What are the consequences of not doing it? How much is it going to cost? What other options are there? If the answers aren’t readily available, you may need to request funding to research and find them.

Risk Management. Among the "other" items my car needs are new front brakes, brake fluid flushed and replaced, and my back breaks aligned. Total cost an additional $450. The risk of not fixing them is obvious. If you can’t stop your car, something else will have to. Whatever you use to stop it (another car, a brick wall, etc.) will probably cost more than $450. As with any risk I could Avoid, Transfer, Mitigate or Accept it. Buying a new car would avoid the problem. Making sure my collision insurance is up to date would transfer the risk. Getting the brakes fixed would mitigate the issue. I opted to accept the risk and postpone the brake fix to a future phase of the project. You may want to stay off Beach Boulevard for the next week or so.

It could have been worse, though. Had the car continued to run it would have completely overheated and destroyed the engine. I wouldn’t have had any choices at that point and my next blog would have been about purchasing a new car. Don’t hide project problems from your sponsor until things overheat and there are not choice left.

No comments: