How Project Managers Can Assess the Vulnerability of Their Projects to the Current Recession

How Project Managers Can Assess the Vulnerability of Their Projects to the Current Recession
By Barry Shore, Ph.D.

The likelihood of a Significant Recession. What is becoming increasingly clear is that the United States, Europe, and Asia are headed into a significant recession. Precipitated by the collapse of the credit markets, it is apparent that few industry sectors will be immune. Some will suffer more than others, but almost everyone will be affected.

Indeed, the signs right now are very troubling. Home sales in the United States continue to fall and along with them real estate prices. Unemployment, at 6.5 % and the highest in 14 years, is rising. The financial and automotive industries are on the verge of collapse, consumer confidence is near its low of 51, and consumers are tightening their belts for the first time in decades.

Few organizations will escape the consequences of this meltdown, and as a result almost every project manager must be prepared to manage through turbulent times.

Determining the vulnerability of your project is the first step.

Increased Vulnerability of Projects. The principles of project management have been applied very successfully over the last two decades. Project success rates have increased, while failures and disappointments have fallen. But our very success has also increased the vulnerability of projects during times like this.

Prior to the adoption of project management principles, work was organized through bureaucratic, hierarchical, and functionally-based structures. Project participants, authority, and responsibility were scattered throughout the organization.

But now, projects have become a primary organizing theme for many companies, and the reason that projects are more vulnerable during this recession is because we have created projects with their own goals, objectives, budgets, schedules and teams. They are more visible to top management as coherent entities, and can be monitored more easily by top management and, in many organizations, the project management office.

Moreover, with project portfolio management (PPM) software, projects can be evaluated against each other.

Today, projects can’t hide.

Assessment of Vulnerability. What this means is that project managers must undertake a realistic assessment of their project’s vulnerability to prevailing economic conditions. Ignoring the realities of the global recession won’t do anyone any good. In fact it could increase the project’s vulnerability. Instead, it makes sense to understand what challenges the project faces and to address these challenges in a proactive way.

How do you assess the vulnerability of a project?

• Begin with an assessment of other firms in your industry. How are they responding? Are they cutting budgets and circling the wagons?
• Look back into the history of your own organization. How have they responded to previous periods of uncertainty and crisis?
• Then, take at close look at the business goals of the project. If they aren’t clear to you, if they aren’t clear to top management, if they won’t clearly contribute to the bottom line, then the project may be at great risk.
• Don’t forget top management; are they still supportive? Has their enthusiasm for the project waned?
• What about project performance until now? Has the project suffered budget overruns or scope creep? Have requests been made to change the schedule or add additional personnel?
• What about the market? Have you talked to the marketing department recently? What are the chances that the faltering economy will lead to marketplace changes? How will this affect the project?

By answering each of these questions in an objective way, you will gain a better understanding of how market and organizational forces will affect the vulnerability of your project. But the most important point is that by understanding these areas of vulnerability you will have a much better chance of taking proactive action and minimizing the chances of becoming a victim of these challenging times.

To learn more about your project’s chance of survival, take the Project Survival Test. After answering fifteen questions you will have a clearer idea of where you stand.

Dr. Barry Shore received his Ph.D. from The University of Wisconsin. He is the author of many scholarly and trade articles which focus on management issues ranging from human relations to decision support systems. Dr. Shore worked for Hewlett Packard, General Electric, and Boeing. His consulting and workshop clients include Liberty Mutual, Westinghouse, GTE, Chase Manhattan Bank, and US Navy. Dr. Shore runs Global Project Strategy, a project management consultancy website.