One of the pillars of successful Project Management is the need for a project to have a clearly defined goal. Establishing a goal provides a basis for the project’s scope to be established, provides a way to measure success and provides a reference point for use when making project related decisions.
There’s no doubt that establishing clear, measurable goals is an important step in setting a project on the road to success, but a clear goal is sometimes insufficient to ensure that everyone is moving in the same direction. As well as there being a project goal, there are other types of goal that exist in the project environment as well. There are the personal goals of the various team members involved, the goals of the different stakeholders and the goals of the different vendors participating in the project. Although in theory everyone is working towards the same project objectives, in practice personal and organizational goals sometimes get in the way and influence how decisions are made.
In most projects people are able to put aside their own goals and focus on the needs of the project and its customer, but unfortunately in my career I have seen several situations in which hidden agendas have done serious damage to a project. In most cases the problems can be traced to the project’s incentives infrastructure.
The term incentives infrastructure is a general term that refers to the structure of incentives that are influencing the decisions made by individuals and organizations who are participating in the project. Ideally the incentives for everyone involved are fully aligned with the project’s stated objectives, but unfortunately in practical situations there are often other layers of incentives that can negatively influence how project related decisions are made.
The classic example is of course the sales person. In many organizations the sales team are paid using bonuses that are tied to the dollar value of the contracts they secure. Those bonuses form a powerful incentive and many people will have seen projects in which the sales teams promised more than could be achieved just so that they could secure the contract. As Project Managers and development teams who have been on the rough end of such an arrangement know, the power of a poorly structured incentive program can be very nasty indeed.
The salesman dynamic is unfortunately an inherent element in most project situations. As Max Wideman (PMI Fellow and chair for the development of the original version of the Project Management Institute’s Project Management Body of Knowledge) has pointed out there is an inherent conflict present in almost all projects. While customers are interested in the value the project’s final product brings, those who work on the project are interested in what they can get out of participating in the project. In most cases the inherent conflict does not directly affect the project, but unfortunately in some situations it certainly can. In my career I’ve seen several projects in which Vendors have made recommendations to their customers based on self-interest rather than by the best interests of the project. In several cases those poor recommendations have added millions of dollars in unnecessary spending to the project tab.
Of course for those planning projects paying attention to the incentives infrastructure is a powerful tool for helping make sure everyone is focused on attaining the project’s stated objectives. By structuring the rewards and penalty sections in the contracts properly customers have the opportunity to help shape the incentives that vendors and those participating in the project have. Unfortunately too many organizations fail to recognise the power of the incentives infrastructure and how it can negatively affect the project unless directly considered.