Why your project needs continued business justification – or could get the axe

Two construction workers in hardhats and hi-vis vests on building site evaluating the business justification for their project with plan documents

How do you decide when to continue with a project – even when it’s horribly late and over budget – or when to stop it altogether?

The new Berlin airport, for example, is scheduled to finally open this year, after its original opening date in 2007 was repeatedly delayed, costing the project billions of Euros extra.

While some argue that Berlin’s existing airports still need replacing and travellers need more choice, others suggest the new terminal should have been demolished in 2012; it may yet be if it fails building inspections.

So, why is what the LA Times calls a “humiliating symbol of failure” still going ahead (and who knows if it is actually going to open at all)?

Answering this type of challenge is why one of PRINCE2®’s seven principles states that every project must have continued business justification from the start and throughout the life of a project.

Though its number one spot among the principles is not intentional, an organization must be able to answer the “why?” question about its project early on. If not, everything else is pointless. However, as the Berlin airport case shows, being late and overbudget may not mean a project doesn’t have justification to continue.

Continued business justification and benefits realization in practice

Continued business justification should be part of any project. Why? Project management history is littered with projects that didn’t include it.

Let’s compare two major projects in London: the Millennium Dome (a building originally designed to house the “Millennium Experience”) and the London Eye (observation wheel on the bank of the Thames).

The Dome project was delivered on time and to budget; using a traditional measure, it was a success. However, the final “product” didn’t deliver on the predicted visitor numbers and was eventually closed. From a PRINCE2 perspective, the Dome’s time and cost performance were undone by a lack of benefits realization.

Conversely, the London Eye was completed both late and over-budget. However, it has delivered, and continues to deliver, benefits by its visitor numbers.

A key project management principle

Having continued business justification is vital, particularly on longer projects. By the end, a business case might be many years old and contain outdated information and objectives that may no longer apply.

Certain things could happen in the interim that make it logical to either change direction or stop the project altogether. For example, in the public sector, a change of Government could affect the original benefits in the business case.

Therefore, project managers and the project board need points on the journey (stages in PRINCE2) to revisit and review the business case rather than rolling on regardless.

Also, if an organization has multiple projects it needs to know there’s no duplication or conflicting activities elsewhere. It’s not unheard of to have two projects doing the same thing; with a business case there’s a greater level of control and visibility of what’s going on.

How to agree the “justifiable reason” for starting a project and its continuation

Each organization will have its own way of putting together a business case for a project and to justify what it’s doing in business terms.

PRINCE2’S justification strikes a balance between the cost incurred (money, people, time, risks) and what the organization stands to gain (benefits) which delivers a measurable improvement.

The benefits could be financial or – in a public sector department – changing citizens’ lives in some way.

Stopping a project – a positive thing?

Many organizations find it difficult to stop projects because of the “sunk cost fallacy”: justifying the continuation of a project because of the investment already made.

Governments often attract criticism when cancelling a project. However, this can sometimes be unfair because a decision to cancel could be the right one. If you can identify no continued business justification, then any spending after that is wasted. If there is no logical reason to continue, investment in the project must stop.

Even in today’s fast-moving business world focused on rapid innovation, there is a still a role for continued business justification: building in stages to review and see where a project is going and to understand what is succeeding and what’s not.

PRINCE2’S approach is an appropriate level of control – enabling rather than disabling – to know where things are and to change or halt projects when business justification isn’t there.

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