More Thoughts on the Budget Sequester's Impact on Project Budgets
In A Project Manager’s Perspective on the Cost Impacts of the “Sequester" I suggested that an unintended consequence of the US government’s budget “Sequester” might be that some ongoing projects will end up costing more than originally planned because of the effect lengthening a project schedule can have on a project’s budget. In other words, a cost saving measure might actually increase costs.
I based that suggestion on 30+ years of IT and technology related project management experience. When you are planning a project, you try to anticipate eventualities by building a “cushion” into your project budget, but sometimes you find later that schedule slippage can overcome even the best laid project plans.
One reason for this is changing requirements. Another is that many project managers don’t have 100% control over 100% of project resources. Here are some observations about what I have learned so far about this complicated situation:
- Not everyone cares if projects cost more. Documenting problems raised by making projects more expensive may not be of interest to those whose primary interest is budget reduction. I recognize this and admit I’m coming at this from the vantage point of the project manager who is usually “on the hook” for delivering something new, on time, and on budget.
- Most projects have downstream impacts. Federal projects, including Federal IT projects, are usually parts of larger programs or activities where deliverables — and utlimate impacts — occur after a given project’s completion. It may therefore be difficult to meaningfully link longer or more expensive projects to effects on down-the-road impacts without also having a complete picture of how all projects within the program relate to each other.
- Many agencies already have serious non-sequester financial issues they have to deal with. If you read, for example, U.S. Government Accountability Office, Fiscal Year 2014 Budget Request, delivered May 21, 2013, you’ll see just for this one agency, GAO, that the overall impacts of Sequester-related budget reductions on individual projects have to be viewed in the context of continuing year to year budget reductions, staff recruiting challenges, unchanged performance requirements, and looming retirement impacts. Impacts on individual projects may therefore be of less interest given more pressing problems.
- How do we quantify the impact of delay? My basic hypothesis is simple: increasing delays cost more. How do we quantify the impact of “costing more” given that program performance and impacts may be difficult to link to individual projects? Perhaps one solution solution is to, at minimum, document the impact on resources and costs of lengthening individual projects. For example, if one project costs more to complete, resources might need to be taken from another project. Looked at another way, wouldn’t speeding projects up help save money, as suggested by the recent IBM Center for The Business of Government Fast Government report?
- If project delays do have negative consequences, who will be held accountable? If we wish to reward “good” performance and penalize “poor” performance, how is performance to be measured in a situation where changed circumstances are imposed on project management across the board without regard to outcome?
I’d like to gather some objective information in order to better understand both the scope of the problem — and the possible solutions. To do that I’m interested in identifying project managers who have current experience with government projects that are being impacted by the Sequester.Since most of my project experience is IT related, I’ll probably be focusing primarily, though not exclusively, on IT related projects.
Depending on how far I get with this, I’ll then consider what might be required in order to conduct a more formal survey in an attempt to document real world impacts and solutions.
If these topics interest you, please let me know!
Thanks to my friend Bob Davis for his feedback on some of the ideas presented here.
Copyright © 2013 by Dennis D. McDonald, Ph.D.