I recently had a conversation with a colleague regarding an article she read about an accounting firm that ran into difficulties while investigating a project-based organization and a few thoughts came from that conversation… Sometimes, even when all the right things are done with regards to accounting for project financials at the organizational level (for example Project Managers regularly reporting on cash flow in accordance to the organization’s accounting system), projects can still spin out of control. Why does this happen? 

One common issue is that the accounting systems are often not based on project deliverables; then you also have projects that are being fast tracked and low bid wins… and if any of these issues occur in conjunction with each other, it can be a perfect storm.  

The project manager has little control over these issues since they are decisions that are made by the executive level and tied to poor governance. These types of situations require analysis from two perspectives: an accounting audit with a top-down perspective and a Project Management type organization, with a bottom up perspective. The blame for projects failing in these situations cannot simply be placed on the last person standing (the Project Manager that can be called “the executioner”). Placing the blame there is too simple of a solution and will perpetuate a cycle of hiring poorly-performing Project Managers; good Project Managers will not want to work for an organization with a reputation for this practice.

Think about a situation where the blame is placed on the Project Manager… they will begin managing projects by following all the “rules” in the best interest of their job security as opposed to what is in the best interest of the project; a rippling effect of this will then be Project Managers hiding bad news from leadership until it’s too late.

One wise executive of a very successful multi-national construction company once told my colleague that they do not fire Project Managers for poorly performing projects, they fire Project Mangers for not escalating problems and issues soon enough to try and solve the project problems… How does your organization handle these situations?