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Project Manager : Project Manager Dec Jan 2013
24 Project Manager •COVER STORY SQUEEZING THE CORPORATE COST BALLOON MAY REDUCE COSTS FOR A SHORT TIME BUT THE PROBLEMS CAUSED WILL OFTEN BE EXPENSIVE TO REMEDY TACTICAL PROJECT COST-CUTTING Greg Hyde's keynote at the AIPM National Conference began with an image of a bursting balloon. "Squeezing the 'corporate cost balloon' is similar," Hyde said. Costs may reduce for a short time, but the problems caused by cuts will often be expensive to remedy, in ter ms of both the direct costs and the damage to the organisation's image. Hyde cites Al Dunlap -- the former Sunbeam and Scott Paper CEO who, in 2010, was listed in Time magazine's Top 10 Worst Bosses for his "myopic obsession with his companies' nancials at the expense of absolutely everything else" -- as a prime example of the bursting balloon: 'slash and bur n' cost-cutting followed by corporate collapse. "It is not possible to shrink yourself to success," Hyde says. Yet this fact is often ignored in the face of pressure to produce linear pro t increases, shareholders who "act more like opportunists than long-term owners", and CEOs driven to maximise short-term perfor mance. So what can project managers do when their budgets are slashed without similar changes to scope? Reducing a project's budget REDUCTIONS WITHOUT SACRIFICE Hyde suggests the following for reducing costs without sacrificing the quality of your projects' outcomes: • Investigate systems thinking and embed business excellence practices. • Map core end-to-end project implementation processes to identify and eliminate waste activities. • Implement process improvement frameworks that incorporate lessons from previous experiences. • Establish and report operational performance measures appropriate to each project and program, as well as the project portfolio. • Ensure that all imposed project cost reductions can be achieved through changes to the scope, business processes, services or products delivered. • Make incentive schemes pay off by designing both them and related performance measures to promote behaviours considered critical to achieving strategic outcomes. • Include a performance measure in executive incentive schemes that requires each executive to demonstrate what decisions and actions they have undertaken to reduce future operational risk. • Ask Board members to include a requirement to measure and report operational risks in risk appetite statements.
Project Manager Oct Nov 2012
Project Manager Feb Mar 2013