Early Project Appraisal

Authors: Professor Knut Samset
Publisher: Palgrave Macmillan

Professor Samset’s book is about doing the right project, (as opposed to doing the project right) and about not starting impossible projects that deliver no value however well they are executed. His rationale for evaluating project concepts early, and thoroughly, is summed up early in the book with this description of the early stages of the project:

“…in which the main premises are decided, when the consequences of decisions made are greatest, and when the information available is lowest. It is also the time at which the cost incurred in making major changes is minimal. This implies that it pays to do a proper job before the concept is chosen and the project is planned in detail.”

Having stressed the value and importance of early appraisal of projects, he then observes, possibly implying that failure to recognise the value of appraisal is at the root of so many failed projects, and that perhaps the industry as a whole is ignoring early appraisal and perpetuating the malaise through its training, texts, and bodies of knowledge:

“It is therefore a paradox that most of the curriculum and textbooks for students in the profession termed Project Management focus on how to manage a project during its implementation phase, while the problem of how to arrive at better concepts up front is largely neglected.”

In addressing Early Project Appraisal, Prof. Samset has produced a book that is overflowing with ideas, strategies, tools, and relevant examples. This makes for a demanding read, not due in any way to the style of language, but purely due to the rate at which the thinking and information is presented, challenging the reader to assimilate all of these ideas. Although the book comes with a hefty price tag attached, comparison with other works suggests that for the material presented, it actually represents good value.

The book is divided into two parts; the first discussing the aspects of front-end assessment of projects, and the second part describing tools and techniques to effect that assessment and draw meaningful conclusions.

The first part of the book addresses appraising the project in a number of stages. Firstly, understanding what the project is really about – what are the benefits, drivers, success factors, and uncertainties. A model showing the build-up of levels of success is shown, that incorporates implementation and short to long term benefits, illustrated by examples of both success and failure. Then, understanding the uncertainties, and the effect these have on perception of the project’s success at each stage. The book considers using the planning activities as a vehicle for understanding greater detail of the project and of the uncertainties and risks that are associated, refining and elaborating the project concept. There is a section that addresses the predictions of costs and benefits made during the early stages; why costs are generally underestimated and benefits overestimated, and why these systemic errors are not always due to the nature of uncertainty and the lack of sufficient information, but due to vested interests. Despite the wealth of information and ideas, the book favours the use of simple planning methods, the use of intuition, and the re-use of learning from similar projects, in a three-stage approach encompassing Definition, Development, and Assessment of the project concept.

Part two of the book refines the ideas from part one, and offers 10 strategies to perform the stages in part one. Considering the problem as a system, Prof. Samset provides an overview of system analysis through the use of SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). He describes how to tease out and treat the uncertainties and to prioritise those that have the capacity to do most harm, those that may yield most benefit, and the continuum between these two extremes. A structured approach to cost estimation and benefit analysis, followed by a section detailing how to analyse and classify risks, and setting a risk policy are provided, which apply approaches familiar to implementation project managers to the strategic project appraisal. Finally, Prof. Samset discusses statistical analysis of project schedules, to provide a distribution (S-curve) for possible completion and milestone dates, explaining how these are used to identify sensitivities to environmental conditions that may cause delay and dislocation to the implementation schedule.

Light relief is provided at the end of the book with a chapter entitled; “Boondoggles and White Elephants”, where some of the examples cited earlier in the book are revisited as either Boondoggles; projects that waste time and resources in futile activities (Concorde is cited), or as White Elephants; projects that deliver a product that presents a burden or cost to the client, and leaves him with more problems than he had at the start. The favourite example of the latter is the Millennium Dome, although its very recent success in the hands of the private sector is not mentioned.

In summary, as mentioned in the preface, this is a book aimed at strategic decision makers, and in that context it provides a wealth of information and guidance. It is also of interest to project managers insofar as it provides a framework to question the project’s existence before agreeing to take a role, and to gain a view of the “big-picture”, and to extend the understanding of project analyses from the tactical environment into the strategic.

ABOUT THE REVIEWER: John Greenwood has around 15 years of project management experience gained in the engineering and IT industries, and has been an active member of the PMI UK Chapter. He holds a degree in Physics from the University of Birmingham, and has worked for a number of years as a Systems Engineer in the defence electronics industry.

April 2011

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