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Imagine being asked to hold a jelly in your hands.

So there it is, wobbling a bit, but relatively stable. Provided you don’t make any sudden movements, the jelly should stay in place. Some may melt and be lost through your fingers, but with a light touch and a steady hand the jelly should be okay.

But what if you got worried about the jelly — that is wobbling, that it might slip out of your hands, that the amount seeping away through your fingers could turn into a flood — would you tighten your grip?
What would happen if you did tighten your grip? Picture yourself gripping the jelly. Would you actually have better control?

The jelly might stop wobbling, but you’re likely to be losing much of the jelly through your fingers. The more you grip the jelly, the more you’ll lose.

Yet, this is how many organizations manage project costs. They get worried about a bit of wobbling in the costs here and there, that some funds are seeping away and so try to exert greater control over the costs in ways that can quickly become counter-productive.

The tighter they control the costs the more the costs seem to seep away.

What we have found, as we have reviewed how different organizations manage projects, is that those with the most focus on costs tend to have the most cost overruns or projects that result in increased costs!

Short-term decisions are made to ‘save costs’ which then cost more down stream. The business decides to skimp on resource costs and then finds either the project is extending out (with the associated cash burn) or is suffering from quality problems that increase subsequent operational costs.

When cost management is seen as an end in itself the tendency to grip too hard is too often seen.

Particularly in a governance role, think of cost management in terms of jelly management — it needs a light touch, no sudden movements and will wobble. But, if you try to control it by gripping too hard, costs are likely to seep away.

Jed Simms

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