WATERMELON REPORTS ARE BOOMING AGAIN AFTER THE PANDEMIC, EVEN FOR YOU?
During the pandemic, an old problem remains: how can an organisation ensure that the promised project results are actually delivered as planned?
Out of a mixture of pandemic-related confidence and scepticism, many companies are starting projects that were previously on hold and initiating new ones. While the pandemic has changed the perspective of many decision-makers and project managers and new working and management methods are now being tried out, an old problem remains: how can an organisation ensure that the promised project results actually materialise as planned?
Despite ever-improving project standards, agility at all levels and even more training for project staff, the economic or qualitative success of projects often falls short of expectations. Strategic challenges such as digitalisation or new markets and products, as well as classic process optimisations, are intended to win back lost profits, margins and customers. But if only half of the projects continue to be successful, then recovery or even preparation for new business models and markets is all the more difficult. We know from our projects that failure begins even before a project starts and then manifests itself in the infamous “watermelon reports”.
Watermelon reports: origin and care
The well-known term “watermelon reports” in project management humorously indicates what a real yield killer is: project reports that report a “green” status but conceal the failure, i.e. red, at the core of the project and delay necessary management decisions.
The reasons for this often lie in the business case and initialisation prior to the project. In our project practice, we often see a generation of managers making the same mistakes as their predecessors. Here is a brief selection:
- The business case is created under optimistic assumptions. Doubts and sceptics are negated and a not harmless confirmation bias (so-called “expectation bias”) occurs, especially with new business models and products
- The reasons for project failures and incorrect forecasts were also not systematically analysed and are missing from future planning assumptions
- It is not uncommon for the same assumptions to be presented to decision-makers in various different ways. Decision-makers with risk aversion are constantly confronted with new presentations, but always with the same risks, and are “overrun” in a convincing manner. These PowerPoint battles often lead to projects that continue to be characterised by poor risk management and framing, i.e. different presentations of the same facts
And during the project, the pressure to act and succeed usually increases. No project manager likes to report problems and the threat of failure. Cultural factors in many organisations sweep deviations under the carpet. Despite all claims to the contrary, we have rarely seen risk management based on organisation-wide and comparable risks in practice. How are management or the portfolio management of IT projects supposed to recognise that a problem is due to test management, for example (e.g. insufficient test cases and data), if the individual projects describe their delays as “IT operations”, “development” or “acceptance environment”? This raises the question of whether project managers are “glossing over” something or whether the portfolio organisation has not yet penetrated the value chain.
There is also great potential for improvement in practice when it comes to the business case and follow-up during the project and, above all, when the project is cancelled or completed. Both successful and unsuccessful projects are rarely compared against the original business case. This deprives the organisation of any opportunity to learn from mistakes and successes (see above).
We therefore experience melon reports as a sign of incorrect planning, organisational barriers to disclosing the true status and a culture of looking away and glossing over.
Control levers for more successful projects
In our opinion, the most important methodological lever is a business case based on the real project benefits and stringent benefit tracking. Many organisations believe that if they calculate an internal rate of return or cash flow for a project, they already have a benefit. Experience shows that these financial indicators in particular are subject to forecasting inaccuracy and “creative freedom” and are not suitable for operational project management from the perspective of a status report. A project should increase the benefit of those who are to work with the results of the project after its completion. This benefit (also known as outcome) differs from the project result (output) due to the different planning horizon and the concrete description of the strategic benefit from the perspective of the organisation’s future stakeholders. Projects are carried out to improve the organisation in the future. Here are a few examples:
- From: “Detailed concept created” to “Detailed concept is supported by the key specialist department”
- From: “Going live on 1 December 20xx” to “80% of users use the new software and report significant work simplifications”
- From: “Return on Project Cost in 6 months” to “Acceleration of “Purchase-to-Pay reduces committed capital by xy % 6 months after introduction of the system”
The examples show that the benefits should not be measured during the project, but after the project has been completed. And it is precisely this strategic benefit for after the project that is used to measure success and decide on conflicts in the project. This must be presented in a business case and always kept in mind as a control element during the project. The consequences include:
- Transparency of project results in a language and description that future users understand
- If the project is cancelled, usable results remain
- The transition and the benefits are presented in the project from the perspective of the subsequent users and are not tied to “formal project deliverables”
- The project and, even better, the portfolio management can use strategic utilisation criteria as a benchmark for reprioritisation and conflicts between projects and not embellished key figures
While this methodology has been known for years under the heading of “Benefits Realisation Management” and is constantly being improved, its concrete application is lagging behind. It seems that traditional and sometimes financial management prevails, despite the many project failures. However, it is not difficult at all to specify the objectives and expectations at the start of the project and to link them to the planned course of the project. It is only difficult to incorporate the expectations of future users and stakeholders in such a way that they can be transparently realised in the project and portfolio. In our experience, this effort is worthwhile. Those who track the subsequent strategic benefits of a project also manage and evaluate the project accordingly and are more flexible when changes or risks occur and can present these transparently to top management.
The most important cultural levers are also clear objectives and leadership behaviour that focuses on communication and transparency. The concrete formulation of benefits can also sharpen the objectives of those involved in the project. What is often formulated rather softly as “mission, goals and values” and is not really recognised by most employees in the actual project business, highlights the problem of setting common goals. However, if the benefit categories and arguments in projects and project portfolios are recognised and communicated as the basis of the work, and each stakeholder can be found with their own benefit category, then productive and aligned communication runs through the projects. Similar to a magnet, the benefit arguments draw the project work and decisions towards these common target components. Teams and projects, even programmes, can be united around a common goal (bundle) with the coordinated benefit arguments. Concretely formulated benefit arguments focus on the actual benefits that will be realised by the subsequent users or stakeholders and thus sharpen the common understanding of the goal, which is often lacking with soft, abstract or purely financial key figures.
At the same time, another cultural lever is indicated. With clarity about the goals pursued in the project, the psychological security of the teams increases. In situations of uncertainty and ambiguity, the disclosure of circumstances and problems is less a negative aspect than a contribution to joint learning. Managers initially experience this as a “flood of problems and decisions”. However, it often turns out that the projects also produce solutions in order to continue to achieve the benefits, albeit in a different way than originally planned. Flexibility, transparency and initiative then relieve the pressure on managers over time. Problems are solved in advance between projects, conflicts are resolved according to uniform standards and the programme or portfolio is supported in terms of substance and benefits. All of this happens without incremental control from top management and yet this ensures the overall success of the projects.
A positive side effect is when project managers report the jeopardised benefit categories in the status together with the respective problems and challenges. If we use Business Realisation Management in our projects, we can defuse conflicts that arise within a portfolio, e.g. between projects and for certain resources, by arguing according to the expected benefit or lack of benefit of the project from the perspective of the line or market.
Managers then focus less on the question of who is responsible and more on what the “reporter” continues to do to achieve the benefits. Instead of negative consequences, flexible action becomes the basic attitude, regardless of whether classic, agile or hybrid project management methods are the order of the day.
To summarise, managers can make their project landscape more flexible and bring employees into a kind of “psychological safety” if they align their project goals more clearly and with a focus on the strategic benefits after the end of the project. This should dry up the watermelon reports over time.
Recommendations for further reading
- Jenner, S. Benefits realization – building on (un) safe foundations or planning for success?, PM World, Vol. I, July 2012
- Jennewein, W.; Leisin, A.C.; Strecker, M.; Das Phänomen der Wassermelone, in: Wirtschaft und Weiterbildung, 07/08 2021
- Kerzner, H. The Beauty Behind Benefits Realization and Value Management; https://project-management.com/the-beauty-behind-benefits-realization-and-value-management/ Abgerufen 28. Juli 2021
- Serra, C.E. and M. Kunc Benefits Realisation Management and Its Influence on Project Success and on the Execution of Business Strategies, International Journal of Project Management 33, no 1 2015, S. 53-66