Projects as Pyramid Schemes

Throughout my career, I have come across and been a part of programme / project or operational teams that have been put in nearly impossible situations – the programme is behind schedule or budget, and what ends up often happening is that the individuals on those teams end up working insane hours, at great personal and professional cost (and unfairly), to try to get things ‘back on track.’

I also often found – particularly when I worked in political risk and sustainability consulting – that critical elements that should have been spotted early in the project lifecycle (for instance, figuring out how long local community consultation was really going to take) were simply ignored. Trying to remedy something like this after ‘shovels hit the ground’ is like trying to put toothpaste back into the tube.

At a portfolio level, I have seen organisations misdiagnose the problem of their projects misdelivering. They focus on new delivery methods, investing in new tools and dashboards, better governance, trying to upskill teams or in ‘better project risk management’.

Often, the problem isn’t delivery at all. It’s decision-making.

🔺 𝐏𝐫𝐨𝐣𝐞𝐜𝐭𝐬 𝐚𝐧𝐝 𝐩𝐲𝐫𝐚𝐦𝐢𝐝 𝐬𝐜𝐡𝐞𝐦𝐞𝐬

The problem is that – just like a pyramid scheme, these projects were set up to fail. They structurally could not succeed, at least not according to the original targets they were given. They ran into Prof. Bent Flyvbjerg‘s ‘iron law of projects’ – ‘over time, over budget, under benefits, over and over again’.

Pyramid schemes collapse under the weight of their own mathematical contradictions. To keep one going, they depend on recruiting more and more investors. It only takes a few levels for one to run out of people on the planet to recruit (this is the same logic behind why multi-level marketing).

Projects often have structural deficiencies, like a pyramid scheme – namely, unrealistic targets.

↗ ↖ ↔ 𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧-𝐦𝐚𝐤𝐢𝐧𝐠

The way forward is a more realistic appraisal of projects at the planning and decision-making phase. I have lost count of how many times in the past year I have recommended Dr. Flyvbjerg’s book “How Big Things Get Done” to colleagues and friends. If you are involved in projects, this is a must-read! In it, he discusses a technique which is also a must for organisations – reference class forecasting. This involves basing project targets on how similar projects have actually performed in the past, not on some dreamt-up targets, with no reference points, and loaded with optimism bias.

This, combined with ways to make quality decisions over those proposed projects helps do the opposite – structurally design them to optimise the likelihood of success.