Spot the trap!

Padding is the process of inflating your estimates by an arbitrary amount to allow for the risk of things going wrong.

In many respects, it is a lazy form of contingency planning.

To illustrate: which is the better result for your projects – to be 5% over budget, or 15% under?

Nearly every organization I’ve worked with would unequivocally say 15% under budget – but wait, do you see the trap here?

Let’s suppose I am a project manager who diligently prepares my project plan, consulting sources and stakeholders as widely as possible to ensure my estimates of time and cost are as accurate as they can be.

Throughout project delivery, I carefully manage not just my triple constraints, but the risks and issues that constantly arise, and at the end of the process, my project comes out 5% over budget. 

This is well within our organisationally defined tolerance of plus or minus 10%.

On the other hand, my fellow project manager rushed his planning, and instead of taking a methodical, bottom-up approach to estimating, he just padded his estimates by 20%.

Now my colleague’s project has come in 15% under budget and he is being praised by the sponsor, the client, and the CEO of the company.

What do you think my response is going to be?

Well, I probably won’t complain, because that never works; but on the next project I plan, I’ll pad my estimates so I can be rewarded with glory as well.

As mentioned earlier, the practical effect of this is that the organization I work for has to quarantine an artificially unrealistic amount of money for project delivery, meaning that it can deliver fewer projects and will be slower to innovate.

And don’t start me again on Parkinson’s Law!

---

A vicious cycle

But that is not the end of it.

Suspicion gets out that everyone is padding their project estimates when everyone’s projects start coming in under budget.

Ok, says the PMO, the next time you submit a project plan for approval, we will draw a big red line through your budget and schedule just because I know you’re taking advantage of the system.

What do you think my response is going to be?

You guessed it – more padding.

Admittedly organizations that are struggling with project delivery are more likely to engage consultants like me; however, it is almost a universal truism in my experience that regardless of official policy statements to the contrary, organizations prefer and reward projects that come in under budget.

I put it to you that that is just plain wrong.

Suppose you want a high-performing project management culture in your business. In that case, in which people are motivated to initiate, plan, deliver, and close projects to the best-practice standards of the profession, you need to incentivize good processes.

This is not to say that innovation in project delivery that results in under-budget or ahead-of-schedule achievement should never be celebrated – quite the opposite, this is a good thing. 

For me, the project manager only deserves praise for coming in massively under or ahead when it results from an opportunity they have directly recognized and seized.

However, applauding someone for being lazy at best and positively deceitful at worst – especially at the expense of hard-working and diligent colleagues – can never end well for an organization.