Case Study
Critical Evaluation of the Risk Management and Stakeholder Management Approaches of BBC’s DMI Project

 

 

 

Executive Summary

This is report investigating about the Digital Media Initiative (DMI) project pursued by BBC, of which eventually failed due to several issues. Two main areas examined under this report, include: risk management and stakeholder management. Through the application of theory on these two areas, the DMI project can be examined and evaluated. From the analysis (based on the theories), it is found that risk management is very weak – in the context on how DMI was managed by BBC. There is virtually no risk identification process, and lack of control mechanism to deal with the possible risks faced by the project along the journey of the implementation of DMI. Indeed, the risks were only highlighted or being paid serious attentions when they are too complex or too serious to be dealt with. Management in BBC also failed to read the hints or signals that the project is going to fail. Then, from the perspective or stakeholder management, the management in BBC had also failed to deal with the different stakeholders properly. To sum that up, there is no concerns on the needs or opinions from the users of DMI seriously, there is lack of communication with business partners such as Siemens, and BBC seemed to be recurring engage a weak stakeholders or partners (such as Siemens or BBC Trust) is catering to the needs of the implementation of DMI. Given that, it is crucial to take the failure of DMI as a lesson. Several recommendations are provided to the management in BBC, so to avoid such mistakes in the context of project management in the future.

Introduction

This report evaluates Digital Media Initiative (DMI), on two areas: risk management and stakeholder management. Upon critical evaluation on the project with important theories of project management, recommendations will be provided.

Background of Project

DMI is a project with the objective to allow BBC staff and partners to develop, create, share and manage video and audio content and programming on their desktop; with the expected benefits include: reduce the time and cost of accessing and editing digital content and to foster creativity (National Audit Office, 2011; House of Commons, 2014). There are two phases of project implementation: (i) Siemens to deliver DMI, and (ii) BBC to take over the project internally (National Audit Office, 2011).

In theory, project fails when the project cannot meet the intended objectives, over the budget or failed to meet the desired specification (Pinto, 2013; Larson & Gray, 2011). Obviously, DMI is a failed project because the project had been delayed (during the phase that it is outsourced to Siemens) and hence unable to achieve the intended cost savings, (National Audit Office, 2011), and eventually being called off at a loss of £98.4 million (House of Commons, 2014).

Part I: Risk Management

Risk management is crucial to ensure the completion of a project effectively and efficiently (Atkinson, Crawford & Ward, 2006; Olsson, 2007). Then, DMI by nature is a high risk project (National Audit Office, 2011). It is the undeniable that DMI is a project that deserves extensive risk management.

Then, theory also suggests that the risk management starts with identification of relevant risks, before the risks can be managed properly (Olsson, 2007; Ward & Chapman, 2003). For that, it is apparent that despite DMI as highly complicated project, there is lack of effort to identify the risks, and the risk of unable to complete the project is only highlighted as ‘red’ when the situation became very critical. Other than that, identification of risk by BBC focuses excessively on technology risks and issues rather than whether the programme could achieve operational change to business practices in the BBC (National Audit Office, 2014). In a way, the risk management process is not holistic.

Indeed, risk identification process is very weak throughout the implementation of the project. For example, BBC never follows up on how the delivery timetable, costs and benefits have changed over time (National Audit Office, 2011). Yet, BBC failed to revisit the business case of DMI (National Audit Office, 2014). With that, BBC effectively failed to have continuous monitoring and control on DMI project execution. Such signs show that risk management is very weak in BBC, as theory suggests that risks must be managed once the project is underway (Maylor, 2010).

Aside from that, theory suggests that risk management demand management to have knowledge on a project (Ward & Chapman, 2003; Maylor, 2010). However, it is later found that BBC had only incomplete knowledge of the system design of DMI (National Audit Office, 2011). With such findings, there is virtually no risk management in BBC.

Theory suggests that prudent risk management must have contingency plan (Burnaby & Hass, 2009). For that, although it is noted that BBC had tried to transfer risks to Siemens (National Audit Office, 2011), which is one of the risk management strategies (Hillson, 2002; Maylor, 2010), the firm failed to develop contingencies plan to cope with the uncertainties that Siemens may fail to deliver.

Then, while a project sponsor had transfer risks to third party, it doesn’t mean that BBC should neglect the progress of the project all together. The firm failed to put in place to the level required the full range of processes and controls that should allow it to complete DMI project to the planned time, budget and functionality (National Audit Office, 2011). This is not proper considering that DMI is a very complicated project.

In a way, it is valid to argue that BBC has no clear understanding on the risk status. The review on DMI by National Audit Office (2014) had actually found that BBC’s plans did not map on to release schedules – indicate that the status of project is not taken as signs to manage risks.

There are many signs available to project management when a project is not progressing well (Kululanga & Kuotcha, 2010), but management in BBC seemed to be totally ignorance on that. As argued by House of Commons (2014), BBC had failed to respond to clear warning signs that it was in trouble. This is obviously weaknesses in risk management as effective risk management demand constant monitoring on project status.

Having clear objectives is crucial for effective risk management and project success (Maylor, 2010; Atkinson, Crawford & Ward, 2006). However, business requirements for the DMI were not adequately defined and yet there is also lack of understandings on the needs of the users (National Audit Office, 2014).

Part II: Stakeholder Management

Among the stakeholders for BBC in DMI project management include: BBC Trust, the taxpayers, the community, employee, business partners such as Siemens as well as the users of DMI. Stakeholder management is critical as different stakeholders have different objectives, values, priorities and interests (Maylor 2010). However, the case of DMI shows that BBC failed to deal with the different important stakeholders proactively and effectively.

For example, Siemens is a very important stakeholder that must be managed and closely monitored, as Siemens have high ‘power’ in affecting the status of DMI (and hence BBC), but also the fact that BBC has high ‘interests’ on the performance of Siemens [Remarks: as per the guidance from the position/importance matrix maps (Maylor 2010)]. There is no proactive stakeholders approach applied within BBC because of the following: BBC did not have an up-to-date assessment of its contractor’s capacity and capability to deliver the programme despite contractor such as Siemens is crucial factor that can affect failure or success of DMI (National Audit Office, 2011); BBC has little knowledge on the approach being followed by Siemens, causing the firm unable to intervene when things go wrong (National Audit Office, 2011), as well as not having serious post-mortem reviews with Siemens.

In the context of project management, effective stakeholder management demand a firm to taking stakeholder interests into account (Loosemore, 2010). In this case, the very important stakeholder to also be managed is about the users. This is actually absence from the case of DMI as technical problems and releases were not meeting user expectations, which were critical in eroding user confidence and undermining the business case (National Audit Office, 2014). As such, BBC should set up a channel to communicate with the users frequently, to gain feedback from them. Indeed, the users should be engaged in developing the software.

Frank and constant communication between stakeholders is critical for effective project management (Loosemore, 2010; Kayis, Zhou, Savci, Khoo, Ahmed, Kusumo & Rispler, 2007). From the case for DMI, it can be observed that communication process between BBC and stakeholders was very weak. For example: BBC failed to communicate to learn from Siemens on why the DMI project is complicated and challenging, there is lack of two-way communication process to better understand users’ preferences and requirements, which resulted in unclear user requirements, and failed to pay serious attentions to many important issues identified by external reviewers during the course of the programme (National Audit Office, 2014). In a way, the lack of communication, coupled with lack of transparency, contributed to many unforeseen issues, and that is a sign of weak stakeholder approach in the context of how DMI was managed.

Lastly, BBC also failed to engage the right stakeholders to contribute to the success of DMI. For that, DMI is lacking of independent reviewer (and hence independent assurance) on the various issues that the project is facing. The situation gets worse when BBC Trust that supposed to be competent is also exhibiting complacency when reviewing the DMI project (National Audit Office, 2014).

Conclusion

In short, from both the risk management and stakeholder management perspective, the DMI is badly managed. While it is possibly true that the complexities of DMI projects had contributed to the eventual project failure, the lack of proper risk management, as well as the inability to manage the important stakeholders in a relevant manner; had actually also play a huge role in affecting project failure. There are lessons to be learnt, and these will be provided below.

Recommendations

On risk management, BBC should perform the following in the future:

  1. Establish proper risk management process, from identification of risks towards proactively manage risks – and follow that risk management process throughoutly. There is lack of systematic approach to risks management, as indicated from the case on how DMI actually failed. An enterprise risk management system should be established in BBC in the future.
  2. Have constant monitoring and updates on the risks. It is crucial to aware that both external and internal environment keep changing, and constant and recurring audit on both the internal and external environment is critical, so to ensure that the risks arise from time to time can be known, and hence manager properly.
  3. Establish proper control mechanism to manage all projects that have high importance to the firm, even when the risks are transferred to third party. Proactive risk management in the future is critical, especially when a project can affect the performance and reputation of BBC seriously.
  4. In the future, BBC should appoint a risk owner to each and every single project it is having. Structured and clear risks ownership is required for managing complex projects, that can be full of uncertainties (and hence risks).
  5. In the future, project objectives as well as the corresponding risk management objectives must be set prior to the commencement of a project.

 

On stakeholder management, BBC should:

  1. Aware that stakeholder management is crucial in project management, especially when a project involve many other essential stakeholders such as the public, business partners and the users. Therefore, meetings to discuss stakeholder management within the company should be conducted in the future.
  2. In the future, there must be business practices that ensure that management in BBC will communicate clearly with all relevant stakeholders. Ignoring the interest of the stakeholders is problematic. Two ways and transparent communication with other stakeholders can reduce risks faced by the company.
  3. It is possible to engage other stakeholder to contribute to project success. As such, BBC should focus on engaging other stakeholders as well, in the future – in the upcoming projects.

 

Reference List

Atkinson, R., Crawford, L., & Ward, S. (2006). Fundamental uncertainties in projects and the scope of project management. International Journal of Project Management, 24, 687-698.

Burnaby, P., & Hass, S. (2009). Ten steps to enterprise-wide risk management. Corporate Governance, 9(5), 539-550.

Garland, R. (2009). A Practical Guide to Effective Project Decision Making. London: Kogan Page.

Hillson, D. (2002). Extending the risk process to manage opportunities. International Journal of Project Management, 20, 235-240.

House of Commons. (2014). BBC Digital Media Initiative: Fifty-second Report of Session 2013–14. London: The Stationery Office Limited.

Kayis, B., Zhou, M., Savci, S., Khoo, Y. B., Ahmed, A., Kusumo, R., & Rispler, A. (2007). IRMAS – development of a risk management tool for collaborative multi-site, multi-partner new product development projects. Journal of Manufacturing Technology Management, 18(4), 387-414.

Kululanga, G., & Kuotcha, W. (2010). Measuring project risk management process for construction contractors with statement indicators linked to numerical scores. Engineering, Construction and Architectural Management, 17(4), 336-351.

Larson, E. W., & Gray, C. F. (2011). Project Management: The Managerial Process, 5th ed. New York: McGraw-Hill.

Loosemore, M. (2010). Using multimedia to effectively engage stakeholders in risk management. International Journal of Managing Projects in Business, 3(2), 307-327.

Maylor, H. (2010). Project Management, 4th ed. Essex: Prentice Hall.

National Audit Office. (2011). The BBC’s management of its Digital Media Initiative: Report by the Comptroller and Auditor General presented to the BBC Trust’s Finance and Compliance Committee. UK: BBC.

National Audit Office. (2014). Digital Media Initiative. London: National Audit Office.

Olsson, R. (2007). In search of opportunity management: Is the risk management process enough?  International Journal of Project Management, 25, 745-752.

Pinto, J. K. (2013). Project Management: Achieving Competitive Advantage, 3rd ed. Harlow: Pearson.

Ward, S., & Chapman, C. (2003). Transforming project risk management into project uncertainty management. International Journal of Project Management, 21, 97-105.

 

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