Case Study 111111111111111111
Critical Evaluation on the Risk Management and Project Governance of the BBC’s DMI Project

1.0   Executive Summary

Projects are subjected to high degree of uncertainties as they are often one-off, demand change and temporary (Maylor 2010; Larson & Gray, 2011; Pinto, 2013). This actually contributed to high project failure rates (Hung, 2012; Elahi, 2013). Drawing on project management’s academic theories, the case of Digital Media Initiative will be analysed. Two topics included in this report are: (i) risk management and (ii) project governance. They are selected as they are most relevant issues causing the call off of DMI project recently.

On risk management. There is a very weak risk management process in place. The manager seemed never care to identify the risks, to analyse risks from time to time, or to take prompt action to deal with the risks. In some cases, there are some signs of direct ignorance of the risks.

On project governance. The work climate among the management team in BBC is problematic, which contributed to weak project governance. There are even no clear roles and responsibilities among the executives. It is actually not hard to explain why the project finally failed.

It is believed that many of the issues occurring during DMI project can be avoided or handled properly (i.e., DMI project actually has a high chance of success). Lessons to be learned from the DMI projects are valuable. To clarify that, recommendations were also outlined in the final section of this report.

2.0   Introduction of this Report

This report has the following sections:

  • Background of Project (to brief directors on the DMI project)
  • An evaluation of risk management of DMI
  • An evaluation of project governance of DMI
  • Concluding remarks to summarise about main points related to both risk management and project governance of DMI
  • Recommendation to directors on how to prevent similar failures in future

3.0   Background of DMI Project

DMI project were commenced in order to facilitate the process and technology relevant for BBC staff to create, share and manage video and audio content and programmes from their desktops. It is supposed to foster creativity, aside from both time and costs savings (NAO, 2011; House of Commons, 2014).

We witnessed that the DMI project undergo two stages. The first is during the outsourced of the project to Siemens. The second stage is about the development and management of DMI internally under BBC. Both these stages failed (NAO, 2011; House of Commons, 2014), and we need to identify the root causes as well as to learn the key lessons from such failure.

The three key components of project outcomes include: quality, time and costs (Maylor, 2010; Cerveny & Galup, 2002; Françoise, Bourgault & Pellerin, 2009; Pinto, 2013). DMI failed to achieve the desired outcomes from all of these perspectives. First of all, DMI cannot meet the requirements from users (NAO, 2014), there are frequent delays during execution of the project (NAO, 2011), failure to achieve costs saving, and the strike off of the project that costs a total of GBP 98.4 million in 2013 (House of Commons, 2014).

4.0   Risk Management

Steps for effective risk management are shown in Figure 1. This model of risk management will be used to guide the discussion, on how risk management process in DMI is weak.

 

Figure 1

project

Source: Lecturer Slide

 

Weaknesses in risk identification. To identify relevant risks is crucial because without being able to do so, those risks cannot be managed. In short, risks identification is the first step to effective risk management (Olsson, 2007; Maylor, 2010; Atkinson, Crawford & Ward, 2006). However from the case of DMI, BBC has been unable to identify the relevant risks, until the risks become very obvious and hardly managed.

There is also theory that risks pertaining to a project can be identified through: (i) knowledge of project, (ii) expertise of team and project stakeholders, and (iii) previous similar projects (Maylor, 2010). However, it is noted that BBC has weak comprehension (of being confused) on the project, do not know about the approach employed by Siemens in dealing with the project, and even lacked clarity about the scope of technology releases (NAO, 2014). For that, it is then not surprising that BBC cannot even identify the risks, when some of the risks are obvious.

Weaknesses in risk analysis. Risk analysis is virtually non-existent within BBC – regarding on the risks due to DMI, because the company had failed to respond to clear warning signs that it was in trouble, and to act slowly in dealing with the problems pertaining to DMI (House of Commons, 2014). Yet, in other situations, risk analysis is narrowly focused. It is reported that the BBC’s management of the DMI was focused more on the technological aspects of the programme rather than enabling BBC-wide change (NAO, 2014). In other words, risk analysis process employed by BBC is not comprehensive enough.

Weakness in monitoring and control. Risks must be managed once the project is underway (Maylor 2010; Ward, 1999). Continuously monitor the progress of a project and to have relevant control mechanism in place is essential part of effective project management (Toor & Ogunlana, 2009; Leach, 1999). BBC failed in this aspect, for not being: continue to test the benefits projections of DMI rigorously, not understand and keep track of the changes in delivery timetable and costs incurred, not taking corrective actions when the interim releases is unclear, not updating the projections, and worst, not attending to the warnings from internal auditors as well as external consultants (NAO, 2011; NAO, 2014).

Other than that, there is also no control mechanism to manage risks. It is reported in NAO (2011) that BBC has not yet as at October 2010 put in place to the level required the full range of processes and controls that should allow the firm to complete the development of the technology (related to DMI) to the planned time, budget and functionality.

Ignorance of risks. One important point to also be discussed is that although BBC had attempted to transfer risks to Siemens (through the use of a fixed price contract with fixed delivery milestones) (NAO, 2011); that is not an excuse to ignore risk management upon DMI project. In fact, ignoring the status or progress of DMI is proven a bad risk management decision, as it later become obvious that: BBC cannot solve the issues due to lack of follow up and knowledge, BBC unable to intervene with the progress of the project, and BBC actually never learnt about why the project failed in the very first stage – when Siemens failed to deliver the project (NAO, 2011).

Lack of proactive risk management. During the outsourcing of DMI to Siemens, it is acknowledged that BBC has no direct control over the delivery end results (NAO, 2011). However, that is not an excuse for BBC not to exert influence on the project. It can be argued that the management within BBC has been very reactive in dealing with risk management – with regards to DMI. Indeed, even BBC Trust failed to exercise sufficient oversight on the delivery of the DMI (House of Commons, 2014).

No recovery plan. Risk management demand ability to respond to unforeseen circumstances, and contingencies plan is essential for effective risk management (Hillson, 2002; Ward & Chapman, 2003). It can be observed in retrospect that there is actually no recovery plan or contingencies plan in place, employed by BBC to handle the uncertainties of DMI project.

5.0   Project Governance

Project governance on DMI is very weak, as there are signs that management had failed miserably in addressing the issues faced by the project. In many instances, the management is too complacent, or event outright ignorance on the needs for strong governance.

Unclear objectives. The argument that the management neglect project governance outright is valid when considering that

BBC was aware that business requirements for the DMI were not adequately defined (and that the BBC had still not established a blueprint stating the required end-state for the system by 2012), but yet did nothing significant to address that (NAO, 2014). As can be seen from the outcomes of the DMI project, which had finally resulted in delays and finally the strike off of the entire project.

Ambiguous roles and responsibilities. Prudent corporate governance demand clear project ownership, which means clear roles and responsibilities among the various personnel handling a project (Maylor, 2010). This is critical as project manager should ensure a single point of accountability for the success of the project (Garland, 2009). For the case of DMI, ambiguous roles and responsibilities had finally cause project failures, when no single individual had overall responsibility or accountability for delivering the DMI (House of Commons, 2014; NAO, 2014). That is a strong evidence of weak project governance in place in managing the DMI project.

Decision is made carelessly. It is noted that BBC tend to make fast decision, which is not prudent. For example, BBC never seeks for alternative contractors – but just to engage Siemens to handle DMI. Yet, when the DMI project was transferred back to BBC, BBC did not test whether that was the best option (NAO, 2014). Given that, it can be argued that the management tend to make reckless decisions. Indeed, the lack of competitive procurement for DMI, is also a sign of weak project and corporate governance (NAO, 2011).

Ethical issues or climates among management team. There are many instances that show that the managers simply do not care. For example: financial benefits of DMI were initially overstated, the management simply did not have a proper understanding of the approach being followed by Siemens, BBC did not examine the technical feasibility or cost of completing the DMI (NAO, 2011), mis-informing the Parliament (such as giving assurance on DMI, but the executives are actually not having sufficient knowledge on the matters) and withholding important information (i.e., PwC found that the DMI did not provide clear and transparent reporting) (House of Commons, 2014; NAO, 2014). Indeed, there are also some signs on ethical issues related to BBC Trust – as BBC Trust failed to exercise sufficient oversight of the Executive Board’s delivery of the DMI, and exhibit similar complacency when dealing with the issues faced by DMI (House of Commons, 2014).

6.0   Conclusion

To conclude, there are many weaknesses on risk management on DMI project and the governance of the project. These weaknesses can actually be overcome. Recommendations are provided accordingly as follow.

7.0   Recommendations

There are crucial lessons that must be learned, to strengthen project governance while mitigating risks in BBC – when managing any project in the future. First of all, it is crucial to clarify both risks and project ownerships. Single point of responsibilities must be established. Otherwise, people may just push responsibilities to others in the corporation – which will result in project failure. Risk management process must be put in place as well in any project in the future. There is virtually no such process currently, and therefore causing lack of internal control on risks – and such issues must be corrected in the future. As such and in the coming projects, all project managers must employ a solid risk management framework, which must be subjected to intense review from third party or the directors (on a periodic basis). Then, recovery plan is very important, even though a project manager is confident on the outcomes of a project. It is a plan that must be put in place even the kick-start of a project (Chow & Ha, 2009). As such, a rule must be set to ensure the establishment of recovery plan in any undertaking in the future. In other words, directors should insist to see some evidences that recovery plan is in place (so to ensure that management had actually think over such issues in advance). Project governance should be managed by influencing the very culture on how people work together in a project team (Tan, Cater-Steel & Toleman, 2009). The attitudes of being ignorance, passive, and outright neglect the issues that will harm the interest of a project, must be addressed. For that, cultural change initiatives must be implemented as soon as possible in the firm.

8.0   References

Barber, R. (2005). Understanding internally generated risks in projects. International Journal of Project Management, 23, 584-590.

Cerveny, J. F., & Galup, S. D. (2002). Critical chain project management holistic solution aligning quantitative and qualitative project management methods. Production and Inventory Management Journal, 43(3), 55-64.

Chow, W. S., & Ha, W. O. (2009). Determinants of the critical success factor of disaster recovery planning for information systems. Information Management & Computer Security, 17(3), 248-275.

Elahi, E. (2013). Risk management: The next source of competitive advantage. Foresight: The Journal of Futures Studies, Strategic Thinking and Policy, 15(2), 117-131.

Françoise, O., Bourgault, M., & Pellerin, R. (2009). ERP implementation through critical success factors’ management. Business Process Management Journal, 15(3), 371-394.

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

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

Hung, H. (2012). A framework for corporate risk management development. Journal of Accounting, Finance & Management Strategy, 7(1), 69-87.

Jaafari, A. (2001). Management of risks, uncertainties and opportunities on projects: time for a fundamental shift. International Journal of Project Management, 19, 89-101.

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

Leach, L. P. (1999). Critical chain project management improves project performance. Project Management Journal, 30(2), 39-51.

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

NAO. (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.

NAO. (2014). Digital Media Initiative. London: NAO.

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

Tan, W., Cater-Steel, A., & Toleman, M. (2009). Implementing IT service management: a case study focussing on critical success factors. The Journal of Computer Information Systems, 50(2), 1-12.

Toor, S., & Ogunlana, S. O. (2009). Construction professionals’ perception of critical success factors for large-scale construction projects. Construction Innovation, 9(2), 149-167.

Ward, S. (1999). Requirements for an Effective Project Risk Management Process. Project Management Journal, 30, 37-43.

 

 

Save

(Visited 128 times, 1 visits today)

About the author

Related Post

Leave a comment

Your email address will not be published. Required fields are marked *