Foretelling failure

rocks-on-rail-lineOver the last few posts I have been looking at the problems for decision making.  We may never be a hundred percent sure of success from our projects, but  sometimes we can be a hundred percent certain of failure!

This is the story of a new hospital, designed as a private-public-partnership. It featured a very complicated financial vehicle that got extensive coverage in the financial press, so much so that I decided to visit with the designer and find out more. Over a period of 5 hours, he generously went through the details of the contract design with the relevant paperwork stacked in three piles at our feet, each almost a metre high! At the end, convinced that if it had taken 5 hours to explain it to me, a fellow economist, the chances of non-economists understanding the finer details were pretty slim, I asked him two questions.

The first was: “This is a very complicated contractual arrangement, what is the likelihood that you will have the opportunity to use this tool for another PPP?”

The designer replied that this was unique. I was concerned that so much valuable time had been committed to the design of this contractual vehicle and it would have no further use outside this project. But more so I wondered about the stability of such a contract. However it was the answer to my second question that told me that the project would not succeed.

I asked him “If you were an investor, would you undertake this project under these contractual conditions”. He laughed heartily and said a very definite “No Way!”

The contract failed and caused the government much grief.   The moral, as I see it, is that unless a contract is designed to be a win-win situation – expect failure!

Our question for exploration today is:  What would you look for to determine the success/failure of a project?

One Thought on “Foretelling failure

  1. Failure is highly likely where a project is being implemented when there is no intention of follow through. You know it will quietly die as the requisite funding or skills or support will not be made available after the initial “project” phase. Similarly for capital projects when there is no budget for maintenance or operations. A gold standard of failure.
    Failure is highly likely when the initiator is unique and no future owners or sponsors have stepped up. Another quiet withering on the vine.
    Equally failure is likely when the vested interest wants the project, has pushed for it, designed it, negotiated funding for it and staffed it. Then it may proceed but without any grassroots support. Social failure guaranteed.

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