Recently I spoke with an executive who leads her company’s program management office, the one that looks after all the company’s projects. We were lamenting the poor performance of many, if not most, of the large, complex projects. (By large, I mean projects over 10,000 person-hours/18 months or spend of $10 million and up.) I was explaining that statistically, more than 75 percent of these projects will fail to meet their schedule and/or budget. And when they fail, they fail big, overshooting their budgets by an average of 55 percent. Considering that this problem is endemic to most of The Fortune 1000, all told, these failures cost the typical Fortune 1000 company an average of $160 million per year.
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In searching for the likely cause of this problem, the simplest and most common belief is bad management. But that’s not the real cause. Most often, it’s not that we lack the management skills to get to our destination: it’s that we underestimate the challenges of getting there. As a result, we set unrealistic goals for how much time and effort it will demand.
The same goes for estimating risk: companies are unduly optimistic, causing the role of bad luck to be grossly underestimated. What’s more, we tend to be overconfident in our ability to prevent or control bad outcomes. So we enter projects with skewed and unrealistic schedule and budget expectations we can’t hope to meet.
“You’re describing my whole world,” my executive friend sighed. “I fight the ‘get real’ battle constantly,” she said. “But I still end up cleaning the mess left from bad estimates.”
Here’s what’s interesting: when I have the same conversation with a man in the exact same role, I get a completely different reaction. “Yeah, I’ve heard those statistics,” he will typically sniff. “But that’s never happened to me. My projects come in on time and on budget.”
Really? The majority of executives leading these big projects are men. And if 75 percent of projects are performing so poorly, a lot more of them should be nodding their heads in agreement, right?.
The male bias
So what’s happening? Do women see the risks that men don’t? Well, yes. Multiple studies support the notion that women are not only better at assessing risk, they are also better at guiding their actions and decisions accordingly.
This isn’t really news. Car insurance companies have known for years that men—particularly young men—are notorious for underestimating the probability of negative outcomes and for overestimating their ability to avoid them. As a result, men are twice as likely to get into an accident and three times as likely to get into more than one accident as women. It’s why men pay higher insurance premiums than women.
Paradoxically, studies also show that the more wrong we men are, the more confident we tend to be in our decisions. Any woman who has endured a car trip with a man who is clearly lost can confirm this.
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Is there any evidence then, that projects led by women perform better than those led by men? Again, yes. A 2007 survey of experienced U.S. project managers shows that female PMs significantly outperform their male counterparts in meeting schedule and budget. Female PMs also abandon fewer projects than men.
At the same time, women are in the minority when it comes to leading big projects. On average, women hold about 49 percent of corporate managerial positions. Yet somewhere between 17–30 percent of project managers are women—about 50 percent less than logic would otherwise dictate.
The confidence trap
One would think that corporations—the efficient and highly rational organizations that they are—would recognize the dangers of this disparity and select more women to lead projects.
Unfortunately, I believe our human nature defies logic in this case. In the corporate world, we like the “can-do” spirit that men tend to exude. It’s something the academics call Agentic leadership. Without it, there would be no convincing senior management to release the capital needed to fund the project in the first place. What hope would anyone—male or female—who droned on with a cold assessment of the risks have in getting the green light?
To make matters worse, those who demonstrate the confidence needed to win the project are often rewarded with its leadership. The more cautious among us are thought to be less confident and therefore more suited to support roles, or even no role at all.
Several years ago, I was part of a team hired to help a $12 billion multinational company execute what was intended to be a $35 million, 22-month ERP implementation. Our initial assessment uncovered several key risks, which we presented to senior management. One of the executives became visibly agitated and said he “hated all this negativity.” Not long afterward, we were told our services were no longer required. The company would go forward on its own.
Just 18 months later, we received a call from the company. Their project “had hit a snow bank.” Could we help them get it over the finish line? We did, but unfortunately the damage done forced the project to be 50 percent late and 300 percent over budget.
Consider a woman to lead your next project
To be fair, it is the lack of clear-eyed risk assessment that derails so many projects, and not men in particular. It’s just that we men display this kind of bravado-induced blindness way more often than women. The good news is that this difference between genders seems to decline as men age.
So if you have a large, complex project you’d like to keep free of the usual failures, I suggest one of three strategies: first, pick a woman to lead the project. Or pick a man to beat his chest and vow to “take that hill” so the project gets approved, then partner him with a woman. Or lastly, if you must pick a man, make sure he’s older.