Over the past few weeks, we’ve been receiving questions around the impact of COVID-19 on projects. As our community grapples with surges in uncertainty and debate, as well as the virus’s flow-on effects – we wanted to share the top 3 topics we’re discussing and how to approach them.
(Please note – that just as often as supermarkets are changing their rules, we too will need to continually revise the thinking and approaches as we navigate the ambiguity over the new few months, or more.)
The top 3 (multi-layered) topics tackled in the project industry at the moment:
- The impact of COVID-19 on in-flight projects
- Decision making in whether to pause, stop or continue / slow down a project
- Techniques/solutions to explore implementing during this time
Here they are in more detail:
1. The impact of COVID-19 on in-flight projects
Most project managers or product owners have needed to reassess their project in current circumstances. The impact has been varied from: can you still access the hardware shipment needed for project time-frames; is your team still able to deliver projected velocity with changes in working from home, caring for kids, or at home infrastructure that is impacting delivery; to is your project meeting safety requirements in the new environment to proceed?
From conversations and research done over the past few weeks, considering the amount of new regulations and mandated changes to the way we now work it is important to re-evaluate and manage your project under a new light with new criteria factored in. Once you’ve re-framed your project with the new impacts factored in, this takes us to the second topic of what to consider when deciding if now you should pause, stop or continue / slow your project down.
2. Decision-making in whether to pause, stop or continue / slow down a project
Once you’ve considered all the changes and re-scoped your project under a new light of criteria, there are two main factors you should consider in your decision making to pause, stop or continue / slow down the project: regulatory and financial.
Regulatory considerations – Is your project able to meet the current regulatory requirements to provide a safe environment for your team? Are you able to safely source core materials for your project? If no – you are likely to consider pausing or stopping the project.
What happens if you stop/pause? There are potentially considerable financial repercussions in doing so, i.e. force majeure contract considerations, capitalisation implications, grant/tax requirements, etc.
What happens if you slow down or pivot? For example, one way of doing that is by having less people on site, or sourcing different materials from a different supplier. Potentially this may cost you more than your original project budget.
This is where project scenario analysis can go a long way to help make that decision.
Financial considerations – Is your project currently capitalisable, i.e. majority of the budget is CAPEX? Is your team consistent of salaried employees, i.e. your project is cross-charged for team resources? If the answer is yes to either – you are likely to consider slowing down.
What happens if you stop/pause? – not only is this not an innovative solution under current conditions, it is also not desirable for you or the organisation. One of the key considerations for capitalisation of a project is that you need to prove “intention” to complete. If you are half-way through and stop/pause due to uncertainty into how to deliver, you are in-fact potentially stating loud and clear that your intention to complete has changed. This potentially has considerable tax and P&L implications on your organisation and the decision should not be made lightly.
What happens if you slow down or pivot? – For projects that are in the tech space, this is definitely an option that should be considered and the project should be scoped with current circumstances considered. But even more broadly there may still be a way to deliver, but you need to ask, “Will you aim to deliver the same, more or less value by slowing down?”. The answer to this will affect the project’s value and could still have implications on CAPEX aka your organisation’s assets. I’ve recently done a talk on Agile Uprising’s Podcast talking through these considerations. Even though it was pre-COVID-19 podcast, it does cover off the high-level capitalisation considerations you need to think through.
3. Techniques/solutions to explore implementing during this time
For those of us fortunate enough to still be working, or running our businesses, we’ve found that this has also been a unique time, and opportunity, to reflect upon our ways of working. These techniques/solutions should be explored when reflecting on how to move forward with your projects:
- Agile values & principles – to implement this you could select any framework, i.e. Scrum, Kanban or other. The important aspect is adopting the principles of agile that allow for innovative decision making to deliver your current projects.
- Earned Value Analysis (EVA) – this technique can take time to set up, but gives immense value and clarity in assessing the value your projects are actually delivering. It also assists in decision making of financial impacts if you are looking to stop, pause or slow down.
- Experiment with software tooling – there are a lot of software companies giving much longer free-trial periods to help you during this time. If previously there was dread to learn or implement a new piece of software, now is the time to experiment with what works for you. Explore that new financial or delivery tool and see whether you can actually make it work for you, and if it will assist in automating or improving certain functions.
As difficult as this time is for many of us, I do strongly believe that we will come out much stronger, more inventive, and more considerate at the end of this pandemic. In the meantime, if you need a helping hand, want a conversation around any project related questions, or just someone to soundboard with – please free to reach out directly by dropping us a note at Project Accounting Australia, or if you’re attending come ‘virtually’ chat at next week’s CA Accounting Conference.