Strategic misinterpretation: mitigating its impact

Is it possible to avoid or reduce the impact of strategic misinterpretation in major projects?

You are asked to read through the findings outlined in a document produced by the National Audit Office: National
Audit Office. 2013. Over Optimism in Government Projects. It discusses several factors that are key to reducing the
impact of strategic misinterpretation. You should be able to identify their key findings listed below.

1. Honesty and integrity

Honesty and integrity are needed in managing major projects and organisations must have a culture which allows
challenges and issues to be highlighted, in order to prevent disastrous outcomes.

“Officials have a key role in advising ministers on policy

and on the schemes for implementing it. It is important
therefore that the culture of an organisation encourages
and supports challenge and does not lead staff to hide
bad news and be reluctant to challenge senior views. We
regularly see major projects continue despite frequent
and serious warnings that things are not going to plan
and remedial action needs to be taken.” - (NAO, 2013,
p.10).

2. Accountability strategy

Having an accountability strategy is important in order to prevent poor decision making. As you have seen, there is a
natural tendency towards over-optimism which causes groups and individuals to carry forward ideas that are often
poorly considered. The report highlights that a:

“desire to show success, may lead decision makers to

push on and deliver something even if the outcome is
likely to be materially different from, and inferior to, that
originally intended.” - (NAO, 2013, p.11).

To guard against this, it is recommends the “effective independent challenge of decision-makers and the importance
of clear personal accountability for the decisions made"(NAO, 2013, p.11).

3. Incentives
There is often more incentive to be excessively optimistic when making judgements and decisions. Decision makers
are eager to gain recognition and so make decisions at the start of a project, but may be in a different role once the
project commences. Therefore, they are no longer responsible for resolving problems when they emerge. There is
also little accountability for the behaviour of contractors and:

“contractual penalties for producing overoptimistic

tenders are low compared to potential profits involved.” -
(NAO, 2013, p.11).

4. Authority

The National Audit Office stresses that the absence of a single authority figure (that has oversight of the whole
project) can contribute to the problem. In many cases, there is no single person who is accountable and responsible
for project delivery. The report highlights the findings of The Committee of Public Accounts, which observed that:

“Senior Responsible Officers only have oversight, and

not the authority and information they need, to manage
the delivery of the project for which they are
accountable”. - (Committee of Public Accounts, 2010,
n.p).

Restructuring and staff turnover adds to this problem. The report highlights that in the example of major defence
projects, the Senior Responsible Owners for projects move post every two to three years. Therefore, they are not
often held to account for decisions made during their employment.

These suggestions are explained in much more detail in: National Audit Office. 2013. Over Optimism in Government
Projects. You are encouraged to consult this document to find out more.
What can you learn about how to manage misinterpretation and optimism
bias?
There are two key factors from the UK National Audit Office report which may mitigate against the impact of
misinterpretation and over-optimism:

"Organisations that actively invite external scrutiny and

learn and apply lessons from other projects demonstrate
higher levels of success." - (NAO, 2013, p.11).

"The introduction of non-executive directors on

departmental boards is potentially key. They are
independent and well placed to provide an objective
view; to reinforce the importance of objectivity in analysis
and to provide a means of challenging plans at a time
when it can make a difference and genuinely influence
decisions.” - (NAO, 2013, p.11).

Additionally, you should always apply the reference class forecast. You will take a more detailed look at this in the
next few pages.

Please refer to the glossary to check any terminology you are unfamiliar with: Glossary of Project Management
Terms