Delivering Bad News to Stakeholders and Decision Makers
We all hate delivering bad project news, but this Tip of the Month (TOTM) will prepare you to better communicate negative information to stakeholders and decision makers. We often hope to avoid giving bad news for reasons such as hurting upper management's opinion of us or damaging our career. Yet our passion is designing and building, and we know sometimes oil and gas projects do not go according to plan. Because of this reality, we must thoroughly prepare to communicate bad news when necessary. This TOTM will walk through the types of issues you should prepare for, managing project relationships and best practices for delivering bad project news.
TYPES OF BAD NEWS
Technical - Discovery of major design errors or omissions
Business Process - A major project schedule milestone cannot be met
Change Management - A key project team member quits
Resources - Equipment, materials, and/or labor costs exceed the budget
Third Party - An unsuccessful bidder complains about the bid evaluation process
MANAGING PROJECT RELATIONSHIPS
Question: According to the Harvard Business Review, which one of the following phrases best describes the “defining attribute of a great business relationship”?
- Players believe that agreements will be kept
- The relationship extends beyond business needs
- Each party invests emotionally in the other’s success
- Each party plays an essential role in meeting the other’s needs and wants
- Each party shares their business network with the other
Answer: C
Why do relationships matter?
Developing a healthy relationship with all project stakeholders, especially the client and/or project owner, helps them accept your credibility when passing on good or bad news. Without a good relationship, your news can evoke skepticism or even hostility. All relationships are built on trust and run at different “levels”. At the beginning level, the basis of the relationship focuses simply on answers. At the deepest level, the players share concern for critical project issues and challenges.
Wrestling with project crises and disappointments refine relationships. Joint ownership of issues and mutual support deepen the relationship. Finger-pointing and fault-finding diminish trust and harm relationships. An ideal progression is shown in the chart below. The jagged red line is reality.
Basis of Relationships
The project manager relies on mature relationships to hold on to credibility when delivering bad news. Should the project manager use the same approach for all decision-makers? Tailoring the message to each of the distinct types of decision makers works.
Types of Decision Makers
Various delivery approaches are shown in the table below.
To address decision makers with distinctive styles, should we prepare several presentations?
The project manager often deals with committees. A “mixed salad” presentation (e.g. “A little bit for everyone.”) works well. To meet the needs of the charismatic, a straight-forward opening with an executive summary works well. Discussing the processes and procedures followed during the issue analysis come next. The traditionalists will see this as important credibility step. Nonpartisans will want to see the logic of the evaluation. Explain decision-making criteria, and alternative solutions. The needs of questioners are met with expository slides that present and answer questions that a contrarian might ask. Include higher-level data for analysts that supports the recommendations. Put added data detail in the backup slides.
BEST PRACTICES FOR DELIVERING BAD NEWS
Management Perspective
Management wants to do something about a problem before it's too late Their confidence in you as a project manager depends on your willingness to communicate your project's progress and problems.
They also want to know your recommendation evaluates the impact of the situation, considers differing options to address it and uses your knowledge of the project implications to recommend solutions.
When to Communicate
Communicate with your sponsor as soon as the problem is understood, the potential impact is known, and workarounds are known.
Communicate with your decision board after your sponsor is consulted, proposed solution(s) are formulated, and impact to cost, schedule and quality are quantified.
Use a “pilot test-type” method for a decision board or committee. Here’s how it works. The project manager meets with one or two decision makers at a time. He or she lays out the facts of the situation with a "what do you think" approach. This allows for:
• Consideration of added possibilities
• Use of decision maker resources
• Joint preparation of the final message for the entire committee
Mutual ownership is created. Evaluating multiple solutions and workarounds, including those suggested by the decision-makers, creates that ownership.
What to Communicate
You need to communicate a detailed description of the issue and its impact on project targets including capital and operating cost, schedule, operability and stakeholder relations. Additionally, present the alternative workarounds or solutions considered, the recommended workaround or solution, and the justification for taking the needed action, including added cost and schedule delays.
To and From Whom
Note: The project manager handles all communication.
How to Communicate
When communicating you need to document the issue with an issues resolution log including a written detailed issue description, probability of occurrence, impact assessment, potential solutions and recommended solution.
Then hold briefings/discussions with your project team, sponsor and decision board.
Where to Communicate
Review your Issues Resolution Log at the:
• Weekly meeting with the project team
• Weekly meeting with the contractor
• Monthly project progress meeting with the sponsor
Address key issues at the quarterly decision board meetings.
Following Up
After the delivering the unwelcome news and finding solutions, you must track the progress made in resolving the issues that led to the bad news. Involve the leadership regularly, update them on the headway made and seek counsel on unexpected side issues. After resolving the issue, communicate that with everyone. When you follow these steps, the delivered news is no longer bad, but good.
SUMMARY
Project managers often focus on the technical definition and business processes associated with a project. They push their project teams and their EPC contractors to produce the best value design and the robust plans needed for development. However, during execution, they can get caught up in problem-solving and neglect communication. The desire to avoid confrontation and the fear of losing credibility can hinder effective communication of bad news. Following the recommendations above fosters joint ownership of bad news and shows a project manager as trustworthy in difficult situations.
To learn more about effective project communication, we recommend enrolling in one of the following PetroSkills courses:
Project Management for Upstream Field Development (FPM2)
Petroleum Project Management (PPM)
Managing Brownfield Projects (FPM42)
Project Management for Engineering and Construction (FPM22)
Written by: Ken Lunsford
