It’s all Funny When You’re Making Money

(The importance of planning in a down economy – part 2)

The title is my friend Chris’ favorite saying. When you are flush with cash, you don’t have to plan a whole lot. But when money is tight, you have to have a rigorous process in place – I talked about this in my last post. For capital projects – how do you convince your organization to follow an organized capital project planning approach? If you are a taxpayer (who isn’t) how do you ensure that your government is following an appropriate process to ensure that your tax dollars are well spent?

The answer – Questions! Lots of questions! Here are a few for you to consider:

Ask about the process for selecting projects? What are the criteria? How much weight is given to each criterion? How were the criteria developed? Ask who is involved in the process?

Then look at history. What projects were selected? What projects were not selected? Do the selected projects align with the selection criteria? Ask for documentation – how were the projects ranked? Are there meeting notes where the selection team debated the projects to prioritize.

If you don’t get good answers to these questions or if you find conflicting information (for example, projects that were not a priority were actually built) – then you can begin to highlight a problem. Step 1 is to help people discover that a problem exists and then you can begin working together to address it.

And just to reinforce that some crazy things happen in business and government, I have an interesting story to share. My friend worked for a company where a new facility was built for $10 Million. The general manager decided to build the facility at the southern tip of the county instead of the middle of the county. This had a big negative impact – mainly because they were in the trucking business – they now had to drive further each day. Shortly after the facility was built the general manager moved to a resort town which was located close to the southern tip of this county. Coincidence? I don’t think so. Somebody questioned the decision at the time and they were transferred out of the division. Another coincidence? Nope. A few years later, the management changed – they took an objective look at the business, and ended up relocating it to the central part of the county. They also sold this $10 Million dollar building for much less than they paid for it. This sort of thing affects all of us – because it increases the cost of business and government which results in higher costs and higher taxes. Effective capital project planning can eliminate these sorts of things.