If you want your capital projects to succeed, this is the area you should focus on. Get this activity right and you will avoid many of the problems that occur later in a project's life cycle.
In Chapter 2, I said that a goal of the Assess stage is to answer the question: What is the best way to take advantage of an opportunity or to solve a problem that will maximize value? Clear objectives identify the criteria that guide the work to select the option that will likely maximize value.
Most executives involved in making key decisions on capital projects fail at this step. Only one in three project teams report that they fully understand the project's objectives as they begin their work. Not having clear objectives has real consequences. Projects without clear objectives are 50 percent more likely to have a major change or recycle later in the project life cycle, which leads to delays and higher costs. On average, you will spend 10 percent more capital because of the inefficiencies created by unclear objectives. You are also much more likely to have a disaster project that erodes more than half the value that was expected to be created.
The “bring me a rock” story is often used to describe the problem of unclear objectives. One version of the story goes something like this:
Your boss asks you to bring him a rock. Being a good employee you run outside to find a rock ...