Probably the most important lesson I learned early in my career concerning the management of complex projects was the need to have a clear understanding of the core problem that was to be addressed. It’s amazing to me how many IT projects fail because management lacks an understanding the problem to be solved or the opportunity to be exploited.
Back in early 1974 the Penn Central Transportation Company which was formed by the merger of the New York Central and Pennsylvania Railroads went bankrupt. The trustees who had been appointed by the bankruptcy court were approach by Victor Palmieri, who was then CEO of the railroad’s non-rail subsidiaries including Arvida Corporation, Buckeye Pipeline and Six Flags Corporation. Victor pointed out that within the railroad there were a large number of real estate parcels that could be carved out and sold. The estimate was approximately 10,000 separate parcels worth an estimated $1.3 billion, no small sum. There were also many properties being leased by the railroad generating millions in annual revenues.
The trustees agreed with Palmieri that these properties could be better managed for the benefit of the estate and entered into an agreement with him to build an organization that would take on this challenge. Victor Palmieri and Company was formed and would receive 2% of the gross proceed generated from the sale of these so called “non-operating” properties. Palmieri began building a team of real estate professionals and he also recognized he would need to create from scratch an information system to better manage and market these properties.
In order to explore what would be required to build these system, Palmieri invited several of the major consulting firms and largest accounting firms to a series of meetings to discuss requirements and approaches to this challenge. Among the invitees was a small operation research consulting firm located in Denville New Jersey. Russ White was the President of this small firm and one of the brightest people I’ve ever known. He attended all of these briefings.
Russ had an innate ability to understand and articulate the core problem that needed to be addressed. After this series of briefing Palmieri asked all the participants to submit proposal on their approach to the problem of creating the information systems that would be required by his new company. The larger firms put teams together to prepare detailed proposals that ran hundreds of pages and covered many extraneous topics.
Russ wrote a proposal that was one page and one paragraph in length. He simply stated the obvious problem that no information system or systems could be built until an inventory of the railroad was conducted to actually identify these 10,000 parcels and collect relevant information about them. The information Palmieri needed to manage and market these properties was co-mingled with the railroads records and information systems.
Bingo he had hit the problem that Palmieri faced squarely on the head. If you don’t know where these 10,000 parcels are and you can’t carve out critical information about them such as rent billing contracts, property taxes, book value and estimated market value, how were you going to manage or market them any better than the railroad’s own real estate department was attempting to do.
Our small firm won the contract and built this inventory data base, mapped the properties on railroad maps and generated a locater atlas using USGA maps to pro-actively market the properties. It took approximately a year to complete this inventory and build what became Palmieri’s property information system. Palmieri went on to sell all of these properties and this same system played a key role in breaking these properties out of the railroad when Penn Central’s rail properties were transferred to Conrail.
The lesson I learned from this experience was clear. Understand the problem your looking to solve and express it in simple and straight forward language that everyone can understand. I’ll be cover other topics in this series in the weeks to come.
William A. Crowell
Magellan Associates, LLC