Project Management Institute

Back to basics: trends to set the course for success

PMI’s 2012 Pulse of the Profession Report

PMI’s 2012 Pulse of the Profession Report

Slow economic growth, shifting global market priorities and a push for innovation all contribute to today’s complex business environment. Organization strategy continues to focus on doing “more with less,” and many executives are still in search of that elusive silver bullet, the one big thing that will drive results and get them back on track.

Estimated dollars at risk (in U.S. dollars) per project by success rate and project spending

PROJECT SPENDING
    $1 million $25 million $50 million
% OF PROJECTS MEETING ORIGINAL GOALS AND BUSINESS INTENT 64%
(Study average)
$120,000 $3,000,000 $6,000,000
70% $100,000 $2,500,000 $5,000,000
75% $85,000 $2,125,000 $4,250,000

PMI’s 2012 Pulse of the Profession—the annual global benchmark research report for organization project and program management—suggests that organizations that refocus their efforts on excellence in basic project management execution can improve performance, reduce risk, save money and result in a greater return on investment.

“Our research indicates that organizations that keep a sharp focus on fundamental project management practices are realizing huge results,” says Mark A. Langley, president and CEO of PMI, Newtown Square, Pennsylvania, USA. “By optimizing strengths and improving on weaknesses in the core project management practices, an organization puts far fewer dollars at risk for each project.”

According to PMI’s 2012 Pulse of the Profession report, an average of 36 percent of projects did not successfully meet their original goals and business intent in 2011. Additionally, when a project fails, an average of one-third of that project’s budget is lost for good. That puts—on average—more than US$120,000 at risk for every US$1 million spent on projects. Considering that the average project budget is US$4.1 million, this can have substantial financial implications.

The Pulse further reveals that low-performing organizations—those with less than 60 percent of their projects completed on time, on budget, and having met the goals and business intent of the project—risk nine times more dollars on projects than their high-performing counterparts. Low-performing organizations risk 27 percent of each project’s budget on average, compared to 3 percent in high-performing organizations.

Assuming a low-performing organization with a US$50 million portfolio of projects has a project risk total of US$13.5 million, that organization—simply through implementing basic project management practices—could fund three additional average-size projects.

Good Practices

There are a number of project management practices that high-performing organizations—those with 80 percent or more of their projects completed on time, on budget, and having met the goals and business intent of the project—are likely to implement and execute. These include having:

  • Engaged project sponsors
  • A defined career path for project and program managers
  • A stated process for maturing portfolio and project management practices
  • A process to develop project management competency
  • Training on the use of project management tools and techniques

Trending data in the Pulse identifies several areas where successful organizations most commonly focus to maintain their competitive edge. These trends point “back to the basics” and maintain a deliberate focus on what organizations know they should do—the fundamentals that often get overlooked in lean times, or when distracted by the next big thing, latest management trend or buzzword.

THE TRENDS: BACK ON TRACK IN 2012

img ORGANIZATIONS WILL RENEW THEIR FOCUS ON TALENT DEVELOPMENT AS THEY LOOK TO GROW AND GAIN A COMPETITIVE ADVANTAGE IN NEW MARKETS. Many companies—distracted by the chaotic business climate of the recession—are now struggling to compensate. Top talent is retiring, there are not enough new leaders to fill their shoes and organizations are challenged to balance their talent portfolio to ensure the right people with the right skills are allocated to the right programs. PMI’s Pulse data reveals that 63 percent of high-performing organizations have a defined project management career path for project managers, compared to only 26 percent of low-performing organizations.
img TIGHT ECONOMIC CONDITIONS WILL CONTINUE TO SPOTLIGHT THE NEED FOR GOOD PROJECT PORTFOLIO MANAGEMENT. The selection of the right projects and resourcing those projects for success will be seen as critical to the efficient achievement of an organization’s strategy. Pulse data indicates that 72 percent of high-performing organizations use project portfolio management, compared to only 39 percent of low-performing organizations.
img AS ORGANIZATIONS STRIVE FOR AGILITY IN ORDER TO LEVERAGE SHIFTING MARKET CONDITIONS, CHANGE MANAGEMENT AND PROJECT RISK MANAGEMENT WILL BECOME EVEN MORE IMPORTANT CORE COMPETENCIES. Pulse data indicates that 80 percent of high-performing organizations use change management techniques (compared to 61 percent of low-performing organizations) and 84 percent practice risk management (compared to 54 percent of low-performing organizations).
img THIS DESIRE FOR AGILITY WILL ALSO LEAD TO INCREASED USE OF ITERATIVE OR INCREMENTAL PROJECT MANAGEMENT APPROACHES SUCH AS AGILE AND EXTREME. The Pulse report indicates that 40 percent of high-performing organizations use agile approaches in project management, compared to 20 percent of low-performing organizations.
img BENEFITS REALIZATION WILL CONTINUE TO BE AN IMPORTANT PROJECT AND PROGRAM SUCCESS METRIC. Senior project management leaders say the most important skill for managing complex projects and programs is the ability to align the team to the vision of the project and design the organizational structure to align people and objectives. This more strategic view of projects helps maintain a focus on its intended benefit. Pulse data reveals that defining key objectives, benefits and expectations is the second-most important factor critical to the success of projects.

“As the world’s largest project management member association, PMI studies project management excellence and areas for improvement,” says Mr. Langley. “As with last year’s study, the 2012 Pulse of the Profession report illustrates a clear and positive return on investment from organizations with mature project, program and portfolio practices. Returning to a focus on the foundational practices identified in PMI’s Pulse report is bound to help organizations secure their future rather than continuing to put it at risk.” —Michelle Brown

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

APRIL 2012 PM NETWORK
PM NETWORK APRIL 2012 WWW.PMI.ORG

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