Project Management Institute

Beyond the bottom line

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Project
management
provides

remarkable
return on investment.

beyond the

bottom line

After implementing
project management, companies
frequently see larger profits—money
saved or better spent—increased
productivity and efficiency, and a
bigger bottom line. Often, companies
also find returns in other, equally
substantive areas, such as better
quality products, happier customers
and projects that regularly are
completed on-time and on-budget.

Four executives discuss where they've
seen both hard and soft returns
on investment after implementing
project management capabilities.

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PHOTO OF MARLA SCHULMAN BY DAVID HOLLOWAY

President, Schreiber Translations Inc., Rockville, Md., USA

Project management is an integral part of any language service provider's organization, and Schreiber Translations Inc. has been utilizing project management for more than 20 years.

Our success as a language service provider rests on our ability to fulfill multiple requests from multiple clients simultaneously, so project management applies to our core service. We offer document translation, oral interpretation, foreign language desktop publishing and Web site localization in more than 90 languages, and timeliness and quality are essential to the successful execution of these tasks.

With the number of projects and volume of documents we handle, there would be no other way to get things done without the rigorous, well-instituted quality control process all of our projects go through. It is critical that our personnel successfully and strategically manage the intake of documents that need to be translated and analyzed, because we're constantly assigning work to linguists on behalf of our project stakeholders. This quality control process is linked directly to our ROI and it's the core of our business and project management processes. We weren't as systematic in the beginning, but as we grew, we found the need for a more regimented process so that we could achieve our key goals of timeliness and quality, which are essential to our success, and also continue to grow. Companies that aren't using these project management processes probably will see financial and other repercussions.

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Technology is a valuable tool that can greatly enhance the abilities of individuals who have the right project management expertise. Technology helps our staff do their jobs more effectively, so combining the right people with the right technologies is especially important in our application of project management. Our investment in project management technology has been returned multifold—our effectiveness has increased and we can solicit and accept a much higher volume of work. The first year after we implemented project management technology, we were able to handle 35 percent more jobs.

We even use technology to track the cost effectiveness of our project management personnel. By tracking how much time each employee spends on an individual project, we can assess the productivity of our project management staff and directly measure their impact on profit margins.

Vice President, Communications Solutions & Integration, North America, Avaya, Basking Ridge, N.J., USA

ROI: Due to project management methodologies, Ms. Holt has seen increased customer satisfaction and on-time, on-budget project delivery in her company.

Avaya's project management skills, methods and standards date back to our heritage with AT&T. Avaya is in the business of implementing leading-edge technologies and solutions for our customers, and consistent project management has been considered a critical best practice.

We enforce the utilization of project and program management in everything we do for customers because it influences higher levels of customer satisfaction and increases our success in completing projects on time and on budget.

The variety of network configurations and project requirements make a standard model for ROI a difficult proposition in our business. To gauge our return on investment from project management, we simply compare the performance of a project where solid project management was leveraged against one where it was not, and the results, generally, are obvious. When we speak to customers, we outline our project management best practices and explain how they will benefit the customer—we have seen measurable differences in terms of customer satisfaction and on-time, on-budget service delivery.

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Our most noticeable ROI measures have been project profit and loss performance, customer satisfaction and effectively using lessons learned to continue to improve processes. We hope to expand our program and project management teams and increase our skill sets as we develop the organization and learn more through each project. We employ a standard project management methodology today, and will continue to enhance and expand this methodology based on the needs of our customers as they continue to embrace new Avaya technologies and products.

Executive Vice President, Operations, Washington Group International, Boise, Idaho, USA

Ioversee the progress of more than 400 engineering projects in 30 countries, including Romania, Egypt, Russia, Iraq and Afghanistan. We're a very dispersed company, so each project is like a small company. With 400 to 500 jobs going on at any time, project management is fundamental to the overall success of our company.

A lot of our success can be attributed to the front-end planning of our project managers. When the planning process is well-defined, the project team can focus on the disciplines of execution, managing the dynamics of the job rather than managing by the seat of its pants. The teams that construct a strong execution plan outperform those that lack a strong plan five to one.

Another one of the dramatic upsides of project management that we've seen is the number of jobs we've completed at or better than our targeted performance. Approximately 75 percent of our jobs meet or beat expectations, and good projects generally make more profit than those that miss budget or schedule goals. Not meeting expectations generally means we overran the budget or completed later than expected, so the other 25 percent is not failure, but rather, projects that did not meet or exceed performance commitments.

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ROI: Mr. Zarges’ company's investment in project management has yielded streamlined operations, increased profitability and repeat business.

This, usually, is due to inadequate fundamentals—an inadequate plan, a failure to monitor and control, or failure to recognize adverse trends and change course. Most of our contracts are incentivized against performance goals, and earnings are directly linked to performance. Therefore, our investment in project management helps to make our project managers more accurate in their work.

Project management methodologies also generate repeat business. If you show a client that you have a strong plan, track the work against it well, and meet goals, you are likely to work for that client again next time he or she has a large capital program.

Senior Director, IT Applications and Architecture, Autodesk Inc., San Rafael, Calif., USA

ROI: Schedule predictability is a major return Mr. Hinners’ company has gained from its investment in project management.

Though we don't formally measure the ROI on project management, we have noticed that projects with strong project management leadership tend to hit their release dates and quality goals much more frequently than projects with weak or nonexistent project management. The hard returns we've seen include the increased reliability of ship dates, higher confidence to accept and manage changes late in the development cycle, and our ability to identify and resolve issues more quickly. Improved communication across project teams and business divisions and greater clarity and precision in milestone and process definitions are among the soft returns.

I have served as manger of development for Autodesk's European Software Centre in Neuchatel, Switzerland and project director for a continental facilities management system in Melbourne, Australia. Good project management helps us identify issues earlier in the product development cycle, when we have the most options available for dealing with them. We have also seen a big benefit from project management in our ability to manage the scope of our product releases:Teams conduct scheduled scope checks at predefined intervals and make rapid, fact-based decisions when a project's scope exceeds that which can be accomplished by currently allocated resources.

We seek to build upon our current set of best practices so we can team with offshore partners who have strong and compatible project management skills. In this way, we can identify the appropriate skill sets and backgrounds during the hiring process to enable successful project management for specific cultures. We would also like to bring offshore project managers for extended visits with the home team to learn about and experience the Autodesk project methodology first hand, as well as pair offshore project managers with project managers who have the time and ability to provide mentorship.

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We also have invested in our project managers, and there is a great return as they move up within our company—it's important that we continue to provide our project management staff with opportunities for advancement. Project managers have gone on to manage major new business divisions within the company, and we expect to help our project managers grow into these senior positions by appropriately staffing from the onset and providing them with ongoing, challenging experiences while offering coaching, mentor-ship and training.

Reader Service Number 077

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.

PM NETWORK | JANUARY 2005 | WWW.PMI.ORG

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