Confronting project management's critical marketing challenges
“Selling project management to senior executives” consistently shows up as a top concern of project managers. In a technical needs assessment conducted for the Project Management Institute (PMI®) by Monalco Market Research & Information Management (2002), the most selected area for PMI research and development was “selling project management to senior executives” followed by the related area of “project management linkage with strategic planning”. The participants in PMI's Research Conference 2002 (Project Management Institute, 2002) submitted “ideas for research” that included:
- Selling project management to senior executives
- Value/return on investment of project management
- Linking strategy and project management
- Project management linkage with strategic planning
The subject is not being ignored. PMI has funded several research projects, including a study by Janice Thomas of the Centre for Innovative Management at Athabasca University on “Selling Project Management to Senior Executives” (Thomas, Delisle & Jugdev, 2002) and an earlier study by William Ibbs of the University of California at Berkeley's Project Management Group on “Quantifying the Value of Project Management” (Ibbs & Reginato, 2002). Others are pursuing the same subject independently, most notably the Center for Business Practices (Oswald & Pennypacker, 2002).
Our failure to sell project management to senior executives is often attributed to a failure to speak the language of senior executives. The argument is that senior executives focus at a strategic level while project management is tactical (Thomas, Delisle & Jugdev, 2002). There is some truth to this premise but senior executives also recognize the importance of tactical excellence for executing strategy. They generally do not ignore such tactical elements as sales management, supply chain management, and financial management. Clearly, there is a misalignment between “seller” and senior executive in the case of project management that does not exist in other tactical functions.
If we reject the notion that project managers are inherently poor sales people, there must be other reasons our message is not being heard. The evidence suggests three possibilities:
- Our claims do no not match the observed results.
- We are selling a product that does not address the need.
- We promise results, but substitute bureaucracy for effective processes.
Our claims do no not match the observed results
There is little doubt that project management is generally not delivering the results it promises. The Chaos Report (1994) (The Standish Group, 1994), stating that only 16.2% of software projects are completed on-time and on-budget, has been widely cited. Colby and Gothard (2002) report a study by Robbins-Gioia Inc. in which 44% of participants reported projects with cost overruns of 10% to 40%. And Cooke-Davies (2001) analyzed 136 (mainly) European projects executed between 1994 and 2000 and found that the mean performance against budget was a 4% cost escalation while mean schedule performance was 16% late.
It can be argued that we are improving, of course. The 2001 update to the Chaos Report (The Standish Group, 2001) reported considerable improvement. Between 1994 and 2000, schedule performance on IT projects improved from an average overrun of 222% to 63%, and cost performance improved from 189% to 45%. Overall, the success rate improved to 28%. This is clearly worth celebrating. But a profession that promises to deliver projects “on time and under budget” can hardly be proud of a 28% success rate.
Project managers will argue these dismal results represent not a failure of project management, but a failure to apply project management effectively. This argument certainly has intuitive merit but the distinction is not readily apparent to the uninformed. And while senior executives probably do not have the Chaos Report at their fingertips, they are undoubtedly cognizant of a considerable gap between our claims and reality.
Thomas, Jugdev, and Delisle (2002) arrived at a similar conclusion in a survey of 1,867 project managers, consultants and senior executives with significant levels of engagement in project management in North America. They report, in part:
- It appears that accidental project managers who manage strategically important projects are not achieving the outcomes they expect.
- Analyzing the data by participant position, industry, and country, the outcome statistics show that strategically important projects are not meeting specification, cost, or schedule expectations relatively consistently across these categories.
There is a growing body of evidence suggesting the application of project management does in fact contribute to bottom line results. For example, Crawford and Pennypacker (2001) used a balanced scorecard approach to survey 103 senior practitioners with knowledge of their organizations’ project management practices and their organizations’ business results. The results are very encouraging. The respondents reported positive improvement in every category, including financial measures, after implementing project management initiatives. Significantly, they report an 88% improvement in Return on Investment.
The challenge in selling project management, then, is to distinguish between project management that contributes to organizational success, and project management that does not. We need to be able to describe how and why the “project management” we are recommending will contribute to organizational success.
We are selling a product that does not address the need
A fundamental premise of any sale is that the purchaser buys to address an unmet need. Successful marketers, like The Procter & Gamble Company, invest heavily to convince consumers they need fresh-scented clothes, less dandruff, and whiter teeth. When the consumer becomes convinced, the sale is inevitable. Applying this premise to project management, it becomes important to ask if we are selling a product that addresses an unmet need of senior executives. More pertinently, are senior executives convinced they need a solution delivered by project management?
The dilemma in answering this question is that project management is generally perceived to be a methodology to achieve cost and schedule targets. While this narrow approach is not promulgated by PMI's A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (Project Management Institute, 2004), it is enshrined in the literature (Pinto & Slevin, 1998, p.67), and taught in popular textbooks (Schwalbe, 2004, pp. 5–7; Meredith & Mantel, 2003, pp. 78–85).
However, cost and schedule performance is often not uppermost in a senior executive's mind. Consider the following examples culled from the literature and the author's experience.
- 2002 Olympic Winter Games. The 2002 Olympic Winter Games was a very successful project from a project management perspective, winning designation as PMI's 2003 International Project of the Year (Foti, 2004). It achieved the key dates, of course. But it deviated from the conventional approach to “success” with respect to its cost performance. The project managers boast that they turned a $100 million deficit into a $400 million surplus, not just by eliminating “nice-to-have” items, but by also securing additional funds. Clearly, success was measured by profitability, not by achieving a specific cost target.
- Batu Hijau Copper Concentrator. PT Newmont Nusa Tenggara's Batu Hijau copper concentrator was the world's largest “greenfield” start-up when it was commissioned in September 1999 (Enos & Rogers, 2002). It was an extremely complex construction project located on the remote Indonesian island of Sumbawa involving 1,704,000 design hours, 48,791,000 construction hours, 551 separate systems, and 19,200 engineering drawings and documents. Nevertheless, it was completed one month ahead of schedule and $100 million under budget. It was considered very successful, but not merely because of its cost and schedule performance. Rather, it was viewed as successful because the production ramp-up was faster than expected, producing a cash flow from operations exceeding 200% of budget within a year after start-up. In this case, the project team focused on the real objective which was to produce copper concentrate, not to achieve the cost and schedule targets.
- Manufacturing Plant Optimization. A paper manufacturing company with five plants across North America decided to increase its manufacturing capacity by embarking on a debottlenecking program (Woodward, 2005). A project team was formed to install the necessary equipment, and charged with completing the work in 18 months at a cost of $26 million. But almost immediately, the project team was asked to defer major expenditures until an unrelated cash flow problem was resolved. Rather than stop work completely, the team adopted a strategy of prototyping the technologies on which the debottlenecking program was based, and actually developed some cheaper and more effective solutions. Even when the project was authorized to proceed, the team continued this same approach. The project eventually spanned five years, but the resulting capacity increase was three times the initial commitment. Not surprisingly, the company immediately appropriated another $42 million to continue the program. The real objective in this case was more manufacturing capacity.
The anecdotal conclusions from this small sample of case studies are supported by a growing body of research. For example, Shenhar, Levy and Dvir (1997) propose a multidimensional framework of project success, incorporating four success dimensions:
- Project efficiency
- Impact on customer
- Business success
- Preparing for the future
Morris (2003), in a keynote address to the 17th World Congress on Project Management, concludes: “The result is that while project management has historically been seen within a well-defined context of executing a task ‘on time, in budget, to scope’ it is increasingly being seen that it has to operate within a much broader, and subtler environment.”
There are times when cost and schedule targets are important, of course. An obvious example is when they are required by contractual obligations. Other examples include the production of a component needed on a specific date for assembly with other components, and preparation for a date-certain event such as the Olympic Games or celebration of a national holiday. In such cases, cost and schedule performance are critical to the organizational success and will be important to the senior executives.
Frequently, however, targets stated as a specific cost or a specific date are really better expressed as “as cheap as possible” or “as soon as possible”. For example, the key to successful new product introduction is often being first to market. Therefore, in a competitive situation, a company will often be willing to invest more for a faster schedule. Conversely, when productivity or efficiency improvement is the goal, an earlier start-up may or may not be a good investment, depending on the relative costs and savings. Nevertheless, a project management process focused rigidly on fixed dates will have limited appeal.
Clearly, it is important to realize that senior executives are not necessarily looking for better cost and schedule performance, and if project management is seen as simply a means to achieve cost and schedule targets, we will find ourselves selling a product of questionable value.
We promise results, but substitute bureaucracy for effective processes
One of the most pervasive liabilities of project management is that it is perceived to be expensive and unnecessary overhead. Regrettably, this reputation is well-deserved. It is an inevitable result of the typical implementation cycle.
Frequently, project management is introduced in response to a “crisis” (Thomas, Jugdev, & Delisle, 2002). While the specific trigger may be internal, such as a large project spinning out of control, or external, such as a precipitous decline in sales, a decision is made to “implement project management” and a team is assembled to make it happen. With the best of intentions, the team develops a process to accommodate the most complex project the organization is ever likely to encounter. If the decision was precipitated by an internal process, the team's mindset is to design a process to guarantee that particular crisis “will never happen again”. Then, having established a process to accommodate projects of rare complexity, the team declares that “common sense” is to be used in applying the process to simpler projects.
The problem is that the optional parts of the process are rarely identified, and the entire organization defaults to meticulous compliance with the entire process. Eventually the memory of the crisis fades away, as does the mythical “highly complex” project, and senior management sees only the costs associated with bureaucratic minutiae they believe to be “project management”. It is not, of course, but the opportunity to educate senior management has usually long passed when the cost cutting begins.
Addressing this subject, Tony Crawford (2004) writes: “Can there be too much methodology? I think the answer to that question is also ‘yes'. I have seen methodologies evolve in several organizations from very little to a maze of methodologies – all mandated for every project, in a futile attempt by senior management to ensure project success – and to the point where rather than helping, they too often inhibit project success.”
A similar cycle often occurs when the introduction of project management involves the implementation of enterprise project management software. Management is initially enthralled with the colourful screens promising instant information about any project in the portfolio. However, providing such information inevitably requires diligent data entry by everybody assigned to project work, including people assigned for just a few hours a month. Soon, this translates to increased staff and significantly higher costs. Eventually, the reasons for implementing the enterprise project management software are forgotten, and once again, senior management sees only the costs associated with a white elephant they mistakenly suppose to be “project management”.
Confronting the challenges
These problems are broad. They are symptomatic not just of individual organizations but of project management globally. And they require global solutions. Nevertheless, senior executives, like people everywhere, draw their conclusions about a profession from the examples they see, and so we all have a part to play. And while we can, and should, expect PMI to market project management globally, it is in our best interest to market it within our own sphere of influence: our immediate organization.
The term “marketing” often connotes a sales presentation. And there is a growing library of marketing materials and “how to” articles describing practical techniques. For example, Thomas, Jugdev, and Delisle (2002) recommend:
- Understand an organization's key business priorities and discuss project management in the context of measurable quantitative outcomes as well as effectiveness outcomes.
- Explain project management in terms of the iron triangle (time, cost and scope) but do not overemphasize technical project language (tools and techniques).
- Ensure that you as a seller have or continue to work on building a credible, effective, professional relationship with the buyer.
- Frame project management as a fit for the organization in terms of operational and strategic goals and discuss it in those contexts that make sense.
- Do not use dramatic or emotional terms (the silver bullet, huge failure, gigantic problems) - they seem less effective although very unsuccessful project managers and consultants still use this strategy.
- Do no fixate on references to competition within the industry - they do not appear to be a key factor causing executives to pay attention to project management.
- Do not second-guess what senior executives are thinking about. The seller's views on senior executive expectations being realistic and attainable do not seem to matter.
These recommendations are undoubtedly valid in the context of a sales meeting. But successfully addressing project management's critical marketing challenges requires we go much further. We must in fact demonstrate that project management is the solution to problems facing the organization.
In his popular book: “SPIN Selling”, Neil Rackham (1988) describes the typical sales process as involving four steps:
- Demonstrating Capability
- Obtaining Commitment
In minor sales, used cars for example, “Obtaining Commitment” is considered the most important. Sales people call it the “close” and often cite the mantra: “If you can't close, you can't sell”.
However, Rackham postulates that major sales, involving significant investment, are different. Based on his researchers’ observation of more than 35,000 sales calls over a period of 12 years, he asserts the most important step in successful major sales is “Investigating”, followed closely by “Demonstrating Capability”.
Selling project management to senior executives is not selling used cars. It typically represents a major investment in relation to the resources available. We cannot expect success jumping from “Preliminaries” to “Obtaining Commitment” in one or two sales call. Success will require patient, and often arduous, attention to the intermediate phases of “Investigating” and “Demonstrating Capability”.
Indeed, the most important step we take in marketing project management may simply be to “demonstrate capability” by leveraging our own projects to achieve key organizational objectives and contribute to the organization's measurable results.
A key first step is to understand the goals of the senior executives leading our organization. In effective organizations, the reward structure for senior executives will be aligned to key organizational targets, and their individual goals will be congruent with the organizational goals. In rare instances, these organizational goals will include the cost and schedule performance of major corporate projects. More often, they will be financial measures like revenue, profit, and shareholder value.
A second step is to understand why our specific project was selected. Projects are never selected because of their cost and schedule targets. They are selected because they contribute to important organizational objectives. They may be intended to increase revenue, or reduce costs, or they may enhance shareholder value because of a high return on investment.
We then need to position our projects to achieve, and even exceed, the contribution assumed during the selection process. If the project was intended to increase revenue, we should be asking: “How can I add even more revenue?” If it was intended to reduce costs, we should be asking: “How can I reduce costs even further?” And if its purpose was to get a new product to market ahead of the competition, we should be asking: “How can I launch the product even sooner?”
The answers to questions like these will drive project managers to some atypical behaviour. They may find themselves offering management a faster schedule at a higher cost. They may find themselves recommending additional scope at higher cost. They may find themselves suggesting a scope reduction even in the absence of cost pressures. Some brave project managers will find and offer opportunities to delay their own projects while redeploying resources to projects with a bigger impact on the organization's objectives. And a few extremely audacious project managers will recognize their projects are no longer a good investment and will recommend cancellation.
These are not behaviours described in traditional project management textbooks. But they are behaviours that drive organizational success. And while these project managers may never win the “project manager of the year” award, they will win the attention of senior executives, and greatly enhance the reputation of project management at the same time.
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© 2005, Hugh Woodward
Originally published as a part of 2006 PMI Global Congress Proceedings – Bangkok, Thailand