if you feel like there's a dark cloud hanging over your head, you're not alone. In a 2006 study of senior-level executives, project office managers and project managers, almost half said their projects had significant issues. Only 24 percent of troubled projects were recovered, 19 percent remained troubled and five percent failed. That translated into an average of $30 million in at-risk projects per organization surveyed, according to Troubled Projects: Project Failure or Project Recovery by the Center for Business Practices, the research arm of project management consultants PM Solutions Inc., Havertown, Pa., USA.
Many organizations have turned to project management—setting up project management offices and bringing in outside consultants—yet their projects still fail. “The curse of project management seems to have taken hold and nothing seems to rid the organization of its poor track record in managing its projects,” says John T. Ikeda, PMP, principal with Honorable Leadership, a project management consultancy in Roseville, Calif., USA.
The article is based on material in the white paper “The Curse of Project Management,” presented by John T. Ikeda, PMP, at the PMI Global Congress 2006—North America in Seattle, Wash., USA.
Part of the problem stems from organizations adopting a one-size-fits-all approach to project management. “Almost to a fault, people try to bring in the process or structured approach regardless of what the organization is used to or its culture,” Mr. Ikeda says. As a result, project managers and project management itself is blamed when projects fail or end up on the troubled list.
Typically, however, these challenges persist because consistent project management practices are only half of the solution. The other half lies at the enterprise level. “When projects fail, most organizations look at the project, the project team and the project methodology, but don't view the organization in its broader context,” he says. “That's where the curse of project management originates: the failure to link project management strategy with culture and unrealistic expectations of it at the executive level.”
When project management isn't imparted from the top down, Mr. Ikeda says, projects are rarely tethered to company strategy. “Priorities within the organization can change too rapidly, resulting in some projects being put on hold or canceled based on the whimsical direction of the company,” he says. “At times when projects are not linked to strategy, although they may be completed, they still fail to have a positive impact on the bottom line.”
This inability to select the right projects—and align them to company strategy—doesn't surprise Mr. Ikeda. He cites a 2005 Harvard Business Review article in which Robert Kaplan and David Norton estimate that 95 percent of employees do not understand their organization's strategy.
“One red flag that often signals a strategy gap are silos within the organization,” he says, often caused when “leaders place their own interests above those of the organization and actually create the disconnect between projects and strategy.”
Cultural Personality
Without an understanding of how to apply project management in the context of an organization's culture, executives “may have great intentions but ultimately end up ineffective,” Mr. Ikeda says. When project management practices match the culture of the organization, projects tend to do well. When they don't, an organization could use project management methodologies for years and see no progress.
Organizational culture is determined by the norms and behaviors that define the organization's actions. Understanding the need to adapt project management to company culture is a short leap, Mr. Ikeda says, but often organizations struggle to put this into practice. In project selection, for example, executives must adjust practices to match the style and size of the organization. “You have to select and prioritize projects in a manner to support the speed at which the organization moves,” he explains.
Mr. Ikeda uses the organizational cultures as defined in Organization Theory and Design by Richard Daft [South-Western College Publishing, 2006] to explain the project management styles used by each group:
1. Entrepreneurial: Organizations have an external focus on customers and markets and offer a flexible environment.
Cultural considerations: They excel at small projects but struggle with large, complex undertakings. Institute simplified approvals and processes that offer flexibility for creative solutions.
2. Clan: Companies—mostly small- to medium-sized businesses—are internally focused and operate in a flexible, people-driven environment.
Cultural considerations: Create a collaborative environment with meetings, adaptable schedules and be sure to offer project team members rewards and recognition.
3. Mission: Organizations are focused on an external mission in a stable environment.
Cultural considerations: The emphasis is on project outcome, not processes. Metrics may be out of the project management norm, such as coming in at the lowest cost measure. Emphasize the overall value as to how the project helps the enterprise fulfill its mission.
4. Bureaucratic: Organizations—including many government agencies and companies operating in heavily regulated industries—are internally focused in a stable environment.
Cultural considerations: Ensure the organization buys into the project. A process-driven approach, often with long approval times, is well-suited for large, complex projects.
The further an organization is down this list, the greater the complexity and level of formality is required. So a large, bureaucratic organization might use a quarterly directors meeting to select projects, while a small, entrepreneurial company might pick them via an e-mail poll, Mr. Ikeda explains.
Getting Formal
Health Net Inc., a Woodland Hills, Calif., USA-based health insurance provider, is a case study in how leadership, culture and strategy can break the curse. Project management needed to be elevated within the organization and more firmly integrated with how its staff took on projects. “We now have a formalized project request process that requires filling out a form and more extensive approvals,” says Peggy Chuang, director of business integration services at Health Net.
Prior to that change and others made in early 2006, the company's IT division had difficulty prioritizing and completing projects because of competing concerns. Projects were often assigned to IT staffers in casual hallway conversations and via e-mail. Worse yet, the project management staff wasn't informed of every project. “The bottom line was the IT projects weren't supporting the proper business priority, and some projects weren't completed due to IT juggling too many projects,” Ms. Chuang says.
To address these problems, Health Net formed a handful of project steering committees throughout its network. Consisting of about a dozen executives from a cross-section of the company's business, the committees meet once a month to review, prioritize and approve projects. “We don't get too far into IT project prioritization on the day-to-day basis, but we do work at resolving any tension around resources when conflicts arise,” she says.
The committees have helped formalize the organization's project management practices, providing a strategic view of projects at hand. Health Net takes the time to better define projects up front and determine, for example, if a project to fix or enhance a software application in one U.S. state is applicable to the entire network. “We now have more project sponsorships at the steering-committee level and we have more time to plan projects,” Ms. Chuang says. Under the new system, the company has avoided duplicating efforts, and project success rates are on the rise.
It's an example other organizations might want to emulate. Mr. Ikeda advises companies to adopt a broader look at how project management is applied within their organization and stop expecting project managers to fix problems stemming from poor strategic execution and silos. “It's not within the project manager's sphere of influence,” he says.
Project managers need to be creative in establishing influential relationships with higher-level staff to ensure projects are linked to strategy. “These problems are somewhat monumental,” he says, “but it's important to start a dialogue with the organization to develop a strategy to help integrate project management into the organization's culture.” PM