Project Management Institute

Finding the competitive edge

Project success rates are falling —but not for everyone; here’s how to buck the trend toward mediocrity, economic turbulence be damned

THE COMPETITIVE EDGE

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Project success rates are falling —but not for everyone. Here's how to buck the trend toward mediocrity, economic turbulence be damned.

BY SARAH FISTER GALE

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First, the bad news: Project success rates dropped 10 percentage points over the past four years, according to the PMI 2013 Pulse of the Profession™ report. PMI research also reveals project delays and cancellations are on the rise, along with scope creep. And a 2013 PwC survey shows that nearly two-thirds of CEOs lack confidence in their organization's ability to grow revenue over the next 12 months.

Yet against this gloomy backdrop, some organization all-stars are forging their own path. High-performing organizations complete 80 percent or more of their projects on time, on budget and in line with original goals. They're also risking less—14 times fewer dollars on each project than their low-performing counterparts, according to the Pulse of the Profession report.

“Effective project management gives companies the ability to achieve repeatability and predictability in project delivery,” says Cathy La Tona, PMP, executive director of global transformation service at HP, Troy, Michigan, USA, a member of PMI’s Global Executive Council. “It truly enables project benefits to be realized.”

Repeatability and predictability sound pretty good in a time of economic uncertainty, but 46 percent of Pulse of the Profession respondents said their organizations don't fully understand the value of project management.

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BREAKING FROM THE PACK

No matter their sector or location, organizations face a highly complex business environment that demands innovation and the agility to respond to shifting global priorities.

In the battle for a competitive advantage, there are clear winners (and losers). The Pulse of the Profession report revealed for every US$1 billion spent on projects, a high-performing organization risks US$20 million versus a staggering US$280 million for low performers.

So what are high-performing organizations doing right? The Pulse of the Profession report showed they were significantly more likely than their low-performing peers to:

  • Use standardized processes across the enterprise
  • Have a clearly defined career path for project managers
  • Invest in training on project management tools and techniques
  • Pay for employees’ professional credentials
  • Insist on active and engaged project sponsors
  • Establish a process to mature portfolio and project management practices
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“Effective project management gives companies the ability to get repeatability and predictability in project delivery. It truly enables project benefits to be realized.”

—Cathy La Tona, PMP, HP, Troy, Michigan, USA

Strong project management is even more important in today's “do more with less” business environment.

Looking to capitalize on insights across the organization, for instance, HP conducts lessons-learned sessions throughout the project life cycle and brings business-unit leaders together to share information and implement permanent change to ensure issues do not recur. “Being able to learn from our experience allows us and our clients to derive greater value from every project,” says Ms. La Tona.

Ericsson has also relied on project management prowess to carry it through tough times. As the global telecom company's project management practices have matured, it's seen a noticeable payoff.

“Predictability is increasing. Control is better,” says Barna Boros, PMP, project management process manager at Ericsson, Stockholm, Sweden, a member of PMI’s Global Executive Council. Added efficiencies mean “the difference between the planned cost and the actual accounted cost is dramatically decreasing.”

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“In the past few years, it seems there has been a professional decline in the maturity of the project management practice.”

—Barna Boros, PMP, Ericsson, Stockholm, Sweden

Despite the potential payoff of investing in project management, both the maturation and standardization of practices remain low. The Pulse of the Profession report shows that only 12 percent of organizations report having effective portfolio management or benefits realization processes in place. Given this reality, it's no surprise that most departments focus heavily on their specific performance objectives, with a scant 12 percent putting primary emphasis on strategic organizational goals.

“In the past few years, it seems there has been a professional decline in the maturity of the project management practice,” says Mr. Boros.

Ericsson has been bucking this trend. For instance, the company assigns a sponsor to every project from its outset. “The project sponsor is generally an employee with strong accountability to the business objectives,” says Mr. Boros, which helps keep project aims aligned with organizational goals. Yet while 79 percent of high-performers assign active sponsors to projects, fewer than half of low-performing organizations do so.

Those missteps on project management basics can carry a steep price. Seventy percent of projects executed by organizations with standardized practices are successful, versus 47 percent of projects in organizations without standardized practices.

THE TALENT SHOWDOWN

Even the best project management practices won't enable innovation and business success without the right team behind them.

“At HP, there is a special focus on our project and program management academy,” says Ms. La Tona. “The academy's initiatives include assessment, mentoring and training, which ensures that we effectively deploy appropriate talent toward critical projects and programs.”

Having a centralized talent-management portfolio also gives HP the organizational agility to assign the right people to new projects, she says.

Still, talent-development budgets have been trimmed at many organizations. Today, fewer than half of organizations offer a defined career path for project managers or have the processes in place to develop project management competency, according to the Pulse of the Profession report. And while 73 percent of high-performing organizations offer training on tools and techniques, just 48 percent of low performers do.

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It often falls to the project leader to make the pitch for investing in project management talent. “I sit down with leaders and ask them about one or two projects they're passionate about,” says James Brown, PMI-ACP, PMI-SP, PMI-RMP, PMP, PgMP, senior manager of the program management office at global agriculture products company DuPont Pioneer, Johnston, Iowa, USA, a member of PMI’s Global Executive Council. “Is it on track, from the perspectives of cost, schedule, risk and quality?”

If the leaders can't say yes, Mr. Brown knows he has an opening to explain the value of project management and the need for ongoing training. “I had an executive tell me recently, ‘I don't know what project management is, but I know when it works. When I have a certified project manager on a project, it just seems to be better.’”

Skimping on talent can wreak havoc on the project portfolio, however. At DuPont Pioneer, for example, if a project manager misses a key milestone in a regulatory project, the government can delay approval for an entire growing season. “We could miss a year's worth of revenue because of poor project management, which adds up to millions wasted,” Mr. Brown says.

No organization can afford that kind of risk. The best way to minimize it is by building a strong culture of project management. “Good project management contributes to business success because it guarantees performance capability,” says Mr. Boros.

The business case for this type of investment is easy to make. High-performing organizations are able to drive efficiency and greater project success by pushing project management maturity and cultivating their talent base. In today's uncertain economic environment, finding ways to increase project success is simple common sense. PM

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“We could miss a year's worth of revenue because of poor project management, which adds up to millions wasted.”

—James Brown, PMI-ACP, PMI-SP, PMI-RMP, PMP, PgMP, DuPont Pioneer, Johnston, Iowa, USA

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 APRIL 2013 WWW.PMI.ORG
APRIL 2013 PM NETWORK

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