Four top priorities of Fortune 500 companies
Decision-makers realize just how much value project management brings to the table.
BY DEBORAH BIGELOW, PMP, CONTRIBUTING EDITOR
What are your company's project management priorities? The answer may be found in the results of the Top 500 Project Management Bench-marking Forum sponsored by the Executive Initiative Institute and the Center for Business Practices (CBP). I recently attended one of these forums and was impressed with not only the results, but also the frankness and openness of the discussion that led to the results.
This particular benchmarking forum revealed the four biggest project management priorities among these Fortune 500 Companies, and I thought it beneficial to share with you as a reflection of current “trending” within the profession.
Nearly 50 percent of the benchmarking participants reported having a project office in place within their organizations. (A project office is the central department in an organization that leads the planning, management and execution of all projects.) The consensus was that project office deployments are on an upward surge as corporate decision-makers continue to recognize the significant value and return on investment that formal project management brings to their organization.
Benchmarking participants also ranked portfolio management as a major project management concentration for their companies. Portfolio management focuses on project selection and prioritization, based on each project's estimated bottom-line value. The consensus was that handling large, multifunctional projects as an integrated portfolio of independent projects is the best way to increase revenues, reduce organizational risk and achieve a company's strategic goals. According to forum attendees, the portfolio management tasks should be handled by the project office. Typically, a cross-functional solutions team of middle managers serves as the project-selection and prioritization decision-makers.
Nearly half of the projects implemented are over budget by 100 to 400 percent, and 86 percent are late in achieving deliverables.
One of the biggest project management challenges for companies is risk management. Most project managers have difficulty accurately assessing risk level and costs of a project before its completion. A project that is under budget results in unused resources that could have been re-allocated to other projects. A project that goes over budget ultimately results in spent resources and lost profits.
According to the CBP's August 2000 edition of Project Management Best Practices Report, nearly half of the projects implemented are over budget by 100 to 400 percent. The research further concludes that 86 percent of projects are late in achieving deliverables. Strategies for overcoming this include assigning a risk manager to the project, conducting risk assessment workshops and using measurement tools to formally manage project risk, such as probability/impact sales and Monte Carlo simulations.
Project office success relies heavily on support and involvement from corporate management. Senior level guidance minimizes cultural problems and encourages acceptance of the new project management methodology. The most convincing way to get senior management's support is to demonstrate a project office's financial return.
The critical question is: Are projects more successful and profitable when a project office is in place? According to most of the benchmarking forum participants, the answer is yes. Professional project management has enabled their companies to execute more projects on time and within budget when compared with other corporate projects. Strong management support improves the company's ability to obtain resources for project initiatives, align project goals with corporate strategy, and for global organizations, adopt uniform standards, methodologies, templates and tools with ease.
If you think your organization's priorities align with what the forum revealed, let me know. If they did not align, then I would be most interested in finding some of the priorities that may not have as yet been disclosed. PM
Editor's Note: PMI sponsored the Top 500 Project Management Benchmarking Forum in 1995 and 1996 to benchmark best practices among large, functional organizations. Participation in the forum is open to any company that wishes to contribute information and share results on an equal basis with other participants.
Deborah Bigelow, PMP, is executive vice president of PM Solutions Inc., a Havertown, Pa., USA-based project management consulting company. She was executive director of the Project Management Institute from 1992 through 1996.
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PM NETWORK | NOVEMBER 2002 | www.pmi.org