Optimization

Get more for each dollar invested in projects

By December 16, 2020December 18th, 2020No Comments

We hear a lot about Agile these days, and that is indeed helping several companies in cutting down costs. Is project management dead then?

First, let me say that agilists that reject “project managers” as if “they were enemies of Agile” will not survive future waves of methods and procedures. For decades we see different approaches coming and going, and there will never be a silver bullet.

(The opposite is also true: project managers that reject agility will be devoured, in a very Agile way).

The essence of a Project Manager is his drive for continuous improvement and learning. We must be aware of what has been available in the past, what is trending to become a new wave, and how to combine the best of all possible knowledge we gather in this area.

The plan with this text is that I will revisit previous knowledge made available by the Project Management Institute and use it as building blocks for a series of articles around “generating more value in projects,” despite trending approaches or opposite schools.

I will start this series by revisiting PMI’s report of 2013. If you find the following excerpt interesting, I invite you to read the full document!

The high cost of low performance in 2013.

This report explains how organizations without proper project management lose a lot of money on failed projects. It also describes how top-performing organizations minimize the risk of failure by improving their project and program outcomes. The report makes context that every strategic initiative is a project or program, and all strategic change in an organization occurs through projects.

Performance in realizing project goals, timelines, and budgets impact an organization’s ability to thrive. Top performers will waste US $20 million per the US $1 billion spent while the low performers will lose US$280 million per the US $1 billion spent. This explains the importance of improving project management for competitive advantage despite the numerous barriers. Best performing organizations approach program, project, and portfolio management differently by creating efficiencies to drive organizational success, focusing on talent management and its role in project management and employing program, project and portfolio management strategically.

Figure 1: Effect of meeting project performance measures on the performance level according to the PMI 2013 survey

Organizations lose a lot of money and market share when they fail in executing their projects and programs, and this makes them less likely to implement their strategies and gain competitive advantage. Projects, programs, and portfolios should, therefore, be assigned to skilled and trained professionals in standardized ways and aligned with organizational strategy to ensure success. According to the research, many respondents believe that project management is vital to business performance and organizational success and enables business growth.

Over the past decade, training and development in project management tools and techniques have declined, and this has resulted in a decreased career path for project management within the organization. Declining project success have effects that extend beyond the scope of individual projects, and this place additional demands on other resources such as people, projects, budgets, products, and overall organizational goals. High performing organizations provide consistent and continuous training and development for the project to enhance organizational success.

Figure 2: Decline of internal training and related processes according to the PMI 2013 survey.

The force to strive for high performance and reduce resources at risk has forced organizations to accomplish more with fewer resources. However, there is an increase in the cancellation or delay of projects due to economic conditions. Organizations should, therefore, align plans with broader business strategies and position program, project, and portfolio management as key business drivers for business success. Efficiency can be increased by expanding into new and emerging markets and localizing on skills.

Standardized project management results in efficient use of resources allowing organizations more time and resources to use in leading, innovating, and delivering products and services and results in better project outcomes. Standardization also helps the organization to innovate through partnerships with other organizations that are potential competitors. Project outcome success also depends highly on having active project executive sponsors who push for the strategic value of projects and communicate the project benefits to stakeholders.

Figure 3: Effect of active project sponsors on project outcome success according to the PMI 2013 survey.

More mature program, project, and portfolio management practices perform better in their projects. Low performing organizations are, therefore forced to tighten their project deadlines and cut budgets to achieve their intended results. Organizations can minimize risk by focusing on talent management, supporting standardization, and ensuring alignment with organizational strategy.

The next steps

I hope that some of you will actually read through this material and with this and other articles, we can have some good discussions about yesterday, today and tomorrow in project management (let’s remember PMI will be 50 years old this year!)

References

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