FROM OUR PRINT EDITION: Around US$1 million is wasted every 20 seconds collectively by organizations around the globe due to the ineffective implementation of business strategy thanks to poor project management practices. This equates to roughly $2 trillion dollars wasted a year.
The 2018 Pulse of the Profession, a global survey conducted by Project Management Institute (PMI), shows that on average oganizations waste 9.9 percent of every U.S. dollar (numbers were converted from local currencies) due to poor project performance. As well, 31 percent of projects do not meet goals, 43 percent are not completed within budget, and nearly half (48 percent) are not completed on time.
Executive leaders may be out of touch with this reality, as 85 percent surveyed said they think their organizations are effective in delivering projects to achieve strategic results. These factors are leading to colossal financial losses for businesses around the world, with a significant, broader macro-economic impact.
“Project management is the driver of strategy, but organizations are failing to bridge the gap between strategy design and its delivery,” said Mark Langley, president and CEO, PMI. “Effective project management to implement an organization’s business strategy is key, and has a significant impact on the bottom line.”
China reported the lowest average monetary waste on projects (7.6 percent or $76 million per $1 billion), followed by Canada (7.7 percent or $77 million per $1 billion), and India (8.1 percent or $81 million per $1 billion). By contrast, Australia reported the highest average waste on project spending at 13.9 percent or $139 million per $1 billion, while the U.S. was in the middle of the pack at 10.2 percent or $102 million per $1 billion.
“There is a powerful connection between effective project management and financial performance,” continued Langley. “Organizations that are ineffective with project management waste 21 times more money than those with the highest performing project management capabilities. But the good news is that by leveraging some proven practices, there is huge potential for organizations to course-correct and enhance financial performance.”
In an era of increased financial scrutiny, shifting competitive pressures, and business disruption from evolving technology, the survey results point to five critical factors that can help organizations drive performance through more effective implementation of strategy.
1 Executive sponsor engagement
The top driver of projects meeting their original business goals is an actively engaged executive champion or sponsor. But at the same time, organizations report an average of 38 percent of projects not having active executive sponsorship, which points to the need and opportunity for executive leaders to be more engaged.
2 Connect strategy design and delivery
Executives often fail to recognize that effective project and program management is what delivers on strategy. More than a third of organizations (35 percent) report not having strong alignment of initiatives and projects that directly deliver against strategy. C-Suite executives need to recognize the full potential of project management to execute strategy.
3 Optimize investment in implementation
Organizations often prioritize investment in developing strategy over proper execution. There appears to be a disconnect between executive leaders and project managers here. While 84 percent of executive leaders believe they areprioritizing and funding the right initiatives and projects, only 55 percent of pProject management office (PMO) leaders agree. This suggests organizations might not be putting priorities in the right place.
4 Leverage disruption – get agile
In a world with an accelerated pace of innovation, disruption is the new normal. So, it’s not surprising that 83 percent of project managers report digital transformation has either moderately or dramatically impacted their work over the past five years. But while 71 percent of organizations report greater agility over the last five years, only 28 percent report having high organizational agility overall.Looking forward, organizations that can leverage disruption and remain agile can drive both financial gain and competitive advantage.
5 Define and track success metrics
The survey showed that 52 percent of projects experience scope creep and 48 percent are not delivered on time, leading to huge financial losses. Defining success measures up front helps ensure projects stay on track, and meet budgets and goals.
The Pulse of the Profession Survey was conducted online in October 2017. The report includes insights from 4,455 project management professionals, 800 project management office (PMO) directors, and 447 executive leaders from a range of industries, globally, including information technology, financial, manufacturing, government, energy, construction, and telecom.