Creating Organizational Excellence--Part Two
H. James Harrington
This column is the second in
an ongoing series about organizational excellence, which
consists of five elements. The first two are process management
and project management.
Processes define how organizations function, and projects
are the means by which organizations improve those processes.
We define a project as a temporary endeavor undertaken to
create a unique product or service. For project management,
we apply knowledge, skills, tools and technology to activities
to meet or exceed stakeholders' needs and project expectations.
Although this seems straightforward enough, it can't be
so simple, or we'd see better results from the projects
we fund. The Standish Group International reports that "corporate
America spends more than $275 billion a year on application
software development projects, many of which will fail due
to lack of skilled project management."
"The average cycle time for IT projects is 27 weeks,"
reports the Wall Street Journal. "The ones that are
cancelled are cancelled after 14 weeks; at that point, they're
52-percent complete. Many of the project teams know that
the project is likely to fail six weeks before it's cancelled."
Similarly, the Gartner Group reports that "in a four-year
period, an application development organization of 100 developers
can expect to spend more than $10 million on cancelled contracts."
Most organizations' projects are mission-critical activities,
and delivering quality products on time is nonnegotiable.
Even with IT projects, things have changed. The old paradigm
was, "Get it out fast and fix the bugs as the customer
finds them" (i.e., the Microsoft approach). The new
paradigm is, "Get them out at Web speed and error-free."
Benchmark organizations complete 90 percent of their projects
within 10 percent of budget and on schedule. Information
systems organizations that establish standards for project
management, including a project office, cut their major
project cost overruns, delays and cancellations by 50 percent.
Let's look at why projects fail. First, they fail to adhere
to committed schedules due to variances, exceptions, poor
planning, delays and scope creep. Projects also fail from
poor resource utilization, including lack of proper skills,
poor time utilization and misalignment of skills and assignments.
Often, an organization's portfolio of projects isn't managed
correctly because the wrong projects are selected, high-risk
projects aren't identified or the interdependencies between
projects are poorly controlled. Finally, projects fail due
to a loss of intellectual and/or knowledge capital, including
lack of means to transfer knowledge, and people leaving
Poor project management is one of the biggest problems
facing organizations today. It's therefore surprising that
quality professionals haven't addressed improvements in
the project management process. Even ISO 9001 ignores this
critical issue. Yet, in our knowledge-driven economy, an
organization's success depends upon the quality of its project
Our general attitude toward project management is similar
to quality management: Everyone thinks he or she knows what
quality is and therefore assumes that anyone can manage
it. But just as quality managers are special professionals
with very specific skills and training, so are project managers.
They require skill, training and effective leadership specifically
related to project management.
The ability to manage one project is no longer sufficient;
organizations need managers who can handle a portfolio of
projects, selecting those that will succeed and bring the
biggest return on investments. This requires an effective
online reporting system that summarizes a project's status
at least once a week, if not daily. The executive team must
also have access to project archives in order to compare
proposed project estimates against actual costs and cycle-time
data from completed projects. Management wouldn't approve
one-third of the projects proposed if it knew how long they'd
take or cost. As John Carrow, CEO of Unisys Corp., says,
"The best time to stop a project that you don't know
is going to be successful is when you start it."
Far too often a quality department will undertake a major
project such as Six Sigma, TQM or reengineering without
the necessary project management skills. Basic tools such
as work breakdown structure aren't used. Neither is risk
analysis, let alone reasonable mitigation plans. Is it any
wonder that the failure rate in quality programs is so high?
The project management body of knowledge defines 69 tools
a project manager must master. Few of the project managers
with whom I've come in contact have mastered all of them,
and only a few project managers are certified by their peers
as having done so.
As you start your next project, my suggestion is: Don't
start it without a certified project manager.
H. James Harrington has more than 45 years of experience
as a quality professional and is the author of 20 books.
Visit his Web site at www.hjharrington.com.
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