Projects In, Money Out
A recent survey of senior project managers by Robbins-Gioia revealed that "for organizations that systematically align projects and programs to their overall business strategy, nearly 75 percent reported they are either very profitable (i.e., exceeding goals) or gaining momentum and increasing profitability."
According to Gartner Inc., 68 percent of projects and/or programs are late and/or overbudget. Inadequate work-execution tools that hamper real-time visibility of output and effort are chiefly responsible for this. Projects either take longer than initially predicted and/or they require more resources to complete.
Either way, the related losses are expected to worsen. In fact, outsourced projects and/or program provisioning have grown by more than 30 percent during the last five years. This increasing distribution of work within and across organizations has only exacerbated challenges in achieving deliverables-based visibility and control. As a result, even higher levels of late and/or overbudget outcomes--not to mention greater money leaks and lower quality--can be expected.
Another major source of money leaks occurs from cancelled information technology (IT) development costs. According to averages reported by The Standish Group, $10 million is spent on cancelled IT contracts for a development staff of 100 during a four-year period.
According to the ANSI/PMI 99-001-2000 standard, and A Guide to the Project Management Body of Knowledge, published by the Project Management Institute, there are nine project management knowledge areas:
• Integration management
• Project scope management
• Time management
• Cost management
• Quality management
• Human resource management
• Communications management
• Risk management
• Procurement management
I believe the following four critical areas should be added:
• Organizational change management
• Portfolio management
• Document and/or configuration management
• Project planning and estimating management
Project integration management is crucial in today's business environment because most organizations must manage many projects simultaneously. Each of these projects competes for limited resources. This requires the management team to manage not only the individual projects but the total portfolio of projects as well.
Poor organizational change management is the biggest cause of project failure. Most projects are technically sound and take into consideration related processes, but project managers fail to recognize what's required to get people who will be affected by the projects to accept them. Organizational change management represents the people side of a project. It prepares those who will be affected by a project to accept and commit to change.
Processes are closely integrated with the project life cycle, which not only indicates how the project starts, but also serves as a road map to the work that must be done and shows who's responsible for doing it. By executing the phases of the project life cycle, the project team can answer questions such as:
• Why are we doing this project?
• What are the business measures that indicate this project's success?
• How do we turn this idea into a solution?
• How do we get approval to commit resources to this project?
• How do we plan the project?
• What are the day-to-day activities that are required to manage the project?
• What did we learn from our experience on this project?
Projects represent a significant and strategic investment to any organization. The investment comprises resources, capital expenditure, time commitment, and individual dedication to make and embrace a change that will help the organization improve business performance and strengthen its competitive position.
H. James Harrington is CEO of the Harrington Institute Inc. and chairman of the board of Harrington Group. He has more than 55 years of experience as a quality professional and is the author of 26 books. Visit his Web site at www.harrington-institute.com.