The Value of Project Management

Looking for a way to stay ahead of the pack in today’s competitive and chaotic global economy, companies are turning to project management to consistently deliver business results. Disciplined project management starts at the portfolio level, where the strategic vision drives initial investments and where value measures are established. A fully aligned project, program and portfolio management strategy encompasses the entire organization, dictating project execution at every level and aiming to deliver value at each step along the way.

Project management is, in fact, shorthand for project, program and portfolio management. And more companies are clearly seeing the payoff from investing time, money and resources to build organizational project management expertise: lower costs, greater efficiencies, improved customer and stakeholder satisfaction, and greater competitive advantage.

A survey by consulting giant McKinsey & Co. found that nearly 60 percent of senior executives said building a strong project management discipline is a top-three priority for their companies as they look to the future.

Why Project Management Matters?

Leading organizations across sectors and geographic borders have been steadily embracing project management as a way to control spending and improve project results. When the recession began in 2007-08, this practice became even more important. Executives discovered that adhering to project management methods and strategies reduced risks, cut costs and improved success rates—all vital to surviving the economic crisis.

More than half of the executives in the Economist Intelligence Unit report said following a project management practices became more important since the recession began. Compared to 2007, respondents reported:

• Investing more time in project planning and due diligence (40 percent)
• Conducting more frequent project reviews to assess risks, milestones and overall value (37 percent)
• Measuring quantitative and qualitative project outcomes more frequently (38 percent)

“Many companies admitted that the economic crisis underscored their project management shortcomings and forced them to do better,” the report says. With little room for error and fewer resources to rely on, project management expertise and oversight is helping organizations streamline their delivery process, cut costs and sidestep risks, enabling them to ride out the recession and implement stronger project management practices for the future.

Tighter budgets and fewer resources mean less money for the innovative projects that help move the company forward. Getting the most out of those available assets, then, becomes paramount. “Resources are precious, and we’ve got to be sure we are spending them in the best and most efficient way possible. Companies are also discovering that as their project management strategy matures, the business value derived from it also increases. To increase that value and ensure strategic alignment across the project portfolio, executives at many global organizations are creating formal project management offices (PMOs).

In State of the PMO 2010, 84 percent of the 291 project professionals responding said their companies have a PMO, demonstrating steady growth from 77 percent in 2006 and 47 percent in 2000.

For many companies, having a PMO can help create the crucial alignment between projects and organizational strategy. The State of the PMO 2010 reported that PMOs:

• Decreased failed projects by 31 percent.
• Delivered 30 percent of projects under budget.
• Demonstrated a 21 percent improvement in productivity.
• Delivered 19 percent of projects ahead of schedule.

When executives believe in the value of project management, champion their PMOs and integrate project management across the organization, the business benefits are evident and easy to qualify.

Project Management and the Competitive Advantage

Implementing project management across the organization helps create a strategic value chain that gives companies an edge on their competitors, particularly in high-risk sectors and markets. Being able to deliver projects on time and within budget often determines whether a company will get the next job or whether its new product hits the market.

Ninety percent of global senior executives ranked project management methods as either critical or somewhat important to their ability to deliver successful projects and remain competitive, according to the Economist Intelligence Unit survey. “A strong project management discipline brings exceptional value to the business, because when there is a demand for a product, we are the ones who deliver it,” says David Buisson, PMP, program manager at Headland Project Management Ltd., which is currently managing the Terminal 3 redevelopment project for BAA Airports at Heathrow Airport in London, England. “We are a key part of the business, and we adhere to the same rules, rigor and commercial goals as the rest of the organization.” Keeping the project on track requires a strict management of metrics and project goals that extends across the project team and out to suppliers, contractors, the client and the stakeholders. And Mr. Buisson and his team are keenly aware of the business impact that results from their progress in the terminal project.

Building Project Management Capabilities

Harnessing the potential of project management doesn’t happen overnight, and it cannot be confined to the project team. Organizations must actively work to shape mature project management practices and integrate it across all levels of the organization. Here are some tips from the trenches:

Define the ROI: Every project plan should begin with an explanation of the business value that project brings to your organization. That measure can be used to decide first whether the project should move forward and later as a metric to determine whether the project brought strategic value to the business.

Manage what’s measured: The way to get the most value out of a project management methodology is through metrics. Focusing on measures and processes tied to business goals, collecting the data and make it available to everyone as “When people know what’s being watched, they put more time and focus on it.”

Use metrics to align projects with strategy: All project metrics and data regarding the project’s timeline, risks and progress should be made available to senior management in an at-a-glance format. “When the executive team can see what’s going on with projects, it is very helpful for strategic planning.”

Get everyone on board: Project management doesn’t happen in a bubble. It must be a collaborative effort that extends to the contractors, vendors and clients working on a project. “Everyone we work with must subscribe to the quality, safety and value metrics we use to track projects.”

Secure buy-in: Unless everyone in the company believes in the value of project management, the organization won’t be able to achieve its project goals. “If the business unit staff doesn’t understand the importance of project execution, the project will always face challenges.”

Summary

As the practice of project management matures—from the portfolio level to individual projects—the connections between organizational project management and business value become clearer. And the more involved the executive team is, the better the results. “With the right resources, a clear timeframe for delivery and senior leadership support, a strong and disciplined project management practices will drive an organization forward”.