The Project Management Institute has released its “Pulse of the Profession” and what’s most surprising about project management is the rate of failure and the rate of waste on projects.
As PMI states on the report website, which is available for download, “PMI’s 2014 Pulse of the Profession, our annual global research, examines the impact of the implementation of project, program and portfolio management. Our report demonstrates that in order to remain competitive, organizations must place a strategic focus on people, processes and outcomes. And the time to act is now.”
[By the way, here’s a technical tip. If you own a Mac – like I do – when you download the report change the extension from .ashx to .pdf. There’s no need for a complicated file conversion beyond that.)
According to the report, more than 10 percent of project investment costs are wasted. It states, “Poor performance results in organizations wasting US$109 million for every US$1 billion spent on projects.” That’s a startling number.
But it’s surprising that it’s not higher in light of this fact: more than two-fifths of strategic initiatives fail. PMI pegs the number at 44 percent. Projects fail for these reasons:
- Lack of alignment – 58% of projects are “not highly aligned to organizational strategy.”
- Lack of agility – only 15% of organizations report “high organizational agility.”
- Lack of execution – only 9% of organizations consider themselves “excellent at executing strategy.”
The report adds, High-performing organizations successfully complete 89 percent of their projects, while low performers complete only 36 percent successfully. This difference in success results in high-performing organizations wasting nearly 12 times less than low performers.”
The secret to success, at least according to PMI, is identifying the high performers in your organization. It says, “High performers achieve significantly more successful strategic initiatives by effectively managing their project management talent. Furthermore, they demonstrate successful organizational change management, which is more effective with actively engaged sponsors.”
It’s important to identify your high performers because:
- High performers have twice as many successful strategic initiatives vs. low performers. The high performers have a success rate of 76% vs. 38% for low achievers and an overall average of 44%.
- High performers are also three times as likely to have high organizational agility (31% vs. 9%).
- High performers are also twice as likely (57% vs. 28%) to have high alignment of projects to organizational strategy.
But how do you identify or create high performers? PMI says it research showed that “organizations that align their talent management to strategy have more successful projects and waste fewer project dollars. Our research revealed that high-performing organizations are more than twice as likely as their low-performing counterparts to align talent management to organization strategy—a significant competitive advantage.”
Successful organizations take these steps:
- Ongoing project manager training
- Formal process to develop project manager competency
- Formal process to mature project management practices
- Formal knowledge transfer process
- Defined career path
- Effective knowledge transfer process
Most disconcerting to those in the project management profession is how many organizations continue not to understand its value. PMI reports, “Similar to 2013 … nearly one half (46 percent) of organizations report not fully understanding the value of project management. These organizations face a real risk to their success—significantly more strategic initiatives are successful when organizations fully understand the value of project management (63 percent vs. 47 percent).”
There has also not been growth in organizations with project management offices. The report finds, “The percentage of organizations that report having a PMO remains flat at 69 percent. Furthermore, there is a lack of growth in the presence of enterprise-wide PMOs: just one half (47 percent) of organizations report having an EPMO; this number was 46 percent in 2011.”