What it means for your company’s bottom line.
If your company is growing, your company is doing projects. How much money have your executives committed to such efforts in improvement, innovation, development and expansion? How did those projects fulfill their objectives? How do they make sense in relation to one another? Are they aligned with your strategic objectives and prioritized accordingly?
Starting your project management strategy discussions with scope, schedule and budget is essential; but it is just a starting point. Focusing solely on process is not enough.
In 2011, a Gallup report revealed a key finding about human nature in the workplace: even the best processes and systems are inefficient if the people who run them aren’t emotionally invested in the outcome.
What does that mean for project management? A lot of things.
Stakeholder alignment is a buzzword you often hear in change management and project management circles. On the surface, it makes sense and doesn’t seem complicated. However, in the deeper places of strategic planning, ownership and the impact of outcomes that touch many different work groups, stakeholder alignment becomes the very glue of your effort.
In a recent project, we encountered an environment which on the surface seemed to be in synch with all the key decision makers. Everyone we met with used the same language surrounding their desire to broaden their reach for their products and tap into a more diverse customer base. But once we initiated our field interviews at the managerial level, that harmony twisted apart and it was very evident that a significant proportion of the team did not buy in. In fact, they had not even been asked for their opinions, and in some cases did not know about the new strategy development at all. To make things more difficult, the leadership team members openly disagreed about whether or not that even mattered.
What role does a project manager have in mitigating this situation and keeping the project moving forward? Unless they have been a member on the strategic team that shaped the project’s direction and approach at the beginning, this can be almost impossible to carry out.
The project manager must have an open and close relationship with the project sponsors, internal and external. The project manager must be part of the project leadership team and be included in all communications. They should also be included in all stakeholder interviews so that they understand the purpose and motivations of all decision-makers, users and workgroups who will be affected by the outcomes and changes created by the project. Above all, they should not have any other responsibilities other than monitoring progress and communications, and steering the project to success.
That takes a commitment to the strategic impact of in-depth project management. That commitment is manifested in a financial investment in the role and development of that role as a core competence. That is how you earn your right to succeed.
A study published in the Harvard Business Review, which analyzed 1,471 IT projects, found that the average overrun was 27%. This does not include the cost of requisite re-work. If a $300,000 project has overruns of 27%, and a follow-up project costing 25% is necessary to mitigate the results, $156,000 is lost, or over 50%. This should be unacceptable to any business, and yet a 2010 KPMG study found that 70% of organizations have suffered at least one major project failure in the prior 12 months.
Research data by Gallup and other organizations consistently point out that the top reasons for such project overruns are not about operational or tactical methods, but about “people factors”. Everybody is concerned about methodology, but not about clear purpose, team cohesion, and active engagement. The people doing the work and the people affected by its outcome are not emotionally invested in its success because they are not truly actively engaged in the project to begin with.
In order to earn your right to succeed in project management, you must commit people, resources and money to setting it up for success. The right project management philosophy, experience and commitment can save you time, control your costs and reduce your risk. Those savings translate directly to the bottom line with successful, sustainable results.
Maureen Donnellan is Director of Consulting for Pathfinder|MPI Management Consulting, Cincinnati USA. She has 25 years of experience in organizational leadership and development. For more information, contact her at 513.721.6611 or firstname.lastname@example.org.
© Pathfinder|MPI Management Consulting 2013.