Organizations around the world waste Rs 6.5 crore every 20 seconds
Mumbai: The 2018 Pulse of the Profession®, a global survey conducted by Project Management Institute (PMI), reveals around Rs 6.5 crore is wasted every 20 seconds collectively by organizations around the globe due to the ineffective implementation of business strategy through poor project management practices. This equates to roughly Rs 1 lakh 28,000 crores wasted a year. The study shows that on average organizations globally waste 9.9 percent of every dollar due to poor project performance and India loses 8.1% of every dollar* invested by businesses, pointing to a significant opportunity to drive financial performance. (*Figures are U.S. dollar amounts, but represent a percentage that applies to any currency.)
Commenting on the report Mr. Raj Kalady, Managing Director, Project Management Institute India said, “A higher level of maturity of project management practices is seen in India in sectors viz. IT, automotive and financial services compared to capital-intensive sectors. The private sector also reports a higher level of induction of project management than the public sector. Of the total 40,000 certified professionals in India, 55% certified project managers belong to IT industry (Source: PMI January 2018). Hence, it comes as no surprise that the 2018 Pulse of the Profession® India results which has 34% respondents representing the IT industry shows a more positive outlook (less wastage) for the country compared to the global average. This is in spite of the fact that we keep hearing about time and cost delays in government and construction projects. However, increasingly, even public sector companies have started laying emphasis on training programs and strengthening their existing project management units and professionals.”
“Project management is the driver of strategy, but organizations are failing to bridge the gap between strategy design and its delivery,” said Mark Langley, President and Chief Executive Officer, Project Management Institute.
“Effective project management to implement organizations’ business strategy is key, and has a significant impact on the bottomline.’’
“There is a powerful connection between effective project management and financial performance,” continued Langley. “Organizations that are ineffective with project management waste 21 times more money than those with the highest performing project management capabilities. But the good news is that by leveraging some proven practices there is huge potential for organizations to course correct and enhance financial performance.”
“As organizations face increasingly complex challenges with new technology and new business models continually altering the landscape of business and how work gets done, the inextricable link between strategy and implementation must be addressed. An understanding of how needed change occurs is also critical: Operations run the business, but projects change the business. A formal approach to project and program management can be the link that ensures that an organization has the capabilities for both change and strategy execution that it needs, ” added Raj Kalady.
In an era of increased financial scrutiny, shifting competitive pressures, and business disruption from evolving technology, the survey results point to five critical factors that can help organizations drive performance through more effective implementation of a strategy.
1. Executive Sponsor Engagement is the Top Driver of Effective Strategy Delivery
The top driver of projects meeting their original business goals is an actively engaged executive champion or sponsor. But at the same time, organizations report an average of 38 percent of projects not having active executive sponsorship, which points to the need and opportunity for executive leaders to be more engaged in the delivery of strategy.
2. Greater Connection Between Strategy Design and Delivery
Executives often fail to recognize that effective project and program management is what delivers on strategy. More than one in three organizations (35 percent) report not having strong alignment of initiatives and projects that directly deliver against strategy. This indicates the need for C-Suite executives to better recognize the full potential of project management to execute strategy, and to ensure they are leveraging the right programs to directly deliver against strategy.
3. Optimize Investment in Strategy Implementation
Organizations often prioritize investment in developing strategy over proper execution. There appears to be a big disconnect between executive leaders and project managers on strategy implementation funding. While 84 percent of executive leaders believe they are effectively prioritizing and funding the right initiatives and projects, only 55 percent of Project Management Office (PMO) leaders agree. This suggests that organizations might not be leveraging the optimum focus and investment to deliver against strategy.
4. Leverage Disruption – Don’t Just React to It – Get Agile
In a world with an accelerated pace of innovation, disruption is the new normal. So, it’s not surprising that 83 percent of project managers report digital transformation has either moderately or dramatically impacted their work over the past five years. What’s key to success in today’s business environment is leveraging an agile approach with project management and delivering against strategy through ongoing evaluation of shifting market dynamics, new technologies, and innovation.
But while 71 percent of organizations report greater agility over the last five years, only 28 percent report having high organizational agility overall. Though agility is increasing, the pace of change is inconsistent. In fact, from a broader organizational perspective, only 40 percent of organizations report prioritizing the creation of a culture receptive to change. Looking forward, organizations that can leverage disruption and remain agile can drive both financial gain and competitive advantage.
5. Define and Track Success Metrics
The survey showed that on average, around half (52 percent) of projects experience scope creep and roughly half (48 percent) are not delivered on time, leading to huge financial losses. Defining success measures upfront helps ensure projects stay on track, and meet budgets and goals.