PMI's The High Cost of Low Performance 2014 reveals the major issues that organizations and leaders worldwide are facing. This year's Pulse research exposes a wide chasm between an organization's actual state and the state of success. Projects, including those focused on an organization's highest priorities--its strategic initiatives--are suffering. And while strategic initiatives are essential to success in today's increasingly complex business world, an alarming 44% of initiatives fail in implementation.
To remain competitive, organizations must focus on three critical areas:
The full 2014 Pulse of the Profession® report is available on PMI.org. Know what's keeping your executives up at night. What you'll learn will help you start a conversation with them on the importance and value of aligning project and program management with your organization's strategic goals.
The newest edition of the Pulse features feedback and insights from over 2,500 project management leaders and practitioners across North America; Asia Pacific; Europe, the Middle East, and Africa (EMEA); and Latin America and Caribbean regions.
When it comes to communications, organizations talk a big game -- but few get it right. And that's downright dangerous. For every US$1 billion spent on a project, 56 percent, or US$75 million, is at risk due to ineffective communications, according to PMI's Pulse of the Professionâ„¢ In-Depth Report: The Essential Role of Communications.
The data also reveal that of the two in five projects that fail to meet business intent, half do so because of poor communications. Still, everyone likes to believe they're making their point -- completely oblivious that their intended audience didn't quite get the message. For example, the report found that while 60 percent of executive sponsors think they're clearly communicating how projects align with strategy, just 43 percent of project managers agree. Some organizations are smart enough to see the gap -- and take action to close it. The U.S. Centers for Disease Control requires everyone on a project, from senior executives to functional managers, to participate in a formal project review or stage gate governance review at all 10 project stages.
On the flip side of that communications equation, there are the project managers who often get mired in project jargon. They just can't resist breaking out the Gantt chart. The result is a fundamental disconnect between project managers and stakeholders. Here, too, some smart organizations are implementing processes to foster crystal-clear and transparent communications. NorthWestern Energy, for instance, faced a tough sell for a multi-year project to upgrade its infrastructure. The revamp will mean better services, but also potentially higher rates and prolonged construction. So the company formed a stakeholder group. Based on their input, the team then translated internal project and business speak into layman's terms to create roadside signs that said: "This project will provide safe, reliable energy for today and tomorrow." The message was upfront about delays caused by the construction, but did so in a way that reinforced the project's ROI.
Another big takeaway from Pulse was that effective communications can't be a one-off. The Pulse data show that only 54 percent of projects with infrequent communications containing sufficient detail meet original intent. That number jumps to 84 percent for projects with frequent clear communications. Standardizing communications practices at the project plan phase can help. IT services company Atos, for example, sets up a framework that details how often to communicate what information to which stakeholder.
Granted, standardization can be time-consuming and just seem like adding more layers of bureaucracy, but the benefits outweigh the effort. Pulse reports that high performers -- organizations that complete 80 percent or more projects on time, budget and target -- are nearly three times more likely than low performers (those that complete 60 percent or fewer projects by the same measures) to standardize practices. The former experience better project outcomes -- and risk 14 times fewer dollars in the process.
Read more about the power of effective communications in PMI's Pulse of the Professionâ„¢ In-Depth Report: The Essential Role of Communications.
On June 12, 2013 the US House of Representatives Government Efficiency Caucus hosted the discussion "Doing More with Less: Reducing Waste and Improving Service Delivery." Hosted by House Representatives Todd Young (R-IN) and Jim Matheson (D-UT), the speakers addressed issues related to efficient program management in U.S. government agencies.
Mark A. Langley, President and CEO, Project Management Institute, presented findings from PMI's 2013 "Pulse of the Professionâ„¢" study on the high cost of low performance. The study revealed that government lags behind private sector industry in key success areas. Mr. Langley also noted that there are pockets of excellence in the Federal government using strong program management practices and seeing positive results. "It is essential to continue nurturing a program management culture government-wide," Mr. Langley said.
Featured speakers also included Dr. Paul Light, Wagner's Paulette Goddard Professor of Public Service, New York University and Mr. Richard Garrison, Vice Chancellor, US Department of Veterans Affairs, Acquisition Academy.
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For all the talk of an economic recovery, many organizations continue to obsess over headcount. But a smaller (and smarter) group is focusing on getting the right people on the right projects -- positioning those people and the organization itself to grow.
The payoff can be huge, according to PMI's Pulse of the Professionâ„¢ In-Depth Report: Talent Management. On average, 72 percent of projects meet their original goals and business intent at organizations with significant or good alignment between their talent management and organizational strategies. Now put that up against the 58 percent rate at organizations with moderate or weak alignment.
Despite the potential ROI, only 10 percent of organizations report significant alignment. That stat takes on added significance when you consider what's shaping up as a true talent crisis.
Pulse data revealed four in five organizations report difficulty in finding qualified project management candidates to fill open positions. Some organizations are resorting to some serious poaching -- check the battle for project talent between Silicon Valley tech titans Apple, Google, Yahoo! and Facebook. China Road and Bridge Corporation is adopting a more long-term approach, according to China Daily. Looking to build talent in a strategic market for its projects, the company is sponsoring a group of Congolese students to study engineering and project management in Xi'an, China.
In this case, organizations that align talent management and strategy have an edge, reporting less difficulty in filling open positions.
Organizations that align talent management to organizational strategy are also more effective at implementing formalized career paths, with 83 percent moving new hires to advanced project management positions. Among organizations with weak alignment, that number drops to 62 percent.
The MD Anderson Cancer Center, for example, clearly outlines the path up. It requires 10 years of experience (including five years of project management) and a Project Management Professional (PMP)® credential for senior project managers who manage highly complex strategic projects that span three or more organizational boundaries. Establishing a career path not only makes employees feel like the organization has a vested interest in them, it also helps the organization spot -- and close -- any skills gaps that might prevent it from delivering on its business goals.
Recruiting and retaining top talent will only get organizations so far. They need to measure results, too. Across the board, organizations with strong alignment are more likely to measure outcomes such as staff turnover, learning development, and employee engagement, retention and productivity.
U.S. space agency NASA (National Aeronautics and Space Administration), for example, tracks the effectiveness of its professional development courses by assessing enrollment numbers and feedback from senior leadership. Armed with that information, the PMI Global Executive Council member knows what's working -- and what's not.
No doubt, creating a talent management program comes with a hefty price tag. But consider the danger of skimping: On a US$1 billion project, organizations with significant or good alignment of talent management programs to organizational strategy put US$50 million fewer dollars at risk than organizations with moderate or weak alignment.
With those kinds of numbers on the line, the bigger question is: Can an organization afford not to make the investment?
PMI's 2013 "Pulse of the Professionâ„¢" Report Identifies the High Cost of Low Performance
PMI Pulse of the Profession
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Every year, I speak with hundreds of executives about their strategic initiatives and the challenges they face. And every year, I hear similar stories from executives, regardless of nation or language: business environments are increasingly complex, global priorities are expanding, there is a continued drive for innovation as well as a prevalent "do more with less" attitude. And perhaps most frequently, I hear about risk--that is, the unacceptable financial risk of failed projects. Because failed projects waste a lot of money. For every $1 billion spent on a project that doesn't meet its business objectives, $135 million is lost for good, according to PMI's 2013 Pulse of the ProfessionTM report.
PMI's Pulse research, which is consistent with other studies, shows that fewer than two-thirds of projects meet their goals and business intent. About 17% fail outright. So if projects have always failed, why should we pay attention now? Because projects and programs continue failing at an increasing rate - this year's study showed that only 62% of projects met their original goals and business intent - down from a high of 72% in 2008, when Pulse first started tracking it this way.
We all know that projects fail for many reasons. But our Pulse research showed one that stands out for me: it's because executives continue to think of project and program management as a tactical competency with no connection to strategy. It's interesting that most executives don't even recognize that every strategic initiative in their business is essentially a project or program, and that all strategic change in an organization occurs through projects and programs. What they don't yet know, and what we need to be telling them, is: organizations that combine excellence in tactical project implementation with alignment to strategy complete projects successfully 90% of the time, while poorer performers are successful only 34% of the time. And that gap (which nets out to somewhere in the neighborhood of $260 million dollars saved on a billion dollar project) is where project, program and portfolio management can deliver competitive advantage and shareholder value for the organizations that do it well.
John Kotter, acclaimed author and former Harvard Business School professor, probably says it best. He wrote recently that "Strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on them, and completes those initiatives swiftly and efficiently." Kotter recognizes the link between strategy and execution, which is where project, program and portfolio management deliver unparalleled value to organizations. Read the Pulse of the ProfessionTM report to find out how. And let us know what you think.