Protecting Project ROI for Project Sponsors
Business complexity is not shrinking and constant pressure to innovate and change is the new normal. The benefits business seek to achieve from the projects that drive that change are incredibly important to them. The costs they will spend to become the next big competitor are astronomical and have significant impact to the global economy. Business leaders must actively apply a governing framework to detect early and often those conditions that most commonly contribute to project failure.
In 2012, PricewaterhouseCoopers shared a study of over 10,000 projects across 200 companies in 30 countries that found that very few companies (2.5%) completed 100% of their projects. McKinsey found in the same year that 70% of projects fail. A Harvard Business Review study pointed to an average schedule overrun of nearly 70%. Gallup cited the cost of project failure upward of $150 billion per year in the United States in 2004 (no doubt considerably higher today). I suspect many of these studies underestimate the true rates of failure and financial impact, and in today’s dollars, they would be even more staggering.
With the stakes so high, it is critical that business leaders have the ability and courage to mitigate risk up front and actively monitor and act on project risks and performance as early warning signs materialize.
Leon A. Kappelman, Robert McKeeman and Lixuan Zhang
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