From Crisis to Control

Many businesses today are losing money by having projects in crisis. In fact, many organizations set up Project Management Offices (PMOs) as a tool to improve project management. However, the evidence shows these fail more often than succeed. In fact, recent findings show that over 75% of organizations that set up a Project Management Office shut it down within three years because it didn’t demonstrate any added value.

To get to the root cause of the problem we’ve got to take a broader perspective and look at how organizations approach project management from a strategic level.
Here are four key strategies that will immediately make a difference for organizations.

1. Ensure All Projects Are Strategically Aligned
A major reason for project failure is that organizations do not ensure that all projects they implement align with their core strategies. In fact, according to recent findings, 80% of organizations have no formal business case for the development of their project management office and 73% of organizations identified “lack of executive sponsorship” as being the primary reason for failure of their project management office.

If organizations were to implement only those projects that were in alignment with their strategic goals, their success rate would increase dramatically because executive sponsorship would not be an issue. However, the recent findings show that the majority of projects on the go are not associated with corporate and/or departmental strategic plans.

What You Can Do To Align Projects With Corporate Strategy
First, review lessons learned from projects currently underway or completed over the past year to uncover possible success criteria and to determine project prioritization issues. For example, if many projects were unsuccessful because of a lack of resources then resources required to complete future projects should be considered a criterion for determining project viability.

Next, develop criteria against which all projects can be prioritized. Include impact on corporate strategy and customers. To do this, work with a sub-committee of senior management. List all projects along with their goal and strategic alignment. Then try to identify criteria necessary for determining the expected impact each project will have on the organization, its departments and its customers. Rank each project quantitatively and determine its level of priority.

Finally, align projects to corporate and departmental strategic plans, thereby demonstrating how each project’s successful execution will support the corporate and/or departmental strategic plan. Terminate projects that are of low priority or not somehow linked to corporate and/or departmental strategy. This will ensure they stop costing the organization money, resources, time and lost customers.

If organizations were to implement only those projects that were in alignment with their strategic goals, their success rate would increase dramatically because executive sponsorship would not be an issue.

2. Create a Culture That Supports a Project-Management Environment
The research identified a number of reasons why organizations set-up a project management office. These included; more successful implementation of projects (82%); predictable, reusable project management tools (74%) and organizational improvement (66%). It is interesting to note some of the more important reasons why organizations should set-up a project management office such as organizational improvement and building the project-management culture, were not the top reasons cited in the research.

If a project is strategically aligned and if project management is built into the corporate culture then everyone who works on a project will immediately know what their part is in making the project successful. Staff will not have to locate a project management office to tell them how to manage a project, what tools to use, what templates to use, and so on. Project management will be a competency embedded into everyone’s role. Much as quality management has evolved over the past 20 years to becoming a competency requirement for all jobs, project management is following the same route.

What You Can Do To Create A Project Management Culture
Undertake a change strategy specific to creating it. Business improvement architects calls this a Project Culture Initiative™ (PCI™). This requires the forming of a cross-functional steering committee to develop the approach and process for creating the corporate change. Values and principles need to be created to identify the unique project approach for the organization. Staff education is required to ensure they understand the benefits of the change to them, the organization and its customers.

3. Implement Strategic Project Management Best Practices
The research identified the strategic priorities of most Project Management Offices and determined that: 77% developed project management methodologies, 76% developed structures for their project management offices, 69% identified project roles and responsibilities, 60% developed tools and templates, and 54% implemented project management training programs. From these results, it became evident that project management olffices were task oriented, not strategic. They didn’t consider lessons learned to be of great importance in their overall mandate.

What You Can Do to Implement Strategic Project Management Best Practices
Knowledge retention is a major benefit to organizations because it contributes to continuous learning and avoidance of repeated mistakes. In order to retain project knowledge that can be passed on as “lessons learned” for future project teams, the project management office must hold a formal ‘project close-out meeting’ as soon as possible after a project is completed because, at this point, the knowledge about the management of the entire project is still fresh in everyone’s mind.

The purpose of the closing meeting is to review what happened in the project and what the team and the organization can learn from what happened. The project sponsor, project manager and project team should be in attendance as well as any outside resources and/or stakeholders who would like to contribute their ideas. The outcome of the project closeout meeting will be the creation of a formal document of “lessons learned” for archiving, to be carried to future projects, their managers and their teams.

4. Create a Strategic Project-measurement System
The research identified how project management offices measured their success. Their measurements included projects on time (76%), projects on budget (67%), achieved scope requirements (66%), customer requirements met (65%) and achieved all milestone deliverables (52%). The project-management offices chose traditional metrics to demonstrate success, not strategic ones.

How to Create a Strategic Project Measurement System
The establishment of project success measures will help to provide the senior management team with relevant information needed to make decisions affecting project completion. For example, the presentation of project success measures may convince management to re-prioritize projects or to re-allocate resources.
Project success measures will also provide the Project Management Office with the necessary information to continuously sell the impact they are having on organizational effectiveness. The strategic types of project success measurement criteria should include:

• Ability of the project to be managed within specified quality criteria;
• Ability to meet regulatory requirements;
• Number of resources used versus the number of resources they thought they would use;
• Ability of the project to meet its defined targets and deliverables;
• Customer post-surveys indicate satisfaction with the product or service delivery from the project;
• A successful and problem-free launch;
• Business case is proven through the rate of return.

Concluding With a Cultural Change
The research shows that successful project-management systems require that organizations undertake a significant cultural change because project management systems have a profound effect on: reporting structures, performance systems, communication systems and resources. Employees need to be prepared for the changes and understand the benefits.

A quality-based approach to the management of projects gives corporations the ability to successfully execute projects time after time.

Michael Stanleigh is President of Business Improvement Architects, a consulting firm that guides organizations to align their business strategy with their culture, performance systems and projects to reduce waste and increase profitability. Hew is also author of the recent global report: From Crisis to Control: A New Era in Strategic
Project Management;[email protected]. (www.bia.ca)