Organizations around the world waste Rs 6.5 crore every 20 seconds
Mumbai – February 20, 2018 - 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 thereport Mr. Raj Kalady, Managing Director, Project Management Institute Indiasaid, “A higher level of maturity of project management practices is seen inIndia in sectors viz. IT, automotive and financial services compared to capital-intensivesectors. The private sector also reports a higher level of induction of projectmanagement than the public sector. Of the total 40,000 certified professionalsin India, 55% certified project managers belong to IT industry (Source: PMI January2018). Hence, it comes as no surprise that the 2018 Pulse of the Profession®India results which has 34% respondents representing the IT industry shows amore positive outlook (less wastage) for the country compared to the globalaverage. This is in spite of the fact that we keep hearing about time and costdelays in government and construction projects. However, increasingly, evenpublic sector companies have started laying emphasis on training programs andstrengthening their existing project management units and professionals.”
“Project management isthe driver of strategy, but organizations are failing to bridge the gap betweenstrategy design and its delivery,” said Mark Langley, President and ChiefExecutive Officer, Project Management Institute.
“Effective projectmanagement to implement organizations’ business strategy is key, and has asignificant impact on the bottomline.’’
“There is a powerfulconnection between effective project management and financial performance,”continued Langley. “Organizations that are ineffective with project managementwaste 21 times more money than those with the highest performing projectmanagement capabilities. But the good news is that by leveraging some provenpractices there is huge potential for organizations to course correct andenhance financial performance.”
“As organizations faceincreasingly complex challenges with new technology and new business modelscontinually altering the landscape of business and how work gets done, theinextricable link between strategy and implementation must be addressed. Anunderstanding of how needed change occurs is also critical: Operations run thebusiness, but projects change the business. A formal approach to project andprogram management can be the link that ensures that an organization has thecapabilities for both change and strategy execution that it needs, ” added RajKalady.
In an era of increasedfinancial scrutiny, shifting competitive pressures, and business disruptionfrom evolving technology, the survey results point to five critical factorsthat can help organizations drive performance through more effectiveimplementation of a strategy.
1. ExecutiveSponsor Engagement is the Top Driver of Effective Strategy Delivery
The top driver ofprojects meeting their original business goals is an actively engaged executivechampion or sponsor. But at the same time, organizations report an average of38 percent of projects not having active executive sponsorship, which points tothe need and opportunity for executive leaders to be more engaged in thedelivery of strategy.
2. GreaterConnection Between Strategy Design and Delivery
Executives often failto recognize that effective project and program management is what delivers onstrategy. More than one in three organizations (35 percent) report not havingstrong alignment of initiatives and projects that directly deliver against strategy.This indicates the need for C-Suite executives to better recognize the fullpotential of project management to execute strategy, and to ensure they areleveraging the right programs to directly deliver against strategy.
3.OptimizeInvestment in Strategy Implementation
Organizations oftenprioritize investment in developing strategy over proper execution. Thereappears to be a big disconnect between executive leaders and project managerson strategy implementation funding. While 84 percent of executive leadersbelieve they are effectively prioritizing and funding the right initiatives andprojects, only 55 percent of Project Management Office (PMO) leaders agree.This suggests that organizations might not be leveraging the optimum focus andinvestment to deliver against strategy.
4.LeverageDisruption – Don’t Just React to It – Get Agile
In a world with anaccelerated pace of innovation, disruption is the new normal. So, it’s notsurprising that 83 percent of project managers report digital transformationhas either moderately or dramatically impacted their work over the past fiveyears. What’s key to success in today’s business environment is leveraging anagile approach with project management and delivering against strategy throughongoing evaluation of shifting market dynamics, new technologies, andinnovation.
But while 71 percentof organizations report greater agility over the last five years, only 28percent report having high organizational agility overall. Though agility isincreasing, the pace of change is inconsistent. In fact, from a broaderorganizational perspective, only 40 percent of organizations reportprioritizing the creation of a culture receptive to change. Looking forward,organizations that can leverage disruption and remain agile can drive bothfinancial gain and competitive advantage.
5.Define and TrackSuccess Metrics
The survey showed thaton average, around half (52 percent) of projects experience scope creep androughly half (48 percent) are not delivered on time, leading to huge financiallosses. Defining success measures upfront helps ensure projects stay on track,and meet budgets and goals.