7458-PM Putting the Pieces Together

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Project ManagementPutting the Pieces Together

March 2012

Nuris Ismail, Nick Castellina


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This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research andrepresent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

March 2012

Project Management:

Putting the Pieces Together

A volatile economy and global competition leave project-based firms withlittle room for error today in managing projects for profitability. The key toproject profitability is delivering projects and milestones on time and underbudget. Between January and February 2012, Aberdeen conducted a surveyof over 290 companies to understand the best practices in projectmanagement. From this research, Aberdeen finds that as the number ofmoving parts increases, so does the difficulty in maintaining visibility andcontrol. This Analyst Insight explores the extent to which the added

visibility and control afforded by technology solutions, such as enterpriselevel project management tools, can directly impact the profitability ofprojects and the businesses that rely their success. Particular attention willalso be paid to the impact that organizational structure and businesscapabilities have on the delivery of projects on-time and under budget.

Business Context

In project-based business, there is a unique set of challenges when it comesto managing both customer-facing requirements and operational processes.Many projects are complex and have a large number of milestones andprocess checks. The wide range of tasks may include bidding and estimating

project costs, working collaboratively across distributed teams, andmanaging multiple resources (whether people or assets). These processesmust be managed effectively in order to deliver projects successfully on-time and under budget to increase customer satisfaction in a highlycompetitive environment.

Based on the feedback of over 290 respondents, Aberdeen finds thatcompared to its 2010 study,Executing the Project Plan: When Projects are yourBusiness,not much has changed (Figure 1). Today's high unemployment ratesdo not guarantee that skilled resources are available for projects. In fact,companies are still finding it extremely difficult to acquire the right skills fortheir projects, followed by increased competition and increasing riskexposure across their project portfolios. It is important to note thatcompared to 2010, more companies are pressured by increasedcompetition (33% versus 27%). This is a reflection that even in a difficulteconomy; competition is still fierce, whether it's from local or internationalmarkets. Indeed, organizations are asked to work smarter, deliver the samehigh quality of work, and with fewer resources. All of these pressures createa business climate that forces project-based businesses to focus theirattention on managing costs for all projects.

Analyst Insight

Aberdeens Insights provide theanalyst's perspective on theresearch as drawn from anaggregated view of researchsurveys, interviews, anddata analysis
http://aberdeen.com/aberdeen-library/6753/RA-project-plan-standardization.aspxhttp://aberdeen.com/aberdeen-library/6753/RA-project-plan-standardization.aspxhttp://aberdeen.com/aberdeen-library/6753/RA-project-plan-standardization.aspxhttp://aberdeen.com/aberdeen-library/6753/RA-project-plan-standardization.aspxhttp://aberdeen.com/aberdeen-library/6753/RA-project-plan-standardization.aspxhttp://aberdeen.com/aberdeen-library/6753/RA-project-plan-standardization.aspx


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Project Management: Putting the Pieces TogetherPage 2

2012 Aberdeen Group. Telephone: 617 854 5200

www.aberdeen.com Fax: 617 723 7897

Figure 1: Top Business Drivers

Source: Aberdeen Group, February 2012

These external business pressures also combine with very specific projectpressures (Figure 2). Indeed, the top project specific pressure directlycorrelates with the top business driver. Lack of available skilled resourcesleaves many project-based businesses challenged with managing theseresources properly. Additionally, in many instances, customers and seniormanagement add to the pressure on project-based companies by frequentlychanging their minds mid-project. Combined with this is the fact that manycompanies are still delivering too many late projects. In today's market,companies are often asked to do more with less, and the consequence ofnot having the right resources and changing priorities often leads todelivering projects that are late and over budget.

Figure 2: Top Project Specific Pressures


21%

29%

33%

27%

37%

20%

29%

30%

33%

36%

0% 10% 20% 30% 40%

Volatile business conditions

Global / distributed teams create the

need for collaboration

Increasing risk exposure across project

portfolios

Increased competition forces us to

lower or freeze prices

Lack of available skilled resources

needed for projects

Percentage of Respondents,n=297

2012

2010

20%

29%

31%

34%

34%

0% 10% 20% 30% 40%

Senior management frequently change

priorities mid-project

Contention for specific limitedresources

Too many late projects

Customers frequently change their

mind mid-project

Need to use project resources more

effectively

Percentage of Respondents, n=297

All Respondents

"The most beneficial thing ourorganization has done when it

comes to project managementhas been migrating from ashared file server fordocuments to a collaborativeplatform environment tailoredfor project management. Indoing so, we have been able toensure that everyone isworking on the latest versionof the data and it enablesgreater collaboration acrossthe organization."

~Project ManagerIndustrial Product Manufacturer


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The Maturity Class Framework

Aberdeen used four key performance criteria to distinguish the Best-in-Class from Industry Average and Laggard organizations. These KPIs wereselected because of their influence on an organization's ability to deliverprojects on time and under budget.

Table 1: Top Performers Earn Best-in-Class Status

Definition ofMaturity Class

Mean Class Performance

Best-in-Class:

Top 20%

of aggregate

performancescorers

94% of projects delivered early or on time

94%of projects delivered within budget

If projects are late, on average how late: 3.5 weeks

19% improvement in project profitability year overyear

Industry

Average:

Middle 50%of aggregateperformance

scorers


86% of projects delivered within budget

If projects are late, on average how late: 2.5 months

3% improvement in project profitability year over year

Laggard:

Bottom 30%of aggregateperformance

scorers


52% of projects delivered within budget

If projects are late, on average how late: 4.5 months

8% decline in project profitability year over year


Strategic Actions

In order to combat these pressures, the Best-in-Class are differentiatingthemselves from their competitors in three distinct ways (Figure 3). First,they understand the importance of identifying the various risks within theirprojects at all stages, and are building contingency plans in case of the eventoccurring. By knowing the probably of an adverse event occurring, as well asthe impact that these events may have on the project, project managers canmore effectively plan and budget, as well as react accordingly if those eventsdo occur.


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Figure 3: Strategic Actions of the Best-in-Class


Secondly, Best-in-Class companies understand the importance of customerrelationships. This involves soliciting customer input as well as informingthem of project timelines (and sticking to them). In project-basedbusinesses, customer interaction is crucial because the ultimate result of theproject is tied to the customer's specific needs. The Best-in-Class have builtstrategies to ensure happy customers to induce repeat business.

Finally, Best-in-Class organizations also understand the role that partnersplay when it comes to delivering high quality projects, and therefore havebuilt standardized processes for gaining the best value from their partnernetwork. Standardized processes ensure that all employees are followingorganizationally-defined best practices when carrying out tasks, in hopes ofleading to improved results.

In the next section, we will see what the top performers are doing toachieve these gains.

Key Business and Technology Capabilities

The success of an overall business or even individual project requirespeople, tools and technology to work together. A highly effective project

management execution requires a combination of strategic businesscapabilities and technologies to effectively achieve Best-in-Classperformance.

12%

18%

23%

7%

23%

27%

21%

29%

34%

0% 10% 20% 30% 40%

Standardize procurement and supplier

contracting processes

Develop client relationships to foster

repeat work

Build assessment of risks into variousstages of the project


Best-in-Class

Industry AverageLaggard

"Before we accept new clients,we go through a rigorous

process of identifying all thepotential risks and problemsthat may arise from deliveringthe project on time and underbudget. With this informationwe make decisions as towhether to accept new clients.Going through this process hasenabled us to effectively bid forprojects that would not bringus over budget."

~ConsultantSmall Legal Services Boutique


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Table 2: Differentiating Business Capabilities

Business CapabilitiesBest-in-

Class

Industry

AverageLaggard

Project management best practices areimplemented and standardized across theenterprise 62% 39% 40%

Ability to embed risk information intoproject plans 68% 40% 30%

Social networking practices areincorporated into project processes 30% 22% 14%

Project management operations areintegrated and coordinated with customerservice and delivery organization 79% 60% 33%

Customer satisfaction is monitored and

measured 84% 71% 54%Monitoring of social media to solicitcustomer feedback 47% 19% 13%

From summary project data, decision-makers can drill down to transactions thatform the fiscal and operational audit trail 81% 36% 25%

Central visibility to resource workloadacross projects 59% 41% 31%

Central visibility to skill sets of availableresources 65% 43% 30%


In the previous section, it was identified that one of the ways that the Best-in-Class differentiated themselves from their competitors was their ability tobuild risk within their project execution plans. The Best-in-Class areaccomplishing this by defining and executing standardized processes acrossthe enterprise. In addition, they also have the ability to embed riskinformation within project plans. Embedding risk information will enable allpersonnel visibility into all risks and thus defer from them. In a volatilemarket, where there is a substantial element of risk, organizations that arenot embedding risk into plans are setting themselves up for failure.

A lot has been written about social media, and the role that it can play inmarketing and sales, but in the case of project management, its benefits have

not been nearly as publicized. Interestingly, the adoption is relatively low,with 21% of all respondents identified as using it. This does not tell thewhole story, however. Best-in-Class organizations are 58% more likely thanall others to be using social networking practices in project management.Additionally, in order to keep a constant pulse on their customersatisfaction, the Best-in-Class are monitoring social media to solicitcustomer experience. While still nascent, Aberdeen suspects that in theyears to come, social media will play a bigger role in project managementand enable greater collaboration across the organization.


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Organizationally, the Best-in-Class understand the importance of keepingcustomers happy and have put in place business capabilities to ensureproper delivery of projects. First, they have integrated their projectmanagement operations with the service and delivery organizations to notonly guarantee that any problems are properly addressed but also tocapture the voice of the customer to ensure greater service for futureprojects. Additionally, the Best-in-Class are also measuring and monitoringcustomer satisfaction and using this valuable information to improve internalprocesses.

Making effective project decisions requires project managers to gain centralinsight into project status. The Best-in-Class are providing their decisionmakers real-time visibility into fiscal and operational costs. By providingsummary level inquiries that allow executives to selectively and successivelydrill into more detail, culminating in seeing the transactional detail thatforms the operational system of record for a business, you remove the

barriers to a full understanding of status and profitability. As a result of thisimproved visibility, decision-makers are better equipped to more proactivelymanage possible exceptions, therefore containing schedule and budgetoverruns.

One of the top project specific pressures was the need to use projectresources more effectively. The Best-in-Class overcome this challenge byproviding project managers with visibility into not only the resourceworkload across all projects in the enterprise, but also the proper skill setsof the resources available. Half the battle of resourcing a project is gettingthe right skills sets to work on the project and ensuring that theseresources have the time to work on the project. Overcoming this battle

could partially explain how the Best-in-Class are able to deliver projectsalmost three months earlier than Laggard organizations.

Technology Enablers

Investment in technology to gain access to project status and details is oneof the major differentiators for Best-in-Class performance. These topperformers use a project management solution to bring all the differentmoving parts of their projects together, whether in scheduling resources,reporting against the project plan or project costing. The majority of Best-in-Class performers use a combination of these solutions:

Project scheduling (85%)

Project management and reporting (82%)

Project costing (87%)

In addition, the Best-in-Class are also supplementing these applications withother technology enablers such as: collaboration tools, workflowautomation, procurement tools, and applications for quoting and estimating.While every project-based business may not require each and every one ofthese solutions, most will definitely benefit from many; tools such asdocument management, change management and resource/workforce

We have improved thediscipline of execution. Plansand intentions are great, butthe real difference is made in

execution. The challenge thereof course is to get everybody -that is: including (senior)managers - to behave in adisciplined manner, even whenoperational pressures mount.

~Project ManagerConsulting Services


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scheduling have universal application across any industry. Again, all theseapplications are being used by Best-in-Class companies.

Where the Best-in-Class are truly differentiating themselves is their ability

to take their applications off the desktop and implement enterprise leveltools (Figure 4). The alternatives to enterprise applications are desktoptools, spreadsheets, and manual processes, none of which support makingdecisions from a single source of data, a characteristic of Best-in-Classperformance. An enterprise project management solution enablesorganizations to gain central insight, control, and accountability into projectmanagement processes. Indeed, this level of control contributes to theability of these organizations to accurately quote, source, and deliver theirwork, generating greater consistency and predictability in how they dobusiness. The added visibility and control afforded by enterprise levelproject management tools can directly impact the profitability of projectsand the businesses that rely on them for growth and profit.

Figure 4: Enterprise Level Tools


To go along with the wide variety of tools available to project managers isthe wide variety of delivery methods for those tools. It is interesting to notethat the most favorable method of deployment is still on-premise (Figure 5).Many project-based businesses work on sensitive subject matter andcompanies feel more secure if the data is hosted in-house.

42%

37%

37%

40%

46%

34%

56%

60%

64%

0% 20% 40% 60% 80%

Project Costing

Project Management and Reporting

Project Scheduling


Best-in-Class

Industry Average

Laggard

Over the years, we have

placed emphasis in changinginternal processes in order tobenefit from adoption of newsoftware (as opposed to adoptsoftware to speed up/supporttraditional processes). We havegained better control of projectexecution processes andenabled better decision making.One of the challenges ofimplementing this change wasconvincing people of thebenefits and to factually

cooperate in their owninterest, at all levels of theorganization."

~ConsultantEngineering Services


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Figure 5: Method of Deployment


What's interesting to note is that when it comes to the latest technology,such as cloud, enabling mobile access and integrating project managementwith other enterprise-level applications such as ERP and CRM, the Best-in-Class are more likely than their competitors to leverage these capabilities.As the vendors within this space are able to ensure the same level ofsecurity and data availability as hosting the solution in house, morecompanies will be likely to invest in these solutions. These delivery methods

allow for constant connectivity for decision-makers. In today's 24x7business world this is essential in order to make agile decisions while takingadvantage of opportunities and mitigating disasters. The quicker reactiontimes may just be what these organizations need to get ahead of theircompetitors. Theoretically, investing in these latest solutions will lower thetotal cost of ownership for the technology solution, however, only time willtime if they will, and if companies feel secure in doing that.

Key Takeaways

The key to project profitability is delivering projects and milestones on timeand under budget. While that sounds simple enough, with so many inter-

connected moving parts, this is very difficult to do without the necessaryorganization and tools to schedule resources, manage and report againstproject delivery and control costs. As shown throughout this analysis, Best-in-Class companies are using a combination of business capabilities andtechnology to successfully deliver projects to meet customer expectations.For companies looking to improve their project management initiatives,Aberdeen suggests the following:

Standardize and implement best practices across theenterprise.This capability will enable organizations to ensure that

13%

10%

12%

26%

52%

23%

26%

22%

35%

58%

26%

30%

38%

49%

68%

0% 20% 40% 60% 80%

Off-Premise

Software-as-a-Service (SaaS) / Cloud / On-

Demand

Mobile access to project management

applications

Embedded Project Management as a module

or extension within other enterprise

applications (e.g. ERP, CRM)

On-Premise


Best-in-ClassIndustry Average

Laggard

Definitions:

On-Premise - Software is

installed on-site or centrally ata company office location, andis deployed to users throughyour internal networkinfrastructure

Off-Premise - Software isinstalled off-site or at a renteddata center, and is deployed tousers through your internalnetwork infrastructure

Software-as-a-Service- softwareis hosted and accessed via a

third-party web-based service


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their employees have a clear understanding of the projectmanagement best practices and how these processes are connectedto timely delivery of projects.

Collaborate across the enterprise.From a strategicperspective, cross-functional collaboration is critical.Enablingcollaboration will ensure that project decisions are madeintelligently to prevent adverse events that can result in poorproject performance. Leveraging applications such as collaborationtools for electronic communication, conferencing and managementwill also help with the collaboration.

Leverage social media to capture the voice of thecustomer. To get a better pulse on customer satisfaction, toolssuch as social media applications will enable greater visibility intogathering customer intelligence to improve the delivery of projects.

Take full advantage of implemented solutions to providebetter visibility.Limiting access to project data to only selectproject members and project managers also limits the ability of thebusiness to respond cohesively to challenges in managing projectsfor profitability. Providing access to project data to all project stakeholders at all levels in the organization, will enable better projectdecision making needed to contain project costs.

Expose the project to the enterprise, invest in enterprise-

level solutions. For companies that still use desktop-boundproject management solutions, elevate these solutions beyond theconfines of the desktop. Some solution providers will provide bothdesktop and enterprise level solutions. For those working with

solutions that are only available at the desktop level, it may benecessary to replace these and/or supplement them with tools suchas workflow automation, document management, and collaborationtools. The added visibility and control afforded by enterprise levelproject management tools can directly impact the profitability ofprojects and the businesses that rely on them for growth and profit.

For more information on this or other research topics, please visitwww.aberdeen.com.

To take part in Aberdeen's 2012 Project Management and PortfolioManagement research, clickhere.

We implemented an operationreporting system, whichconsolidated all of ourdesperate systems into a

centralized platform. Our newsystem shows real time statusof on-going and in-comingprojects and stock inventorystatus. In addition, weimplemented a regular programfor soliciting customer feedbackregarding project and servicesatisfaction levels, whichprovides us valuable insight intohow to improve our business."

~CEOEngineering Services Company
http://www.aberdeen.com/http://www.aberdeen.com/http://www.aberdeen.com/survey/0433-ProjectManagement2012Final/http://www.aberdeen.com/survey/0433-ProjectManagement2012Final/http://www.aberdeen.com/survey/0433-ProjectManagement2012Final/http://www.aberdeen.com/survey/0433-ProjectManagement2012Final/http://www.aberdeen.com/


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Related Research

Project Portfolio Management: Selecting

the Right Projects for Optimal InvestmentOpportunity;March 2011

Executing the Project Plan: WhenProjects are your Business;December2010

The Impact of Project Management

Technology in the AEC Industry;March2010

Delivering Project Profitability: On Timeand Under Budget;January 2010

Author: Nuris Ismail, Research Analyst, Manufacturing([email protected]);Nick Castellina, Research Analyst, Enterprise Applications([email protected])

For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class.Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provideorganizations with the facts that matter the facts that enable companies to get ahead and drive results. That's whyour research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% ofthe Technology 500.

As a Harte-Hanks Company, Aberdeens research provides insight and analysis to the Harte-Hanks community oflocal, regional, national and international marketing executives. Combined, we help our customers leverage the powerof insight to deliver innovative multichannel marketing programs that drive business-changing results. For additionalinformation, visit Aberdeen http://www.aberdeen.com or call (617) 854-5200, or to learn more about Harte-Hanks, call(800) 456-9748 or go to http://www.harte-hanks.com.

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologiesprovide for objective fact-based research and represent the best analysis available at the time of publication. Unlessotherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not bereproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by

Aberdeen Group, Inc. (2012a)
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