The High Cost of Low Performance

PMIs Pulse of the Profession- 2014Presented by

Rene Ramirez, PE, PMP

Corporate Strategy

►88% of executive say that strategy implementation is important to their organizations.

►Executives tend to ignore that projects or programs are required to “change the business” , which is the objective of corporate strategy.

►Most projects are to “run the business”.

The Cost

►Organizations lose an average of $109 million for every $1 billion spent on projects.(This is based on unrecoverable budget if the project fails.)

►The lack of alignment of projects to organizational strategy most likely contributes to the result that 44% of projects are reported as unsuccessful. One reason sited is that a majority of companies either

lack the skills or fail to deploy the personnel needed for strategy implementation.

Definitions

► High Performers - Organizations that achieve 80 percent of projects on time, on budget and meeting original goals.

► Low Performers - Organizations that achieve 60 percent of projects on time, on budget and meeting original goals.

► Organizational Agility - the capability of an organization to maintain a competitive edge by responding faster to changing market conditions while improving organizational efficiency and customer satisfaction.

The Numbers

►High Performing Organizations are: 3 times likely to have organizational

agility (31% vs. 9%) Twice as likely to have high alignment of

projects to organizational strategy (57% vs. 28%)

Twice as many successful strategic initiatives (76% vs. 38%)

Talent Management

►Effective talent management is prevalent in high performers.

Talent Management

High Performers

Low Performer

s

Ongoing project manager training

77% 51%

Formal process to develop project manager competency

68% 36%

Formal process to mature project management practices

66% 35%

Formal knowledge transfer process

66% 33%

Defined career path 62% 32%

Effective knowledge transfer 29% 5%

Talent Management

►Effective Talent Management leads to more successful strategic initiatives.

% of Successful Strategic Initiatives

With Without

Ongoing project manager training

60% 48%

Formal process to develop project manager competency

62% 50%

Formal process to mature project management practices

63% 49%

Formal knowledge transfer process

63% 49%

Defined career path 63% 50%

Effective knowledge transfer 70% 45%Study Avg. - 56%

Change Management

►Actively engaged sponsors was a top driver of project success.

►Effective Change Management is more prevalent in high performers.

High Performers

Low Performer

s

Projects with Active Sponsors 81% 45%

Effective change management 42% 10%

Change Management

►Effective Change Management leads to more successful strategic initiatives.

% of Successful Strategic Initiatives

With Without

Projects with Active Sponsors 66% 41%

Effective change management 69% 41%

Study Avg. - 56%

Process Maturity

High Performers

Low Performer

s

Organization understands value of Project Management

77% 40%

Has a PMO 74% 64%

Standardized practices used throughout the organization

45% 15%

Project management maturity 35% 8%

Program management maturity

32% 5%

Portfolio management maturity

31% 6%

% of Successful Strategic Initiatives

►Process Maturity Leads to Success

% of Successful Strategic Initiatives

With Without

Organization understands value of Project Management

63% 47%

Has a PMO 58% 50%

Standardized practices used throughout the organization

66% 41%

Project management maturity 70% 44%

Program management maturity

72% 45%

Portfolio management maturity

72% 46%Study avg. - 56%

Outcomes

►Benefits realization - the practice of ensuring that the outcome of a project produces projected benefits claimed in the business case. This is achieved through the

establishment, measurement, and communication of the expected benefits of an organization’s initiatives.

Outcomes

►High benefits realization maturity is more prevalent in high performing organizations and leads to more successful strategic initiatives.

With Without

Mature benefits realization 73% 44%

% Successful Strategic Initiatives when in place

Summary

►High performing organizations successfully complete 89 percent of their projects. Low performers only complete 36 percent of their projects successfully.

►On average, organizations report that 3 out of 5 projects are not aligned to strategy.

Strategic Project Success

►Talent Management Effective knowledge transfer

►Change Management Increase sponsor engagement

►Process Maturity Project/Program/Portfolio maturity