The Value of Project Management
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The Value of Project Management
Looking for a way to stay ahead of organization-wide commitment to practices became more important
the pack in today’s competitive and project management leads to better since the recession began.
chaotic global economy, companies results and long-term business value. Compared to 2007, respondents
are turning to project management to reported:
consistently deliver business results. “The delivery of business out-
comes is realized through the Investing more time in project
Disciplined project management success of projects, and in planning and due diligence (40
starts at the portfolio level, where the essence that is the way that percent)
strategic vision drives initial project management strategies Conducting more frequent
investments and where value drive organizational success,” says project reviews to assess risks,
measures are established. A fully Adrian McKnight, PMP, program milestones and overall value
aligned project, program and portfolio director at Suncorp-Metway Ltd., a (37 percent)
management strategy encompasses financial services firm in Brisbane, Measuring quantitative and
the entire organization, dictating Queensland, Australia. qualitative project outcomes
project execution at every level and more frequently (38 percent)
aiming to deliver value at each step A survey by consulting giant
along the way. McKinsey & Co. found that nearly 60 “Many companies admitted that the
percent of senior executives said economic crisis underscored their
Project management is, in fact, building a strong project manage- project management shortcomings
shorthand for project, program and ment discipline is a top-three and forced them to do better,” the
portfolio management. And more priority for their companies report says.
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companies are clearly seeing the as they look to the future.
payoff from investing time, money With little room for error and fewer
and resources to build organizational resources to rely on, project
project management expertise: lower Why Project Management management expertise and oversight
costs, greater efficiencies, improved Matters is helping organizations streamline
customer and stakeholder Leading organizations across sectors their delivery process, cut costs and
satisfaction, and greater competitive and geographic borders have been sidestep risks, enabling them to ride
advantage. steadily embracing project out the recession and implement
management as a way to control stronger project management
The economic downturn only spending and improve project results. practices for the future.
heightened that value. When the recession began, this
practice became even more “Good project management
An Economist Intelligence report important. Executives discovered that discipline stopped us from
showed that 80 percent of global adhering to project management spending money on projects that
executives believed having project methods and strategies reduced fail,” says Ron Kasabian, general
management as a core competen- risks, cut costs and improved manager at global IT giant Intel,
cy helped them remain competitive success rates—all vital to surviving Folsom, California, USA.
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during the recession. the economic crisis.
Tighter budgets and fewer resources
And even as come executives see More than half of the executives in mean less money for the innovative
the glimmers of a fragile recovery, the Economist Intelligence Unit report projects that help move the company
there is little doubt that a strong said following a project management forward. Getting the most out of those
available assets, then, becomes a demand for a product, we are the Project Management In Action
paramount. ones who deliver it,” says David The Company: DirecTV, Buenos
Buisson, PMP, program manager at Aires, Argentina
“Resources are precious, and we’ve Headland Project Management Ltd., The Industry: Satellite TV
got to be sure we are spending them which is currently managing the The ROI: Improved ability to track
in the best and most efficient way Terminal 3 redevelopment project for fulfillment of strategic objectives,
possible,” he says. “When project BAA Airports at Heathrow Airport in lower project costs, improved
failure rates decrease, Intel gets the London, England. “We are a key part customer service
biggest benefit out of IT, which in turn of the business, and we adhere to the
improves Intel’s ability to remain same rules, rigor and commercial When DirecTV’s IT team launched a
competitive.” goals as the rest of the organization.” PMO two years ago, senior manage-
Companies are also discovering that ment wasn’t all that enthusiastic—but
Keeping the project on track requires it didn’t take long for them to come
as their project management strategy a strict management of metrics and
matures, the business value derived around.
project goals that extends across the
from it also increases. To increase project team and out to suppliers, “When we started the PMO, we were
that value and ensure strategic contractors, the client and the like a three-eyed fish in a lab. No one
alignment across the project portfolio, stakeholders. And Mr. Buisson and knew what we were. But after six
executives at many global his team are keenly aware of the months, the results started to show,”
organizations are creating formal business impact that results from Mr. Romero says. “Now we are
project management offices (PMOs). their progress in the terminal project. considered a center of excellence in
In State of the PMO 2010, 84 percent the company, and other departments
“If we don’t do a good job, have started to copy our model.”
of the 291 project professionals passengers may choose to fly
responding said their companies through a different airport, or retail The PMO established a formal project
have a PMO, demonstrating steady outlets see declining sales,” he says. management methodology based on
growth from 77 percent in 2006 and “But when we are successful and a platform of standardized practices
iii
47 percent in 2000. passengers are happy, the company forged in the regional PMOs. It then
is successful.” implemented established key perfor-
Project Management and the mance indicators, as defined by the
To keep that competitive edge, regional PMOs, to measure progress
Competitive Advantage companies need to align their project
Implementing project management and outcomes as they relate to
management strategies directly with business goals. Along with measuring
across the organization helps create their strategic business goals, says
a strategic value chain that gives whether projects meet schedule and
Patricio Romero, head of the IT PMO budget goals, teams track whether
companies an edge on their compete- at DirecTV’s Buenos Aires, Argentina they’ve met the business objectives
tors, particularly in high-risk sectors division.
and markets. Being able to deliver outlined in the project plan.
projects on time and within budget And PMOs can serve as a powerful Tying project results across the
often determines whether a company bridge in creating and managing the portfolio to key business objectives
will get the next job or whether its link between strategy and results. drives the value of project manage-
new product hits the market. ment for the executive team, says Mr.
DirecTV, for example, has
Romero.
Ninety percent of global senior established regional PMOs that act
executives ranked project as project management centers of “When senior management wants to
management methods as either excellence to guide local PMOs in the launch a new product before the
critical or somewhat important to adoption of standardized project competition, they come to the PMO,”
their ability to deliver successful management tools, practices and key he says. “They know that we know
projects and remain competitive, performance measures. how to deliver it, how to speed the
according to the Economist process up and how to measure
Intelligence Unit survey. “The regional PMOs see the value of
project management,” says Mr. results.”
“A strong project management Romero. “They help implement For example, the IT team recently
discipline brings exceptional value to standard processes across the took on project aimed at one of the
the business, because when there is company.”
2
company’s key strategic goals: Project Management and outcome was tied to a strategic
improving customer satisfaction by Measurable Results business goal to increase the
building an application to automate There’s nothing like hard numbers to percentage of time Intel can say “yes”
key functions performed by customer bolster the case for project manage- to customer order requests.
service representatives (CSRs). First, ment.
the team spent two weeks analyzing Once the project began, his team was
the behavior of the call takers and “It’s hard to imagine how you would able to track changes in customer
how they used the system, then built go about delivering a project without order deliveries compared to baseline
a series of applications that auto- program and project management prior to the project.
mated billing questions and offered discipline,” says Intel’s Mr. Kasabian.
“Without a consistent approach and “We had metrics that we tracked
CSRs a click-through dashboard to
clear milestones, decision points and across the business, and we were
streamline screen switching. When
metrics to measure your success, able to see a definite increase in
the application was ready, they rolled
you’re just flying by the seat of your our ability to meet customer
it out in small groups to build support
pants.” requests,” he says.
and tweak the process.
Mr. Kasabian requires his team to The success of the project was about
The project took less than three
define the business value of each more than delivering it on time or on
months to complete and came in on budget: It improved Intel’s ability to
time and on budget. But more project in measurable terms before it
can move from the exploration stage meet customer demand. “That’s an
importantly, a follow-up review of the
into the planning stage. This helps indicator that the CEO looks at
project’s impact shows that the new regularly.”
system shaved 17 seconds off the focus the project team on the end
average customer call. goals of the project, offers a metric to
measure ROI, and helps Mr. Project Management In Action
“With 600 CSRs serving 1 million Kasabian and the company avoid
The Company: Intel, Santa Clara,
customers, that’s a huge amount of investing in projects that aren’t tied to
California, USA
time saved,” says Mr. Romero. That business results.
The Industry: IT
means lower costs, of course, but the
Defining the value also aligns the The ROI: Drastically reduced
project also ties directly to DirecTV’s project length, improved on-time
strategic goal of improving customer business units with the project goals
to ensure everyone impacted by the project delivery within similar
satisfaction. budget restraints, bolstered
project and its outcomes buys into the
All project data are shared through a process and commits the necessary customer relationships
PMO website that gives executives a financial and human resources.
high-level view of project status. This Intel’s IT department has always
transparency helps the senior “We will not launch a project unless followed a project management
management team with strategic the business units involved are strategy, but it wasn’t always as
planning and helps connect project engaged,” says Mr. Kasabian, who rigorous as it could have been about
success and organizational success. notes that cross-team alignment is a adhering to project plans. In the past,
critical component of successful the department regularly missed
The CSR project is just one example project management strategy. “It delivery dates and struggled to meet
of how the executive team set a ensures they get a voice throughout its commitments to customers. The
strategic goal that was delivered the process, instead of spewing forth average IT project duration at Intel
through the use of project requirements at the beginning then four years ago was 88 weeks, and it
management discipline from the complaining when they don’t get a wasn’t uncommon for delivery dates
portfolio level on down, says Mr. solution that meets their needs.” to be pushed back by a quarter or
Romero. more.
Last December, for example, Mr.
“The PMO is aligned to the strategic Kasabian’s team rolled out a new Out to improve those numbers, the IT
planning of the business,” he says. business process and system support department invested heavily over the
“We are not just about controlling project to better manage product past few years in improving its project
costs. We are about adding value to supply and demand through the management delivery methods. It
the company.” company’s enterprise resource implemented a PMO and rolled out a
planning system. The project series of IT project management
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practices that led to a dramatic and deliver them in a more iterative The new approach has resulted in
project delivery improvement. process. dramatic improvements. In the last
two years, 90 percent of projects hit
“Now we focus on metrics, data “Today, if a project plan estimate their release dates or went over by
and standardization of processes goes beyond six months, we look for just a few days, and the IT
to deliver better results,” says ways to reduce scope or break the department is delivering more
Mark Brodnik, Chandler, Arizona, scope into two projects,” says Mr. projects per year on roughly the
USA-based program/project manager Brodnik. “That way the customer same budget as before, according
at the company. receives incremental value earlier on to Mr. Brodnik.
and reduces the chance that the
The new streamlined project customer will want changes or that “With the focus on shorter projects,
management framework sets the business case will have changed. tighter planning and consistent
standards for project deliverables, Some projects need to go longer than reviews, we’ve dramatically
including tracking and communicating six months. We recognize that and increased our predictability,” he
schedules, setting measurable built that into our metric goal says. “That’s an important business
delivery goals and milestones, structure.” goal that helps our customers.”
performing stage-gate reviews
and conducting quality measures. Implementing the six-month limit on Intel by the Numbers
projects helped project teams frame Since Intel launched its IT PMO, the
Having a solid base in standards the conversation around scope when company has steadily increased the
established at the portfolio level, pro- they talk to customers. “It helps them number of projects released while
ject managers and their teams have identify the key things they need right budgets remained flat, thanks to
the flexibility to determine precisely now and it builds buy-in for the better project management, shorter
which processes are needed—and project when we deliver the first timeframes and a more robust system
which are not—to get the job done. release.” of tracking.
“They are required to deliver what’s When the first release is delivered, it 2007: 402 projects successfully
expected, but how they do it is up to creates a natural opportunity for released
the project manager and team,” Mr. customers to re-examine their 2008: 440 projects successfully
Brodnik says. “Having a standardized business needs and to tweak the released
project management framework second project plan if their needs or 2009: 454 projects successfully
creates consistency while giving the market has changed. released
them the flexibility to engineer the
deliverables of the project life cycle Mr. Brodnik’s team also devised an From the Top: The Role of
however they’d like.” evaluation system to keep shorter Executives in Building Project
projects on track. Project teams are Management Value
Of course it helps to have the right required to record and compare Having executive support and
talent—especially by recruiting planned versus actual dates for key sponsorship for a strong project
project and program managers decision points across the project life management discipline is directly
who come in armed with a Project cycle. At every project decision gate,
® linked to better project results,
Management Professional (PMP ) the project team must review whether according to a May 2010 Economist
credential. it delivered milestones on the date as Intelligence Unit report on project
“We think it's important that our planned. Initially, the entire IT staff management in industrial
® reviewed these stage gates metrics, manufacturing industries.
iv
project managers be PMP -certified,”
says Mr. Kasabian. “The certification and if the project team missed those
dates, it needed to explain why. The report shows that when project
gives them the book smarts, and the
Today, metric accountability is managers answer to executive-
experience gives them the street
monitored by the project decision- level leadership, they are almost
smarts.”
makers within the organization. twice as likely to bring projects in
The PMO also decided to reduce the on schedule. They also meet or
With the strategic value proposition exceed budget expectations 50
scope of projects whenever possible,
encouraging project teams to hone established at portfolio level, project percent more often than at compa-
in on key deliverables that can be managers and their teams know nies where project managers answer
they’re delivering to business needs. to a mid-level project sponsor.
achieved in a shorter amount of time
4
For many companies, having a PMO It’s about delivering business value. to be sure the team is delivering
can help create the crucial alignment against the expected outcomes.”
between projects and organizational “The CEO and executive team view
strategy. projects as core to delivering the The CEO has mandated that project
organization’s strategy,” says Adrian teams and business units make a
The State of the PMO 2010 reported McKnight, PMP, program director for strong business case for every
that PMOs: the company’s strategic building project—and they all know they’re
blocks program (SBBP). “The goal of accountable for the results.
Decreased failed projects by every project is to deliver business
31 percent benefit, and the project activity is “It’s clear to everyone what is
Delivered 30 percent of focused on delivering that value as expected and that every project will
projects under budget quickly as possible.” be seen as a business improvement
Demonstrated a 21 percent act,” says Mr. McKnight. “The new
improvement in productivity When Patrick Snowball was named system has enabled us to perform
Delivered 19 percent of CEO in September 2009, one of his well against several benchmarks
projects ahead of schedule first initiatives was to develop the and to increase our productivity
Saved companies an average SBBP which involved the design of a enormously.”
of US$567,000 per project. number of organization-wide projects
to significantly improve performance Mr. McKnight points to a recent
When executives believe in the value and profitability. project to deliver a new management
of project management, champion system designed to deliver “transfor-
their PMOs and integrate project “The strategy and vision of the mational improvements” to home and
management across the organization, organization is linked to the motor claims by consolidating several
the business benefits are evident and execution of these projects. We steps. Using the new project manage-
easy to qualify. Still, the investment need to have a strong level of ment methodologies, the team broke
has to be made, says Patricio project management discipline and the project into smaller key deliver-
Romero, DirecTV. capability to meet those ables for clients, rolling out the
expectations,” says Mr. McKnight. consolidation in phases over the life
“You can have the point of view that a of the project.
PMO takes a lot of time, people and A key part of the initiative was
money, but if you make room for it, creating a streamlined approach to “This reinforced to the business unit
feed it, and give it power and respon- the way the company governs and the value of project delivery method
sibility, you’ll see results,” he says. manages projects. because they didn’t have to wait a
“You’ll have a better organization and long time to see results,” says Mr.
“Our new CEO values project McKnight. “It built their confidence
better communication about project management as much as or more
progress across the company, which and commitment to the project and to
than our previous leadership,” he supporting the project delivery team.”
is key for the success of any
says. “He created my role to lead the
business.” SBBP, and I report directly to him A review of the project outcomes
because he wants to stay close to showed that it delivered improved
Project Management In Action this process.” customer satisfaction by creating a
The Company: Suncorp-Metway more user-friendly process, signifi-
The project management approach cantly reduced the cost for handling
Ltd., Brisbane, Queensland, creates a consistent level of
Australia claims and enabled the company to
governance, leadership, monitoring better leverage its service repair
The Industry: Financial Services and reporting for projects, but
The ROI: Improved strategic network, says Mr. McKnight.
eliminates much of the bureaucracy
alignment and increased
and paperwork that could otherwise “Project management is an integral
accountability via cost-benefit and slow the project team. part of the business,” he says.
delivery analysis
“We’ve created a strong governance
The executive team at Suncorp- framework around costs, benefit and Building Project Management
Metway Ltd. recognizes that project delivery management,” he says. “Our Capabilities
success isn’t just about meeting time progress and metrics are monitored Harnessing the potential of project
and budget goals. closely through the project life cycle management doesn’t happen over
5
night, and it cannot be confined to the Use metrics to align projects with Summary
project team. Organizations must strategy. All project metrics and data As the practice of project
actively work to shape mature project regarding the project’s timeline, risks management matures—from the
management practices and integrate and progress should be made avail- portfolio level on down to individual
it across all levels of the organization. able to senior management in an projects—the connections between
Here are some tips from the trenches: at-a-glance format, says Mr. Romero. organizational project management
“When the executive team can see and business value become clearer.
Define the ROI. “Every project plan what’s going on with projects, it is And the more involved the executive
should begin with an explanation of very helpful for strategic planning.” team is, the better the results.
the business value that project brings
to your organization,” says Mr. Get everyone on board. Project “With the right resources, a clear
Kasabian. That measure can be management doesn’t happen in a timeframe for delivery and senior
used to decide first whether the bubble. It must be a collaborative leadership support, a strong and
project should move forward and effort that extends to the contractors, disciplined project management
later as a metric to determine whether vendors and clients working on a practices will drive an organization
the project brought strategic value to project, says Mr. Buisson. “Everyone forward,” says Mr. McKnight. “It’s
the business. we work with must subscribe to the how you stay competitive in the
quality, safety and value metrics we marketplace.”
Manage what’s measured. The way use to track projects.”
to get the most value out of a project
management methodology is through Secure buy-in. Unless everyone in
metrics, says Mr. Brodnik. “Focus on the company believes in the value of
measures and processes tied to project management, the organization
business goals, collect the data and won’t be able to achieve its project
make it available to everyone,” he goals, says Mr. McKnight. “If the busi-
says. “When people know what’s ness unit staff doesn’t understand the
being watched, they put more time importance of project execution, the
and focus on it.” project will always face challenges.”
i
Closing the gap: The link between project management excellence and long-term success, Economist Intelligence Unit,
October 2009.
ii
McKinsey & Co., January 2010. Results based on a survey of 1,440 senior executives.
iii
State of the PMO 2010, PM Solutions, May 2010. Results based on a survey of 291 management employees.
iv
Industrial manufacturing: Managing for success, Economist Intelligence Unit, May 2010.
©2010. Project Management Institute, Inc. All rights reserved.
“PMI”, the PMI logo and “Making project management indispensible for business results” are registered marks of Project Manafgement Institute, Inc. For a comprehensive list
of PMI marks, contact the Legal department. (12-10)
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