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Why are companies persisting in making it difficult for their projects to succeed?

In today's market situation companies increasingly have to change the "how to do it" in order to gain competitive advantage or to stay profitable. Also, the demand for change comes at an ever faster pace. This pace is likely to increase further due to the growing digital economy. Most CEOs therefore improve their organizations' ability and agility to successfully implement their strategies in an increasingly changing environment.

Still, many companies are experiencing difficulties to succeed with their strategic initiatives and projects, not least when they are IT-related. Recent studies provide evidence of a rather poor track record. The average budget overrun is 27% and one in every six projects have average budget and schedule overruns of 200% and 70% respectively*1. Going beyond the triple constraint of time, cost and scope to also look at achieved business results and whether we are actually implementing the right projects considering the chosen strategies will not make the picture any prettier.

So, does this mean that the quest for fast and agile strategy implementations through successful projects is futile? No, not at all. Project and Program management can of course always be improved. However, the main reasons why projects fail are often outside the project manager's area of responsibility and influence, e.g. unrealistic estimates, unforeseen dependencies or resource clashes with other projects. It could even be that it is simply the wrong project for achieving the strategic objectives. Hence, the areas for improvement typically lie within the domains of project portfolio management – PPM. Research shows that the vast majority of companies without proper PPM succeed with less than 10% of their projects. For those with proper PPM, the corresponding success rate is 90%*2.

Considering how essential PPM is to succeed with projects, the maturity is still surprisingly low. We see that most companies gather some information on ongoing projects but often lack key things such as clear link to strategy, a PPM process owner, common resource planning and quality business cases and project definitions/charters prior to start of project. Also, executives are often forced to make decisions on starting projects one by one without being provided the full picture, e.g. what are the immediate and future consequences of the decision or what is the optimal set of projects to start given strategic objectives versus current state as well as restrictions and dependencies. Some don't even have a consistent measurement system for portfolio and project targets and for measuring achieved business results. Many are still following rigid roadmaps spanning over many years instead of constantly reassessing the portfolio based on as-is versus target fulfillment of strategic objectives providing the desired agility.

On the other hand we are also starting to see quite a number of companies who have rather quickly established PPM and are already harvesting the results. Hence, ramping up the PPM capabilities would probably be a good favor to both project managers and CEOs.

By Akselera | 12 January 2017

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