The Necessity for and the Current Situation of Project Management

Autor: Hugo Ascacíbar 
Change Manager at Grupo Santander, PMP®

Today, faced with such a competitive and dynamic economic landscape, organizations are encountering many new challenges. They are driven by constant change which, in turn, is accelerated by both environmental and economic forces. Technological, political, legislative, demographic and cultural forces are creating new opportunities for organizations that must continually adapt to thrive.
As can be seen from the latest report by Gartner, there is expected to be a growth in high-profit services during the next 5 to 10 years, in areas related to the connectivity of; homes, machines, digital security and the use of Big Data.

Diagram 1. Prediction of the growth of services in the digital economy. Source: Gartner

With the goal of maintaining and improving their competitiveness, organizations have been moving away from their regular activities towards the development of projects as part of their strategy of competitive advantage as reflected in the report, the 4th Global Portfolio and Program Management Survey of PWC in 2014, in which 3,025 CEO's participated from 110 countries [i]

The majority of these organizations had expected to develop their areas of business in answer to the rapid changes in the new digital society.

Diagram 2. Adaptation to change as a strategic priority. Source: PwC CEO Survey 2014

According to the data of the third edition of: Insights and Trends: Current Portfolio, Programme and Project Management Practices The third global survey on the current state of project management of PWC in 2012, 97% of CEOs surveyed agreed that the project management is fundamental to the success of the organization, and 94% agreed that the development of projects facilitates the growth of the business [ii].

Nevertheless this data does not match the results, observing that the main causes for the failure of projects have not changed in the last decade, the most important elements are management basics, such as, incorrect estimates in the planning phase, and badly defined changes in scope, goals and objectives..

Diagram 3. TOP 3 causes of project failure since 2004. Source: PWC 4th Global Portfolio and Programme Management Survey 

According to a survey completed by 2,428 project management professionals, 192 high level executives and 282 Project Management Officers in the report: The High Cost of Low Performance of PMI Pulse of the Profession in 2016 the most critical aspect is wasted money when projects are not adequately managed, valued at 122 million dollars lost for every billion dollars invested, with an increase of 12 per cent in the last year [iii].

Whatever the case other ways of doing things need to be explored in order to prevent the continuation of this tendency.

IT systems are a very important competitive element in many industries, with ever bigger technological projects that include more and more areas of the organization, representing a substantial risk.

In accordance with the investigation by McKinsey in collaboration with the University of Oxford, after analyzing more than 4,500 projects, they reached the conclusion that more than half of all big IT projects, those with initial budgets that were over 15 million dollars, far exceeded their budget with an excess of 66 billion dollars, or, equivalent to the entire GDP of Luxembourg [iv].

On average large projects require an additional 45% on top the budget and 7% overrun on the dead-line, leading to a 56% reduction in the expected value.

Diagram 4. Percentage of projects of more than $15m falling short of their objectives. Source: McKinsey and Oxford University 2010

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[i] When will you think differently about programme delivery? - 4th Global Portfolio and Programme Management Survey – PWC - http://www.pwc.com/gx/en/consulting-services/portfolio-programme-management/assets/global-ppm-survey.pdf

[ii] Insights and Trends: Current Portfolio, Programme and Project Management Practices The third global survey on the current state of project management – PWC -http://www.pmi.org/~/media/PDF/RCP/PwC_PPPM_Trends_2012.ashx

[iii]  The High Cost of Low Performance - How will you improve business results? – PMI Pulse 2016 https://www.pmi.org/~/media/PDF/learning/pulse-of-the-profession-2016.ashx 

[iv] Delivering large-scale IT projects on time, on budget, and on value – McKinsey http://www.mckinsey.com/business-functions/business-technology/our-insights/delivering-large-scale-it-projects-on-time-on-budget-and-on-value

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