PMI Proves the Value of Project Management (2)

Defining the Value of Project Management

The PMI study, ‘Researching the Value of Project Management’  [download the summary] has clearly demonstrated the value of effective project management but was unable to quantify a specific ‘Return On Investment’ (ROI).  The primary reasons for this were: organisations do not measure business results from project management and they do not measure the costs of PM implementations. Consequently, they are unable to calculate a financial ROI for their investment. But ROI is only one measure of ‘value’.

The ‘Researching the Value of Project Management’ study employed a ‘multi-methods’ approach to collect and analyse data from 65 case studies involving 418 project descriptions from organisations of all sizes, types and structures spread around the world. Of these, 95% of the case study organisations realised a range of valuable improvements including:

• Improvements in decision making
• Enhancement of communication and collaboration
• Improvements in effective work cultures
• Alignment of practices, terminology and values within the organisation
• Overall effectiveness of the organisation and its management approach
• Improved transparency, clarity of structure, roles and accountability.

The types of value realised by the organisations included:

• Revenue increases
• Greater market share
• Increased Competitive advantage
• Customer retention
• Increased customer share (more engagements per customer)
• Reduced write-offs and rework
• Cost savings

Given projects account for 21% of the world GDP or 1/5th of the world’s value generation improving the efficiency of the process of PM delivery should be a valuable wealth generating activity.  The

One Size does not ‘fit all’

One of the key findings of the study was that understanding the organisational context and selecting the ‘right project management’ processes to implement are essential for value realization.

The context of the organisation, its geographical location and industry dictate the type of PM implementation that will be most effective. Fitting the correct PM implementation to the needs of the organisation was repeatedly demonstrated in the case studies as critical for delivering value. Unfortunately, there is no simple formula where implementing ‘x’ amount or type of PM will deliver ‘y’ amount or type of value. Each organisation is unique as are its PM needs.

Three of the factors that determine the appropriate ‘fit’ between PM processes and the organisation identified in the study are:

• Maturity.  Even minor improvements in PM resulted in value realisation in some organizations. Values associated with internal efficiencies and productivity dramatically increased in more mature organisations.
• Culture. National, organisational and even the PM culture of the organisation affects value realisation. Understanding the culture is a contributing element to the correct fit of PM implementation.
• Sustainability.  Once implemented, ongoing value realisation needs to be sustained by nurturing the PM processes. Even the organisational fit of the PM implementation should be regularly assessed and changes made as appropriate. Overzealous/bureaucratic PM practices can actually destroy value.

One option to determine the current levels of maturity and capability in an organisation and then plan the optimum improvement strategy for the organisations current situation is to conduct an OPM3 analysis this was discussed in the first blog in this short series, Waking up the C Suite. 

For more on OPM3 see: http://www.mosaicprojects.com.au/OPM3.html

To buy ‘Researching the Value of Project Management’ visit the PMI MarketPlace