Apr 18, 2016

Risky Business: PMI Study Charts a Dip in Project Success Rates

Posted by Jeannette Cabanis-Brewin in Performance Measurement, Portfolio Management, Project Failure & Recovery, Project Management Events, Project Management Office (PMO), Project Management Research, Strategy Execution | 0 Comments

Though the changes are not huge, the fact that they are systemic should give us all a wake-up call.

Last week, our CEO Kent Crawford presented a webinar on strategies to recover troubled or failing projects to a large audience. The questions they submitted for the Q&A displayed just how much worry and stress failing projects create for project managers. We will be interviewing Kent on this blog, answering many of the questions that we ran out of time for during the event, in the coming weeks.

Project failure is a perennial problem, as shown by the line of studies on it stretching back into the mid-90s and beyond.  You might argue that having a certain percentage of failed projects is just part of the workaday landscape: yet another manifestation of the Pareto Principle. Except that, in many industries, a 20% failure rate would be literally death-dealing: think bridge construction or medical devices. The late quality guru Phil Crosby, originator of the Zero Defects system of quality management, often argued that there are many things in life that we simply expect to achieve perfectly every time, and that our expectations of success or failure play into the results we experience. It might be no coincidence that he came into quality engineering from a medical background.(We'll come back to the idea of self-fulfilling expectations when we explore the divide between execuive and project manager viewpoints in our next blog.)

Like many persistent problems, project failure rates cycle in and out of our attention partly because it is exhausting to struggle with a problem we can’t solve; practitioners and researchers alike are subject to a kind of mental fatigue on the topic. But the newest PMI Pulse of the Profession study refocuses our attention, in part because it reveals a troubling overall trend of projects increasingly hammered by scope creep, budget overages, and schedule overruns. Nearly every metric charted by the study has gone in a negative direction since 2012, and though the changes are not huge, the fact that they are systemic should give us all a wake-up call. “Most critical,” says the PMI study, “is the money that continues to be wasted when projects aren’t managed well. We see US$122 million wasted for every US$1 billion invested … a 12% increase over last year.”

The good news is that companies that use their Enterprise PMO in instill a project management culture do much, much better than this: on average, companies in the study reported that only 62% of projects met their original business intent but companies that invested in training and established formal processes scored at 71%. PMI’s findings echo our own State of the PMO studies, which have consistently found that established PMOs and top organizational performance go hand-in-hand.

As for the bad news: we will delve into that more deeply in my upcoming series of blogs. Stay tuned for Wednesday’s topic: “Seeing Eye to Eye: CEOs and PMs Disagree on Some Big Issues.”

Meanwhile, I urge everyone to read the PMI study and take its message to heart. You may also want to check out our new white paper: Troubled Projects? Key Strategies for Quick Turnarounds.

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