Feb 23, 2011

New Benchmark Study on Strategies for Project Recovery Reveals the Average Firm Risks Losing At Least $74 Million in Failed Projects Each Year

GLEN MILLS, Pa. (February 23, 2011) — Revealing new data from a recent PM Solutions’ benchmark study shows that organizations have a lot at stake in insuring that their projects are successful. The study, “Strategies for Project Recovery,” finds that the average firm manages US $200 million in projects each year, and more than a third of those projects — $74 million worth — are at risk of failing. The good news is that when project managers take specific actions to overcome these troubled projects, they are successful at least 75% of the time, according to the study.

PM Solutions surveyed 163 high-level project management employees from large, midsized and small organizations in various industries including manufacturing, health care, technology, professional services, finance, and government. The primary purpose of the study was to identify several factors that may lead to the development of strategies for successful project recovery: the causes of troubled projects, the cost to firms, and actions taken to successfully recover the troubled projects.

The study reveals that while there are many factors that enter into the success of project recovery efforts, the project manager is one of the most important.

“Project managers not only play a significant role in addressing the root causes of troubled projects, they are the key resource in effectively managing the process to recover them,” noted J. Kent Crawford, PMP, CEO of PM Solutions.

The full report, now available at www.pmsolutions.com/research, identifies the major causes that put some projects in jeopardy of failure:

  • Requirements that were unclear, contradictory, ambiguous and lacked agreement;
  • Insufficient resources, conflicts, turnover;
  • Unrealistic schedules, too tight, overly optimistic;
  • Poor planning, based on insufficient data or details, poor estimates; and,
  • Unidentified, assumed, or unmanaged risks.

The actions taken to successfully recover projects were primarily people-related, again emphasizing the importance of an effective project manager. They included improving communication, redefining the project, adding resources, and replacing the project manager with someone more experienced.

Additional findings show that firms that used a standard project management methodology had fewer than half as many project failures as those that did not.

“We advise our clients to make sure they have a core set of experienced, highly skilled, well-trained professional project managers, especially for managing critical projects. In many cases, we provide senior project and program managers for our clients, mentor their project managers, and recover their failing projects,” concluded Crawford.

About PM Solutions
PM Solutions is a project management firm helping organizations execute, govern, and measure their portfolios to improve business performance. We are the leader in applying project and portfolio management processes and practices to drive operational efficiency for our clients. Our comprehensive offerings address organizational improvement, project execution, and learning and development delivered through our training arm, the PM College® (www.pmcollege.com). PM Solutions serves a diverse client base that includes some of the world’s leading organizations. For more information, visit www.pmsolutions.com.

*Based on 163 survey respondents across various industries and organizations.