The economist.com recently looked at the current state of project management and muses Overdue and over budget, over and over again. It cites the usual litany of anecdotes, completion and failure statistics, historical as well as recent tales of projects behaving badly. So why are more companies adopting formal project management practices? And how do methods which improve product development lead to improved operational performance?
Some companies have gone so far as to become more like project co-ordinators than producers of goods or services. The “business-as-usual” bits of their operations have been outsourced, leaving them free to design and orchestrate new ideas. Nike, for instance, does not make shoes any more; it manages footwear projects. Coca-Cola, which hands most of the bottling and marketing of its drinks to others, is little more than a collection of projects, run by people it calls “orchestrators”. Germany's BMW treats each new car “platform”, which is the basis of new vehicle ranges, as a separate project. Meanwhile Capital One, a fast-growing American financial-services group, has a special team to handle its M&A “projects”. For all these firms, project management has become an important competitive tool. Some of them call it a core competence.
Good project management can certainly make a difference. BP's fortunes were transformed when it converted its exploration division, BPX, into a portfolio of projects, each of them more or less free from head-office control—a structure which the company describes as an “asset federation”. Asset/project managers can no longer rely on head office for support. They are required to build their own self-sufficient teams.
Very interesting that a set of practices and principles that have such a sorry record of success should be embraced whole heartedly and result in improved performance. Most projects, at least those that get completed, are still woefully over budget, past due and short on meeting objectives. Software project management success rates are abysmal. Larger projects fail to deliver the benefits promised to the sponsors. The old PM joke - cost, schedule or performance, pick any two - is grossly optimistic. You get one if you’re lucky and it is usually trying to manage projects to cost targets that cause you to miss schedule and goals.
So here is an article that says companies that embrace these methods are improving operational performance. How can this be? Perhaps it is due to greater number of Project Management Professionals (over 150,000 + and growing rapidly) certified by PMI. Maybe after 40 years companies are beginning to appreciate that the practices and procedures used to deliver complex integrated weapons platforms can also be used to design sneakers. Suppose that the methods used on projects are worthwhile and can be tailored to about any project-like operation. Maybe it is that these methods provide the metrics that managers are finally beginning to watch and therefore manage.
Spreading project management practices through an organization has a positive effect, but it is not likely to be responsible for the improvements noted. Project management methods and the traditional waterfall approach (Gantt charts, Critical Path Method, Program Evaluation and Review Techniques) advocated by PMI are most useful on projects where the engineering and design constraints are well understood. Programs where there is no reliance on a technology breakthrough, suspending the laws of physics or miracle needed immediately prior to completion. And projects that benefit from experience in designing or delivering similar entities are most likely to achieve success. With practice, outcomes become nearly acceptable.
In no small way it is not so much the adoption of the methods that matter but rather the strategy of looking at the business as a set of projects rather than a continuously operating set of processes. We've often argued that the essence of project management is being effective. Further, projects should be considered and managed as strategically significant rather than just another mode or means of getting new products or processes developed or existing systems maintained.
Businesses that attain a certain level of success or size, that are owned by the public or become industry leaders at some point begin to focus on being efficient. We believe these same businesses are beginning to realize that they have sacrificed too much operational performance and profit potential on the altar of efficiency. It is impossible to save your way to greatness. So the adoption of these methods and techniques reflect an acknowledgement by businesses that they must innovate to prosper rather than just evolve. And using these methods somewhat mitigates the risk attendant with this approach.
It is too early to predict whether this new found enthusiasm for risk taking is a passing fad or the foundation of fundamental change in executive practice. Projects are risky and no matter how much the method to track and manage improves, there will still be more failures and shortfalls than successes along the three constraints - cost, schedule and performance. Projects that are highly complex, large scale or include useful extensibility vastly increase the chance of missteps, delays, overruns or outright abandonment. Management will have to recognize and appreciate the trade-off they are making to be more effective. Time will tell.
Comments