A month ago, we talked about the high costs of failing projects, but now we can report good news from the Pulse of the Profession 2017: The success rate of IT projects is growing for the first time in five years.
Meeting Project Goals and Realizing Benefits: Redefining the Meaning of SuccessLinh Tran, Friday 17 March 2017 | Reading time: unknown
In last year’s Pulse of the Profession, the PMI showed how the rate of project failures has consistently been increasing over the last 5 years, despite a growing optimization effort. This year’s study finally brings good news: organizations have finally increased the success rates of their IT projects – for the first time in five years. When is a project successful? When it’s being completed on time, within budget and within scope. But there’s another success variable: successful projects meet their original goals and realize the benefits they strived for.
“Success Rates Rise – Transforming the high cost of low performance”
One reason for the rising success rates is that organizations have finally fully recognized that having a high project management maturity is important for project and organizational success. The higher the project management maturity level of an organization is, the higher the chance that they reach their project objectives.
28 times less money means that instead of wasting US$122 million for every US$1 billion invested, they are wasting an average of US$97 million. This doesn’t sound much, but it is still 20% less than a year before. And if the organizations invest that saved money correctly, e.g. in training for project management professionals as well as improving their PM processes, they can increase that percentage even more.
The importance of Benefits Realization Maturity
The PMI has realized this year that while the “traditional” measures of success are still important, the definition or meaning of success has changed. A project can be considered successful when it managed to realize the expected benefits and when it met its goals. The PMI has defined this as “Benefits Realization Maturity” (BRM):
“Benefits realization management (BRM) is a powerful way to align projects, programs, and portfolios to an organization’s overarching strategy. […] [M]ore organizations are taking steps to establish procedures for identifying benefits and monitoring progress toward achieving them throughout the project life cycle and beyond.”
(PMI Pulse of the Profession 2017, page 8)"
The PMI also distinguishes between two performance levels of Benefits Realization Maturity:
- Champions: Organizations with a high BRM which have completed 80% or more of their projects on time, within budget, and have met their goals and business intents.
- Underperformers: Organizations with a low BRM which have a project success rate of 60% or lower.
Looking at the Champions and Underperformers, it is clear what distinguishes them. Champions have a higher overall project success rate, and conversely experience much fewer scope creep - only 28% of their projects experience scope creep versus 68% for Underperformers. In the graphic below you can see a clear difference in the project performance averages of Champions versus that of Underperformers:
Source: PMI Pulse of the Profession 2017
Lessons learned from the Pulse of the Profession 2017
Increase executive sponsorship
Executive sponsorship continues to be one of the driving factors of project success. More and more projects have project sponsors (62% in 2017 versus 59% in 2016), which means that organizations are aware of the benefits of having a dedicated project sponsor. An executive sponsor is someone from senior management who is invested in and committed to the project. Effective project sponsors will ensure the best possible working environment for the project manager and the team to complete the project successfully. It is essential that there is mutual trust between the sponsor and the team.
Invest in Training
In last year’s report, organizations have said that their organizations have not yet fully realized the full potential of project management and as a result, it was not a priority to invest in project management training. It seems like a mindset shift has finally happen and organizations are investing more in strategic and business management skills and leadership skills besides technical skills. Investing in these skills is what distinguishes Champions from Underperformers, as shown in this graphic:
Source: PMI Pulse of the Profession 2017
Agile is not just suitable for IT projects, but every organization can benefit from it. It is notable that 55 percent of Champions focus on using agile methodologies, but only 24 percent of Underperformers do so. Any team can use agile methods such as Scrum to bring more flexibility into their projects. Agile techniques enable teams to react to project changes much more quickly and enables them to deliver projects faster, something that is essential if you want to have a competitive edge in today’s fast-paced business world. Which is why it is particularly pleasing to see that the report found out that 71 percent of organizations are already utilizing agile methods or some kind of hybrid approach.