The high cost of poor project performance

Worldwide spending on IT is projected to be US$3.5 trillion in 2020, according to the latest forecast from Gartner, Inc. If we generously assume 90 percent of that spend is on business-as-usual, and only 10 percent is allocated to projects, the global IT projects budgets for 2020 is approximately US$350 billion.

That’s a lot of money in anyone’s language. Yet the same research shows spend has actually decreased 7 percent in 2020, which means CIOs face increasing pressure to successfully deliver projects with less money. This, coupled with the need for businesses to make a successful post-COVID recovery, means businesses can’t afford projects to fail.

Research from the Project Management Institute’s Pulse of the Profession 2018 suggests that 10 cents in every project dollar is wasted on poor project performance. Reasons include:

1. Organizations fail to bridge the gap between strategy design and delivery.
2. Executives don’t recognize that strategy is delivered through projects.
3. The essential importance of project management as the driver of an organisation’s strategy isn’t fully realised.

Escient CEO, Stephen Mabbs, says successful projects are the critical link between strategy design and delivery.

“What senior executives must realise is that strategy is just ink on paper if project execution fails,” said Mabbs.

Watermelon projects hard to spot

With so many moving parts, competing priorities, stakeholder interests, deadlines, media scrutiny and tight budgets, glitches in large and complex programs of work are almost inevitable. Problems often lurk in the grey areas of the project making them difficult for project sponsors to see. In fact, Pulse of the Profession 2018 says 31% of project fail to meet the original goals and business intent of the project.

Mabbs says while roadblocks in major projects are common, it’s not always easy for project sponsors to get a clear picture on what’s causing the problems.

“These projects are what we call watermelons, because they look green on the outside but they are actually red on the inside. Often, a project sponsor will be told the project is on track but their experience and gut instinct tells them it’s not,” said Mabbs.

The best…and the rest

The difference between high performing companies and the rest is significant. High performing companies waste 21 times less money than underperformers (Pulse of the Profession 2018). Often, the difference between a “champion” and an underperformer is spotting the watermelon project early before valuable resources are wasted and the project is too far gone to recover.

This can be done via a project health check, or as we call it a Rapid Project Review, which looks at 9 key dimensions of the project. With a focus on ensuring project success rather than finding fault, the review looks at the dimensions that are crucial to project performance, and ultimately, a successful delivery.

There are many triggers for a project review. Often, it starts with just a feeling the project isn’t going 100% to plan or that the reported status does not reflect the true state. Or, there may be more obvious signs, like budget overruns or conflict between project team members or stakeholders. A Rapid Project Review provides clarity on problem areas whenever there’s uncertainty about the successful delivery of the project.

World Vision International – a real life case study

To foster a deeper connection with sponsors, World Vision initiated the Leapfrog program to deliver a more frequent, mobile-friendly experience. With richer content connecting children and their communities with their sponsors, Leapfrog represents the next generation sponsor experience.

This ambitious project, envisioned by the global marketing team, was comprehensive in terms of scope and scale, with stakeholders spanning World Vision’s global offices and representing all areas of the organisation.

Six months into the program, Child Sponsorship, Marketing & Engagement Senior Director, Jim Goddard, felt the project was lagging.

“I had a sense there were things we could be doing better,” said Jim.

This prompted a meeting with the CIO and together, they agreed to a rapid project review to determine the best way forward. Having helped World Vision to deliver other projects successfully, Escient was invited to do the review.

Applying Escient’s tried and tested framework, Escient Director, Michael Panosh, reviewed the Leapfrog project, capturing the current state, discussing challenges with participants, and providing pragmatic steps the project sponsors could take to achieve better outcomes.

The cost of poor project performance is more than just money wasted on one project. Failure to deliver on projects diminishes confidence, long-term growth and performance, and that’s too high a price to pay.

Sources:

• Gartner Says Worldwide IT Spending to Decline 7.3% in 2020
• Pulse of the Profession 2018