Firms waste Rs 128K cr annually due to poor project management

  • Industry News
  • Mar 01,18
Indian businesses loss more than 8% of every rupee spent through ineffective implementation of business strategy, reveals the 2018 Pulse of the Profession survey.
Firms waste Rs 128K cr annually due to poor project management

Indian businesses loss more than 8% of every rupee spent through ineffective implementation of business strategy, reveals the 2018 Pulse of the Profession survey. 
 
Around Rs 6.5 crore is wasted every 20 seconds collectively by organisations around the globe due to the ineffective implementation of business strategy through poor project management practices,  according to the 2018 Pulse of the Profession - a global survey conducted by Project Management Institute (PMI). This equates to roughly Rs 128,000 crores wasted a year. The study shows that on average organisations globally waste 9.9% of every dollar due to poor project performance and India loses 8.1% of every Dollar invested by businesses, pointing to a significant opportunity to drive financial performance. 
 
Raj Kalady, Managing Director, Project Management Institute India, said, “A higher level of maturity of project management practices is seen in India in sectors viz IT, automotive and financial services compared to capital-intensive sectors. The private sector also reports a higher level of induction of project management than the public sector.”
 
Of the total 40,000 certified professionals in India, 55% certified project managers belong to IT industry, according to PMI. Hence, it comes as no surprise that the 2018 Pulse of the Profession India results which has 34% respondents representing the IT industry shows a more positive outlook (less wastage) for the country compared to the global average. “This is in spite of the fact that we keep hearing about time and cost delays in government and construction projects. However, increasingly, even public sector companies have started laying emphasis on training programs and strengthening their existing project management units and professionals,” stated Kalady.
 
Project Management Institute (PMI) is the world's leading association for those who consider project, program or portfolio management their profession. Founded in 1969, PMI delivers value to more than three million professionals working in nearly every country in the world through global advocacy, collaboration, education, and research.
 
According to Mark Langley, President and Chief Executive Officer, Project Management Institute, project management is the driver of strategy, but organisations are failing to bridge the gap between strategy design and its delivery. “Effective project management to implement organisations’ business strategy is key, and has a significant impact on the bottomline,” he added.’
 
Stating that there was a powerful connection between effective project management and financial performance, Langley said, “Organisations that are ineffective with project management waste 21 times more money than those with the highest performing project management capabilities. But the good news is that by leveraging some proven practices there is huge potential for organisations to course correct and enhance financial performance.”
 
Raj Kalady added, “As organisations face increasingly complex challenges with new technology and new business models continually altering the landscape of business and how work gets done, the inextricable link between strategy and implementation must be addressed. An understanding of how needed change occurs is also critical: Operations run the business, but projects change the business. A formal approach to project and program management can be the link that ensures that an organisation has the capabilities for both change and strategy execution that it needs.”
 
In an era of increased financial scrutiny, shifting competitive pressures, and business disruption from evolving technology, the survey results point to five critical factors that can help organisations drive performance through more effective implementation of a strategy. 
 
Executive sponsor engagement is the top driver of effective strategy delivery: The top driver of projects meeting their original business goals is an actively engaged executive champion or sponsor. But at the same time, organisations report an average of 38 percent of projects not having active executive sponsorship, which points to the need and opportunity for executive leaders to be more engaged in the delivery of strategy.  
 
Greater connection between strategy design and delivery: Executives often fail to recognise that effective project and program management is what delivers on strategy. More than one in three organizations (35%) report not having strong alignment of initiatives and projects that directly deliver against strategy. This indicates the need for C-Suite executives to better recognize the full potential of project management to execute strategy, and to ensure they are leveraging the right programs to directly deliver against strategy. 
 
3. Optimise investment in strategy implementation: Organisations often prioritise investment in developing strategy over proper execution. There appears to be a big disconnect between executive leaders and project managers on strategy implementation funding. While 84% of executive leaders believe they are effectively prioritizing and funding the right initiatives and projects, only 55% of Project Management Office (PMO) leaders agree. This suggests that organisations might not be leveraging the optimum focus and investment to deliver against strategy.
 
4. Leverage disruption; Don’t just react to it, get agile: In a world with an accelerated pace of innovation, disruption is the new normal. So, it’s not surprising that 83% of project managers report digital transformation has either moderately or dramatically impacted their work over the past five years. What’s key to success in today’s business environment is leveraging an agile approach with project management and delivering against strategy through ongoing evaluation of shifting market dynamics, new technologies, and innovation.
 
But while 71% of organisations report greater agility over the last five years, only 28% report having high organisational agility overall. Though agility is increasing, the pace of change is inconsistent. In fact, from a broader organisational perspective, only 40% of organisations report prioritising the creation of a culture receptive to change. Looking forward, organisations that can leverage disruption and remain agile can drive both financial gain and competitive advantage.  
 
Define and track success metrics: The survey showed that on average, around half (52%) of projects experience scope creep and roughly half (48%) are not delivered on time, leading to huge financial losses. Defining success measures upfront helps ensure projects stay on track, and meet budgets and goals.

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