A recent survey conducted at META Group`s METAmorphosis 2003 conferences indicated that 77% of respondents believe lack of project and programme management skills is a major IT issue. Moreover, preliminary results from another survey of project managers found that 16% of organisations have no project management capability, and 22% depend on ad hoc management by people who often have little training or experience. Only 2% of organisations require mandatory project management certification for their managers.
IT projects are the mechanism that turns a company`s strategic business and technology vision into reality, and project management is the control mechanism that shifts the odds of successful change in the organisation`s favour. But in too many companies, the state of project management capability (as demonstrated by high project costs, poor schedule performance and business irrelevance) is astoundingly abysmal.
In Global 2000 enterprises, on average, IT projects account for 0.75% of total corporate revenues, according to META Group analyst Robert Handler. Consequently, two or three large IT projects that run seriously over schedule and cost can become items that must be reported on the negative side of corporate results under the provisions of the Sarbanes-Oxley Act (SOX) in the US and other legislative requirements worldwide (Basel Accord, etc). This increased scrutiny into the business impact of IT projects is alerting senior management to the necessity of effective project planning.
Although project management certification is no guarantee of improved business performance (eg, wrong projects can still be funded, low-value projects can remain active), we believe investment in project management skills along these lines demonstrates a firm commitment to solving project performance issues.
A fully trained and certified project manager (eg, project management professional) will more likely be able to establish realistic project performance baseline measures (eg, budget, schedule), identify and escalate issues, negotiate corrective actions, and sensibly navigate political and cultural situations. Continued reliance on inexperienced project managers and the use of ad hoc methods and processes may inadvertently harm corporate relations with employees - or, worse, with trading partners and customers - since projects may meet cost/schedule performance goals only through heroic efforts.
"Project management does not come naturally to many IT professionals, and not everyone is destined to be a successful project manager," says META Group analyst Carole Macpherson. "Even the seemingly simple task of creating and managing a project budget requires skills that most IT professionals have not been taught as part of their formal education. Project budgeting requires knowledge of cost accounting, multiple methods of cost modelling, and an organised approach to gathering and reporting appropriate measurements of progress, among other skills."
Stricter financial reporting requirements (eg, SOX) are making one of the most difficult project budgeting tasks - estimating costs - even more critical. The complexities of cost estimation are demonstrated by the number of projects that experience large cost overruns. Effective project management requires that a decision on whether to go ahead with a proposed project be made on the basis of a comparison of expected costs and benefits. If the cost estimates are wildly inaccurate, a meaningful comparison cannot be made.
Another key area on which to focus to improve project success is effective requirements gathering, management and analysis. Projects are often begun without a clear understanding of the business needs on the part of IT project staff. Sixty to 70% of project failures can be tied directly to poor requirements processes, resulting from poor communication.
"If the IT organisation has resources and attention to put into a single lifecycle area to improve project relevance/success and responsiveness to business, that area should be requirements," says META Group analyst Melinda-Carol Ballou. "Not only does poor requirements gathering create a disconnect between what is built and what the business needs, but inadequate information in this area also leads to poor estimates and makes cost management nearly impossible."
Increasingly, Global 2000 IT organisations are pressured to produce estimates for overall project costs with woefully inadequate requirements definition and limited business information to help drive initial decisions about the project portfolio and enable a "go" or "no go" on IT initiatives. This pressure is driven by constrained time frames and resources within highly competitive environments. Early, high-level estimating with poor requirements usually results in ballpark estimates that are wildly out of line with ultimate costs.
Overall, this coordination between requirements and project initiation exemplifies the trend of IT organisations pulling together project management best practices with application lifecycle methodologies to gain consistency, greater efficiency and cost savings across both environments.
USER ACTION: Companies need to develop a cadre of experienced, effective project managers. While they do not all necessarily require formal certification, they do need opportunities to lead projects to gain valuable experience, access to relevant training programmes (communication, negotiation, budgeting, etc), and other tools germane to project managers. Senior management must reward successful project management, and it must monitor behaviour to ensure that project management skills and tools are put to use to obtain improved outcomes. Project management is not a simple or intuitive activity, and providing tools and training alone will not ensure that the right behaviour develops.
META Group advises clients to pursue the following specific actions to assess and improve their programme and project management capabilities:
* Establish an enterprise programme management office to oversee project management development and identify critical issues negatively impacting current project performance.
* Critically and objectively assess the current state of project management capability and the organisation`s readiness to evolve the maturity of project management processes - the use of an objective third-party to assist with the maturity assessment can be beneficial, because organisations tend to overrate their capabilities.
* Retroactively assess recent project implementations to establish a baseline performance measurement on basic project metrics regarding cost control, risk management and value delivery. If actual metrics do not exist, which likely is the case, quasi-quantitative metrics can be obtained through facilitation of an agreement with key stakeholders, leading to equally beneficial results. A good facilitator is a must.
* Build a business case to support the changes in project management behaviour.
* Pilot the changes in project management behaviour to demonstrate their effectiveness.
* Grow project management exponentially through a mentorship programme. Pair experienced project managers with less experienced project managers to transfer skills.
META Group analysts Carole Macpherson, Robert Handler, Scott Bittler and Melinda-Carol Ballou contributed to this article.
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