Bigger Projects, Bigger Stakes

Insights | 10 March 2017

Across the globe last year, poor project management cost organisations $97 million out of $1 billion in major infrastructure spending, says the new 2017 Pulse of the Profession study by the Project Management Institute.

That’s the bad news. The good news is the trend line is looking healthier. These most recent findings are 20 percent better as compared to the previous year.

Australia was not immune to waste and mismanagement.

The same PMI survey featured the experiences of about 187 Australian respondents. They reported wasting $108 million for every $1 billion invested. (Figures are U.S. dollar amounts, but represent a percentage that applies to any currency.)

One particular area Australia lagged in was offering “defined career paths for project and program managers,” Mark A. Langley, PMI President and CEO, told reporters according to the blog State Government Careers, “the failure to retain good project staff is a key contributor” to project failure.

By sector, the story was familiar, with relative winners and losers: IT was the most efficient and successful of the group, but still wasting around $78 million per $1 billion. Healthcare was the most challenged in this regard with $112 million wasted per $1 billion

By country: India had the lowest average monetary waste on projects ($73 million per $1 billion) while Europe reported the highest average at $131 million per $1 billion.

Failure is an option

Despite the gloomy sounding numbers, this direction marks an improvement.

Companies are getting better at seeing projects as “strategic initiatives” (from 38% to 50%, 2015 over 2016). At the same time, more than one quarter of reported initiatives “failed outright”.

Driving that failure was a multitude of factors reported in the survey. Among the top: “Lack of clearly defined and/or achievable milestones and objectives to measure progress” (37 per cent), closely followed by communication (19 per cent).

The survey represents the views and experiences of 3,234 professionals globally working in government, information technology (IT), telecom, energy, manufacturing, healthcare and construction, according to PMI.

Langley, the PMI chief, in announcing the results in Sydney, continued: “We are encouraged to see that organisations are making significant progress and experiencing more success with implementing strategic initiatives and delivering intended project benefits,” he said. “We have long advocated that project management is essential for any organisation’s success and are excited that others are increasingly realising this fact as well. Organisations that invest in proven project management practices waste 28 times less money because more of their strategic initiatives are completed successfully.”

More highlights from the survey:

Defining Performance

The survey also took some time to define two new performance levels: Champions and Underperformers. The key difference is that among so-called “Champions” 80 per cent or more of projects come in on time and on budget, according to PMI. Underperformers go by the same metric, but in this case 60 per cent or fewer meet that bar.

By the Numbers

  • 32 per cent. Survey respondents highly prioritising technical and leadership skills. In related data, just under half have a formal process to develop project manager competencies.
  • 31 per cent. Organisations self-reporting a “high benefits realisation maturity” which means they’ve created established procedures for developing project benefits and how to track them. The report gives specific examples of how this worked in companies such as Telstra Corporation and Michelin.
  • 50 per cent. Organisations with an enterprise project management office (among those having a project management office.)
  • From 59 per cent to 62 percent. Growth in the per cent of projects with actively engaged sponsors compared year over year.
  • 71 per cent. Those using Agile approaches “sometimes or more frequently”.

What’s Next

PMI is calling on all Australian organisations — and those across the world — to extend their expertise in the following areas:

  • Developing project management talent
  • Managing project benefits
  • Establishing PMOs (and strategic EPMOs)
  • Driving executive sponsorship
  • Addressing Agile approaches

It’s a tall order, but one that can (and should) be grounded in the work on the ground and the people that make up the soul of a business.

In the years ahead, says PMI, winning organisations will focus on a “culture of engagement, learning, and innovation” and will lead an ongoing conversation around the core value of project management.

For over 20 years the PM-Partners group have worked with private and public sector organisations to run projects, programmes and PMOs or provide the advice and support needed to help run them better.  Speak to us and find out how we can help with the development of your project management talent, set up a PMO or ensure successful Agile implementation. Contact us on 1300 70 13 14.


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