More than half of global business projects fail By Richard Noble, Director of project Management Services, PwC

15/09/2004

Ask yourself what makes them fail....

Superior business performance is dependent on project management maturity levels according to a new global survey from PricewaterhouseCoopers called Boosting Business Performance through Programme and Project Management. Yet, 51% of survey respondents are at maturity levels 1 and 2 and only 13% achieve level 5, the highest rating.

“There are fundamental changes that companies need to undertake in the way they launch and implement new projects to achieve success,” said Richard Noble, Director of Project Management Services with PwC’s Advisory Practice. “Good project management is not just about using a new software tool-kit. Companies need to manage project budgets, time, and drive out the project’s intended business benefits—for example reduced operation costs and improved market share. Doing so can materially impact top and bottom lines.”

The PwC survey focused on 200 organizations, both large and small, in 30 different countries and from a broad range of industries. It is the first such survey to address the issue of project management maturity on an international scale. Altogether, the 200 participants represented some 10,640 pending projects, at a total estimated value of $5.6 billion.

On a scale of 1 to 5, the overall average project maturity rate for respondents was 2.5. Only 2.5% of the companies completed 100% of their projects on time, within budget, to scope and with the right business benefits. This accounts for only 254 projects out of the estimated 10,640 projects undertaken by the companies surveyed. More than 50% of the survey respondents’ projects actually failed.

The survey also found that 60% of respondents are dissatisfied with their current maturity level. One-third of the businesses questioned said they hope to advance at least two levels. Only nine businesses said they were happy to stay at level 1. The desire to improve is driven by an increased recognition that successful projects directly contribute to an organization’s performance, competitiveness and stakeholder value in both the private and public sectors. “Boards of Directors and management must focus, get involved and engage their executives to realize project priorities,” said Noble. “If they don’t keep tabs and benchmark their performance, projects can peter out and fail.”

The average maturity level for the 71 responding North American organizations was 2.8. Asia boasted the highest maturity levels, with an average of 3.1. European countries averaged 2.5.

When the survey results were reviewed from an industry perspective, technology, information, communication and entertainment companies demonstrated the highest maturity levels, with 30% of companies surveyed above level 3. The lowest maturity levels were found in the public sector, where the majority of organizations (56.3%) only reached maturity level 1. The public sector was closely followed by the pharma sector, financial services and consumer and industrial products and services, with maturity levels ranging from 1 to 3.

“It’s no surprise that the technology sector has the higher levels of maturity. Typically, companies in this sector continually and incrementally add value to themselves and their clients through product development or service improvement,” said Noble. “But competing day-to-day operational issues can still take attention away from any plan even in the higher performing industry sectors. Companies must ensure they use the sometimes limited pool of experienced project managers to lead and complete key initiatives to success within their businesses.”

The survey indicated that project failure is clearly driven by organizational factors as well as process, resources and tool inadequacies. “Projects often fail because of external factors and imbalanced organizational priorities,” said Noble also noting that project managers are often blamed for bad project management. Yet, the PwC survey indicates that project failure is organizationally related 59% of the time and can be outside the immediate influence of the project managers themselves.

”Complex projects are more often successful when they identify the related organizational risks and then ensure that both senior management and a seasoned project team are thoroughly engaged in taking deliberate steps to proactively reduce the risks and manage any issues,” said Noble. “Indeed, we find that we are often called in to help pre-empt or manage these issues in addition to solving the traditional challenges such as controlling scope creep or cost and schedule overruns.”

Furthermore, organizational structure can influence the performance and outcome of projects. The survey supported the theory that the higher the alignment between organizational structure and business needs, the higher the overall project performance of the organization. Highly competitive and dynamic sectors make finding the right balance a challenge.

A copy of PwC’s Boosting Business Performance through Programme and Project Management can be found at www.pwc.com/ca/pmm.