Organizations lose $122m for every billion dollars to bad project management
Organizations around the world waste an average of $122 million due to poor project management, for every $1 billion spent on projects, according to the Project Management Institute, an American non profit organization for project management.
The figure is an increase of 12 per cent from the previous year, according to the Institute’s 2016 report “Pulse of the Profession: The High Cost of Low Performance.”
The report says, though organizations that effectively use formal project, programme and portfolio management practices waste 13 times less than organizations that don’t, few organizations are successfully embracing these proven capabilities.
The wastage problem fits into a wider deterioration in project outcomes worldwide, as found by the Project Management Institute’s study.
The study found, the percentage of projects that were completed within their original budget was 53 per cent, a decline from 55 per cent the previous year, and the percentage of projects completed on time fell slightly from 50 per cent to 49 per cent.
Budget loss from failed projects rose from 30 per cent to 32 per cent, and the percentage of projects that were deemed a failure and those that experienced scope creep – continuous widening of the project’s scope – also increased slightly.
“With little movement in key data points over the past five years, and a regression in the percentage of projects reaching goals, something definitely needs to change”, the PMI says.
Of the industries studied, government agencies had the lowest average monetary waste on spending projects: $108 million per $1 billion spent, while financial services reported the highest average waste on project spending: – $149 million per $1 billion spent.
The Project Management Institute’s study surveyed 2,428 project management practitioners, 192 senior executives, and 282 project management organization directors from a range of industries, including interviews with eight corporate leaders and ten project management directors.
To achieve better results, the study recommends that organizations look beyond technical skills in project management and consider broader leadership and business qualities as well.
Organizations should also recognize the importance of a project management office and also make use of well-placed executive sponsors.
By Emmanuel Odonkor