Room for better project management

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1 April 2005 | 0

Project management is a management approach concerned with getting the job done — on time, within budget, and according to specifications. The primary focus is on results. The project management discipline emerged in an unobtrusive manner in the 1950s in the construction field.

For many years, project endeavours focused on large scale, long duration, single projects such as power plants, bridges, dams etc. The construction industry has long known that managing such endeavours with a fixed deadline and budget is a very specialised art/science.

This has now been discovered by every industry where new products are the lifeblood of competition. Project management became a major approach to managing business and government undertakings in the 1990s. Its ascendance is closely tied to today’s chaotic business environment, which is characterised by such phenomena as downsizing, outsourcing, customer focus, re-engineering, and the need for cross-functional solutions to complex problems.

 

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The explosive growth of project management can be tracked by monitoring membership of the world’s largest body, the Project Management Institute, USA. In the 1980s, its membership ranged from 6,000-8,000 for many years. It grew to 25,000 in the mid-1990s, and currently numbers in excess of 100,000. Its major growth is occurring in knowledge based industries, such as finance, IT, and telecommunications. It is estimated that these sectors now represent 70 per cent of total membership numbers.

In software development and other IT/IS application areas, the value of project management has never been more in the public consciousness. Projects such as Y2K and Euro conversion have greatly heightened this awareness. When the microscope was turned on many of these IT projects, including domestic ones such as: PULSE, the Garda management information system; and ISIS/the Credit Union’s proposed financial system — it became apparent that many of them were not managed very well.

Intense scrutiny

High technology projects have been subjected to intense scrutiny and studies by organisations such as the Standish Group. America spends over $275bn each year on about 200,000 software development projects, many of which fail. The dismal failure statistics of technology projects have been tracked since 1994 by The Standish Group (see graph).

The good news in these bad statistics is that there is a trend towards improvement. In 1994, only 16 per cent of application development projects met the criteria for success — on time, on budget, and with all the features originally specified. By 2000, 28 per cent were successful. Three factors are believed to explain these encouraging results:

  • a trend toward smaller projects which are more successful because they are less complex;
  • better project management; and
  • greater use of ‘standard infrastructures’ — such as a Project Office, standard methodologies, international certification and project offices.

What Does This Mean for Ireland?

An international benchmarking study conducted in 2002 shows that while Ireland is quite advanced at the thinking and practice of project management, a lot more needs to be done.

The study was coordinated by the University of Economics and Business Administration in Vienna, and in Ireland, the research was jointly undertaken by the Department of Management and Marketing, University College Cork and the Institute of Project Management of Ireland.

Experts from Irish universities and institutions, and project management practitioners from many sectors of the economy, participated in the assessment. These sectors included construction, financial services, health, LT., major consultants, telecom, and transport.

The study, sponsored by the International Project Management Association, based in Zurich, showed that Ireland was ranked second, behind Sweden, and ahead of the United Kingdom, Norway, Denmark, Hungary, Austria, Romania and Latvia in the practice of project management.

Rank slip

Ireland’s capability in the area of project portfolio management was ranked fourth behind Sweden, Norway and Demark.

The development of project management also requires macro level support structures, such as national certifying institutions, dedicated educational programmes, professional training programmes, and research into project management. The benchmarking study compared countries’ macro level support structures, and Ireland received a lower ranking (fourth, after the UK, Austria and Sweden).

Ireland’s rating on project management research was even lower, at seventh. This should be a major cause for concern. The low research ranking reflects possibly the relative dearth of social science and business research in Ireland generally.

The Irish research team’s analysis of Ireland’s rankings lead to the following observations:

  • that a key attribute of this high ranking stems from the demands of many of the US multinationals operating in Ireland.
  • that the surge in the use of project management on a global scale is helping us to deal with at least three of the strategic challenges that face organisations: how to manage complexity; how to manage time; and how to manage cost.
  • that many senior executives do not necessarily appreciate the true potential and strategic value of project and portfolio management. The reality in most organisations is that dozens of projects exist throughout the company in various stages of completion (or more commonly, of disarray). But for many, embracing the discipline happens as a response to an internal crisis or change in the environment.

As a nation, it is important that Ireland can offer and provide a highly trained and skilled pool of project management expertise, both for its own indigenous organisations as well as for inward investment. It particularly needs to strengthen its capability in the direct application of project portfolio management. Projects are a natural outgrowth of the organisation’s mission, and the IT function is frequently the common link between most projects, whether it be in a minor or major role.

The Gartner Group (US based market research company) has predicted that companies that fail to have structured project and portfolio management in place will experience twice as many major project delays, overruns and cancellations as those that do. The competitive advantage will reside with those organisations that do projects that add value, dependably and in a repeatable manner.

 

The author is the Director General of the Institute of Project Management of Ireland (www.projectmanagement.ie). The Institute spearheads project management education, certification and research in Ireland.

05/09/2003

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