Project Management: The key to competitive strength
26 April 2015
Continued economic fluctuation and rising costs in 2015 are forcing UK organisations to take a more critical look at how successfully they hit their targets.
The verdict? They are not doing much better than they were a year ago. According to Project Management Institute’s (PMI) 2015 Pulse of the Profession® study, their success in delivering on their strategic initiatives remained largely unchanged over the previous 12 months. Furthermore, they waste an average of £126million for every £1billion spent on projects and programmes – 16 per cent more than the global average.
If UK organisations are to remain globally competitive, reducing this waste and completing strategic initiatives faster is imperative. For this to occur, organisations must refocus their attention on project and programme management. All positive change in an organisation happens through projects and programmes. When a project and programme management mindset is embedded into an organisation’s DNA, performance improves and competitive advantage accelerates. Organisations that do it successfully meet their strategic goals two and a half times more often, and waste 13 times less money, than their low-performing counterparts.
The UK government has taken notice of this need. Four years ago, it established the Major Projects Authority (MPA,) which oversees a portfolio of 199 major projects whose lifetime costs run to more than £400billion. In its latest annual report, the MPA charts a year-over-year increase in overall cost, an increase in the percentage of projects rated amber/red and a decrease in the percentage rated green in terms of confidence in the project’s delivery.
The talent connection
Authors of the MPA report recognise the important role of talent management when they note that they “still have much to do to become excellent at delivering projects, particularly in planning and prioritisation, as well as further improving the skills and accountability of project leaders.” This aligns with PMI research findings about the direct connection between the ability to implement strategic objectives and the strength of an organisation’s project management
skills. The lack of proper talent leads to lack of performance. High-performing organisations don’t just emphasise strategy and improve efficiency, they cultivate human capital to deliver successful projects and programmes. The outcomes are reduced risk, increased stability, improved growth and a stronger competitive advantage.
Strategic development of in-house talent can play a significant part in boosting overall organisational efficiency. As reported by PMI’s Pulse of the Profession In-Depth Report: The Competitive Advantage of Talent Management:
- High performers – that is to say, organisations that complete 80 per cent or more of their projects on time, on budget and in accordance with the original strategic goal and objective – are two times more likely than low performers to have their talent-management programme aligned to the organisation’s strategies and values (69 per cent of high performers versus 31 per cent of low performers).
- Organisations in which talent management is aligned to corporate strategy have an average project success rate of 72 per cent, while organisations in which talent management is not effectively aligned have an average success rate that is 14 points lower.
- This alignment translates to bottom-line value: for organisations where the reduction of risk can be attributed to significant or good alignment of talent management to organisational strategy, there is a 33 per cent reduction of the dollars at risk on projects.
Successful talent development must be an on-going organisational priority. High-performing organisations such as NASA, CH2M Hill, Hewlett-Packard and others understand and invest in talent development, providing consistent, continuous training and development for project managers to enhance organisational success. They are significantly more likely than low performers to provide a defined career path for project managers, a process to develop project management competency, and training on the use of project management tools.
Naturally, high performers do not represent the majority of organisations. When PMI sponsored a survey of a group of senior executives, it became clear that there is still a significant gap between recognising the importance of talent and putting that into practice. Key observations include:
- There is agreement but no investment – 72 per cent of respondents say that talent management will become increasingly important to strategy implementation and execution in the next three years. Yet just 41 per cent indicate their organisation has an understood and accepted approach to strategic talent development. And only a minority report that their organisations provide adequate financial resources, C-suite attention, or employee time to manage and develop the talent needed.
- Poor alignment between talent management and corporate strategy is ubiquitous. For example, only 21 per cent of respondents say their organisations reappraise talent management approaches in light of corporate strategic requirements every six months or on an ongoing basis.
- Talent management must be a C-suite priority. Only 23 per cent of respondents believe senior leadership gives strategic talent management the priority it deserves. Top executives must be involved in developing the next generation of leaders for the organisation. Executives need to emphasise that succession planning matters to the success of the enterprise.
Updating talent management programmes and increasing training for practitioners is a necessary step toward high performance. But it’s not enough. Effective talent-management programmes need to be developed concurrently with an organisation’s business model and vision, rather than rolled out incrementally or tacked on as an afterthought.
Improving your project management team
There is an additional challenge to embracing project management that may seem surprising in a labour market still recovering from a sustained recession: the demand for qualified project managers outstrips supply. Over the next five years, 1.57 million new project management roles will be created globally per year. Along with job growth, the project management profession is slated to grow its economic footprint by US$6.61trillion.
This creates a highly competitive job market, so organisations need to be prepared for a real commitment to attracting and retaining the right talent. Establishing a formal career path for project managers within the organisation is vital to retention in a competitive jobs market.
Reduce the risk of investing in uncertain skill sets by including certifications in your requirements. Project management certifications such as the Project Management Professional (PMP®) assure the hiring organisation that resources are easily transferable across industry sectors, business units or geographical regions, bringing to each role the same set of proven skills and a shared vocabulary with other project managers and those who work with project managers.
To find out more, please visit www.pmi.org.uk