Why excellence in project management is not enough

By Robert Buttrick

The only reason for undertaking a project is to add value to an organisation in pursuit of strategic objectives. A project, which does not do this is useless or a  sink for scarce resources.

Projects, however, do not directly create value. Projects deliver new capability to an organisation, but it is the organisation itself, which creates value by using those capabilities. Value creation (benefits realisation) usually happens after a project has been completed.

If a project is truly a vehicle of change which will add value, it must have:

• Alignment: It is aligned to the company strategy
• Priority: It has high priority relative to other change initiatives which may use the same resources
• Positive impact: It impacts somebody’s budget, somewhere in the organisation either by decreased costs or increased revenues.

Define project success in project managment

When talking about successful projects we must understand what the word “successful” means. Success is too often interpreted through the differing eyes of stakeholders.

Successful project management ensures the delivery of a specified scope, on time and to budget. It is related to how efficiently a project is managed. This should be assessed during the project closure review, documented in a project closure report and measured by timeliness of delivery milestones, adherence to budgets and quality. This is associated with the role of the project manager.

A successful project realises the business objectives it was set up to achieve as stated in a business case^a. It is related to the effectiveness of the project in meeting the objectives set. The post implementation review (post-project review) assesses this. Measures of success here must be indicative of the business objectives being achieved. This review therefore has to happen some time after the output of the project has been put into use. It is associated with the role of the project sponsor^b.

A successful company drives towards its strategic objectives whilst fulfilling expectations of shareholders, managers, employees and other stakeholders^c. Measures for this are at a corporate level and should be financial and non-financial (e.g. balanced score card). This is associated with the role of the Chief Executive.

What actually counts is whether the organisation, as a whole, is successful or not. The likelihood of business success is increased if the projects undertaken align with the organisation’s strategy. Success can be enhanced if best practice project management is undertaken. The aim is to ensure the linkage from successful project management to successful projects to a successful company remains effective.

How to measure and realise benefits

For benefits realisation and measurement to be effective therefore, an organisation must have:

1. A business strategy and goals communicated in sufficient detail to be useful to decision makers: this will facilitate strategic alignment
2. A business plan, which explicitly demonstrates how the company’s resources are to be used in operating the organisation in its current state and investing in future capabilities in order to achieve future benefits;
3. Measures by which the whole organisation can monitor its progress towards strategic objectives and may be used to aid prioritisation decisions.

Without these three fundamentals, business-led, or benefits-driven project management has little to tie into, regardless of how well each individual project is managed or directed.

GLOSSARY EXPLAINING TERMS USED:

1. BUSINESS CASE: A document outlining the justification for the initiation of a project. It includes a description of the business problem (or opportunity), a list of the available solution options, their associated costs and benefits and a preferred option for approval
2. PROJECT SPONSOR: Individual or group within organization that provides the financial resources for the project.
3. STAKEHOLDERS: Individual and organizations that are actively involved in the project or whose interests may b positively or negatively affected as a result of project execution or completion; also some-one who exert influence over the project and its results.

References

This article is adapted from Part 2 of The Project Workout, 4th edition, Robert Buttrick, Financial Times/Prentice Hall, 2009.

Do you think your business projects are creating value?  Please share your thoughts……