The High Cost of Low Performance PMIs Pulse of the Profession Presented by Rene Ramirez, PE, PMP

Corporate Strategy ► 88% of executive say that strategy implementation is important to their organizations. ► Executives tend to ignore that projects or programs are required to “change the business”, which is the objective of corporate strategy. ► Most projects are to “run the business”.

The Cost ► Organizations lose an average of $109 million for every $1 billion spent on projects. (This is based on unrecoverable budget if the project fails.) ► The lack of alignment of projects to organizational strategy most likely contributes to the result that 44% of projects are reported as unsuccessful.  One reason sited is that a majority of companies either lack the skills or fail to deploy the personnel needed for strategy implementation.

Definitions ► High Performers - Organizations that achieve 80 percent of projects on time, on budget and meeting original goals. ► Low Performers - Organizations that achieve 60 percent of projects on time, on budget and meeting original goals. ► Organizational Agility - the capability of an organization to maintain a competitive edge by responding faster to changing market conditions while improving organizational efficiency and customer satisfaction.

The Numbers ► High Performing Organizations are:  3 times likely to have organizational agility (31% vs. 9%)  Twice as likely to have high alignment of projects to organizational strategy (57% vs. 28%)  Twice as many successful strategic initiatives (76% vs. 38%)

Talent Management ► Effective talent management is prevalent in high performers.

Talent Management High Performers Low Performers Ongoing project manager training 77%51% Formal process to develop project manager competency 68%36% Formal process to mature project management practices 66%35% Formal knowledge transfer process 66%33% Defined career path 62%32% Effective knowledge transfer 29%5%

Talent Management ► Effective Talent Management leads to more successful strategic initiatives.

% of Successful Strategic Initiatives WithWithout Ongoing project manager training 60%48% Formal process to develop project manager competency 62%50% Formal process to mature project management practices 63%49% Formal knowledge transfer process 63%49% Defined career path 63%50% Effective knowledge transfer 70%45% Study Avg. - 56%

Change Management ► Actively engaged sponsors was a top driver of project success. ► Effective Change Management is more prevalent in high performers. High Performers Low Performers Projects with Active Sponsors 81%45% Effective change management 42%10%

Change Management ► Effective Change Management leads to more successful strategic initiatives.

% of Successful Strategic Initiatives With Without Projects with Active Sponsors 66%41% Effective change management 69%41% Study Avg. - 56%

Process Maturity High Performers Low Performers Organization understands value of Project Management 77%40% Has a PMO 74%64% Standardized practices used throughout the organization 45%15% Project management maturity 35%8% Program management maturity 32%5% Portfolio management maturity 31%6%

% of Successful Strategic Initiatives ► Process Maturity Leads to Success

% of Successful Strategic Initiatives WithWithout Organization understands value of Project Management 63%47% Has a PMO 58%50% Standardized practices used throughout the organization 66%41% Project management maturity 70%44% Program management maturity 72%45% Portfolio management maturity 72%46% Study avg. - 56%

Outcomes ► Benefits realization - the practice of ensuring that the outcome of a project produces projected benefits claimed in the business case.  This is achieved through the establishment, measurement, and communication of the expected benefits of an organization’s initiatives.

Outcomes ► High benefits realization maturity is more prevalent in high performing organizations and leads to more successful strategic initiatives. WithWithout Mature benefits realization 73%44% % Successful Strategic Initiatives when in place

Summary ► High performing organizations successfully complete 89 percent of their projects. Low performers only complete 36 percent of their projects successfully. ► On average, organizations report that 3 out of 5 projects are not aligned to strategy.

Strategic Project Success ► Talent Management  Effective knowledge transfer ► Change Management  Increase sponsor engagement ► Process Maturity  Project/Program/Portfolio maturity