1 Recent Developments in Information Technology (IT) Project Management Kathy Schwalbe, Ph.D., PMP Associate Professor, Dept. of Business Administration, Augsburg College December 4,

2 Personal Background B.S. in math, 1981 (before Notre Dame and most colleges offered computer science or MIS degrees), MBA in 1986, Ph.D. in education in 1996 B.S. in math, 1981 (before Notre Dame and most colleges offered computer science or MIS degrees), MBA in 1986, Ph.D. in education in 1996 First job was as a project manager in the Air Force working on advanced communications systems First job was as a project manager in the Air Force working on advanced communications systems Worked on many projects to develop and install several types of systems Worked on many projects to develop and install several types of systems Now enjoy teaching, writing, and mentoring others Now enjoy teaching, writing, and mentoring others Personality profile: ENTJ, driver, high need for achievement Personality profile: ENTJ, driver, high need for achievement

3 Presentation Overview Update on project management (PM) and progress in managing IT projects Update on project management (PM) and progress in managing IT projects Key findings from recent PM research Key findings from recent PM research New developments in software to help manage projects New developments in software to help manage projects Personal views on what’s changing and what needs to change Personal views on what’s changing and what needs to change Suggested references Suggested references

4 Recent Facts About Project Management* The Project Management Institute (PMI) estimates that 4.5 million people in the U.S. (3.3% of the workforce) and over 12 million people in the rest of the world regard project management as their profession of choice The Project Management Institute (PMI) estimates that 4.5 million people in the U.S. (3.3% of the workforce) and over 12 million people in the rest of the world regard project management as their profession of choice The U.S. spends over $2.3 trillion on projects every year, or one quarter of the nation’s gross domestic product The U.S. spends over $2.3 trillion on projects every year, or one quarter of the nation’s gross domestic product *The PMI Project Management Fact Book, Second Edition, PMI, 2001

5 Certification Updates Number of PMPs continues to grow Number of PMPs continues to grow PMI’s CAQ for IS Development came out summer 2002 PMI’s CAQ for IS Development came out summer 2002 CompTIA purchased the Gartner Institute IT PM exams and launched the IT Project+ exam in April 2001 CompTIA purchased the Gartner Institute IT PM exams and launched the IT Project+ exam in April 2001 See and for more details on certification examswww.pmi.orgwww.comptia.org

6 IT Project Demand In 1998, corporate America issued 200,000 new- start application development projects In 1998, corporate America issued 200,000 new- start application development projects In 2000, there were 300,000 In 2000, there were 300,000 In 2001, the estimate was over 500,000 In 2001, the estimate was over 500,000 *The Standish Group, "CHAOS 2001: A Recipe for Success," 2001

7 A 1995 Standish Group study (CHAOS) found that only 16.2% of IT projects were “successful” and over 31% were canceled before completion, costing over $81 B in the U.S. alone. Time overruns were 222%, cost overruns were 189%, and only 61% of features were provided A 1995 Standish Group study (CHAOS) found that only 16.2% of IT projects were “successful” and over 31% were canceled before completion, costing over $81 B in the U.S. alone. Time overruns were 222%, cost overruns were 189%, and only 61% of features were provided The latest CHAOS Study (2001 data) showed improvements in all areas but still… The latest CHAOS Study (2001 data) showed improvements in all areas but still… Only 28% of IT projects succeeded Only 28% of IT projects succeeded Motivation for Improving IT Project Management

8 Recent Research Findings on Managing IT Projects Standish Group Standish Group What the Winners Do (Dragon Milosevich) What the Winners Do (Dragon Milosevich) Project Management and ROI, Maturity Levels (Ibbs and Kwak) Project Management and ROI, Maturity Levels (Ibbs and Kwak) Project Management and Competitive Advantage (Jugdev and Thomas) Project Management and Competitive Advantage (Jugdev and Thomas)

9 The 2001 Standish Group Report Findings (Compared to 1995 Report) Time overruns significantly decreased to 163% compared to 222% Time overruns significantly decreased to 163% compared to 222% Cost overruns were down to 145% compared to 189% Cost overruns were down to 145% compared to 189% Required features and functions were up to 67% compared to 61% Required features and functions were up to 67% compared to 61% 78,000 U.S. projects were successful compared to 28,000 78,000 U.S. projects were successful compared to 28,000 28% of IT projects succeeded compared to 16% 28% of IT projects succeeded compared to 16%

10 Why the Improvements? "The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.”* "The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.”* The Standish Group, "CHAOS 2001: A Recipe for Success" (2001) The Standish Group, "CHAOS 2001: A Recipe for Success" (2001)

11 “What the Winners Do” Companies that excel in project delivery capability: Companies that excel in project delivery capability: –Build an integrated project management toolbox (use standard/advanced PM tools, lots of templates) –Grow competent project leaders, emphasizing business and soft skills –Develop streamlined, consistent project delivery processes –Install a sound but comprehensive set of project performance metrics Dragan Milosevic, Portland State University, “Delivering Projects: What the Winners Do,” PMI Conference Proceedings, November 2001

12 Using a Standardized Project Management Approach (SPM)* Research found that a consistent (one-size-fits- all) managerial approach may be essential to the successful standardization of certain aspects of project management, and a contingency approach is needed for certain aspects, too Research found that a consistent (one-size-fits- all) managerial approach may be essential to the successful standardization of certain aspects of project management, and a contingency approach is needed for certain aspects, too Low standardization with a sufficient amount of variation is the more appropriate approach Low standardization with a sufficient amount of variation is the more appropriate approach SPM factors include process, technology, organization, methods, metrics, culture, and leadership SPM factors include process, technology, organization, methods, metrics, culture, and leadership Milesovich and Pantanakul, “The Impact of Standardized Project Management: New Product Development Projects versus Software Development Projects,” Proceedings of PMI Research Conference 2002

13 Significant Predictors of Project Management Capability For NPD projects: methods, metrics, and culture For NPD projects: methods, metrics, and culture For SWD projects: metrics, culture, and leadership For SWD projects: metrics, culture, and leadership

14 Metrics, Culture, and Leadership* Metrics: Projects using comprehensive metrics to measure and monitor performance will have fewer problems Metrics: Projects using comprehensive metrics to measure and monitor performance will have fewer problems Culture: In a strong project culture, team members are more satisfied, engaged, and mutually supportive Culture: In a strong project culture, team members are more satisfied, engaged, and mutually supportive Leadership: Projects managed by project managers with strong leadership skills are more successful and effective Leadership: Projects managed by project managers with strong leadership skills are more successful and effective

15 Project Management ROI* Over 94% of senior project management professionals say that implementing PM added value to their organizations Over 94% of senior project management professionals say that implementing PM added value to their organizations Higher PM maturity (PMM) leads to Higher PM maturity (PMM) leads to –Better project schedule and cost performance –Lower PM costs (ave. about 11% of PM revenues) Formula to predict increased company ROI based on increased PM maturity (PMM) level Formula to predict increased company ROI based on increased PM maturity (PMM) level –For example, current PMM of 2.3, future of 3.1, upgrade cost $400K, 5% profit margin, $10 million in revenues, PM/ROI = 40% William Ibbs, “The $$$ Value of Project Management: Continuing the Search for PM’s ROI,” PDS ’02 Conference Proceedings, PMI-ISSIG, also see

16 Project Management Maturity* *Figure in my book, Information Technology Project Management Second Edition, 2001

17 But Today’s PM Maturity Models Only Measure Explicit Knowledge* Explicit knowledge: “know what,” can be put into IT, a digital or discrete process that can be codified and transmitted in formal, systematic language (Nonaka 1994) Explicit knowledge: “know what,” can be put into IT, a digital or discrete process that can be codified and transmitted in formal, systematic language (Nonaka 1994) Tacit knowledge: “know how”, in one’s experience; hard to replicate and can be transferred indirectly though time consuming socialization processes (Kaplan et al 2001) Tacit knowledge: “know how”, in one’s experience; hard to replicate and can be transferred indirectly though time consuming socialization processes (Kaplan et al 2001) *Jugdev and Thomas, “Blueprint for Value Creation: Developing and Sustaining a Project Management Competitive Advantage Through the Resource Based View,” Proceedings of PMI Research Conference,2002

18 Need to Make PM a Strategic Asset (Just Like IT) Many executives view project management as having worth at the operational and tactical rather than strategic level Many executives view project management as having worth at the operational and tactical rather than strategic level Resource Based View (RBV) frameworks emphasize how firms create value and profits from their internal resources and focuses on strategic assets Resource Based View (RBV) frameworks emphasize how firms create value and profits from their internal resources and focuses on strategic assets RBV is relevant to project management because it emphasizes intellectual capital RBV is relevant to project management because it emphasizes intellectual capital

19 RBV Model* *Jugdev, Kam, presented at PMI Research Conference, July 2002

20 What’s New In Project Management Software By 2001, there were hundreds of different products to assist in performing project management By 2001, there were hundreds of different products to assist in performing project management Three main categories of tools: Three main categories of tools: –Low-end tools: Handle single or smaller projects well, cost under $200 per user –Midrange tools: Handle multiple projects and users, cost $ per user, Project 2000 most popular –High-end tools: Also called enterprise project management software, often licensed on a per- user basis

21 Move Toward Enterprise PM SW? Microsoft’s Project 2002 now includes an enterprise version Microsoft’s Project 2002 now includes an enterprise version Microsoft suggests organizations plan to take at least 3-6 months to install their enterprise software, mostly because organizations need to standardize a lot of things and change the way they work to get the most out of the software Microsoft suggests organizations plan to take at least 3-6 months to install their enterprise software, mostly because organizations need to standardize a lot of things and change the way they work to get the most out of the software Milesovich’s research did not find PM software as a distinguishing factor for what the winners do, perhaps because it’s still fairly new at the enterprise level Milesovich’s research did not find PM software as a distinguishing factor for what the winners do, perhaps because it’s still fairly new at the enterprise level

22 Personal Views on What’s Changing and What Needs to Change What’s Changing What’s Changing –More people are “learning the language according to PMI” –More people are getting certified –People are under even more pressure at home and work, often have too many projects and unrealistic deadlines What Needs to Change What Needs to Change –Top management needs to emphasize a common language that fits in their organizations –Certification is not enough: Need to use best practices –Organizations need to focus on sound business planning: pick the high value projects and focus on them, get rid on unnecessary work

23 Suggested References Lots available (see citations and next slide) Lots available (see citations and next slide) Take advantage of PMI’s web sites and conferences Take advantage of PMI’s web sites and conferences – – – My book and web site have lots of references My book and web site have lots of references – (goes to with no ads/distractions –Information Technology Project Management, Second Edition (on

24 Sources for Project Management Research PMI’s research pages ( PMI’s research pages ( Historical PM Research database (Kloppenborg, Opfer, and Gallagher) Historical PM Research database (Kloppenborg, Opfer, and Gallagher) Project management research on the web ( Project management research on the web ( Research methods knowledge base Research methods knowledge base ( ( The Standish Group The Standish Group ( (

25 PMI’s ISSIG Web Site

26 Several Free WebCasts and Great Conferences

27 Questions or Comments?