Cost Management

More Companies Met Project Objectives in 2016

Seventy percent of all projects met strategic business goals in 2016, up from just over 60% the previous year, says the Project Management Institute.
Sean AlloccaFebruary 10, 2017
More Companies Met Project Objectives in 2016

For the first time in five years, more organizations are meeting project goals on time and on budget, according to new data from the Project Management Institute. Seventy percent of all projects met strategic business goals in 2016, up from just over 60% the previous year, PMI said.

The Pulse of the Profession survey on efficiency in completing corporate projects, which polled 3,234 project management professionals, found that many companies are becoming more project-management savvy. The average organization wasted just 9.7% of funds invested, or $97 million on every billion dollars spent on projects in 2016. That was a 20% decline from the previous year.

One of the driving factors behind the improvement is the adoption of agile, a project management methodology that incorporates a more incremental approach to managing building activities, allowing the entire process more flexibility. Seventy-one percent of respondents say they have used agile approaches in the past year.

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“The world is changing very quickly around us,” said Phillipe Husser, senior partner of progress direction at Michelin, “so much so that we cannot afford anymore to have projects taking two to five years to deliver, because, during this time, the initial requirements have changed.”

Companies have also engaged executive sponsorship to help drive projects to meet their original goals. The majority of respondents (62%) cited executive sponsorship as the top-driving factor for project success. An effective executive sponsor can use their position of authority to clear roadblocks, make quick and effective decisions, and help influence executive leadership, according to the institute.

“[Executive sponsors] manage the politics, break down barriers, and stay engaged,” said Jeff Zircher, a manager of Caterpillar’s global program management group. “The sponsors are a huge part of driving not just the initial project charter, but also team engagement throughout the life of the project.”

Still, companies have more work to do. The most significant pitfall identified in the survey was failing to set clearly defined and achievable objectives. Thirty-seven percent of respondents said that not incorporating milestones into the construction of the project, which could have more accurately measured its progress, was most responsible for project shortcomings. Poor communication (19%) and a lack of communication by senior management (18%) also proved to be key roadblocks.

Among the industries included in the research, the health-care sector was the most inefficient, wasting $112 million on every billion dollars invested last year. The telecom sector was next, misusing $106 million, followed by the energy sector at $101 million.

Believe it or not, government organizations ranked near the middle of the pack of industries surveyed for project efficiency. Government projects squandered 9.7% of funds invested, the same as the average figure for the survey.

The IT sector was the most economical, wasting $78 million of each billion dollars invested.

The survey’s 3,234 participants included 200 senior executives and 510 project-management-office directors.

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