Project management — a structured approach to driving business results through a strategic focus on a company’s most important initiatives — is essential for any organization’s success. It’s also a powerful tool for CFOs, whether they act primarily as stewards of their organizations’ financial portfolio and assets, or additionally as strategic adviser to the CEO.

Mark Langley, CEO, Project Management Institute

Mark Langley, CEO, Project Management Institute

Yet CFOs rarely understand project management as a role, a profession, or an organizational competency that enables delivery of strategic initiatives. I speak from experience. When I was a CFO, I didn’t understand it either.

Research by the Project Management Institute shows that senior executives recognize the importance of strategy and its implementation, with 88% saying the successful execution of strategic initiatives will be “essential” or “very important” to their organizations’ competitiveness in the next few years (I can’t help but wondering what the other 12% were thinking).

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Yet 61% of respondents acknowledge that their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation. And only 17% categorize the implementation of strategy as strategic — most apparently think of it as operational or tactical — so it’s no surprise that organizations are struggling to achieve competitive advantage.

So the first thing I would tell a CFO is that all strategic initiatives are delivered through projects and programs.

When I was a CFO, I worked at a company where we employed what I think of as “brute force management.” Hard-working, smart people were focused on positive outcomes with no sense of structure or consistency around how to achieve those outcomes, and no understanding of how those results would contribute to overall organizational success.

We were successful, but in the years since I served in that role, I have often wondered how much more profitable we could have been had we formalized our organizational capability in project and program management, which would have helped us avoid re-creating the wheel (and spending the same money over and over) every time we entered a new market.

The second thing I would tell a CFO is how much money is wasted on projects that fail to meet their objectives due to poor performance. On average, organizations in the public and private sectors waste $109 million for every $1 billion invested in projects and programs — almost 11 cents on every dollar, according to research results reported in PMI’s Pulse of the Profession report. More than half of projects are over budget, a third fail to achieve business objectives, and 17% fail outright. Had someone presented those numbers to me when I was CFO, I’d have broken into a cold sweat.

In your financial stewardship role, you probably have visibility into the success or failure of individual endeavors and evaluate them on a serial basis. But how often do you look at the waste generated by poor project performance across your entire enterprise? Do you have the visibility or means to measure overall project success — and by extension the organization’s strategic success?

By viewing projects as a portfolio — the collection of activities that drive your organization’s strategy — you will get a better sense of not only how well the organization is meeting its strategic goals but where waste is hiding in the form of poor project performance.

To ensure transparency, the third thing I would tell a CFO is that having a culture of project management can make his or her life easier. If you don’t understand what project management means to your organization’s ability to grow and compete and how the money that is being spent on strategic initiatives is (or isn’t) contributing, you can’t make the best decisions about where to invest.

Your organization’s operations reflect who you are today. But if you can’t see your future strategy reflected in your portfolio of projects and programs, you have little chance of ever achieving it. And if you can see it but you don’t have the project management capability to implement and deliver your organization’s most important strategic initiatives, you will lose to competitors that have embedded a project management mindset and capability into their culture.

Why spend the time and money creating a unique strategy without ensuring your organization has the capability to deliver it? Neither a CFO nor any senior executive should leave strategy implementation to chance or assume that the operating divisions will “figure it out.” Don’t wait as long as I did; use your knowledge and influence to help recognize project management as the strategic competency that delivers results.

Mark A. Langley is president and CEO of the Project Management Institute and a former CFO of ChemLogix and Assetrade.com.

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4 responses to “3 Things CFOs Should Know about Project Management”

  1. Thanks you for this insight. Before I started teaching at colleges and universities I was a strategic consultant. One of my consultant engagements was as an audit manager. Your article reminded me of an experience I had as a consultant to a university in Southern California. This internal auditing role involved coordination with many of the financial professionals in the organization and the external audit team. I now realize how adapting a project management philosophy would have helped these relationships.

  2. Great article! Given many CFOs assuming Project Management is a skill that anyone who’s trained as an engineer or architect or any other technical speciality already somehow possesses, many seek to learn more about Risk Management. They somehow wrongly assume that we have to teach people about Risk Management skills whereas Project Management is something they can learn on their own through experience. They fail to recognize and see Project Management as a disciplined approach to implementing projects. You nicely put it as “brute force management”, I’d like to refer to it as chaos management. And it’s exactly what many of companies do nowadays. And they do it so well that you somehow begin to doubt whether a structured approach to managing projects is needed. You only confirm your understanding of the need for a structured approach when you realize the type of chaos that results and when your project is delayed and goes over-budget. The chaos in such projects and the drive to get out of all the mess eventually somehow “drives” people into thinking they’ve managed to deliver successfully. Yes they managed to deliver but surely went either over-budget or were delayed.

  3. Interesting perspective Mark. Its very unfortunate, however, that this value-based ideology has long been replaced with the model of mass selling PM certifications like candy, thus overly-saturating the market with PMPs and thereby decreasing the value of project management in corporate America to mere acronyms, particularly in the C-Suite.

  4. Excellent read. And so very true!
    More often than not, projects get driven by “I’ll tell the PM what and how to do and I will ask for the numbers as I need them”. Brute Force vs. developing project management as a competency to deliver results.
    Despite working on internal projects, I have experienced that a lot of energy is channelized towards managing the stakeholders alone, rather than focusing on net deliverables.
    Thank you for structuring this into an article.

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