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

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).

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.