Survey of Project Management Practices RESULTS

(1)

BUSINESS RISK SERVICES

Survey of Project Management

Practices

Survey of Project Management

Practices

RESULTS

(2)

Overview

• Project Management Survey by Ernst & Young Hungary in cooperation with PMI

Budapest. The first survey of overall project management practices in Hungary.

• Benefits of the Survey:

– Knowledge Sharing:

• Evaluate the current state of project, programme and portfolio management • Identify critical areas

• Identify benchmark possibilities through country-wide and industry-wide comparisons

– Promote project management expertise, create awareness

– Activate project management experts in Hungary

• Main focus of questions:

project management experience, success rates, major reasons for failure, tools and methodologies, project portfolio management experience

• Main target group:

major companies in Hungary, including banks and insurance firms

•

Project Management Survey by Ernst & Young Hungary in cooperation with PMI

Budapest. The first survey of overall project management practices in Hungary.

•

Benefits of the Survey:

–

Knowledge Sharing:

• Evaluate the current state of project, programme and portfolio management

• Identify critical areas

• Identify benchmark possibilities through country-wide and industry-wide comparisons

–

Promote project management expertise, create awareness

–

Activate project management experts in Hungary

•

Main focus of questions:

project management experience, success rates, major reasons for failure, tools and methodologies, project portfolio management experience

•

Main target group:

(3)

Overview

• Process

–

Phase 1:

• Web based survey, ensuring full anonymity for respondents

• Timing: Questionnaire sent out on 11th _{of May 2006, responses received until end of}

June 2006

• Results: presentation and executive summary in September 2006

–

Phase 2 (plan):

• Further discussions on hot topics, critical areas (September-November 2006) • Final PM Survey Report with in-depth analysis (November/December 2006)

• In “Phase I” 41 responses were obtained (response rate: 13%)

• Results are compared to other international Project management surveys

E.g. project management surveys done by Ernst & Young in other countries, EQuest Consulting and IGATE project management survey of Australian IT project management landscape 2004, KPMG’s international programme

management survey 2002-2003, PriceWaterhouse Coopers’s global project management survey 2004, Computer Weekly project / programme management survey: the state of IT project management in the UK 2002-2003

•

Process

–

Phase 1:

• Web based survey, ensuring full anonymity for respondents

• Timing: Questionnaire sent out on 11th _{of May 2006, responses received until end of}

June 2006

• Results: presentation and executive summary in September 2006

–

Phase 2 (plan):

• Further discussions on hot topics, critical areas (September-November 2006)

• Final PM Survey Report with in-depth analysis (November/December 2006)

•

In “Phase I” 41 responses were obtained (response rate: 13%)

•

Results are compared to other international Project management surveys

E.g. project management surveys done by Ernst & Young in other countries, EQuest Consulting and IGATE project management survey of Australian IT project management landscape 2004, KPMG’s international programme

management survey 2002-2003, PriceWaterhouse Coopers’s global project management survey 2004, Computer Weekly project / programme management survey: the state of IT project management in the UK 2002-2003

(4)

Some Highlights

Number of projects are increasing

in

almost every industry

Number of

projects are increasing

in

almost every industry

The major reason for project failures

the change of project scope during the

is

project’s process

The major reason for project failures

project failures

is

the change of project scope during the

project’s process

In the Telecommunications &

Technology sector, most of the Project

Offices were created in the past 3 years.

Their tasks and responsibilities

were/are still developing

according to

the initial experiences. A good

benchmark

for PMOs could be the

Financial services sector.

In the Telecommunications &

Technology sector, most of the Project

Offices were created in the past 3 years.

Their tasks and responsibilities

tasks and responsibilities

were/are still developing

according to

the initial experiences. A good

benchmark

for PMOs could be the

Financial services sector.

Only 50% of the respondents, who have

a Project Management Office

were

satisfied with the current capabilities of

the PMO.

Only 50% of the respondents, who have

a Project Management Office

Project Management Office

were

satisfied with the current capabilities of

the PMO.

Business case

is regularly used

by almost all respondents. But

Status report

is very rarely used:

63% of the respondents’ companies

never (or rarely) use status

reports during the project process!!!

Business case

is regularly used

by almost all respondents. But

Status report

is very rarely used:

63% of the respondents’ companies

never (or rarely) use status

reports during the project process!!!

90% never (or rarely) use Performance

evaluation

for project team members.

90% never (or rarely) use

Performance

evaluation

for project team members.

Benefits realisation

is considered as an area for improvement by many of the respondents.

Benefits realisation

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Structure

1. Respondents

2. Project Trends

– Most typical projects – Project size

3. Project Success Rates

– Success rates per industry – Major reasons for failure – Evaluating project success

4. Project Leadership

5. Outsourced functions in

Projects

1.

Respondents

2.

Project Trends

3.

Project Success Rates

4.

Project Leadership

5.

Outsourced functions in

Projects

6. PMO

– Project / Programme / Portfolio Management Office

– Activities

– Project approval – Qualities

7. Project Management Tools

8. Project Management Standards

& Methodologies

9. Overall assessment

– Project management evaluation – Summary of findings

6.

PMO

– Activities

7.

Project Management Tools

8.

Project Management Standards

& Methodologies

9.

Overall assessment

Content of the Report

(6)

2.

Project Trends

3.

Project Success Rates

4.

Project Leadership

5.

Projects

2.

Project Trends

– Most typical projects

– Project size

3.

Project Success Rates

– Success rates per industry

– Major reasons for failure

– Evaluating project success

4.

Project Leadership

5.

Projects

6. PMO

– Activities

& Methodologies

6.

PMO

– Activities

– Project approval

– Qualities

7.

8.

& Methodologies

9.

Overall assessment

– Project management evaluation

– Summary of findings

1.

Respondents

1.

Respondents

Structure

(7)

Respondents

• Represented Industries

The major industries represented:

• Telecommunications & Technology (39%) • Financial services (15%)

• Public Sector (10%) and

• Other Services, which mainly consists of Consultancy and IT Development companies (20%).

Other represented industries: Manufacturing (7%), Real Estate / Construction (5%), Utilities (2.4%) and Pharmaceuticals (2.4%)

• Respondent companies were of varying sizes

similar split of companies according to number of employees and to annual sales

• The average local sales of the respondent’s companies were USD 164.5m per annum

• 56.1% of the respondents were international companies, and 43.9% have only local

operations.

• The respondents were most often C-level managers, department heads (responsible

for project management), PMO heads/PMO members or project managers

•

Represented Industries

The major industries represented:

• Telecommunications & Technology (39%)

• Financial services (15%)

• Public Sector (10%) and

• Other Services, which mainly consists of Consultancy and IT Development companies (20%).

Other represented industries: Manufacturing (7%), Real Estate / Construction (5%), Utilities (2.4%) and Pharmaceuticals (2.4%)

•

Respondent companies were of varying sizes

similar split of companies according to number of employees and to annual sales

•

The average local sales of the respondent’s companies were USD 164.5m per annum

•

56.1% of the respondents were international companies, and 43.9% have only local

operations.

•

The respondents were most often C-level managers, department heads (responsible

for project management), PMO heads/PMO members or project managers

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Structure

1.

Respondents

2.

Project Trends

– Project Size

3.

Project Success Rates

4.

Project Leadership

5.

Projects

1.

Respondents

2.

Project Trends

– Project Size

3.

4.

Project Leadership

5.

Projects

6. PMO

– Activities

& Methodologies

6.

PMO

– Activities

7.

Project Management Tools

8.

& Methodologies

9.

Overall assessment

2.

Project Trends

– Project size

2.

Project Trends

(9)

Project Trends

• Number of projects at respondents’ organisations increased or at least stayed the

same compared to last year (96% of the companies)

• Over 46% of companies started at least 20 new projects in the past 12 months

•

Number of projects at respondents’ organisations increased or at least stayed the

same compared to last year (96% of the companies)

(10)

Project Trends

/

Most typical projects

Project Trends

/ Most typical projects

Most frequent projects over the past five years:

The top 3 projects are

1. IT-related improvements, inc. system integrations 2. Process/organisation improvement 3. New product development

Cost reduction, major

investments & infrastructure enhancements and compliance projects are also relatively

frequent.

The top 3 projects are

1. IT-related improvements, inc. system integrations 2. Process/organisation improvement 3. New product development

Cost reduction, major

investments & infrastructure enhancements and compliance projects are also relatively

frequent.

Frequency of project types

32 19 15 7 7 4 ₃ 2 ₁ ₁ 0 5 10 15 20 25 30 35 IT-related impro vements, incl. s ystem integration Process/organization impro vement _New product de ve lopment Cost reduction initiati ve s

Major capital addition/ infrastructure Regulatory

o r Corporate _compliance Post-merger/business integration acti vi ties Ph ys ical enhancemen ts (e.g. plant construction or Construction projects Major maintenance program Scores

(11)

Project costs

– Average project budgets over the past 5 years are typically above 20,000

USD (86% of the respondents);

– Average project budgets are between 20,000 USD and 100,000 USD at 56%

of the companies;

– Average project budgets are above 100,000 USD at 30% of the companies.

Project duration

– Most typically, project duration is between 3 and 12 months (76%);

– Only 10% of the respondents said that average project duration over the last

5 years were more than 12 months;

– 12% said that average project duration over the last 5 years was from 1 to 3

months

Project costs

–

Average project budgets over the past 5 years are typically above 20,000

USD (86% of the respondents);

–

Average project budgets are between 20,000 USD and 100,000 USD at 56%

of the companies;

–

Average project budgets are above 100,000 USD at 30% of the companies.

Project duration

–

Most typically, project duration is between 3 and 12 months (76%);

–

Only 10% of the respondents said that average project duration over the last

5 years were more than 12 months;

–

12% said that average project duration over the last 5 years was from 1 to 3

months

Project Trends

/

Project Size

(12)

Project Team Size & Team composition

– 78% of the respondents said that projects had less than 10 members on

average in the last 5 years;

– Only one respondent (out of 41) said that the average project team size was

more than 50 members over the past 5 years;

– 76% of all respondents said that their typical projects involve multiple

functions / departments or divisions;

– Most frequent project composition is a project team involving multiple

functions / departments and also external contractors.

Project Team Size & Team composition

–

78% of the respondents said that projects had less than 10 members on

average in the last 5 years;

–

Only one respondent (out of 41) said that the average project team size was

more than 50 members over the past 5 years;

–

76% of all respondents said that their typical projects involve multiple

functions / departments or divisions;

–

Most frequent project composition is a project team involving multiple

functions / departments and also external contractors.

Project Trends

/

Project Size

(13)

International Outlook based on other international Project Management studies

– Project Size: In Hungary, the average project size, in terms of project duration and in project team size is similar to other countries in Central and Eastern Europe (CEE), to

Western-European countries and also similar to Australia and the U.S.

The average project size is between 3 and 6 months, and the average project team is less than 10 people.

– Budget: in terms of project budget there are much bigger differences.

Project budget is similar to other CEE countries. (E.g. in the Czech Republic, the project budget is less than 100,000 USD in most cases.)

Not surprisingly, project costs (and budgets) are bigger in Western countries (Western-Europe, Australia, USA) where most typical project budgets are in excess of 100,000 USD. – Number of projects: in Hungary, as well as in the Czech Republic, companies run around

25 projects per year. As a contrast, the average number of projects per year in Western

countries is more than 50. Of course the number of projects per year heavily depends on the size of the country and on the size of its economy and industry.

In general, we can assume that the average projects are significantly more complex in bigger Western-European countries than in the CEE.

International Outlook based on other international Project Management studies

– Project Size: In Hungary, the average project size, in terms of project duration and in project team size is similar to other countries in Central and Eastern Europe (CEE), to

Western-European countries and also similar to Australia and the U.S.

The average project size is between 3 and 6 months, and the average project team is less than 10 people.

– Budget: in terms of project budget there are much bigger differences.

Project budget is similar to other CEE countries. (E.g. in the Czech Republic, the project budget is less than 100,000 USD in most cases.)

Not surprisingly, project costs (and budgets) are bigger in Western countries (Western-Europe, Australia, USA) where most typical project budgets are in excess of 100,000 USD.

– Number of projects: in Hungary, as well as in the Czech Republic, companies run around 25 projects per year. As a contrast, the average number of projects per year in Western

countries is more than 50. Of course the number of projects per year heavily depends on the size of the country and on the size of its economy and industry.

In general, we can assume that the average projects are significantly more complex in bigger Western-European countries than in the CEE.

Project Trends /

International Outlook

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Structure

1.

Respondents

2.

Project Trends

3.

4.

Project Leadership

5.

Projects

1.

Respondents

2.

Project Trends

3.

– Evaluating project success

4.

Project Leadership

5.

Projects

6. PMO

– Activities

7. Project Management Tools

& Methodologies

6.

PMO

– Activities

7.

8.

& Methodologies

9.

Overall assessment

3.

Project Success Rates

3.

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The average number of projects over the past 5 years were 130.

The average success rates:

The average percentage of delay at the respondent’s organisations is usually between 10% and 20%. 71% of the respondents said that delays typically stay within 20% of the original time frame.

The average percentage of budget overrun at the respondent’s organisations is typically below 10% or between 10% and 20%. 78% of respondents say that budgets are usually exceeded by up to 20%

The average number of projects over the past 5 years were 130.

The average success rates:

The average percentage of delay at the respondent’s organisations is usually between 10% and 20%. 71% of the respondents said that delays typically stay within 20% of the original time frame.

The average percentage of budget overrun at the respondent’s organisations is typically below 10% or between 10% and 20%. 78% of respondents say that budgets are usually exceeded by up to 20%

But:

Average numbers can hide some excessive overruns, and are very dependent upon the average size of projects.

And of course there is also a big deviation between industries…….

But:

Average numbers can hide some excessive overruns, and are very dependent upon the average size of projects.

And of course there is also a big deviation between industries…….

•

On time and within budget: 51%

•

Late: 34%

•

Over budget: 25%

•

Failed/cancelled before completion: 5%

•

On time and within budget: 51%

•

Late: 34%

•

Over budget: 25%

(16)

Project Success Rates /

per Industry

The respondent’s organisations have

varying “project-intensity”.

The more “project-intensive” industries

are:

– Telecommunications & Technology

– Financial Services

– Real Estate / Construction

– Other Services

The highest number of projects are at “Other services”. This is understandable, as these were mainly consultancy and IT development organisations, where projects are developed as deliverable within the main line of the business (project organisations).

Public Sector organisations also had a relatively high number of projects.

The respondent’s organisations have

varying “project-intensity”.

The more “

project

-

intensive” industries

intensive

are:

– Telecommunications & Technology

– Financial Services

– Real Estate / Construction

– Other Services

The highest number of projects are at “Other services”. This is understandable, as these were mainly consultancy and IT development organisations, where projects are developed as deliverable within the main line of the business (project organisations).

Public Sector organisations also had a relatively high number of projects.

Average number of projects: 130

Average number

of projects: 130

Number of projects over the past 5 years

159 125 ₁₂₀ 93 50 34 ₃₀ 218 0 50 100 150 200 250 Te le c o m m u ni c a ti on s / Te c h no lo gy F ina nc ia l S e rv ic e s R e a l E s ta te / Co n s tr u c ti o n P u bl ic S e c tor Ph ar m a ce u ti c a ls M a nuf a c tur in g U tilit ie s (E n e rg y /G a s /W a te r) O th e r s e rv ic e s

(17)

Project Success Rates /

per Industry

Not surprisingly, industries show a big deviation in terms of project success rates,

which relates to the different project management maturity of the industries.

Not surprisingly, industries show a big deviation in terms of project success rates,

which relates to the different project management maturity of the industries.

• Real Estate / Construction companies and Pharmaceuticals have a very good project success rate.

• Among the Financial Services,

Telecommunications and Technology and Manufacturing and Utilities sectors, less than half of the projects are

completed on time and within budget. • The Public Sector companies are in the

middle range; this is because the respondents of this group are

significantly heterogeneous in terms of their project maturity (number of

projects range from 20 to 200, and projects completed on time and within budget vary from 5% to 96%.)

• Real Estate / Construction companies and Pharmaceuticals have a very good project success rate.

• Among the Financial Services,

Telecommunications and Technology and Manufacturing and Utilities sectors, less than half of the projects are

completed on time and within budget.

• The Public Sector companies are in the middle range; this is because the

respondents of this group are

significantly heterogeneous in terms of their project maturity (number of

projects range from 20 to 200, and projects completed on time and within budget vary from 5% to 96%.)

Average on time & within budget: 51%

Average on time &

within budget: 51%

Average share of projects completed on time and within budget

93% 80% 60% _58% 50% 48% 41% 40% 0% 20% 40% 60% 80% 100% R e a l E sta te / C o n st ruc tion Ph ar m a ce u tic al s Ot h e r Se rv ic es Pu bl ic Sec tor U tilit ie s (E n e rg y/ G a s/ W a te r) M a nu fa ct ur in g Te le co m m u n ica tio n s / T e ch n o lo g y F in a n cia l S e rv ic e s

(18)

Project Success Rates /

per Industry

• Time over-run is generally more frequent than budget over-run.

• Among the Financial Services sector, 56% of projects are completed late. The

share of late projects in the Utilities, Telecommunications and Technology,

Manufacturing and Other services sectors is significant, too (more than 30%).

• In the sectors of Telecommunications and Technology and Manufacturing and

Financial Services, more than 20% of projects also over-shoot the originally

planned budgets.

•

Time over-run is generally more frequent than budget over-run.

•

Among the Financial Services sector, 56% of projects are completed late. The

share of late projects in the Utilities, Telecommunications and Technology,

Manufacturing and Other services sectors is significant, too (more than 30%).

•

In the sectors of Telecommunications and Technology and Manufacturing and

Financial Services, more than 20% of projects also over-shoot the originally

planned budgets.

Average late: 34% Average late: 34% Average over budget: 25% Average over budget: 25%

Average share of projects completed late 56% 40% _38% 35% _33% 16% 12% 3% 0% 10% 20% 30% 40% 50% 60% Fi na nc ia l S e rv ic e s U tili ti es (E n e rg y/G as/W a te r) Te le c o mmuni c a ti ons / Te c hnol ogy M a nuf a c tur in g O th e r s e rv ic e s P ubl ic S e c tor P h ar m aceu ti cals R eal E s ta te / C o ns tr uc ti on

Average share of projects completed over budget 36% 30% 23% 18% 11% 10% 6% 5% 0% 10% 20% 30% 40% T e le c o m m u ni c a ti on s / Te c h nol og y Ma nu fa c tur in g F in a n c ia l S e rv ic e s O th e r s e rv ic e s Pu b lic Se c to r Ut ilit ie s (E n e rg y/ G a s/ W a te r) R eal E s ta te / C o ns tr uc ti on P h a rm a ce u ti c al s

(19)

Project Success Rates /

per Industry

• The share of cancelled projects is relatively low.

In almost all industries only less than 5% of the projects are failed or cancelled before completion. • But low share of cancelled projects is not necessary a positive signal……

• The share of cancelled projects is relatively low.

In almost all industries only less than 5% of the projects are failed or cancelled before completion.

• But low share of cancelled projects is not necessary a positive signal……

Low share of cancelled projects can have different reasons:

• The organisation has an effective project

selection & pre-approval process, which ensures, that projects that should not start, are really not started.

• There is an effective project management in the organisation (including good risk management and change management).

• Cancelled projects are not visible.

• There is no formalized process for terminating projects before completion. Cancelling projects before completion doesn’t have a corporate “culture”, and considered as a negative result. The benefits of stopping projects if necessary is not recognised.

Low share of cancelled projects can have different reasons:

• The organisation has an effective project

selection & pre-approval process, which ensures, that projects that should not start, are really not started.

• There is an effective project management in the organisation (including good risk management and change management).

• Cancelled projects are not visible.

• There is no formalized process for terminating projects before completion. Cancelling projects before completion doesn’t have a corporate “culture”, and considered as a negative result. The benefits of stopping projects if necessary is not recognised.

Average cancelled:

5%

Average cancelled:

5%

Projects cancelled before completion

17% 11% 4% _3% _3% _3% 0% 0% 0% 10% 20% 30% 40% 50% Manufactur ing Financial Services Telecommunications / Technology Public Sector Pharmaceuticals

Other services Real Estat

e / C o nstruction U tilities (Energ y/Gas/Water)

(20)

Project Success Rates

Having a

visible and fair process to terminate projects

is necessary from a

strategic management and business governance point of view, and has direct and

indirect benefits.

Having a

visible and fair process to terminate projects

is necessary from a

strategic management and business governance point of view, and has direct and

indirect benefits.

“…shifts in the organisation’s politics or strategic goals… means that there could be a reduced organisational will to complete some existing projects. Those should be

cancelled or suspended, while others that were previously rejected should be

re-evaluated.” … “The culture must not stigmatize failure.” – says Richard Brenner, Chaco Canyon Consulting, Mass. USA in PM Network, June 2006 (PMI)

“…shifts in the organisation’s politics or strategic goals… means that there could be a reduced organisational will to complete some existing projects. Those should be

cancelled or suspended, while others that were previously rejected should be

re-evaluated.” … “The culture must not stigmatize failure.” – says Richard Brenner, Chaco Canyon Consulting, Mass. USA in PM Network, June 2006 (PMI)

“By putting a halt to projects on the path to failure, organizations can divert resources to more valuable endeavours. Yet most companies don’t have a process for shutting down projects before their scheduled demise – and that’s proving to be a costly mistake. … Not pulling the plug means lost time and money and the delayed progress of other projects that could have used the resources from the failed project.” – Xiaojin Wang, Ph.D., PMP Yunnan University, Kunming, China and Lonnie Pacelli, Leading on the Edge International, Wash. USA in PM Network, June 2006 (PMI).

(21)

Project Success Rates

/ Reasons for Failure

.

29

21

14

1211

10 9

8 8 7 7

6 5

4 4 3 3

2 1 1

₀

0 5 10 15 20 25 30

Major Reasons for Project Failure Project’s scope changing in time

Insufficient or overoptimistic budgeting / scheduling Insufficient support from top management/sponsorship Misunderstanding the Project’s deliverables

Environmental change

Inadequate resource capability / availability or coordination of resources

Staff resistance / insufficient change adoption outside the Project team

Poor Project management processes in execution and monitoring

Lack of compelling case / clear vision Inadequate management of risks and issues

Communication issues (insufficient personal contact, language or cultural barriers)

Unclear Project governance / organization structure Lack of a robust (appropriate) business case Poor resource / costs management and controls Low motivation or issues within the Project team Vis major

Incompatibility with organizational processes and/or strategic goals

Poor vendor management process and subsequent weak control over vendors

Insufficient project team competency Industrial relations

(22)

Project Success Rates

The top 7 reasons for project failure are:

1. Project’s scope changing in time

2. Insufficient or overoptimistic budgeting / scheduling 3. Insufficient support from top management

4. Misunderstanding the projects’ deliverables

5. Environmental change

6. Inadequate resource capability / availability, or coordination of resources 7. Staff resistance / insufficient change adoption outside the project team.

The top 7 reasons for project failure are:

1. Project’s scope changing in time

2. Insufficient or overoptimistic budgeting / scheduling

3. Insufficient support from top management

4. Misunderstanding the projects’ deliverables

5. Environmental change

6. Inadequate resource capability / availability, or coordination of resources

7. Staff resistance / insufficient change adoption outside the project team.

An interesting aspect of this result is that among the top 7 reasons for failure, five are out of the perceived direct control of the project manager.

As also confirmed by several other international surveys, in many cases project failures can be related to organisational and other management issues. Such “other management issue” could be the lack of change management or the lack of the organisation’s ability in efficient resource coordination.

Scope changes, environment changes and insufficient estimates are also among the top reasons in other international survey results.

An interesting aspect of this result is that among the top 7 reasons for failure, five are out of the perceived direct control of the project manager.

As also confirmed by several other international surveys, in many cases project failures can be related to organisational and other management issues. Such “other management issue” could be the lack of change management or the lack of the organisation’s ability in efficient resource coordination.

Scope changes, environment changes and insufficient estimates are also among the top reasons in other international survey results.

(23)

Companies usually use “time”, “budget” and “meeting expectations” together when

evaluating the success of a project.

Companies usually use “time”, “budget” and “meeting expectations” together when

evaluating the success of a project.

/

Evaluating project success

/

Failed (delayed, or overspent) projects have an impact not only on the direct

project costs, but also on indirect losses, not included in the original calculations…

Failed (delayed, or overspent) projects have an impact not only on the direct

project costs, but also on indirect losses, not included in the original calculations…

What are the measures for evaluating Project Performance? 5 5 10 29 0 5 10 15 20 25 30 35

Meeting budget Meeting expectations

Completion on time

Each of the three preceding options

(24)

But:

• Alarmingly high number of unknown opportunity losses (34%)!!!

• Some respondents expressed the difficulty in measuring the loss caused by

failed projects…

But:

•

Alarmingly high number of unknown opportunity losses (34%)!!!

•

Some respondents expressed the difficulty in measuring the loss caused by

failed projects…

34% Not known

5% Loss of more than 10 % of sales

5% Loss of 5% to 10 % of sales 24% Loss of 1% to 5 % of sales 17% Loss of up to 1 % of sales 15% Only the direct costs of the projects

Opportunity loss caused by failed Projects annually

56% of the respondents answered that the opportunity cost is only the direct costs of

the failed project, or up to 5% of the annual sales.

56% of the respondents answered that the opportunity cost is only the direct costs of

the failed project, or up to 5% of the annual sales.

/

(25)

International Outlook

• Losses from Project Failures:

As shown on page 13, Hungary has a similar project complexity to the Czech Republic, whereas the project environment is more complex (and project costs are higher) in bigger

Western-European countries, in Australia, and in the USA. This might be the reason why the losses caused by project failures are usually bigger in many other countries.

Other international studies confirm the difficulty of measuring the loss caused by project failures. On an international level, the unknown opportunity losses are even bigger than the results in Hungary show. The post-survey discussions in the Czech Republic have uncovered that at many companies opportunity loss calculations are only performed on the most important projects, on a high level basis and only when priorities have to be assigned.

• Project Success Rates:

the results show that time overrun is generally more frequent than budget overrun in Hungary, whereas international surveys show a more balanced picture.

An interesting question for debate: Is it true that time overrun is more frequent? Or is it possible that time overrun is generally more visible (and easier to measure) than budget overrun, therefore the budget overrun is not seen as critical in every case?

• Reasons for Failures:

Interestingly, the top reasons for project failures are very similar in almost all international surveys. In most cases there are external (mostly organisational) issues behind the failures, which means

• Losses from Project Failures:

As shown on page 13, Hungary has a similar project complexity to the Czech Republic, whereas the project environment is more complex (and project costs are higher) in bigger

Western-European countries, in Australia, and in the USA. This might be the reason why the losses caused by project failures are usually bigger in many other countries.

Other international studies confirm the difficulty of measuring the loss caused by project failures. On an international level, the unknown opportunity losses are even bigger than the results in Hungary show. The post-survey discussions in the Czech Republic have uncovered that at many companies opportunity loss calculations are only performed on the most important projects, on a high level basis and only when priorities have to be assigned.

• Project Success Rates:

the results show that time overrun is generally more frequent than budget overrun in Hungary, whereas international surveys show a more balanced picture.

An interesting question for debate: Is it true that time overrun is more frequent? Or is it possible that time overrun is generally more visible (and easier to measure) than budget overrun, therefore the budget overrun is not seen as critical in every case?

• Reasons for Failures:

Interestingly, the top reasons for project failures are very similar in almost all international surveys. In most cases there are external (mostly organisational) issues behind the failures, which means

(26)

Structure

1.

Respondents

2.

Project Trends

3.

4.

Project Leadership

5.

Projects

1.

Respondents

2.

Project Trends

3.

Project Success Rates

4.

Project Leadership

5.

Projects

6. PMO

– Activities

& Methodologies

6.

PMO

– Activities

7.

8.

& Methodologies

9.

Overall assessment

4.

Project Leadership

(27)

Project Leadership

• Most companies have dedicated project managers to run projects.

• Although 46% of companies mentioned that they typically use external contractors

in their projects, only one company mentioned the external contractor as being the

usual project manager.

(In the case of bigger consultancy involvement though most companies have a project manager from the company side and a project manager from the consultants side)

• 49% of companies have at least 5 project managers.

•

Most companies have dedicated project managers to run projects.

•

Although 46% of companies mentioned that they typically use external contractors

in their projects, only one company mentioned the external contractor as being the

usual project manager.

(In the case of bigger consultancy involvement though most companies have a project manager from the company side and a project manager from the consultants side)

•

49% of companies have at least 5 project managers.

How many employees have "Project Manager" title?

17% 22% 12% 15% 27% 7% None Up to 3 From 3 to 5 From 5 to 10 From 10 to 20 More than 20

W ho is usually the project m anager?

26 8 3 3 ₂ 1 0 5 10 15 20 25 30 D edi ca te d proj ec t m anag er Te am le ader A nal ys t D ivi si on m ana ger Fi rs t pe rs on av ai la bl e Ex te rn al co nt ra cto r

(28)

Project Leadership

• According to the respondents, in almost all cases (97%) the project managers

do have sufficient knowledge on subject matter.

• On the other hand, the view on the project managers’ knowledge on PM tools

and techniques is not so positive. 20% of the respondents reported that project

managers rarely possess sufficient PM skills and are not familiar enough with

the required PM tools and techniques.

•

According to the respondents, in almost all cases (97%) the project managers

do have sufficient knowledge on subject matter.

•

On the other hand, the view on the project managers’ knowledge on PM tools

and techniques is not so positive. 20% of the respondents reported that project

managers rarely possess sufficient PM skills and are not familiar enough with

the required PM tools and techniques.

Do project managers possess sufficient knowledge and experience

on the project subject matter?

33% 65% 3% Always Mostly Rarely Do project managers possess

sufficient knowledge and experience on the project subject matter?

33% 65% 3% Always Mostly Rarely

Do project managers possess sufficient knowledge and experience of project management tools and

techniques? 23% 58% 20% Always Mostly Rarely

(29)

Project Leadership

• Professional development of project managers is usually ensured by internal or

external training.

• 9 respondents mentioned that one or more colleagues have a professional PM

qualification. They’ve mentioned IPMA and PMP.

•

Professional development of project managers is usually ensured by internal or

external training.

•

9 respondents mentioned that one or more colleagues have a professional PM

qualification. They’ve mentioned IPMA and PMP.

How is the professional developm ent of Project m anager ensured? 29 23 13 9 ₈ 0 5 10 15 20 25 30 35 Internal training External training Mentoring Formal certification/ qualifications None

(30)

Project Leadership

• 85% of respondents said that project managers always or mostly run more than

one project simultaneously.

• Where they run more parallel projects, 2 or 3 projects are typically managed by

one project manager.

•

85% of respondents said that project managers always or mostly run more than

one project simultaneously.

•

Where they run more parallel projects, 2 or 3 projects are typically managed by

one project manager.

Do Project Managers run more parallel independent projects? 2% 10% 61% 24% 0% 10% 20% 30% 40% 50% 60% 70%

Never Rarely Mostly Alw ays

How many projects are managed by one project manager simultaneously? 56% 20% 10% 0% 10% 20% 30% 40% 50% 60% 2-3 3-5 More than 5

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Structure

1.

Respondents

2.

Project Trends

3.

4.

Project Leadership

5.

Projects

1.

Respondents

2.

Project Trends

3.

Project Success Rates

4.

Project Leadership

5.

Projects

6. PMO

– Activities

& Methodologies

6.

PMO

– Activities

7.

8.

& Methodologies

9.

Overall assessment

5.

Outsourced functions in

Projects

5.

Projects

(32)

Outsourced functions in projects

What function in Projects are usually outsourced?

82% 82% _79% 91% 37% 78% 94% 39% 94% 78% 81% 88% 12% 12% _12% 6% 40% 13% 3% 32% 3% 16% 9% 8% 9% 23% 9% 29% 6% _9% 6% 3% 3% 3% 4% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Preliminary analysis Business case development Project plan set-up Resource management Advisory support in project implementation phase Project risk reviews Vendor selection and/ or management Project implementation Post implementation reviews Regular project audit/ monitoring Change management PMO Audit

(33)

Outsourced functions in projects

The most important criteria for

selecting a contractor are:

• Price

• Experience in the industry

• Experience with the

company

The most important criteria for

selecting a contractor are:

•

Price

•

Experience in the industry

•

Experience with the

company

• Project implementation and project implementation support are the most frequently

outsourced functions.

• Several companies outsource the project plan set up, project risk reviews, and

project audit / project monitoring, too.

• Post-implementation reviews and, surprisingly, vendor selection / vendor

management are the least outsourced functions.

•

Project implementation and project implementation support are the most frequently

outsourced functions.

•

Several companies outsource the project plan set up, project risk reviews, and

project audit / project monitoring, too.

•

Post-implementation reviews and, surprisingly, vendor selection / vendor

management are the least outsourced functions.

Key criteria for selecting a contractor

30 28 26 11 ₁₀ 8 0 5 10 15 20 25 30 35 Price Experience in y our industry Experience with y our company Experience in project management Team composition Head of f ice pref erence

(34)

Structure

1.

Respondents

2.

Project Trends

3.

4.

Project Leadership

5.

Projects

1.

Respondents

2.

Project Trends

3.

Project Success Rates

4.

Project Leadership

5.

Projects

6. PMO

– Activities

– Project Approval – Qualities

& Methodologies

6.

PMO

– Activities

– Project Approval – Qualities

7.

8.

& Methodologies

9.

Overall assessment

6.

PMO

– PMO activities

– PMO qualities

6.

PMO

– PMO activities

(35)

PMO

Project / Programme / Portfolio Management Office

PMO

Project / Programme / Portfolio Management Office

• 35% of the respondents have no project office at all.

• 65% of the respondents have a PMO in operation, but with varying

responsibilities:

•

35% of the respondents have no project office at all.

•

65% of the respondents have a PMO in operation, but with varying

responsibilities:

• 15%: PMO for Portfolio Management • 15%: PMO for Programme Management

• 23%: PMO for Project Support (e.g. methodology, templates)

• 15%: PMO for Portfolio Management

• 15%: PMO for Programme Management

• 23%: PMO for Project Support (e.g. methodology, templates)

Existence of a PMO & responsibilities

15%

23% 28%

35%

One dedicated body for Project Portfolio Management

One dedicated body for Programme Management

One dedicated body for Project Support (e.g. methodology support) One dedicated body for all the above None

(36)

59% No answer

24% Enterprise PMO for all business projects

17% (IT) PMO for IT projects

In which function(s) do the PMO(s) operate?

30% More than 5 years

20% From 3 to 5 years

30% From 1 to 3 years

20% Less than 1 year

How long does the PMO operate in the Company?

32% 95 - 100 % 21% 75 - 95 % 11% 50 - 75 % 21% 20 - 50 % 16% max. 20 %

What percentage of Projects is covered by the PMO?

More companies commented that the responsibilities and the tasks of the

PMOs are still developing, and are being revised according to the initial

experiences.

The necessity for the PMO heavily depends on the project-intensity of the organisation.

Organisations with higher PMO maturity have, on average, a better project

management performance.

More companies commented that the responsibilities and the tasks of the

PMOs are still developing, and are being revised according to the initial

experiences.

The necessity for the PMO heavily depends on the project-intensity of the organisation.

Organisations with higher PMO maturity have, on average, a better project

management performance.

The characteristics of the PMOs

(roles and responsibilities, as

well as their maturity) show a

varying picture among the

respondents.

The characteristics of the PMOs

(roles and responsibilities, as

well as their maturity) show a

varying picture among the

respondents.

PMO

(37)

The maturity of PMOs and the span of portfolio and programme management is

different in the different industries.

• In the Financial Services sector it is very common to have a Project Office in place. Only 17% of the respondents have no PMO at all.

• It is less common in the Telecommunications & Technology industry to have a PMO. 31% of the respondents have no PMO at all…. This is a surprising result, as this is one of the most project-intensive sectors. (156 projects over the past 5 years.)

This result is also confirmed by the percentage of projects covered by the PMO:

• In the Financial Services sector the PMO usually covers 75-100% of all projects.

• In the Telecommunication & Technology sector most respondents said that less than 50% of the projects are covered by the PMO.

The maturity of PMOs and the span of portfolio and programme management is

different in the different industries.

• In the Financial Services sector it is very common to have a Project Office in place. Only 17% of the respondents have no PMO at all.

• It is less common in the Telecommunications & Technology industry to have a PMO. 31% of the respondents have no PMO at all…. This is a surprising result, as this is one of the most project-intensive sectors. (156 projects over the past 5 years.)

This result is also confirmed by the percentage of projects covered by the PMO:

• In the Financial Services sector the PMO usually covers 75-100% of all projects.

• In the Telecommunication & Technology sector most respondents said that less than 50% of the projects are covered by the PMO.

Observation - 75% of the respondents from the Telecommunications & Technology

sector say, that the PMO has been in operation for less than 3 years. Therefore, its

tasks and responsibilities are probably still developing.

Observation - 75% of the respondents from the Telecommunications & Technology

sector say, that the PMO has been in operation for less than 3 years. Therefore, its

tasks and responsibilities are probably still developing.

PMO

(38)

PMOs at the respondent’s organisation usually report to the CEO / Division Head or

a C-level manager.

The Project Offices at the respondent’s organisations can be grouped into two

distinctive types:

A “best practice” example for the structure of a “broader” PMO came from the Financial

Services industry. Here, the Head of the PMO has 3 distinctive teams: the Project Managers (PM pool), the Project Coordinators (responsible for project portfolio and/or programme

management) and the Project Support Team.

PMOs at the respondent’s organisation usually report to the CEO / Division Head or

a C-level manager.

The Project Offices at the respondent’s organisations can be grouped into two

distinctive types:

A “best practice” example for the structure of a “broader” PMO came from the Financial

Services industry. Here, the Head of the PMO has 3 distinctive teams: the Project Managers (PM pool), the Project Coordinators (responsible for project portfolio and/or programme

management) and the Project Support Team.

PMO (in the “traditional” sense):

Project offices concentrating mainly on project co-ordination (portfolio

management and/or programme management).

The PMOs of these organisations usually have 3-8 employees.

PMO (in the “traditional” sense):

Project offices concentrating mainly on project co-ordination (portfolio

management and/or programme management).

The PMOs of these organisations usually have 3-8 employees.

“Broader” PMO:

Project offices that include dedicated project managers (project manager pool), plus project coordination

(portfolio and/or programme

management) and project support. The PMOs of these companies have

10-26 employees.

“Broader” PMO:

Project offices that include dedicated project managers (project manager pool), plus project coordination

(portfolio and/or programme

management) and project support. The PMOs of these companies have

10-26 employees.

PMO

Project /Programme /Portfolio Management Office

(39)

PMO

/

Activities

PMO

/

Activities

8% Coordinating business benefits management

18% A mentoring platform for Project managers

20% Resources sharing and coordination

23% Consolidated portfolio reporting and controlling (continuous tracking)

23% Coordinating post project reviews

23% Setting priorities for project approval (reflecting strategic priorities)

23% Maintaining a centralized archive of completed projects

25% Intermediating between strategic management and operational project managers (top down and bottom up communication,

intermediate in negotiations on resources, etc.)

25% Coordinating project approval and project portfolio planning

25% Quality assurance and / or quality management

25% Cost accounting and control

25% Centralized repository and management for both shared and unique risks for all projects

28% Central office for operation and management of project tools, such as enterprise-wide project management software

30% Coordination of interdependencies between projects

38% Identification and development of project management methodology, best practices and standards

40% Central monitoring of all project timelines and budgets

48% Clearinghouse and management for project policies, procedures, templates, and other shared documentation

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More respondents noted that PMO is responsible for the “central knowledge management” across the company’s projects (e.g. organising PM “club” events, making sure that lessons learned are stored and archived, etc.)

“Coordinating Business Benefits Management” and “Assessment of the business readiness to change” have achieved relatively low scores. This may be because these

aspects are usually not part of the PMO’s activities or that these activities are not performed in the organisations at all. According to our analysis (see also slides 50-53), it is more probable that these activities are not regularly carried out and these areas can be / should be improved.

More respondents noted that PMO is responsible for the “central knowledge management” across the company’s projects (e.g. organising PM “club” events, making sure that lessons learned are stored and archived, etc.)

“Coordinating Business Benefits Management” and “Assessment of the business

readiness to change” have achieved relatively low scores. This may be because these

aspects are usually not part of the PMO’s activities or that these activities are not performed in the organisations at all. According to our analysis (see also slides 50-53), it is more probable that these activities are not regularly carried out and these areas can be / should be improved.

PMO

/

Activities

PMO

/ Activities

The top 5 activities of the PMOs at the respondents’ organization:

1. Clearinghouse and management for project policies, procedures, templates, and other shared documentation

2. Central monitoring of all project timelines and budgets

3. Identification and development of project management methodology, best practices and standards

4. Coordination of interdependencies between projects

5. Central office for operation and management of project tools, such as enterprise-wide project management software

The top 5 activities of the PMOs at the respondents’ organization:

1. Clearinghouse and management for project policies, procedures, templates, and other shared documentation

2. Central monitoring of all project timelines and budgets

3. Identification and development of project management methodology, best practices and standards

4. Coordination of interdependencies between projects

5. Central office for operation and management of project tools, such as enterprise-wide project management software

(41)

5% None

28% Project management audits

20% Post-implementation reviews

28% Compliance checks

13%

“Project Health Check”

Are any of the following specific activities performed by the PMO?

• 28% of the respondents said that the PMO performs compliance checks as well as

project management audits.

• Post-implementation review is done by the PMO at 20% of the respondents’ organisations. As this was in many cases a “missing” or “to be improved” project

management tool, the PMO probably can have a crucial role to make it a more common activity in these organisations. This task is also connected to the knowledge management responsibilities which were mentioned by some respondents as a PMO role and which have an increasing importance / visibility in project management.

Post-implementation reviews can be performed (and in most cases are performed) by the

• 28% of the respondents said that the PMO performs compliance checks as well as

project management audits.

• Post-implementation review is done by the PMO at 20% of the respondents’

organisations. As this was in many cases a “missing” or “to be improved” project

management tool, the PMO probably can have a crucial role to make it a more common activity in these organisations. This task is also connected to the knowledge management responsibilities which were mentioned by some respondents as a PMO role and which have an increasing importance / visibility in project management.

Post-implementation reviews can be performed (and in most cases are performed) by the

PM