The high cost of low performance
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The High Cost of Low Performance. PMIs Pulse of the Profession- 2014. Presented by Rene Ramirez, PE, PMP. Corporate Strategy. 88% of executive say that strategy implementation is important to their organizations.

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The High Cost of Low Performance

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The high cost of low performance

The High Cost of Low Performance

PMIs Pulse of the Profession- 2014

Presented by

Rene Ramirez, PE, PMP


Corporate strategy

Corporate Strategy

88% of executive say that strategy implementation is important to their organizations.

Executives tend to ignore that projects or programs are required to “change the business” , which is the objective of corporate strategy.

Most projects are to “run the business”.


The cost

The Cost

  • Organizations lose an average of $109 million for every $1 billion spent on projects.

    (This is based on unrecoverable budget if the project fails.)

  • The lack of alignment of projects to organizational strategy most likely contributes to the result that 44% of projects are reported as unsuccessful.

    • One reason sited is that a majority of companies either lack the skills or fail to deploy the personnel needed for strategy implementation.


Definitions

Definitions

High Performers - Organizations that achieve 80 percent of projects on time, on budget and meeting original goals.

Low Performers - Organizations that achieve 60 percent of projects on time, on budget and meeting original goals.

Organizational Agility - the capability of an organization to maintain a competitive edge by responding faster to changing market conditions while improving organizational efficiency and customer satisfaction.


The numbers

The Numbers

  • High Performing Organizations are:

    • 3 times likely to have organizational agility (31% vs. 9%)

    • Twice as likely to have high alignment of projects to organizational strategy

      (57% vs. 28%)

    • Twice as many successful strategic initiatives (76% vs. 38%)


Talent management

Talent Management

Effective talent management is prevalent in high performers.


Talent management1

Talent Management


Talent management2

Talent Management

Effective Talent Management leads to more successful strategic initiatives.


Of successful strategic initiatives

% of Successful Strategic Initiatives

Study Avg. - 56%


Change management

Change Management

Actively engaged sponsors was a top driver of project success.

Effective Change Management is more prevalent in high performers.


Change management1

Change Management

Effective Change Management leads to more successful strategic initiatives.


Of successful strategic initiatives1

% of Successful Strategic Initiatives

Study Avg. - 56%


Process maturity

Process Maturity


Of successful strategic initiatives2

% of Successful Strategic Initiatives

Process Maturity Leads to Success


Of successful strategic initiatives3

% of Successful Strategic Initiatives

Study avg. - 56%


Outcomes

Outcomes

  • Benefits realization - the practice of ensuring that the outcome of a project produces projected benefits claimed in the business case.

    • This is achieved through the establishment, measurement, and communication of the expected benefits of an organization’s initiatives.


Outcomes1

Outcomes

  • % Successful Strategic Initiatives when in place

High benefits realization maturity is more prevalent in high performing organizations and leads to more successful strategic initiatives.


Summary

Summary

High performing organizations successfully complete 89 percent of their projects. Low performers only complete 36 percent of their projects successfully.

On average, organizations report that 3 out of 5 projects are not aligned to strategy.


Strategic project success

Strategic Project Success

  • Talent Management

    • Effective knowledge transfer

  • Change Management

    • Increase sponsor engagement

  • Process Maturity

    • Project/Program/Portfolio maturity


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