Back in 2004 the Project Management Institute (PMI) went on a quest to understand and quantify the value that project management provides to organizations. At the time, the actual value resulting from investment in project management was hard to define and measure. Studies conducted in the past struggled to provide credible evidence of the value that project management provides to the organizations.

The PMI commissioned the researchers at Athabasca University in Canada, who conducted a 3-year study in order to find unequivocal evidence of the value organizations provide when project management is appropriately implemented. After conducting 447 interviews, reviewing 418 project summaries, and looking at more than 60 case studies from a globally dispersed array of industries, they concluded that project management has the ability to deliver significant value to organizations. Janice Thomas, PhD, and Mark Mullaly, PMP, documented the three years of global fieldwork and cross-disciplinary analysis conducted by the team in their book, Researching the Value of Project Management.

To investigate the value of project management, the researchers adopted the value model that consists of six principal components:

• Satisfaction (degree to which stakeholders are satisfied with the project management implementation, including project manager satisfaction)
• Alignment (the degree to which organizational practices support and are consistent with the need of projects within the organization)
• Consistent Practices (the degree to which the project management practices within the organization are aligned and consistently adhered to)
• Process Outcomes (the degree to which projects deliver specific process improvements in managing projects within the organization)
• Business Outcomes (the degree to which projects deliver improvements in organizational outcomes)
• Benefits Realized (benefits realized from the project management implementation, such as cost savings, revenue increases, customer retention, etc.)

The researchers used these six components to identify and describe the types of value being realized by the organizations participating in the case studies. The following six value types emerged:

1. Aligned project management practices, improved process outcomes, and overall business outcomes. The case study organizations reported significant improvements in overall processes and process capabilities, with high level of value being placed on the role of process in creating transparency and improving project collaboration. These organizations also demonstrated improvements in overall performance, including increases in revenues and the ability to attract new project work based upon previous project success.

2. Good Project Management practices, effective Human Resources and no desire for change. The organizations in this group reported extremely high satisfaction with their project management implementations with the desire to sustain the current level. They placed greater emphasis in their project management implementations on the cultural and human resources aspects of project management that resulted in improved human resource effectiveness, improvements in overall quality of life, and attainment of better work-life balance for their employees.

3. Better project results, aligned organizations and corporate culture. The organizations reported that their project management implementation has had a positive influence on the overall culture and effectiveness of the organization.

4. Good project results, absence of process, lower customer satisfaction. The organizations reported satisfaction with their ability to deliver projects successfully. These organizations also reported absence of process capabilities and lower customer satisfaction than other organizations within the case study.

5. Good Project Management, lack of consistent process, high customer satisfaction. The organizations reported good project results with few consistent process capabilities in place. Their customers reported satisfaction with the projects and services provided.

6. New services, staff retention and growth. The organizations reported increases in value associated with the project management services, including ability to either charge for their project management or increase their revenues associated with project services. They also reported the ability to secure additional projects as a result of improvements in their reputation for delivery or successful delivery of previous projects.

The value observed within the framework of this study was further categorized into two groupings – Tangible (defined as the value that can be measured) and Intangible (defined as the value that is much more difficult to quantify).

The following value was observed within the Tangible category:

• Cost savings
• Revenue increases
• Customer retention
• Increased customer share
• Greater market share
• Reduced write-offs and rework

The delivery of intangible value included the following dimensions:

• Improvements in the decision making
• Enhanced collaboration and communication
• Improvements in effective work cultures
• Alignment of approaches, terminology and values within the organization
• Overall effectiveness of the organization and its management approach
• Improved transparency, clarity of structures, roles and accountability.

In the course of the research, it was discovered that tangible and intangible value is being realized to a different degree by the case-study organizations. First of all, not all organizations participating in the case study reported tangible values. Consulting, construction or engineering firms were more likely to demonstrate tangible values. The researchers found little correlation between tangible values and the level of maturity of the organizations. Even organizations with relatively low levels of maturity were able to achieve high levels of tangible value that involved minimal and superficial project management practices.

On the other hand, most of the organizations reported evidences of intangible value. The level of intangible value being observed does appear to be tied to increasing levels of maturity.

Conclusion: “What clearly emerged from this study is that value appears to increase in proportion to the maturity of the project management implementation that is encountered. Tangible value can be attained at almost any level of maturity, and is primarily a result of the nature of the organization and the delivery of customer projects. The attainment of intangible value requires a base level of capability and a reasonable level of robustness to be established for it to be realized. As well, continued increase in maturity of the project management implementation appears to lead to greater levels of intangible value. “

Back in October, I had the opportunity to attend the Project Management conference in Denver, Colorado. It is an annual conference organized by the Project Management Institute (PMI).  Every year PMI holds four conferences in four locations covering most of the world – North America; Latin America; Asia Pacific; and Europe, the Middle East, Africa.

This is the second time I attended this conference. What was different this time, besides the record participation of over 4,000 program and project managers, was the variety and selection of topics. Past conferences have focused primarily on the project management standards and guidelines, known as PMBOK (Project Management Body of Knowledge). This year, a number of presentations explored other aspects of project management, with several focusing on new trends.  Agile project management continues to be a hot topic, with presentations ranging from agile project management in the changing business environment, to application of hybrid agile project management methods.

The presentation by Global Project Design’s Patrick Murray and Susan Thomas on “Designing Complex Projects” stood out for me because it offered an innovative way of thinking about complex projects. While you may find these ideas too revolutionary and forward looking to be considered for immediate implementation, they provide an outline for some future trends in the project management, particularly when viewed in the context of recent developments in the area of agile project management.

The main premise of their presentation was that the business environment and projects are increasingly complex due to the use of the remote teams and multi-cultural business relationships. As a result, some of the project management principles considered the industry norm need to be re-examined and adjusted. One of the areas requiring re-thinking is project initiation and planning. It comes out of a need to design a project in such a way that it allows accommodating for the unknowns.

With projects becoming more complex and global in nature, the amount of coordination increases as the project manager has to deal with time, culture and possibly even language differences. These global factors can increase the amount of coordination required two or three times over. However, coordination often goes unrecognized, resulting in optimistic schedules and budgetary overruns. Even when coordination effort is acknowledged and accounted for in a project budget and schedule, it is challenging to accurately forecast the required level of effort.

So how can you account for coordination?  First, there is a direct relationship between coordination effort and project complexity. The following factors contribute to the project complexity and signal that a significant coordination effort will be required:

·         Project size

·         Teams from different time zones, work cultures, and abilities

·         Complex dependencies between activities/tasks

·         Concurrency in activities/tasks

·         Relationship between projects

·         Complex decision making process

·         Stability of Requirements  (expected results difficult to predict )

·         Maturity of Technology

·         Process Maturity

Once a project manager concludes that a project requires some coordination effort, he or she can predict the amount of coordination effort required to effectively complete the project by using the following formula –

Coordination = Dependence X Distance, where

Dependence is demand for coordination between the teams and

Distance is team’s ability to coordinate with others

To predict Distance, the following criteria should be considered:

·         How large is a project team? Are the members in the same building?

·         How many time zones separate the teams?

·         How many projects have they worked together before?

·         Do they share the same native language?

·         Do they share the same profession/function?

·         Do they share the same direct boss?

The formula, along with these indicators, helps the project manager recognize project complexity and estimate coordination effort. However, to accurately predict the level of coordination, the authors propose a more complex approach that leverages methods typically employed in product development, such as building prototypes and running simulations to identify and select the most optimal project plan. Identifying and analyzing several possible project approaches during the planning phase helps the team to be more flexible in the implementation phase.  The ability to rapidly switch to another project approach helps teams address internal and external changes, such as changes in the project requirements, stakeholder priorities, or earlier delays. 

For more information about Project Model and Simulation, please refer to “Designing Complex Projects” (designing-complex-projects).