pwc global project management survey first survey 2004 26 feb '15

Boosting Business Performancethrough Programme and ProjectManagement*

A first global survey on the current state ofproject management maturity in organisationsacross the world

*connectedthinking

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Company profiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Current maturity levels - a long way to go? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Maturity level and its link to project performance . . . . . . . . . . . . . . . . . . . 11

Current maturity levels - far from excellent . . . . . . . . . . . . . . . . . . . . . . . . 12

Desired maturity levels - senior management aims high, project managers are more pragmatic . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Organisational alignment - why does it matter? . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Organisational aspects represent 59% of project failures . . . . . . . . . . . . . 15

Organisational structure and its link to project performance . . . . . . . . . . . 17

Additional organisational findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

People are the most important asset in projects - do we really mean that? . . . . . . 20

Does the investment in capability-building pay off? . . . . . . . . . . . . . . . . . 20

Does project management certification matter? . . . . . . . . . . . . . . . . . . . . 22

Is it worthwhile to spend time and effort on change management and communication? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Do external consultants add value? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Systems and tools - do they help to increase performance? . . . . . . . . . . . . . . . . . 27

Does project management software help to increase an organisations level of maturity? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Are companies using all the softwares functionalities? . . . . . . . . . . . . . . . 29

Contact details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

02Table of contents

PricewaterhouseCoopers, 2004

Today, no matter which sector you lookat, organisations are constantly facedwith the challenges of a fiercelycompetitive and changing environment.Environmental forces - competitive,economic, technological, political, legal,demographic, cultural and ecosystem -create challenges and opportunities fororganisations. They must thereforecontinuously adapt to the environment ifthey are to survive and prosper. TopManagement are thus confronted withthe critical task of analysing andimproving the ability of an organisationto survive and grow in this complex andchanging world.

The successful organisation employsproject management as a strategic toolto respond to this changing environmentand to outperform those that do notadapt. An organisation that excels atproject management becomes an agileorganisation that knows how to deal withand drive change. As we see from thesurvey results, these leadingorganisations use project managementto consistently position themselvesahead of the wave of change.

The surveys main objective was toinvestigate whether a higher maturitylevel would go hand in hand with ahigher project performance level. Notonly have we gathered information ontheir views on the degree to which theysucceed in the field of projectmanagement but we have also analysed

how the subject companies arestructured and how they operate in fourareas: project management processes,their overall organisation, employeeseducation in project management andthe project management systems used.The following conclusions can be drawn,based on the survey results andsubsequent detailed analysis:

z A higher maturity level for anorganisation enhances overall projectperformance (not in just one project,but in the overall portfolio of projects)

z Most organisations are not satisfiedwith their current maturity level

z Project failures are often aconsequence of aspects that areorganisational and over which projectmanagers have little influence

z Organisational structure has a biginfluence in overall projectperformance

z Staff development and professionalcertification enhance overall projectperformance

z A systematic approach to changemanagement in projects isfundamental for superiorperformance

z The extent to which projectmanagement software is used iscorrelated to maturity levels

z Staffing projects with a majority ofinternal resources as against externalresources is a better guarantee ofsuccess.

Throughout the survey, we observeddifferences according to geographicalregion and industry and also noticed thatthe majority of companies are still in theearly stages and recognise the need tomove to a higher level of projectmanagement maturity. Consequently, theefficiency, effectiveness, speed andquality with which companies manageand deliver projects will increasinglybecome a key competitive factor. Themore mature organisations - those thatfully understand and exploit all theproject management elements describedin this report - will undoubtedlyoutperform the competition and will befar better placed to achieve superiorfinancial results.

03Executive Summary


Organisations should be aware that when talking about Strategic Planning,Investment Appraisal, Capital Budgeting, New Product Development,Organisational Change, Mergers and Acquisitions, Outsourcing, etc., they are infact talking about initiatives that translate into, and are executed through, projects.Top and Senior Management should therefore understand that projectmanagement is a key strategic tool to drive these initiatives and to reap theirbusiness benefits. Those organisations that understand the vital importance ofexcelling at project management, and act upon it, will undoubtedly outperform thecompetition.

PricewaterhouseCoopers

*connectedthinking


Nowadays, it is hard to imagine anorganisation that is not engaged in somekind of project activity. Over the pastdecade, organisations have been turningfrom operations to project managementas part of their competitive advantagestrategy. The most successfulorganisations employ projectmanagement as a strategic tool to drivechange and achieve their businessobjectives. New product development,organisational change, restructuring,post-deal integration, outsourcing andpolicy implementation are some of theinitiatives, besides the traditional, butvital, systems development andimplementation, which today are beingmanaged as projects.

As one of the leading professionalservices firms, PricewaterhouseCooperswas confronted with multiple cases ofproject management in different types oforganisations. Some of the organisationswere delivering projects consistentlybetter than others (i.e. projects on time,within budget, to scope and deliveringbusiness benefits). Our theoreticalconclusion was that these organisationshave a higher level of maturity and,therefore, the organisation as a wholeperforms better. However,PricewaterhouseCoopers decided tocarry out a study to validate thishypothesis. At the beginning of 2004,PricewaterhouseCoopers conducted asurvey to assess the current state of thelevel of project management maturitywithin organisations.

One of the main goals of the survey wasto assess if these leading and best-performing organisations scored high interms of project management maturity.In theory, the more mature anorganisation is the better it shouldperform, maturity being regarded for thepurposes of this survey as theconsistency with which an organisationruns its business in a given manner. Overpast years, many models have beendeveloped as tools to assessorganisational maturity, to identify theirstrengths and weaknesses and toprovide benchmarking information.However, very few if any studies havedemonstrated that a higher level ofproject management maturity is linked tobetter project performance.

When talking about an organisationsmaturity, there are four core elements

that are taken into account: processes,structure, people and systems. Thecombination of the strengths of each ofthese individual elements, and thebalance between them, determine theoverall maturity level of the organisation.It is important to note that the maturityof an organisation is established by thelowest level of any of the four elements(and not by the highest). So, forinstance, an organisation that has anexcellent project managementmethodology in place but whose peoplelack project management competenceswill have a low maturity level. A briefdescription of each of these four coreelements follows:

z ProcessesProject management is essentially asystematic and organised set ofprocesses that bring order andefficiency to the logistical detailsand team management of any sizeof project with a definable end.Therefore, the existence of well-defined project managementprocesses - often grouped into aproject management methodology -differentiates those companies thatare able consistently to deliver highproject results from the rest.Management should understandthat a project managementprocess, such as project plandefinition, is just as important as aprocess that, for instance,describes the order-to-fulfil cyclewithin the finance department.

Aspects considered in this area:standardisation andinstitutionalisation of projectmanagement processes; integrationwith other corporate processes (i.e.procurement, strategic planning);prioritisation of projects andapplication of a standard projectlife cycle; utilisation of projectportfolio techniques; andcontinuous improvement mentality.

z Organisational structureThe way an organisation is structuredis fundamental to the outcome oftheir project managementperformance. The alignment of theorganisational structure to the degreeof importance of projectmanagement within the organisationis decisive in overall projectperformance. More often than not,

04Introduction

We are what werepeatedly do.Excellence then, isnot an act, but ahabit.

Aristotle(384-322 BC)

this element is underestimated orcompletely ignored by management,as organisations have not evolved (oradapted themselves) as quickly asthe business has, and hence thelarge proportion of projects that fail.

Aspects considered in this area:resource ownership, mainly staff andbudgets; definition of clear roles andresponsibilities; support andinvolvement of senior and topmanagement; and availability of aProject Support Office (orProgramme Management Office).

z PeopleProject management is all aboutworking in teams and, therefore, thepeople management skills of aproject manager are essential.Special emphasis is placed onproject or programme managers, butthe people who are below or above(i.e. project sponsors) them also playa significant role in project success.Therefore overall competencybuilding is fundamental to increasethe maturity of an organisation.

Aspects considered in this area:project manager skills; developmentand training programmes;organisational culture; motivation andincentives; career opportunities forpeople working on projects.

z Systems and toolsOrganisations use systems and toolsto automate part of their projectmanagement processes and tosupport project managers inmanaging projects and allow topmanagement to take key decisions.What we often see is that largeamounts of money are spent onsystems that are subsequently notactually used by project managersand the other levels involved inproject implementation.

Aspects considered in this area:availability of company-wide

software; software used; areasreported on (i.e. programme andproject management, capacitymanagement, cost tracking, benefitrealisation).

In addition to maturity level, we used thesurvey to find out more about currenttrends and best practices in projectmanagement.

Methodology

The study was primarily carried outamong top management, seniormanagement and project managers.During the months of February, Marchand April 2004, two hundred responseswere gathered from a balanced group ofcompanies from thirty different countriesacross the globe, of various sizes andfrom various sectors, medium to small,and with differing business structures(subsidiaries, headquarters, etc.). Thedata were gathered via a web-basedquantitative survey, which consisted of50 closed questions and did not includeany face-to-face interviews.

The survey gives us an insight into thecollective opinions of these groups ofkey people on a wide range of keytopics (project types, failure factors,tools, people aspects) and into bestpractices (organisational structure,maturity level, project performance).

In addition to group opinions and keytrends, we have calculated two essentialindexes that have been used for theanalysis: maturity level and projectmanagement performance. Maturity levelhas been calculated by combining theanswers to 33 of the survey questions.The project management performancepercentage was computed byaggregating elements of individualperformance measured as a percentageof projects delivered on time, withinbudget, to scope and that deliverbusiness benefits. The outcome is apercentage that tells us when

05


performance is highest - closer to 100%- and lowest, closer to 0%. It isimportant to highlight that, in order tomake the results more relevant, we havedecided not to link the formulas of thesetwo indexes.

We have used thePricewaterhouseCoopers maturity modelto assess the maturity levels of therespondents. It consists of the following5 levels:

To the results have been added researchon project management theories andeconomic studies carried out previouslyby PricewaterhouseCoopers. In addition,the analysis has been complemented byPricewaterhouseCooperss decades ofexperience in project and programmemanagement activities.

Company profiles

The project management survey wascompleted by 200 different organisations.The relevance and impact of the studycan be established by looking into theprofiles of the respondents.

z Balanced representation of alllevels in the organisation. This is an important aspect to beremembered throughout the survey -out of 200 participants whocompleted the survey, 33% (68) aretop managers (i.e. Managing Director,CFO, Finance Director, IT Director,Vice-president, etc.). 32% (64) aresenior managers (i.e. Line Manager,Quality Manager, Corporate ProjectManagement Office, etc.) and 28%(55) are project managers (i.e.Programme Manager, Chief ProjectManager, etc.).

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Maturity level

1. Unreliable processes

2. Informal processes

3. Standardised processes

4. Monitored processes

5. Optimised processes

Sporadic use of project management. Formal documentation and the knowledge ofthe standards of project management are lacking. No training. Little organisationalsupport.

A formally approved project management methodology is lacking. Basic processes;not standard on all projects. Project participants are informed about projectmanagement standards, but do not apply these standards appropriately. Lessonslearned are not gathered.

A project management methodology is developed, approved and used. Projectparticipants are informed about project management standards. Most projects areimplemented using these standards. Management supports the use of standards.Focus on individual projects.

An integrated project life cycle methodology is used. Application of the standard setis monitored and fixed for all projects. Projects support the strategic plan. Projectbenefits are tracked. Internal training is in place. Project Office is established.

A regular analysis and renewal of the existing project management methodology isconducted. Lessons learned files are created. Knowledge transferred. Process inplace to improve project performance. Management focuses on continuousimprovement.

Brief description

Figure 1

Participation overview by position in the company - Positions represented

z Europe has the most companiesparticipating.Companies in a total of 30 differentcountries completed the survey:Australia, Austria, Belgium, Brazil,Canada, Cyprus, the CzechRepublic, El Salvador, Estonia,France, Germany, Great Britain,Greece, Indonesia, Jordan, Kuwait,Luxembourg, Mexico, theNetherlands, Norway, Russia,Singapore, Slovakia, South Africa,Spain, Switzerland, Taiwan, Thailand,Trinidad and Tobago, and the UnitedStates.

To facilitate the analysis, thecountries represented have beengrouped under the 5 continents:Africa, the Americas (North, Centraland South), Asia (incl. the MiddleEast), Australasia and Europe. As

shown in figure 3, the largestrepresentation comes from Europewith 44% (89), followed by Americawith 35% (71).

z Major sectors well represented. The key industry sectors are wellrepresented and give a fair picture ofthe current composition of theeconomy. Consumer and IndustrialProducts and Services (CIPS), whichincludes Automotive, Energy,Manufacturing, Professional Services,Retail, etc., is the highestrepresented with 53% (107), followedby Financial Services (FS) with 17%(33) and Technology, Information,Communication and Entertainment(TICE) with 16% (32). Public Sector(PS) and Pharma (includingHealthcare) are also represented.

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Figure 2

Participation overview by continent

Figure 3

Participation overview by industry sector

z Estimated 75 bn in total annualturnover1. If we added up the turnover of all200 participating companies, theresulting amount would put the groupin 42nd place in the national GDPrankings, right after the Philippines(77 bn) and ahead of Colombia (71.2bn) and the Czech Republic (70.1bn).

z A total of 10,640 projects run on ayearly basis. The 200 companies run a total of10,640 projects per year. 42% of therespondents run more than 50projects, out of which 26% (54companies) run more than 100projects on a yearly basis. Only 10%(20) of the companies run fewer than5 projects.

z 4.5 bn worth in projects.Extrapolating and aggregating thespend of the 200 companies onprojects, we arrive at an estimatedtotal budget of more than 4.5 bn forprojects. To give you an idea of therelevance of this amount, MicrosoftCorporations net profit in 1998 was$4.5 bn.

z 3,488 project managers in total.The 200 companies have a total of3,488 project managers. 48% (96) ofrespondents said they had fewerthan 5 project managers. 12% (24)companies have more than 50project managers. The survey showsthat, on average, a project managerruns 3.1 projects annually.

z IT Change and PerformanceImprovement, two main reasonswhy projects are used. In 73% of cases, projects are usedto implement IT Change initiatives(i.e. package implementation, newtechnologies, major upgrades,outsourcing). Projects are used forPerformance Improvementinitiatives in 57% of cases, followedby Software Development (49%),New Product Development (45%),Strategy Deployment (43%),Construction (31%) and Research(15%). It is interesting to notice that43% of the companies already useproject management as a tool toachieve their business objectives.

z Only 2.5% of the companies had100% of their projects on time,within budget, to scope anddelivering the right businessbenefits. This accounts for approximately254 projects out of the estimated10,640. On the other hand, 71 ofthe companies have 100% (2,862projects) delivering businessbenefits.

Acknowledgements

PricewaterhouseCoopers would like toespecially thank all 200 organisationsand individuals who took time tocontribute to this study by completingthe survey.

08


1 For simplification purposes, consider USD=EUR.

1. Positive correlation between maturitylevel and project performance

A higher project managementmaturity level will in most casesdeliver superior performance interms of overall project delivery andbusiness benefits.

2. Current overall maturity level is 2.5 -informal processes

The total average maturity level of2.5 denotes that the current state ofproject management in organisationsis at the level of informal processesand it is not yet institutionalised. Thisis one of the main reasons why somany projects are unsuccessfultoday.

3. Most organisations want to reach ahigher maturity level

More than half of the companies(60%) are not satisfied with theircurrent maturity level and wish toachieve a higher maturity level. Morethan 36% (71) of them, however,want to increase their maturity bymore than 1 level.

4. Many of the project failures are dueto an imbalanced organisation

Top and senior managementfrequently blame project managersfor bad project management andpoor project results. And yet, we cansee from the survey, in which alllevels of management were fairlyequally represented, that many of thereasons for project failure areorganisationally related and areoutside the direct range of influenceof project managers.

5. Organisational structure has a biginfluence in overall projectperformance

Organisational structure influencesthe performance and outcome ofprojects. The higher the alignmentbetween structure and businessrequirements, the higher the overallproject performance of theorganisation. Finding the rightbalance is not a simple task,especially for those companiesoperating in highly dynamic andcompetitive sectors.

6. Industry, location and businessobjectives are key to determiningthe optimal organisationalstructure

The optimal organisationalstructure is determined by thebusiness objectives of anorganisation and influenced by theindustry and the geographicalregion in which it operates.

7. Investing in staff developmentincreases project performance

Having a staff developmentprogramme has a positive effecton the overall performance of theorganisation. The current situationdoes not look very promising,however, as more than 60% of thecompanies do not regularly offer adevelopment programme to theirstaff.

8. Project management certificationof staff pays off

Certification does actually matter.Organisations should not be afraidof investing in their people viacertification. The benefitsorganisations can receive from thisare significantly higher than therisks they take.

9. Organisations that apply changemanagement outperform the rest

The survey reveals an undeniablecorrelation between projectperformance, maturity level andchange management. The majorityof the best performing and mostmature organisations always orfrequently apply changemanagement to their projects.

10. External resources add value whenemployed in smaller scales

External resources used, ifemployed with moderation, willadd value and increase theperformance of your projectactivities. In addition, theproportion of external resourcesemployed varies depending on theorganisations maturity level.

09Key findings


11. Implementing project managementsoftware successfully is significantlyinfluenced by the organisationsmaturity level

Specialised project managementsoftware can create or destroyvalue, depending on when youdecide to buy and implement it. Weobserved that the lower the maturitylevel, the more difficulties anorganisation will have to implementthe software.

12. Software is not used to its fullpotential, several reporting aspectsare still performed manually

Reporting is an essential part ofproject management, but it is oftentime-consuming and gives lowadded value. Software tools areused to facilitate and automate thereporting process, but the surveyshows that there is still a gap, andthe software is not always used todo all the reporting.

10


Excelling in project management has allowed us not only toincrease the quality of our services, reduce our time-to-market,decrease reworking costs and increase staff motivation, butalso to create a more integrated and agile organisation.

Survey participant

Maturity level and its linkto project performance

One of the underlying assumptions thatsustain our entire analysis is that ahigher maturity level will bring a higherlevel of performance in the organisationsprojects, not just to one but to theoverall portfolio of projects. This is afundamental hypothesis, which has notbeen directly addressed in any similarstudy of the topic in the past. We askedourselves: It is fine to try and reach ahigher level of maturity, but what if ahigher level of maturity doesnt carry ahigher performance level?

To answer this question, we had todetermine the overall projectmanagement performance of eachrespondent. We asked participants totell us their overall performance interms of percentage of projectsdelivered on time, within budget, toscope and that deliver businessbenefits. Aggregating these fourelements - having assigned a higherweighting to business benefits - wedeveloped a weighted averageperformance index for eachparticipating company.

Once we had calculated theperformance levels, we assessedwhether there was any positivecorrelation with the maturity levels ofthe participants. Figure 4 shows theresults of this analysis, which confirmsour initial assumption. For the majorityof cases, the higher the maturity level,the higher the project performance2.Those few cases where a highermaturity level does not represent highperformance are mainly due to the factthat the organisational structure neitheris suited to nor supports the capacity ofprojects required by the companysbusiness. And, therefore, theorganisation is not aligned and does notfulfil its project requirements, and henceis unable to maximise its performance.We will look again into organisationalstructure aspects in the followingchapter.

Note: After having identified thispositive correlation between maturitylevel and project performance, westarted considering the likelihood of acorrelation between projectperformance and the financialperformance of the business and viceversa. We asked ourselves: Doessuperior project performance generatean increase in financial performanceand shareholder value? We looked intothe financial data, annual reports andstock market evolution of thosecompanies that scored highest in thearea of project performance. Althoughthe analysis seemed to provide us withsome kind of a slim correlation, we feltthat we had neither enough data norsufficient cases to draw that conclusionin this report. Our intention, however, isto continue our research on this topic inthe near future.

11Current maturity levels -a long way to go?


Conclusion No. 1

A higher maturity levelwill in most casesdeliver superiorperformance in termsof project delivery andbusiness benefits.

Figure 4

Maturity versus performance

2 How to read this chart: the percentage on the axis indicates the number of cases of organisations

at that level with high performance and those with low performance. For example, of the 64organisations that are at level 1, 75% have low project performance while 10% have highperformance. The remaining 15% have medium performance (40-60).

Current maturity levels -far from excellent

We have assessed the maturity levels ofthe 200 participating companies. Theresults are shown in figure 5. 51% of thecompanies are today on level 1 (64) andlevel 2 (41). Of the 200 companies, only13% (25) have reached level 5. Theaverage for all 200 companies is 2.5 andstands for Informal Processes.

Sector-wise, the TICE companies reachthe highest maturity levels, with 30% oftheir companies above level 3. This canbe explained by the fact that the TICEsector is the youngest of all the sectorsand is highly related to IT andTechnology, which require intensiveinvestment in project management. Thelowest maturity levels can be found in

the Public Sector, where the majority oforganisations (56.3%) only reachedmaturity level 1. The Public Sector isclosely followed by the Pharma sector.Financial Services and Consumer andIndustrial Products and Services arefairly equal, with maturity levels from 1 to3.

Location-wise, the highest maturity levelcan be found in Asia, with an average of3.1, followed by the Americas, with anaverage of 2.8 and Europe with 2.5. Thisis also reflected when we look intoproject performance in these three areas,where Asia has a 53% performance rate,followed by the Americas with 50% andEurope with 46%.

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Figure 5

Project management maturity levels

Conclusion No. 2

The total averagematurity level of 2.5denotes that the currentstate of projectmanagement inorganisations is at thelevel of informalprocesses and is notyet institutionalised.This explains the highpercentage ofunsuccessful projects.

Desired maturity levels -senior management aimshigh, project managersare more pragmatic The targeted maturity level is the levelthat, the respondents believe, best fitstheir organisation according to theproject management requirements oftheir business. For example, a retailcompany that uses projects on an adhoc basis and only in order to maintainits sales system will need a lowermaturity to reach its optimum level thana telecom company that uses projects todeploy its strategy, and runs more than200 projects on a yearly basis.

The survey shows that more than half ofthe companies are not satisfied withtheir current maturity level. More than50% of the companies want to reach amaturity level of 4 to 5. On the otherhand, 22% (42) of them are happy tostay at the level they are currently at.There are 9 companies (4%) that arehappy to stay at level 1. As explainedpreviously, this is of course possible ifthe company operates in a sector whereoperations are the main driver of the

business (6 of the companies belong tothe CIPS sector).

Regarding the number of levels by whichcompanies want to increase (see figure6), 26% (53) of the respondents saidthey are happy to raise their maturity by1 level. Likewise, 34% (71) of theorganisations would like to increase bymore than 2 levels (up to 4 in someinstances).

Note: In this respect, it is worthwhilementioning that organisations shouldunderstand that it is not possible toincrease maturity by more than one levelat a time (i.e. companies cannot jumpfrom level 1 to level 3 in one go). This isconsistent with the concept of maturity.Each improvement towards a higher levelrequires all persons involved directly orindirectly in project activities to changenot only the way they work but also theirmentality. This transformation of cultureshould be led and followed by top andsenior management by means ofincentives and firm discipline. Dependingon the size of the company, reaching ahigher level will require an enormouseffort and could take several years.

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Figure 6

Maturity level gap

Conclusion No. 3

More than half of thecompanies (60%) arenot satisfied with theircurrent maturity leveland wish to achieve ahigher maturity level.More than 36% (71) ofthem, however, want toincrease their maturityby more than one level.

If we look at the gap between currentand target maturity levels from anindustry perspective, we can clearly seethat the TICE sector is the one that islooking for the highest level (4.2), whilethe Public Sector is aiming for thelargest increase (+1.4), followed by thePharma (+1.3) sector. This is in line withthe increase in importance of projectmanagement in these two industries.

To conclude the maturity analysissection, one final observation seemspertinent. When asked for their targetmaturity level, senior and topmanagement have greater expectationsthan project managers. Their aim is toachieve around level 4 or 5, while projectmanagers are happier to reach a moremodest level of 2 or 3.

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Figure 7

Industry maturity gap

Organisational aspectsrepresent 59% of projectfailures

Project managers are often blamedwhenever there are delays, budgetoverruns or poor quality deliverables intheir projects. There seems to be a beliefamongst most organisations that nomatter what happens, if the project fails,the project manager is always guilty.With this study, we wanted to look intothis common belief in more detail,

assess whether or not it is true, andidentify the actual root causes of thenumerous project failures.

First, we looked at the main reasons forproject failure. As can be seen in figure8, bad estimates, missed deadlines andscope changes rank amongst the mostfrequent reasons for project failure. It isinteresting to note that poor quality ofthe deliverables and stakeholders notadequately being defined are among theleast prevalent reasons for projectfailures.

15Organisational alignment -why does it matter?


Figure 8

Reasons for project failure

Conclusion No. 4

Project managers arefrequently blamed forbad project managementand poor project results.And, yet, we can seefrom the analysis thatmany of the reasons forproject failure areorganisationally related,thus outside the directrange of influence ofproject managers.

Following this first analysis, we wantedto study whether it is true that projectmanagers are the culprits. We looked atthe reasons for failure given by each ofthe positions in the organisation of therespondents. For example, for topmanagement, the main causes of failureare bad estimates and insufficientresources, while for senior management,the problem lies primarily in scopechanges. We then categorised all causesfor failure according to the degree ofinfluence, whether high or low, that theproject manager has in order to avoidthe failure occurring. Hence, forexample, changes in environment cannotbe greatly influenced by a projectmanager. This does not mean that, ifthere is little influence over the reasonfor failure, the project manager is notresponsible for monitoring and takingcorrective action to mitigate the impact

on the overall project. Figure 9 showsthe results of this new classification.

It is interesting to see that there is verylittle difference in opinion betweenproject managers and senior and topmanagement on the overall question asto whether project managers are to beblamed for project failure. On average,59% of the reasons for failure occurunder low influence of the projectmanager, confirming that theorganisational aspects have an importantinfluence in project failure.

As we will see further in this section, theimportance of understanding theinfluence of the organisation on overallproject performance is crucial toachieving a better performingorganisation.

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Figure 9

Managements view of project managers influence over reason for failure

Organisational structureand its link to projectperformance

Based on the previous conclusion and inorder to emphasise the importance andinfluence of the organisation in overallperformance, we looked for positivecorrelations between projectperformance and types of organisationalstructure. To perform the analysis, wedrew on the 5 organisational types asdefined by the Project ManagementInstitute (PMI ): Functional, WeakMatrix, Balanced Matrix, Strong Matrix,and Projectised. We calculated eachindividual organisational structure bylooking into several organisationalaspects, such as who owns theresources? who owns the budget? isthere a dedicated group of projectmanagers? etc.

The study shows that the highestperforming companies in terms of projectresults are those that have a projectisedor strong matrix structure (see figure10)3. This is no real surprise: with thesetypes of structures, a project managerhas significantly more influence over thedifferent elements that influence a

project. In addition, project managementis mostly widely recognised at all levelsof an organisation as a core aspect andkey driver of the companys business.

Alternatively, the balanced matrix andweak matrix are the worst performingones. This can also be explained by thefact that, in these types of structures, therole of the project manager is in manyinstances that of a negotiator. He/sheneeds constantly to negotiate andbargain the project resources with theowners of the staff and budget (i.e. linemanagement and functional directors).Every time the priorities of thedepartment change and its resources arereallocated, the project manager has tolook for new people to fill the gaps. Itcomes as no surprise that most of thecompanies we know with these twostructures have the most frustratedproject managers.

Note: It is important, however, to highlightthe fact that not every organisation needsto aim for a projectised structure. Eachorganisation has its own projectrequirements, which are determined bydifferent factors, such as the industrythey operate in, the nature of theirbusiness, their strategy, theproduct/service they sell, their size, theirmaturity, etc. For instance, someorganisations rely heavily on operationsand do not require lots of projectmanagement. This could be the case fora medium-sized logistics company thatoperates in the warehousing sector andruns fewer than 5 projects per yearinvolving less than 5% of its totalworkforce. This company will probablyperform better with a functionalstructure than with a projectised one.The key to success is to find the rightbalance and the optimum structure.Unfortunately, this is often not a simpletask. Businesses, as well as the industriesthey operate in, are constantly evolving,which makes finding the right balance avery complex task.

17


Figure 10

Organisational structure versus project management performance

3 How to read this chart: the percentage on the axis indicates the number of cases of organisations at that level with high performance and those with

low performance. For example, of the 42 weak matrix organisations, 45% have low project performance while 14% have high performance. Theremaining 41% have medium performance (40-60).

Conclusion No. 5

Organisational structureinfluences theperformance andoutcome of projects. Thehigher the alignmentbetween organisationalstructure and businessneeds, the higher theoverall projectperformance of theorganisation. Finding theright balance is not asimple task, especiallyfor those companiesoperating in highlycompetitive and dynamicsectors.

Additional organisationalfindingsIf we look into the organisationalstructure per industry, we find that, in thePublic Sector, the most widely usedstructure is the weak matrix (hence itslower maturity level and weaker projectperformance). In the Pharma sector, thebalanced matrix is the most commonstructure (40% of Pharma respondents).It is interesting to note that, in thissector, there are no companies under theprojectised structure. TICE, which hasthe highest maturity level, also has a

majority of strong matrix structures. Inthe FS sector, one-third of thecompanies have a functional structure,which denotes that they are stillorganised on the basis of the traditionaldepartmental structure. Finally, the CIPSindustry also has a large group ofcompanies in the balanced matrixstructure. It can also be observed thatthis sector has the largest number ofprojectised companies, which is to alarge extent due to the fact thatprofessional services firms are includedin this group.

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Figure 11

Organisational structures per sector

Conclusion No. 6

Depending on whichindustry your companyoperates in, itsorganisational structureneeds might bedifferent. This is alsoapplicable to thegeographical regionyour company islocated in.

We also looked at organisationalstructure from a geographicalperspective. As shown in figure 12, themain findings are that: in Africa,organisations mainly have a functionalstructure; Europe and the Americas havesimilar structural spread; and Asiancompanies primarily adopt a strongmatrix, which could explain highermaturity levels.

The fact that I dont have any decision on the resources, neither staff norbudgets, of the projects I manage means that I spend a lot of timenegotiating with the directors of each department every time theirpriorities change.

Survey participant

19


Figure 12Organisational structures per continent

Does the investment in capability-building pay off?

We asked the participants whether theyhad an institutionalised developmentprogramme so that their projectmanagers and other project resourcescan build up their capabilities on acontinuous basis. The answers, whichare shown in figure 13, are quitesurprising: only 8% (16) of thecompanies have a standarddevelopment programme. 15%, on theother hand, do not have any type ofdevelopment for their staff.

Industry-wise, TICE and CIPS, with 55%and 40% of always or often cases,are the two sectors with the highestconcerns in building up the capabilitiesof their staff. At the lower end, both PSand FS score lowest in terms of staffdevelopment (with 19% and 21%,respectively). If these two sectors wantto increase their project performance,they should seriously consider alsoinvesting in the area of staffdevelopment.

20People are the most importantasset in projects - do we reallymean that?


Figure 13

Staff development programme

Conclusion No. 7

Having a staffdevelopment programmehas a positive effect onthe overall performanceof the organisation. Thecurrent situation doesnot, however, look verypromising, as more than60% of the companiesdo not regularly offer adevelopment programmeto their staff.

We have crossed this question withproject management performance. Ascan be seen in figure 14, there is apositive correlation between these twoareas. For instance, of the 16organisations that always have adevelopment programme, 50% scorehigh in terms of project performancewhile 12% score low. Organisations thathave a development programme shouldexpect to have higher performance interms of project management. Thesurvey did not, however, look into thecontent and quality of the developmentprogrammes.

Note: It is worthwhile mentioning that wefound a link between those companiesthat want to achieve the highest level ofmaturity and those that score the highestin terms of development programmes.This is a clear signal that management iscommitted to investing time and effort inthis area.

21


Figure 14

Development programme versus performance

Does project managementcertification matter? A lot has been written about the value ofcertifying staff. Some opinions claim thatcertifying staff does not add any value tothe company, but just to the individual,who will afterwards be more inclined tochange companies. Other opinions,closer to the learning organisation,maintain that certifying staff adds valueto the company in three ways: first, itgives additional motivation and incentiveto the staff; second, the companybenefits from the additional capabilitiesthe staff acquire in the certificationprocess; and, third, it creates a companyculture of continuous learning andimproving the status quo.

The survey results show that only 27%of the companies do not have any typeof certification. Company internal andPMIs Project Management Professionals

(PMP) certifications are the mostwidely used. Industry-wise, CIPS andTICE are those sectors with the highestcertification levels. The Public Sectorand Pharma have the lowest certificationlevel. In the PS, 57% of companies havecertified staff - 59% in Pharma -compared to 82% in TICE. Continent-wise, both America and Europe have thehighest levels of organisations withcertified staff.

If we look at certification from a maturitylevel perspective (see figure 16), we canobserve that having certification doesinfluence the maturity level of theorganisation and, subsequently, projectperformance is also positivelyinfluenced. Those companies that scorehigh in terms of maturity level do havecertified staff - more than 80% for level 5- those companies that have a lowermaturity level frequently do not alwayshave certified staff.

22


Figure 16

Certification versus maturity level

Figure 15

Project management certification

Conclusion No. 8

Project managementcertification does actuallymatter. As betweenwhether or not companiesshould certify staff, ourview is that organisationsshould not be afraid ofinvesting in their peoplevia certification. Thebenefits organisations canreceive from this aresignificantly higher thanthe risks run.

Is it worthwhile to spendtime and effort on changemanagement andcommunication? Often we have seen that companies donot place a high priority on the changemanagement aspects of their projects. Insome cases, they are not evenconsidered. We were therefore curious tofind out whether change managementaspects (in the broader sense of theterm, including communication,stakeholder engagement, organisationalculture, leadership, etc.) influencedproject performance and maturity level.The results of this analysis can be seenin figures 17 and 184.

23


4 These graphs should be read by looking into the performance/maturity range shown on the x-axis and deriving the number of cases from each individual

category. For instance, if we look into the performance range 80-100, we see that, of the 26 organisations in that range, 90% always or often use changemanagement in their projects. The same applies if we look at the maturity level 5.

Figure 17

Change management versus project performance

Figure 18Change management versus maturity level

Conclusion No. 9

The survey reveals anundeniable correlationbetween projectperformance, maturitylevel and changemanagement. The majorityof the best performing andmost mature organisationsalways or often applychange management totheir projects.

The analysis shows that there is a clearlink between change management andthe best performing organisations. Out ofthe 27 companies that score the highestin performance, 26 always or often use astandard change management andcommunication approach for theirprojects. The same goes for thosecompanies that reached the highestmaturity levels. Out of 25 companies thatreached maturity level 5, 24 always oroften use change management in theirprojects.

24


Knowing that our people consistently apply a standard project management methodologygives our management the comfort of knowing that projects are being done right, whichallows us to spend more time strengthening the relationships with our customers.

Survey participant

25


Figure 20

External resources versus performance

5 This graph should be read by looking at the performance range shown on the x-axis and deriving the number of cases from each individual category.

So, for example, if we look at the performance range 80-100, we see that, in that section, the majority of organisations (above 50%) employ 25%external resources, which are followed by 32% of the organisations, which do not employ any external resources in their projects.

Conclusion No. 10

External resources, ifemployed withmoderation, will addvalue and increase theperformance of yourproject activities. Inaddition, theproportion of externalresources variesdepending on thecompanys maturitylevel.

Do external resources add value? We asked participants whether theyemployed external resources to givethem advice and support their projects.56% of the respondents said that theyhire external resources on a 3-to-1 ratio(3 internal staff to 1 external resource -i.e. 25% externals). On the other hand,23% of the respondents say that theywork by themselves and never useexternal resources on their projects. It isinteresting as well to see that 2% of therespondents completely outsource andstaff their projects to and with externalresources.

Geographically, all of the regions arecloser to the 3-to-1 ratio. On the otherhand, the Americas is the region whereexternal resources are more often

worked with, with 83% of the companiesthere hiring external resources (17% ofthe companies work on their own). Theyare followed by Asia, with 79%, Europewith 74% and Australasia, which, with64%, is the region that uses leastexternal resources in its projects. Froman industry perspective, the 3-to-1 ratiois also the most common. In terms ofthe use of external resources, theranking is as follows: Financial Serviceshire external resources for their projectsin 84% of cases; Pharma 83%; TICE78%; and CIPS 74%.

We examined if there was a correlationbetween performance rate and thepresence of external resources in theorganisations projects, and, if so, whatcombination guaranteed the highestperformance. The outcome is purelybased on the replies of the survey and isshown in figure 205.

It can be seen that the highestperformance is achieved with a rate of25% of external resources. It isinteresting to note that a ratio higherthan 25% does not guarantee higherperformance. When looking at a 100%ratio, for example, we can clearly seethat, at this level, performance reachesits lowest levels. This can be explainedby the fact that companies that onlywork with external resources havedifficulties in keeping and buildingknowledge in house as well asacceptance problems by theorganisations staff. Often, theconsultants are not the same, and thus

Figure 19

External versus internal resources

26


Figure 21

Employment of external support per maturity level

have to go through a learning process,which costs time and money andinfluences overall performance.

Finally, we looked at this topic from athird angle. We wanted to find outwhether companies that are on a highermaturity level used more or fewerexternal resources. The results of thisanalysis are shown in figure 21. Theconclusion is that the number of externalresources varies depending on thecompanys maturity level. For example,when companies reach level 4, theyseem to need fewer external resourcesthan when they were at level 3 or below.This could be explained by the fact thateach maturity level requires differentconcentrations of the four elementslooked at in this survey.

Does project managementsoftware help to increasean organisations level ofmaturity?We asked the participants to tell us ifthey used company-wide projectmanagement software and, if so, whatkinds of programs they used to manageand monitor their projects. 78.5% (157)of the 200 companies replied positively.Surprisingly, there are 43 companies thatdo not use any software. Industry-wise,TICE is the leading sector, where 9 outof 10 companies have projectmanagement software. The lowest is thePublic Sector, where 68% of theorganisations employ projectmanagement software.

Note: During the past 10 years,companies major IT investment hasbeen in ERP systems. The main focushas been on improving and automatingorganisations operations, both core andsupporting activities. Lately, however, wehave noticed that organisations haveincreased their interest in specialisedproject management software. Thisconfirms that organisations have turnedto project management as a strategic

tool to run their businesses. In the nearfuture, thus, it is probable that we willexperience a new wave of company-wide software implementation, but thistime in the area of improving andautomating organisations projectmanagement activities.

Looking into the link to performance, wecan clearly observe that the highestlevels of performance (80-100) arereached using project managementsoftware. On the other hand, we canalso see that lower levels of performance(0-20) can also be achieved by havingsoftware in place. To clarify thisdiscrepancy, we looked into maturitylevels. Here, we see that, without havingsoftware, you can reach level 1 or 2 inmaturity, but to reach a higher level, youare better off investing in projectmanagement software. This explains theprevious discrepancy: if the maturitylevel of the organisation is low, installingsoftware will create problems andinfluence your project performance.Once the organisation reaches a certainmaturity level, where the projectmanagement processes areinstitutionalised, the use of software willsignificantly increase overall projectperformance.

27Systems and tools - do theyhelp to increase performance?


Figure 22

Project management software versus project performance

Conclusion No. 11

Specialist projectmanagement softwarecan create or destroyvalue, depending onwhen it is that anorganisation decides tobuy and implement it.At low maturity levels,software could well endup creating moreproblems than it solves.To reach a higher levelof maturity, however,project managementsoftware becomes aprerequisite.

28


Figure 23

Project management software versus maturity level

Project management isthe discipline of gettingthings done.*

PricewaterhouseCoopers

*connectedthinking

29


Figure 24

Software functionality versus actual reporting

Are companies using all the softwaresfunctionalities?

Another area we wanted to explore andshed some light on with the survey wasfunctionality. The question was whethercompanies were using all the functionsand the full potential of the projectmanagement software they purchase.We asked participants to tell us whatsort of functionality they were using inthe software and which areas theyusually covered in their reports.

We crossed the two answers, and theoutcome is shown in figure 24. Basically,software is not used to 100% of itscapacity. A number of reports are stilldone without using the software6. Themost significant variation is in managingand reporting risk and issues, which ismostly done outside the projectmanagement software. The gap is also

important in the areas of cost andbusiness case management. On theother hand, we can see that dependencymanagement and programme & portfoliomanagement are primarily done throughthe system.

6 In practice, we see that this reporting gap is filled with MS Excel spreadsheets and/or MS Access databases.

Conclusion No. 12

Reporting is an essentialpart of projectmanagement, but it isoften time-consumingand gives low addedvalue. Software toolsare used to facilitateand automate thereporting process, butthe survey points outthat there is still a gap,and the software is notalways used to do allthe reporting.

Daniel EvrardPartnerPricewaterhouseCoopers Woluwe Garden, Woluwedal 18B-1932 Sint-Stevens-WoluwePhone: +32 (0)2 710 7200Fax: +32 (0)2 710 7224Cell : +32 (0)475 602443E-Mail: [email protected]

Antonio Nieto-RodriguezSenior ManagerPricewaterhouseCoopers Woluwe Garden, Woluwedal 18B-1932 Sint-Stevens-WoluwePhone: +32 (0)2 710 9685Fax: +32 (0)2 710 7224Cell : +32 (0)479 809418E-Mail: [email protected]

30Contact details


Industry groupings

z CIPS = Consumer and Industrial Products and Services

z FS = Financial Services

z TICE = Technology, Information, Communication and Entertainment

z PS = Public Sector

z Pharma = Healthcare and Pharma

Other terms

z ERP = Enterprise Resource Planning

z PMI = Project Management Institute

z PMP = Project Management Professional

31Abbreviations


PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

PricewaterhouseCoopers, June 2004*connectedthinking is a trademark of PricewaterhouseCoopers.

All rights reserved.

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pwc global project management survey first survey 2004 26 feb '15

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