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Tracking ROI in Project Management
How often have you been the victim of project delays? Have you come across IT folks failing to deliver on their commitments and delaying the closure of projects? The obvious questions are: Why does it happen? Is it a global phenomenon? Why the delays cannot be foreseen? And who is responsible?
Global statistics show that 90 percent either fail to meet the budget or timeline. According to a KPMG survey, 56 percent of IT projects result in failures. Looking at these statistics, we can always feel good but the basic question of 'why' remains answered.
IT projects are more complex than we think and there is a lot beneath the tip of the iceberg which we fail to see. Mostly project managers tend to hide the potential issues that could mar the project at some stage, hoping that something will bail them out of crisis. However, they realize only later that there is no other way but to announce the "bad news".
In our view, project managers are the weakest links. In most unsuccessful projects, the project manager is remembered and not the project. A list of reasons which are quite common in all red projects leads to such failures.
If we look at the history of all failed projects, a number of reasons are visible as a common pattern which are for example frequent changes in requirements, lack of stakeholder commitments, inadequate reviews, changes in technology or architecture, insufficient risk management, political reasons which were not handled, unrealistic deadlines for which the project manager was forced to commit, funding issues related to projects, project not aligned to business objectives, lack of focus and or ambiguity on perceived benefits etc.
In order to address many of these issues, Project and Portfolio Management (PPM) framework comes in handy. Before we discuss how we can use PPM to streamline our project deliveries, it is necessary to understand what project management is.
Project Management is popularly defined as "a temporary endeavor undertaken to create a unique product, service or result". This means projects have a specific start date and end dates with deliverables as an outcome.
People often confuse between a project and program. A program is a group of related projects managed together to obtain a common benefit that would likely not happen if these projects are individually managed. The project management objectives are towards the deliverables of the project but the program management objective is more strategic, which is achieved by integrating the realization of benefits of individual projects. At times, the project could be in conflict with the program objectives and the corrective actions are taken by the program manager.
Portfolio Management is one step further. This is a collection of project and programs grouped together to facilitate effective management of efforts to meet strategic business objectives. There may not be any common theme in the portfolio but mostly it is managed for optimization of effort and strategic business objectives. Mostly this is done across a department or a vertical and aligned to vertical objectives. For example, all programs and projects across CS vertical can be called as portfolio.
In order to address the concerns which we discussed above in project management, we see the trend in organizations to move towards Project & Portfolio Management. PPM is not as simple as it sounds and it requires quite a lot of rigor to implement and manage. PPM revolves around saying "NO" at an early stage. It changes the entire culture of business as it revolves around tough questions which are asked in the beginning and forces us to begin with the end in mind. The concept of PPM revolves around the following:
Doing Right Investments: PPM makes us think everything from the perspective of money. Everything we do in a project, whether we add resources, time of stakeholders, material, consumables or communications, PPM helps us think in pure money terms, converting these into numbers and consider them as investments. Hence, a project for us is an investment and review of project is investment review. For every penny we spend, it forces us to justify whether it is correct and will be able to give us the right returns.
We say NO when it does not and this is a big transformation in the Project Manager earlier viewed as techie who is always bullied to say YES. The same person questions the investment decision and looks at the budget more realistically. He also looks at the themes of the organization, directions, prioritization of initiatives and takes an informed decision to shelve a project just because it did not meet the commercial sense to initiate.
Managing Demand: PPM helps us integrate and track demand management, set realistic expectation and ensure delivery by end-to-end tracking. It also helps balance management of resources by managing the demand. The brilliant idea can be captured and converted into actionable project and right resources, funding can be made if it makes business sense. PPM allows us to make it happen. It also helps us track payments, forecast usage and outflow of cash and help us visualize challenges early in the project. It also helps us to control the amount of changes which we are going to accommodate or gives the realistic view of timelines.
Staying in Control: Most often we see the project fails towards the end. One reason can be the lack of control and tracking. PPM allows us to track our projects and gives the early warning signs before it goes out of hand. If we are using a robust tool, we can collate information and convert it into an executive dashboard to create various views. By implementation of tools and real time capture of data, it becomes almost difficult to hide the current status of the projects. By forcing the right discipline, it forces the project manager to take action in time and stakeholders to remain on toes.
Return on Investment: Since we said initially that it makes business sense to go for the project, PPM allows us to measure the same at the end as well as to ensure that it really made some sense out of the investment. This also helps in doing some course correction if needed due to deviations from actual versus perceived benefits.