Avoiding failure

When economies are flourishing and the enterprises are doing well, project failures are less of a concern because the organisation is in a position to absorb the overhead costs. However, in today’s competitive business climate corporations want their projects to be on time, within budget and meet quality objectives, which means CIOs need to realise that project management is a very real business issue.

  • E-Mail
By  Angela Prasad Published  January 25, 2005

|~|DSC_0061.jpg|~|Regional businesses are starting to realise that poject management solutions and services can have a direct impact on the performance of a company, says Epico Scala's Mahesh Gopalakrishnan.|~|IT project failures are all too common. Billions of dollars are wasted worldwide on failed projects annually. Some make the headlines, while the vast majority is quickly forgotten.

The reasons for failure are wide and varied, however some common causes are: lack of co-ordination of resources and activities, poor communication with interested parties, poor estimation of duration and costs, lack of control over the progress of the project and a lack of quality control.

Without a project management method, those who commission, manage and work on a project will have different ideas about how things should be organised and when the different aspects of the project will be complete. Those involved will not be clear about how much responsibility, authority and accountability they have, and as a result there will often be confusion surrounding the project. Without a project management methodology, projects are rarely complete on time and within acceptable cost.

On the other hand, good project management will guide the project through a controlled and well-managed visible set of activities to achieve the desired results.

The art of planning for the future has always been a human trait. In essence, a project can be captured on paper with a few simple elements: a start date and an end date. However, when the plan starts to involve different things happening at different times, some of which are dependent on each other, plus resources required at different times and in different quantities and perhaps working at different rhythms, the paper plan could start to cover a vast area and be unreadable.

Today, projects are no longer regarded as isolated units, but are interrelated to one another within an enterprise and between enterprises because of the complexity of globally distributed networks. When economies are flourishing and the enterprise’s balance sheets show profits, project failures are less of a concern because the organisation is in a position to absorb the overhead costs of failures.

However, in today’s competitive business climate, things are slightly different. Many enterprises—ranging from those in oil &gas industries to telecommunications are faced with tighter budgets due to changing markets, economic conditions and limited capital investments in human resources, technologies and business processes.

In order to remain afloat, enterprises have either reorganised or downsized their operations to the point of making staff redundant, and then focusing on scarcer resources to avoid repeating past project mistakes. Hence, there is immense pressure on CIOs to deliver projects on time and within budget.

Most businesses want their projects to be on time, meet quality objectives and not cost more than the budget; hence the typical time, quality and cost triangle. In order to meet the challenges, CIOs are seeking the help of enterprise project management offices (EPMOs) and solutions.
An EPMO is an office —either physical or virtual —staffed by project management professionals who serve their organisation’s project management needs.

It functions as a developer and repository of the standards, processes and methodologies that improve individual project performance. Most importantly, it facilitates the company’s ability to manage its entire collection of projects as one single source of information on project management across the entire enterprise.

It also serves as the critical link between executive visions and the work of the enterprise. EPMO is neither a new solution nor the panacea for project management challenges. However, the trend toward establishing such an office in order to have some form of discipline in IT departments is increasing rapidly.

One reason for the growing demand is the need to understand how to look after complex projects, often in high-tech areas that are critical to business success. Epicor Scala says in the never-ending pursuit of operational excellence, businesses are in constant search for the perfect project management solution

“Regional businesses are starting to realise that poject management solutions and services have the potential to have a tremendous and direct impact on the performance of a company,” says Mahesh Gopalakrishnan, consulting services manager at Epicor Scala.

“For instance, these solutions are crucial for project-based companies like those in the oil& gas and utilities sectors. These sectors have multiple projects underway at once that it becomes almost impossible to manage them without the help of project management solutions and services. Project management solutions have the ability to point out the difficult areas. Sometimes it is difficult for businesses to notice the pain areas and they continue to work the hard way,” he adds.

The uptake of project management solutions may not be that high in the Middle East, however most businesses are already using them for scheduling and resource planning purposes. Gopalakrishnan believes the first step is already in place.

“Businesses are using part of the solution, which is a good sign. Over time, they will start using the entire package. Organisations will soon realise they need to automate not only the scheduling processes, but other parts of the project as well.”

However, Gopalakrishnan says technology is often used as the scapegoat for human error. The software businesses use does not drive the factors that contribute to the failure of a project. Software at best is only a facilitator to do businesses. “Enterprises should be in complete control of their projects. IT solutions are there only to help. The failure of projects is due to the weaknesses within the organisation. It has nothing to do with the software,” he adds.

Microsoft says in a competitive business climate, an organisation’s ability to efficiently align resources and business activities with strategic objectives can make a huge difference between succeeding and surviving. In order to achieve strategic alignment, businesses are starting to manage their activities and processes as projects.

In essence, companies are projectising their businesses to monitor performance more closely and make better business decisions about their overall work portfolio. By planning and tracking projects with clarity and precision, businesses can respond with greater agility to the demands of a fast changing business environment.

“The successful execution of a project is much higher with a project management solution. It brings in efficiency. Solutions like enterprise project management (EPM) reduce the risk factors and time to manage a project. They also help reduce the failure rate of projects dramatically,” says Saad Ksheer, engagement manager at Mirosoft South Gulf.

Dubai Customs, which has deployed the software giant’s EPM solution in order to gain a much greater insight, analysis and control over its Reform and Modernisation Program (RMP), says project management solutions and services play a critical role in the success of a project.

The government body, which handles more than 70% of the UAE’s non-oil trade and volumes, has several projects underway at once and the ability to efficiently align resources and business activities with strategic objectives can make a huge difference to the day-to-day operations.

The organisation has approximately 100 projects that fall under RMP, an initiative run by the Dubai Customs PMO and developed following a World Customs Organisation (WCO) gap analysis study carried out in 2003. In total, the PMO has approximately 100 projects to complete before the end of 2006 if Dubai Customs is to reach the standards it has set itself and match the best practices of other customs houses around the world.

“The role of the Dubai Customs has increased considerably in recent years from managing customs to performing economic, financial and statistical duties; hence there is an ongoing RMP program to streamline our processes. The PMO is responsible for driving this program so we needed a solution to provide strong coordination between projects, centralise resource management and provide more detailed reporting on status and resources,” explains Sultan Al Shamsi, director of PMO at Dubai Customs.

Dubai Customs, which is now reaping the benefits of a PMO, says project management solutions and services are crucial for large projects. One major benefit of the new solution is that the government body now has a complete visibility and control of all its projects.

“The management of Dubai Customs needed the visibility of the projects. We have about 100 projects managed by different project managers and stakeholders and it was difficult for us to keep track of them,” says Al Shamsi.

“Furthermore, the project teams are now accountable and in control for their projects. We wanted them to take control of their projects. It has also helped us in our resource allocation because we know exactly what is required and where.”

Within PMO the EPM solution is also integrated with Microsoft Office. This allows the government body to take advantage of the workflow capabilities housed within each application and move project decisions up the chain of command quickly and efficiently.

||**|||~||~||~|Nick Graham, who provides consultation on project management to National Bank of Dubai, says project failures are not only about lost financial resources; they have enormous impact on an organisation’s employees. If projects fail a lot in a company, employees get disillusioned and leave because they do not want to be associated with failure.

Furthermore, if an organisation gets a reputation for not managing their projects properly, their credibility is at stake. “Reputation of an organisation is crucial because it impacts the corporate governance. If one looks at the impacts of project failure. There are always business impacts,” Graham says. “Good project management is an important business issue. Projects do matter because they impact efficiency and the profit of a company.”

What happen if businesses do not manage a project well and it goes wrong or does not fully succeed? If a business loses money for instance, it has wasted those resources on a project that has failed. In a commercial company, that comes off a bottom line.

Project management is just as important in public sector organisation because it has a bottom line as well. “Let us take a public sector organisation such as a hospital for instance, it is suppose to deliver a service within an allocated budget. The money that is wasted on a project could have been used to deliver a service,” he comments.

Project management solutions and services do not come cheap; hence businesses in the Middle East and around the globe are cautious in either implementation of an EPM solution or establishing a PMO. However, according to Graham, things are starting to change.

“Businesses are slowly starting to realise that project management is a business issue. It is a very slow process, but it is happening. I was talking to the managing director of a large enterprise who said to me the standard of project management of his company directly affects the bottom line. There are very few CIOs and managing directors who are able to make that connection,” he adds.

Businesses in the Middle East are taking project management seriously because they want to be good at what they do. The thing about project management is that it has been around for a long time, therefore the management techniques are well tried and tested and known to work well. Project management is a very mature area of management and if understood properly, it works perfectly. There is however, a tendency of it being misunderstood and that is when it does not work.

According to Graham, there are still instances where enterprises are keen to manage their core business professionally, but ignore their projects. “Sometimes organisations can be rather strange and I have seen it. They will manage their core business rather well, but when it comes to projects they think it does not really matter. Companies need to manage their projects just as professionally as any other business. Why should the projects be any different?”

Risk is another major factor that has to be considered during the management of a project. Project management must control and contain risks if a project is to stand a chance of being successful. According to project management firm Prince 2, there are two types of risks: business and project. Business risk is associated with a project not delivering products that can achieve the expected benefits.

It is the responsibility of the project board to manage business risks. Project risk on the other hand, is a collection of threats to the management of the project; hence to the achievement of the end results within budget and on time. These risks should be managed on a day-to-day basis either by the project board, project manager or the team manager.

“Risks management has to be considered while managing a project and businesses are starting to realise this. A mature approach to project management includes risk management so it is tied in intricately in managing the company well,” says Graham.

Aveva, which provides project management solutions, says Middle East’s growing business environment is forcing companies to adopt various IT tools to better manage their operations. Project management has emerged as a critical and strategic business practice in every industry including the booming shipping and oil& gas.

“Virtually everything in business is project related. Project management breaks down the chaos of an overwhelming workload into manageable elements — scope, time, cost, quality, human resources, communication, risk, procurement and integration,” says Louay Dahmash, regional director of Aveva Middle East.

The overall objectives of an organisation include the need to improve customer satisfaction, build competitive advantage, address global business issues, improve speed-to-market, better resource utilisation and improve shareholder value.

“The use of project management services facilitates accomplishment of all these goals. For example, project management solutions have the ability to improve resource utilisation by letting an organisation know which employee is available to get projects complete on time and if his or her skills set match the job requirements,” Dahmash explains.

However, the biggest challenge facing organisations is the inconsistent approach to managing projects. Difficulties in allocating resources, managing too many projects or managing the wrong project are other hurdles that businesses encounter while managing projects.

Aveva says although software tools are the most common solution implemented to improve project management, organisations need to create and sustain a project management culture in order to optimise the benefits.

“Project management solutions will improve cost, schedule and technical performance besides providing customer satisfaction, but businesses have some responsibilities too. Although, these solutions micromanage every aspect of a job to ensure it gets done on time and within budget, organisations have to play their part in the successful implementation of a solution,” he adds.

Project management office and solutions are there to help enterprises implement projects successfully and should be utilised accordingly. IT organisations often pick between the extremes of two PMO models: one that promotes a supervisory role and the other that works in a supportive role. Both these models have their advantages and disadvantages.

For example, the PMO in a support entity cannot be a governance force because it does not have any real control over project funding. However, the PMO in a supervisory role can be dangerous and may lead to clash of corporate cultures because it has a complete control over everything.

When it comes to establishing a PMO, there is no correct methodology; businesses have to take the path that works best for them. The most effective PMO helps enterprises avoid project failures and pushes the IT department to perform to the best of its abilities. ||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code