Mark Langley believes he has three answers to a question that perplexes chief executives. Why don’t companies do what the CEO tells them to on major projects?
Langley is president and chief executive of the Project Management Institute, the world's largest global project management association, serving three million professionals in 190 countries. And his first answer, predictably, is that CEOs are far too busy. “When they get to the point where they believe they have decided the direction of their organisation, they believe that the organisation will carry out their direction,” he says. “And their time is consumed in other areas such as regulatory, customer, banking and bondholder issues. They’re overtaxed in terms of their attention span and ability to focus.”
Langley’s second reason, which he says he gleaned from management strategy expert Tom Peters, is that: “projects are hard and when things are hard, people go and do something else”. “It’s hard,” continues Langley, “because it’s different to manufacturing or processing or whatever it is that the company does in its day-to-day activity. Manufacturing the same thing over and over again is a lot different from trying to do something different every day, week or year. The thing about projects and programmes is that they are fundamentally different from the ongoing business and the ability to deliver each on is different and unique.”
Langley’s final reason came from one of the PMI’s global executive council members. “Just because the CEO says something doesn’t mean it is going to happen,” he says. “In order for it to happen, companies have to do a whole load of things. There’s an element of expecting an organisation to be able just figure it out but companies that are high performers know that figuring it out means building strategic competency around major projects and programmes to help ensure that the organisation be successful.”
Project failures
Consequently, says Langley, many projects fail through budget and time overruns and inability to achieve objectives. Globally, the PMI’s research find that most organisations globally risk about 11 per cent of project budgets being wasted due to poor performance and there is a huge gulf between the top and bottom performers.
The top one-eighth of organisations, with success rates of more than 80 per cent in reaching their objectives within budget and being on schedule, risk just $20 million per $1 billion of project budget being wasted, compared to $280 million for the bottom layer of performers.
In the UK, where the government’s Major Projects Authority is responsible for 185 projects and programmes with a total spend of £414billion, the UK’s average project wastage of 13 per cent means that more than more than £50 billion is burned through needlessly when it could be made available for additional infrastructure, such as the costly and controversial planned High Speed 2 rail link between London and the midlands and north of England.
Lord Browne, the former chief executive of oil major
The PMI, a not-for-profit membership association for the project, programme and portfolio management profession, headquartered near Philadelphia, develops industry standard and certifies managers in order for them to attain qualifications and works to improve organisational success with public and private sector organisations.
Its members handle major infrastructure projects but are also engaged in the drug development, healthcare, informational technology and other industries.
Does the board care?
For Langley, it is perplexing that he is asked so frequently why board members should care about project and programme management. Some people even suggest that this should be “just something that anybody can do,” which he says is the reverse of the focus that companies should have.
“At the top, companies are worried about future strategy and getting there as quickly as possible,” he says, “but what I always tell the C-Suite is that all your projects and portfolios and programmes equal your strategy. If you’re going to ignore your project management capability, you’re essentially ignoring the strategy of your organisation because all strategic change through your organisation happens through projects and programmes. You can name it something different such as a strategic initiative, change programme, management agenda or five-year plan but in the end it’s all delivered through projects and programmes. I get amazed that organisations have not recognised the importance and value of project and programme management. By ignoring it, they are essentially putting the future of their organisation at risk because they may not achieve their strategy and even if they do, they may not achieve it in the timeframe they desire. That puts their competitive advantage at risk.”
There is some hope, though it is not particularly surprising. The PMI’s research indicates strongly that programmes have a much better chance of success when they are personally sponsored by a senior executive. And it’s a fair bet that projects personally endorsed and supervised by the CEO perform better than most.
“The role that such sponsors play is the number one factor and has the biggest impact on the success of a project,” says Langley. “That’s the key message for leaders of organisations to remember.”
Why do so many company projects and programmes fail? Let me know what you think.
