Taking Control of Project Outcomes
By Matson Blocker - Managing Director at Alvarez & Marsal
Refocusing on Delivery Fundamentals
If you look at recent Gartner studies, they indicate that up to 25% of IT projects fail. In the context of these studies, failure is defined as material schedule slippage, financial overrun or the failure to meet defined project outcomes. I believe this statistic is conservative and the rate of project failure is actually significantly higher. This is unfortunate as projects represent a critical vehicle for driving improvement and change. If Operations is the “lifeblood” of an organization then Project Delivery enables its “adaptability.”
In this article I hope to describe some of the root causes of project failures and a framework for mitigating these risks. Before we delve into the details, it is important to set some context about how IT organizations manage and deliver projects. I have seen a number of different models for managing project delivery across our clients but there are some common trends in how these organizations operate. Most IT organizations have a defined group that is accountable for project management and delivery. This Project Management group is accountable for defining and managing the portfolio of improvement projects, controlling budget allocation, coordinating with the appropriate business stakeholders and stewardship overall portfolio progress reporting. Because of the dynamic nature of project resource requirements, Project Managers may be sourced externally – often from the lowest cost provider. Project Managers commonly report to an Internal Project Coordinator that is responsible for multiple projects. In this model, Project Managers are responsible for day-to-day execution while the Internal Coordinator is accountable for issue/risk escalation, business relationship management and quality assurance. Internal Coordinators report to an overall Project Management Lead accountable for budget management and portfolio stewardship. The Lead engages other IT Capability Leads as well as the business to identify new project requirements and communicate progress. Some of the strengths of this approach include:
Scalability – the use of external resources allows for the size of the projects organization to grow or shrink, as needed, to address the varying needs of the organization. Project management has become a fungible skill that can be readily obtained from the market so there is no need to maintain large pools of these resources.
Internal Resource Utilization – outsourcing of project management roles can drive greater clarity in terms of roles, responsibilities and service levels. By staffing project management roles with market resources, organizations’ have the ability to focus their internal resources on higher value activities.
Cost – by building a dynamic capability based on commodity resources, organizations can lower their overall cost without sacrificing their ability to deliver projects.
Of course, this approach also comes with some issues which can increase the risk of project failure.
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