Project Management: The need of the hour.
By Rizwan Amirjohn ME, PMP & Wahid A. *
Around USD 1.7 trillion is wasted in projects across the globe annually, an amount that is close to Canada’s 2019 GDP. Perhaps this may not affect us personally but we have contributed to this catastrophic loss. How did such a colossal wastage occur and what is the best measure against this?
One-fifth of world GDP has been spent on projects according to the Project Management Institute (PMI). Accordingly, USD 15 trillion is an average spent on various projects across the globe in the year 2019. The current global crisis and the looming uncertainties and declining economy push the government and private sector to focus and prioritize more on critical and essential projects over the development projects in 2020.
The economic team at Morgan Stanley predicts 6.4% GDP growth in 2021, though expected rebound V shaped recovery is impressive, the effectiveness of managing the project will be pivotal in the Project Economic era.
The pulse of profession 2020 survey conducted from the project management professionals across the globe from a range of industries, like information technology (IT), financial services, government, manufacturing, energy, construction, healthcare, and telecom indicates organizations waste an average of USD 114 million for every $1billion spent i.e global average of 11.4% project fund wasted which was approximately USD 1.7 trillion.
Notably, according to Forbes magazine, 50% of new businesses fail within the first five years and 30% fail within the first two years. In the current crisis, these numbers are surging and business closure becomes an unavoidable choice particularly if ethical project management best practices are not followed. On other hand, the profit margin is getting diminished due to the competition and fewer opportunity demands, business failure will be increasing at an alarming rate if advanced project management approaches are not practiced like Agile and hybrid model to reduce the wastages in the project fund. With a wastage of 11.4% from the project budget, the profit margin and business sustainability grow slim.
Change in organization’s priorities, Inadequate/poor communication, Limited resources, Change in project objectives, Ineffective risk management, inexperienced project team, Inaccurate requirements gathering, poor change management, Poor upfront planning are the major reason for the project failures as claimed by the pulse report. The project professionals who participated in the survey have responded that 35% of the companies do not have PMO offices and 36% of companies are partially practicing the project management standards. Also per the report, in the last 12 months, 31% of the projects have not even fulfilled their core objective, 41% of the projects overshoot the cost and 47% of the project has not completed on time.
Though the facts and figures are a bit discouraging, the situation may be even worse if there is was no awareness and methodologies of project management in place. Thanks to institutions like PMI, a nonprofit organization for unleashing four decades of promoting & sharing knowledge, conducting research, evaluating skills of the professionals through world-recognized project management certification exams like PMP. The number of PMP certification holders reached beyond 1,000,000 and it clearly indicates the world is preparing to deal with the crisis at hand.
Due to the advancement in project management practices at least 22% of the projects completed using Agile methodology and 19% of projects adopted hybrid approach against the 56% of the traditional approach of managing the projects in the past 12 months say the pulse of profession survey.
To be a successful organization or an individual it is high time to invest our time and effort in learning and adopting the latest trends in technology and upskilling project management knowledge. To achieve successful outcomes and advocate for the client, today's leaders must have a knowledge of technological, leadership, business, and digital skills to lead multidisciplinary teams of people and for that Project Management knowledge has become the need of the hour.
Project management is not an option for any leader rather it is a necessity; it becomes part and parcel of the business itself.
Look forward to our future article where we will address the identification and distinction between project and operation work as well as the methodologies to adopt in project Management. Till then stay safe and keep the dream alive.
*Rizwan Amirjohn holds a Master’s Degree in Thermal Engineering and Bachelors’s Degree in Mechanical Engineering. He is a certified Project Management Professional (PMP) from PMI, USA. He has 15+ years of work experience with leading GCC group companies. During this period, he played various roles in Project Management, Change Management, Business Development, Strategic, learning and development, and Compliance and Risk Management.
Wahid A is currently working as a Sales Manager for a leading conglomerate. He has over 20+ years of experience and his expertise includes but not limited to selling to Dealer Channel Network, Project Sales to Construction / Real Estate Development firms/ Contractors / Consultants. He is a team player, motivator and leads people through effective communication and personal interaction skills. He holds a B.Sc degree.