Hit-and-miss project management exposed

By Christopher Adams

Photo / Thinkstock
Photo / Thinkstock

Seventy per cent of companies experienced at least one major project failure in the past year, says a survey by tax and business advisory firm KPMG.

That figure was up on the previous New Zealand Project Management Survey, conducted in 2005, when 49 per cent of organisations reported a failed venture.

Gina Barlow, KPMG's director of project advisory services, defined a project as a "one-off piece of work" separate from day-to-day business.

The survey found three main reasons for failed ventures - scope changes, competition for resources in the firm and unrealistic deadlines.

Perry Woolley, a KPMG director who specialises in project management, said the increase between 2005 and 2010 could be put down to companies "having to do more with less" as a result of the recession.

"The irony is they are then succeeding less of the time," Woolley said.

The study found only one-third of companies always prepared a business case - a plan drafted before the beginning of a project, setting out what benefits needed to be achieved, at what cost.

Woolley said many New Zealand companies were starting projects with only a vague assumption, or hope, of achieving a return.

If a firm made a plan it could then make regular checks, throughout the course of the venture, that the objectives set out at the beginning were being accomplished.

The firm could then pull the plug on the scheme and avoid wasting capital if it was not proving successful, he said.

The chief executive of the Employers and Manufacturers Association, Alasdair Thompson, said small-to-medium-sized firms, rather than large companies, were more likely to fail to conduct effective project planning.

The survey also found that 60 per cent of organisations did not have a formal system in place to measure the benefits of an individual venture.

Barlow said: "The lack of benefits measurement is particularly concerning - if organisations do not measure the benefits of their projects they cannot understand if the investment was worthwhile."

KPMG says the results of the survey reflect an incapability of New Zealand firms to translate project investments into valuable returns.

"The productivity and profits of New Zealand companies are being impacted by their inability to consistently deliver projects that fulfil the expected objectives," said Woolley.

The survey found 68 per cent of companies did not always have an effective sponsor to provide direction for a project, or deal with problems.

Woolley said the sponsor should be a company executive, such as the chief executive or chief financial officer.

"Typically a project may run into competition for resources in the business," he said.

"The sponsor is the person that undoes those roadblocks."

Forty-four per cent of the firms surveyed spent more than $15 million on their projects during the 12-month period. About 100 companies from public and private sectors took part.

STAYING ON TOP OF IT

KPMG's survey found high-performing firms shared characteristics including:

* High-quality business cases (plans).
* Co-ordination by a project management office.
* Active management of risks.
* Timely, accurate and up-to-date reporting of a project's progress.
* Project managers who adopt a formal methodology.

- NZ Herald

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