Avoiding a business flop

A Tauranga firm has established a dedicated consulting team to provide project management and business analysis skills to local organisations.
Cucumber Software's move has been backed up by a survey from KPMG that revealed 70 per cent of companies experienced at least one major project failure in the past year.
The figure was up on the previous New Zealand Project Management Survey, conducted in 2005, when 49 per cent of organisations reported a failed venture.
The survey results was precisely the reason Cucumber set up its dedicated Consultancy Services team to provide high-quality project management skills, said Jodie Tipping, general manager of Cucumber Software.
"We can help prepare business cases and manage the project in a structured way to deliver the expectations of clients," she said. "We have found a growing local demand for our project managers and business analysts.
"There is often a need for independent consultancy services to support existing resources or to provide a fresh perspective on business projects," said Ms Tipping. "We are truly impartial and based on the analysis have recommended that a project not proceed."
Cucumber created its new stand-alone consultancy services unit for companies to use with or without its other web and application development services.
The KPMG 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," Mr 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.
Mr 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.
KPMG says the results of the survey reflect an incapability of New Zealand firms to translate project investments into valuable returns.
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.
Mr 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.
Forty-four per cent of the firms surveyed spent more than $15 million on their projects during the 12-month period.