Project success vs organisational success
Projects implement strategic change. If a project meets its goals (succeeds) then the organisation meets its goals (succeeds). Right? Well maybe. Let’s take a closer look at success, value, strategic goals and what they mean for projects and organisations. What does success look like? Are project managers responsible for project delivery or for strategic goals and value-add?
Is success doing what was promised or adding value?
Leaders of organisations set strategic goals and create operational capability to deliver them. Strategic projects improve, modify, redirect or extend operational capability. A project is a strategic tool – it creates a product or deliverable to achieve a strategic outcome. The project manager and team have to deliver “something” within time, cost and quality constraints and have traditionally been judged on how well they do that. Project success is doing what was promised.
An executive sponsor convinces their colleagues that creating a new product, opening a new branch, or implementing a new ERP system etc. will create more growth, profits, customer satisfaction, benefits to society etc. – the desired outcome. Leaders agree that the “something” will add value and the executive who champions the project (the sponsor) is accountable. The sponsor needs to prove that the project was effective at achieving the desired outcome. Did it add net value – either through financial return on investment (ROI) or other benefits? Organisational success means meeting strategic goals and adding value.
Are project and organisational performance different?
Executives are responsible for value and project managers are responsible for delivery but nothing is black and white. A project manager who sees little value in a project should discuss that with the project sponsor as early as possible. Project sponsors should heed Peter Drucker: “There is nothing so useless as doing efficiently that which should not be done at all.” We also know that organisations create most of their value through operations not projects – let’s come back to that.
The Project Management Institute has just redefined its definition of project success. PMI used to say that a project is a success if it meets the defined goals and requirements within the set time frame, budget and quality standards. PMI now defines project success as: Successful projects deliver value that was worth the effort and expense. That is a major change and some will argue that PMI are confusing project success with organisational success. Most project managers don’t determine the value of their project and have limited control over its value, especially if the project is just one part of a large strategy.
Do we measure project success in isolation?
We often measure project performance in isolation from organisational performance. Portfolio or Project management offices align projects and programmes (groups of projects) to strategic goals. Doing the projects should achieve the strategy. In fact, Operations delivers value to customers. They have their own ways of measuring their success through operational and financial measures (metrics/KPI/OKRs). Those operational measures almost always differ from the measures used for projects.
We usually measure project delivery against time, cost, scope and quality. We measure project value for money against the financial and non-financial measures in the project business case. The business case defines the projected value of the project so how does reality match the projection? Benefit realisation or return on investment often requires specific measures to collect and report on performance after the project is completed. It requires a unique effort just to measure a project’s success. Poor evaluation of projects results from this ad hoc, one-off approach to measurement.
Lost benefits
After a project is done, who has an incentive to create and maintain such bespoke ROI or benefit realisation measures? No one cares. They have all moved on. Many benefits occur 6-18 months after a project is completed. Some take decades. It is hard to fund and motivate benefits realisation so organisations fail to realise many benefits. That is a wasted investment. A lost benefit capture approach can reclaim those benefits.
Embedding value for money in performance measurement
Some projects rely on existing operational measures – data collected in the ordinary course of business. Consistent data collection, with snapshots at key times, can identify the impact of interventions. Those interventions may be projects, continuous improvement initiatives, organisational redesign or events. If the organisation uses Balanced Scorecard, an organisational excellence model or its own performance framework it can easily track impact. Other ways to measure value include earned value management, value chain analysis, value stream mapping or a structured return on investment framework. There are many ways to embed value for money into management practice. In practice, few organisations take such a systematic approach. That is a lost opportunity.
How should we implement strategy?
The Project Management Institute (PMI) says project and program management is widely used as a means of implementing corporate and business strategy, and is a key business process. That is true but organisational success is about more than managing projects well. It is also about ongoing operations.
The Strategy Implementation Institute recognises the importance of project management as a discipline but has a focus on 7 key areas including leadership, value creation, culture and tracking performance across the business – not just the project. Strategy implementation is more than just projects. It is the day-to-day operating model – how organisations execute delivery of their business model and the value propositions within it – and how they measure it.
There is no single tool or methodology to transform organisational performance. We need strong leadership, and good operational and financial management. We also need good data, business analysis, project management, change management, effective teams, and systems and processes . Consistent measures and measurement of value and performance are better than sporadic and disconnected efforts, each set up for different purposes.
Integrating project and organisational success measures
Organisations need to adapt to change to succeed. Ram Charan writes in Harvard Business Review that “Organizations succeed over time only when they adapt to the speed and character of external change. Every aspect of an organization — from how it operates and is structured to how it is led — must match the current yet ever-shifting context in which it exists.”
That is a strong argument for an integrated approach to how we manage and measure value streams in organisations over time. Value for money, effectiveness and return on investment are equally important for projects and operations. A $2 Million investment in a new project will face rigorous analysis. An extra $10 Million on operations may face no such scrutiny. We can’t assume that doing more of what we have always done is lower risk than doing something new. A more integrated approach to measuring and managing value would help.
Phil Guerin, Consultant/Director, Hague Consulting Ltd. © Hague Consulting Ltd 2024. If you like this content, subscribe to our blog – it’s free!
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