Why repeating 2018’s processes and commercial contracts could destroy your PMO
In today’s economic climate, project delivery stakeholders are being asked to do ‘more with less’ as the business environment rapidly evolves and becomes fiercely competitive. The world’s top engineering construction companies operate under frightfully skinny margins, which seem to decline as a percentage year-on-year.
Further, megaprojects continue to arrive off-schedule and/or tremendously over budget, with the situation worsening despite advances in technology.
For example, the Olympic Games is almost expected to experience cost blowout: Athens 2004, $7 billion over budget; London 2008, $11.9 billion over budget; and Sochi 2014, a staggering $39 billion over budget.
The universal truth of project management holds: the project will be underestimated, delivered late and cost more.
Swift adaption to the current climate is crucial to short-term bottom-line performance and long-term survival.
Hexagon PPM recently partnered with the Project Management Institute (PMI) to survey over 200 project controls practitioners and stakeholders in Asia Pacific to give you a sense of project performance maturity and gain insight into where the problem areas may be in your projects function.
Our survey found:
- 93 per cent of respondents believe that project controls are important
- The biggest challenges associated with project controls occur during planning and scheduling, when forecasting and estimating, as well as when managing risks and issues
- Scope creep continues to be an issue with project controls, as 41 per cent of respondents identified they often deal with last-minute surprises
- Strong budgeting and estimating skills have a correlation with project success
- The majority of PMOs in Asia Pacific experience challenges with project control processes related to issues and risks
- Real-time reporting is limited with only 12 per cent of respondents updating data in real-time and 55 per cent making weekly/monthly updates; this poses a risk for project and portfolio managers who may have to make decisions based on out-of-date data
- The project management industry is slowly adopting more digital technology offering a range of better project control options
- With 42 per cent of respondents aligning with the Project Management Book of Knowledge (PMBOK), it is clear that aligning with industry-accepted practices can provide the relevant tools and processes to implement effective project controls
Saeed Shalbafan is a senior project planning and controls consultant with a PhD in project portfolio management from the University of Technology Sydney. He says industry best-practice awareness among project management professionals is low, meaning personal expertise dictates process, even if this is detrimental to the project.
“Not all the blame can be given to practitioners… when you look at the evolution of the body of knowledge across best practice since the 1980s and 1990s, the core business is the same,” Mr Shalbafan said.
“If you look at it from a product lifecycle perspective, the whole world is going much faster. It used to take ten years to bring a complex project to maturity and drop it, then move to the next version – now it’s a matter of two to three years. This faster pace needs a more flexible approach.”
Compounding this, project management digitization is set to change the way we work. According to Gartner, by 2030 project managers’ skillset will need to shift toward managing and collaborating with smart machines.
And PMOs need to start building a plan to become the centers of change and innovation, focusing on the Internet of Things (IoT) and Artificial Intelligence (AI).
Best-practice processes realize the value of information transparency and machine-to-machine communication to improve forecasting and predictable costs. The hunt for more clarity, better preparation and increased value is very much on.
Accordingly, predictable cost is becoming a major issue for most segments. The primary concern for most organizations is knowing where, when and how cost will impact a project, meaning wholesale audits of current solutions are underway.
Are Excel and other similar platforms adding to or detracting from understanding overrun problems as they occur?
In The 2019 State of Project Controls Study, you’ll discover:
- How to start making a cultural shift and align projects to the strategic vision of the company
- How to start collaborating with other functions in the projects team to overcome siloed reporting to senior management
- What industry-experts believe can help change the way projects are done
This partner content is brought to you by Hexagon, a global leader in digital solutions that create Autonomous Connected Ecosystems (ACE). Its industry-specific solutions create smart digital realities that improve productivity and quality across manufacturing, infrastructure, safety and mobility applications. Hexagon’s PPM division empowers its clients to transform unstructured information into a smart digital asset to visualize, build and manage structures and facilities of all complexities, ensuring safe and efficient operation throughout the entire life cycle. Learn more at hexagon.com, or at @HexagonAB.