The decline of project management offices in New Zealand

The decline of project management offices in New Zealand

Project activity is on the rise, but so are failure rates, and more organisations are disestablishing project management offices, reports KPMG.

Project activity is on the rise compared to three years ago, but so are failure rates. Meanwhile, there are fewer project management offices across New Zealand. These are the key findings of the latest KPMG Project Management Survey, released last week as a follow-on from its inaugural study on the same subject in 2010.

Project management has a huge contribution to make in fuelling prosperity in New Zealand, says Perry Woolley, director-project advisory services, KPMG New Zealand, who presented the results of the latest survey.

More than 200 organisations participated in the survey. The challenge, he says, is “How will we ‘raise the game’ in project management to make NZ organisations more successful?”

The 2013 report found an increase in project activity across all sectors. In 2010, 98 per cent of respondents said they completed only from zero to five projects across the business. In 2012, more than half – 54 per cent – said they completed more than 21 projects across the business.

The survey uses the Project Management Institute definition of a project as a temporary group activity designed to produce a unique product, service or a result. Project success is measured on timely delivery, delivery on budget and delivery of stated deliverables.

The latest report finds only a third – 33 per cent – of organisations reported projects delivered on budget, a decrease from 48 per cent in 2010. On timely delivery, the latest figure is 29 per cent, compared to 36 per cent in 2010. On delivering stated deliverables, this year’s figure was 35 per cent; down from 59 per cent in 2010.

Interestingly, information technology companies reported above average project success on these three measures. The data does not explain the reason for this trend, but “higher maturity in general of project management in the IT industry” could be one reason, the report states.

The report finds since 2010 there has been a near 30 per cent decline in the number of project management offices (PMOs) across New Zealand. In 2012, the year the report focussed on, 60 per cent of respondents indicated they had some kind of PMO. In 2010, the figure was 88 per cent. “This is significant and worrying,” the report stated.

Woolley explains there is a strong correlation between business reporting successful outcomes and use of a PMO.

The key is not all PMOS are created equal, says Woolley: “They do different things in different businesses.

“It is critically important the role and function of the PMO is optimised for the organisation and its needs.”

He says one of the findings in the survey is the experience of the project manager is critical to the success of the project.

“The project manager that has the most experience, the most scars and most learnings will get the better results,” he says.

“The methodology gets you somewhere in the journey, but there is a lot of learning and understanding in how to apply it. We get the best results if we get the oldest and the most experienced project manager in any project. ”

So how can organisations beat the odds and increase the chances of project success?

Woolley says the one-third of organisations surveyed that were consistently getting better results cite a list of “good practices”.

“If you have to focus on anything, these are the things to focus on that are demonstrably giving better results,” he says.

⦁ Consistent application of a suitable methodology throughout the project;
⦁ Effective project risk management (In a lot of projects, it is not "risk management going on but risk cataloguing”);
⦁ Use of a project management office;
⦁ Use of programme and/or portfolio management techniques in addition to project management; and
⦁ Ensuring projects are supported by a high quality business case and tracking the associated benefits.

Woolley says the use of programme and portfolio techniques is “shorthand” for organisations taking a holistic view of projects, and not running a project in isolation.

Constant pace of change is also impacting project management. “That is the new normal,” he says. “There was a time when we can pause for breath between changes. Nowadays it is a constant. “

He does not see this situation changing. “We just have to get used to it and find ways to deal with it.

“The reality is we have a lot of need for agility in business, [there is] constant pressure for change and if a business isn’t changing it is dead in the water.”

He says with the upswing of projects, “we are outstripping the capacity to get these projects done effectively and efficiently.”

Thus part of project management is understanding when to cut the project off. “Understanding if a project starts to veer off its benefits case, the right thing to do is stop and redeploy [resources] to other projects.”

He says he has seen projects where the business sponsor pursues it to the bitter end, "long past the point where it is economically viable".

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