Recently in Researching the Value of Project Management Category

A lot of energy has been spent investigating the "value" of project management. My question is: value to whom? Doesn't it all boil down to what the projects' decision-makers do with their project management information?

Imagine a project manager who pays a very small amount for a very advanced cost and schedule control system, and the system reliably produces accurate information in a timely manner. If that project manager ignores that output, and instead acts out of impulse, then the value of the project management information system is zero.

And, to be blunt, no amount of eat-your-peas hectoring from our side of the debate will lead such a project manager to have an epiphany and turn away from his or her nefarious ways. Conversely, a project manager who pays a great deal for a system that barely reports projected costs at completion and forecasts completion dates, but uses that information to avoid a massive overrun or delay, has an extremely valuable system.

Not to abrogate the debate, but, in my opinion, the value of project management is like the macro-economists say: It's what somebody's willing to pay for it.

PMI editor-in-chief Dan Goldfischer and book editor Donn Greenberg colluded to bring me to PMI's North American Congress in Denver, Colorado, USA to participate in a book signing for Things Your PMO Is Doing Wrong. I must admit, I was somewhat apprehensive before arriving, having never participated in a book signing before. As it turns out, everything went swimmingly, just as Dan and Donn said it would.
    Well, almost everything.
    What was plain to me (and, presumably, every other congress participant) was that considerable energy and intellectual capital has been spent in support of a definitive study investigating the ROI of implementing project management. Of course, I would rather trim my fingernails in a Cuisinart than support such an undertaking. Why? Well, I have two reasons.
    One, ROI is an assessment tool for evaluating assets. Yes, that's right, it's something our old friends the accountants use and regular readers of The Variance Threshold know what I think of them. You may as well calculate the cost performance index (CPI) on a bulldozer. Taking an assessment tool out of the asset managers' toolbox and trying to use it in the project management domain doesn't work, in my opinion. Sorry about all the effort.
    Second, what's the practical application of a study like Researching the Value of Project Management? Does anybody really believe that we project management types can plunk a copy of this study down and exclaim, "See! Project management really is worth your while!" And have them answer, "You're right! Let me make room for you at the boardroom table?"
    It'll never happen. Cost performance information translates into sheer organizational power, and our suspender-clad brethren will not simply stand by and allow project management types to own that information stream.
    But hope springs eternal. Who knows, maybe I'm all washed up, and this ROI study will provide many a project manager with the leverage he or she needs to further the project management agenda within their organization, leading to the inescapable conclusion that I've become too cynical to have my writings taken seriously.
    But I don't think so.
   
Editor's note: You can purchase Michael Hatfield's new book, Things Your PMO Is Doing Wrong, in the PMI Marketplace. During the month of October it is available at the discounted rate. Or find out more about PMI's Researching the Value of Project Management study.

I thought the best presentation at this year's Leadership conference was the keynote address by Mark Mullaly. He discussed at great length how to quantify the value of project management from the results of a study he and his team performed on 65 companies. He quantified project management value in terms of satisfaction, alignment to business practices, process improvements, outcomes and ROI.
    The study measured project management value using both tangible and intangible metrics. And although Mark concluded that it was more difficult to show a positive relationship amongst project management levels using tangible value determinants, correlations were more evident when using intangible value as a measurement tool.
    I spoke to Mark immediately after his presentation about the difficulty in convincing stakeholders, particularly executive sponsors, of the value of project management using intangible value. He agreed it was a challenge to address intangible value, but with the caveat that this was true also of tangible value. He suggested to me that higher-level managers were usually more concerned with intangible value because they knew how intangibles offer such tremendous, long-term leverage for a company's success--forward thinking.
    I agree. Executive, leaders, senior stakeholders know deep down inside that it is the intangible value that ultimately drives their projects and company forward. That's why I changed my mind after speaking with Mark. It's really at the lower stakeholder levels that the tangible case needs to be made. And if intangible project management value can be demonstrated at the top, like executive sponsors, their buy-in will help us make the tangible case for project management value well down into the organization.

Editor's Note: Find out more about the study mentioned in this post.

Okay, after lots of discussion around the preliminary results of PMI's Researching the Value of Project Management, I think we can all agree that project management does indeed bring value to the organization. But we haven't really talked about the people delivering that value--and where companies are going to find them.

Developing economies like India and Latin America are struggling to find enough people while established economies like Europe and the United States are struggling to find the right people. Indonesia, for example, is expected to be 12,000 project managers short in the oil and gas, mining, IT and telecommunications industries over the next five years.

At PMI's recent Latin America Congress in Sao Paulo, Brazil, Ricardo Viana Vargas, PMP, gave a great example that pretty much summed it all up. He recalled getting an e-mail from an Australian colleague with only three sentences: "I need a specialist in iron ore projects to work here. I need it now. Don't worry about the cost."

So what's a company to do? "The Great Talent Shortage," a January 2008 article in PM Network, provided some solutions. Here are a few:

"Call it sharing, stealing, enticing--we all have to go to the same pool to get people. You have to raid your competition, and they do the same."
--Yahya Khader, CEO, Clough Zuhair Fayez Partnership, Al Khobar, Saudi Arabia

"It's extremely important to hire a certain proportion of new project managers from outside your industry. It's the only way you can get fresh thinking and a new look at how you do business. Yet, human resource departments tend to always advertise in the same place and look for the same characteristics as the previous employee."
--Uma Gupta, Ph.D., PMP, senior advisor to the provost at the State University of New York, Buffalo, New York, USA

"Organizations are being more responsive to offering longer leave periods, better parental-leave provisions and a far greater proportion of performance-based payments. Measuring workplace satisfaction is becoming more common, with companies looking at their main employment brand attributes and developing programs to address gaps through benefits, mentoring, or training and development."
--Paul Bell, managing director, Fanselow Bell, Nelson, New Zealand

Of course, all of those things are often easier said than done. Companies have to make the commitment to not only recruit and retain the cream of the crop, but also to groom the next generation of project management leaders.

Increased innovation keeps popping up in discussions on the intangible benefits uncovered in the preliminary results of PMI's Researching the Value of Project Management study.

It's a topic that's covered often in PM Network--just check out "A Closer Look: Film Riot" from January 2008 or "The Big Payoff" from the February 2008 issue. And it's a topic that the business world at large is paying attention to. CIOs--that's chief innovation officers--are more and more becoming a part of the team. Citi, The Chicago Tribune, Humana, YMCA of the USA and Innovolt have all brought them to the table.

Innovation and project management go hand-in-hand when it comes to driving the overall strategy of an organization. Project professionals have a big role in this--they will be the ones developing, organizing and executing these innovative new projects. Just look at Apple's iPhone or Masdar City--a $22 billion portfolio of mega-projects aimed at building the world's greenest city in Abu Dhabi. There's no telling what project leaders will come up with next.

Want More Information?

The results are in: Project management does have value. If you didn't get a chance to view the full presentation of PMI's Researching the Value of Project Management preliminary results you can still watch it now. You'll hear more about the tangible vs. intangible benefits of project management, along with the importance of fit. It clocks in at about an hour--definitely time well-spent.

The preliminary results of PMI's Researching the Value of Project Management study was given by principal researchers Janice Thomas, Ph.D., and Mark Mullaly, PMP, on 14 July 2008 during PMI's Research Conference in Warsaw, Poland. For more on the study, be sure to check-out the full monograph, available this October.

I was doing a little research for this post and like every good writer these days I started with Google. I typed in "why projects fail" and came up with 16,700 entries. The first few pages were dominated with entries like "Top 10 Reasons Projects Fail" and "Why Projects Fail: Part 1." So what were some of the answers? Some articles blamed a lack of user involvement. Others said projects were started for the wrong reasons.

There was nothing related, however, to organizational fit or to measuring intangible benefits as part of your ROI. It made me wonder: Will the results of the Researching the Value of Project Management study change the way the profession thinks about project failure? Will things like the makeup of the organization--and how project management plays into that--become more important to a project's failure or success? And, how can organizations use the results to improve the way they achieve project results?

All good questions, right? And I hope to get the chance to ask the study's principal researchers, Janice Thomas, Ph.D., and Mark Mullaly, PMP, at PMI's North American Congress 2008 in Denver, Colorado, USA. It's coming up in October, and I hear they will be giving a special presentation on the research.

Want proof that project management does add value to organizations? Check out a short video on Researching the Value of Project Management featuring fresh insights on both the tangible and intangible benefits of project management from principal investigators Janice Thomas, Ph.D., and Mark Mullaly, PMP, and some of the study's contributing researchers, including Terence J. Cooke-Davies, Ph.D.

Did you know that this month PMI is celebrating 25 years of standards creation? Tuesday, I interviewed Debbie O'Bray for an upcoming PMI.org story I am writing on PMI standards. She has been involved in standards development for quite some time and is currently a member of the Standards Member Advisory Group.

The interview got me thinking about the added value of standards. For some project professionals, they serve as a constant companion while for others these standards are guidelines or references project professionals can turn to with questions. But for everyone, the standards help create a common language to help communicate about everything from project scope to risk. And that common language is a key intangible benefit revealed in the Researching the Value of Project Management study.

In the presentation of the study's preliminary results in Warsaw, Poland, principal investigator Janice Thomas, Ph.D., said:

"The good news is that most organizations demonstrate intangible value and its significant intangible value around decision-making, around strategy, around effective work cultures, around alignment of approach, around terminology ..."

For my story, I also interviewed team members of different standard development teams. They devote time--sometimes years--to helping develop PMI's library of standards.

Obviously they see the value of standards. And this leads me to one conclusion: The value of standards and the value of project management go hand in hand.

We've talked a lot about what the Researching the Value of Project Management study means for executives, but what does it actually mean for the in-the-trenches project manager? How do they benefit?

First of all it re-emphasizes the importance of the work they do.

But listening to interviews with principal investigators Mark Mullaly, PMP, and Janice Thomas, Ph.D., I see it goes beyond that. It helps project managers in a few key ways, including:

1. Understanding what support they need in the organization to be the most effective

2. Implementing the most effective project management practices in their organizations

3. Understanding how project management ties to the strategic direction of their organizations

But it doesn't end there. Once the full report is available, the library of 65 case studies can be used by project managers for lessons learned. It will also help the next generation of project leaders. Several of the academicians I spoke with during and after PMI's Research Conference have said they will be able to take the study and use it in their classrooms. In fact, some of them are already doing precisely that.