Across industries, organizations invest heavily in project management frameworks, certifications, and software, yet still experience chronic project failures. Budgets are exceeded, deadlines are missed, and value is left unrealized. At Uruk, the issue is not project management itself. The problem is how organizations view, structure, and invest in their project management systems. That leads us to the question: Can project management be a competitive advantage?
When done right, project management is more than operational support. It is a strategic asset and a source of competitive advantage.
This article explores why project management maturity matters, how organizational project management systems can drive performance, and how Uruk can help you transform project management into a core business enabler.
Project Management Challenges
From 2018 to 2019, our CEO conducted intensive research for one of his books. He was contracted with CRC Press to write a book about mega projects. The study focused on capital projects and mega projects, which are significant projects related to building facilities, such as petrochemical plants, power generation, and other large-scale facilities.
We list below some of the critical points:
- These types of projects are often significantly behind schedule and over budget.
- The success rate was low; in some cases, the percentage of successful projects was in single digits.
- A typical (internal) cause was the lack of effective organizational project management (OPM) systems. If an OPM system existed, it would either be in poor condition or outdated.
- Consequently, the opportunity losses from these projects were massive, and their legacies were tarnished.
Losses and opportunity losses can be in billions of dollars!
Was Project Management Failing?
Our experience and observations have often found that some executives might blame the project management domain for being ineffective. Others might blame the project management methodology (usually a project life cycle or stage gate model) for bureaucracy, among other reasons. In other words, the common thought was that project management might have failed them.
However, numerous studies have shown that project management is not failing these organizations. It was their people and processes. Please note that the intent here is not to play the blame game; it is neither healthy nor productive. We can say that, for some reason, executives and directors have not trusted, accepted, or recognized the gaps in practice. As a result, they have not identified the need to invest in their organizational project management systems and methods.
It is vital for executives to understand the strategic value of project management.
What Is An Organizational Project Management System?
The short explanation is that an organizational project management system often consists of the governance structure, policies, guidelines, procedures, and project management methodology. This is a lengthy discussion, which we cover in more than one video or podcast episode.
What we can say here is that the OPM System must be (a) adaptive, (b) scalable, (c) sustainable, and (d) built with the pillars of processes, people, and technology. The OPM system must include tailored methods for managing projects and programs.
A practical and sustainable system must be adaptable and scalable.
Will An Organizational Project Management System Work?
Yes, and we can confidently say that competent project management that aligns with a higher level of project management maturity in organizations is a competitive advantage.
This first figure is from a University of California Berkeley study based on the UCB maturity model. In this illustration, “step” is equivalent to “level” or “stage.” In this illustration, the line is related to the organizational project management costs.
What the illustration is telling us is the following:
- Project management costs (as a corporate function, the red line) will increase from the starting point[5] to level 3. The primary reason for the increased cost is that the organization would invest in establishing and building its policies, processes, and methods. Further, they invest in training their people and elevating their competence.
- However, once an organization reaches level 3, it should have standardized its organizational project management system and would start to see significantly higher efficiency.
- Beyond that point, with higher competence and maturity, project management would give them a competitive advantage due to highly efficient practice. In other words, the cost of project management will start to drop.
- The bottom arrow (x-axis) shows the significant cost and schedule improvement on projects. So, it is evident that as the organizational project management maturity increases, organizations can complete projects faster and at lower costs.
- Further, what you cannot see in the illustration but was documented in the study was improved predictability. This means that when the organization estimates the project in the early stages, its predictions are significantly enhanced.
- There are other points to make, but we will save them for another time.
How About The Project Management Methodology? Does It Work?
The following images represent information from two highly credible references:
The first is an independent analysis of the value of a stage gate model (the project management methodology). The numbers are self-explanatory, and they are significant. This first set of data shows that organizations can increase market speed and significantly enhance their on-budget performance.
The second image is from an IPA (Independent Project Analysis) book and shows the value of a well-defined process, a PLC model. Once again, the value of a PLC model is evident from the change in the NPV (Net Present Value) of the three conditions shown.
Closing
In Part 2, we will share:
Examples of How Project Management Can Be a Competitive Advantage.
