We have been talking about Success with regard to our perception and what is needed for a project to be considered a success.? PMI published their Pulse of the Profession for 2017 and succ

Transforming the high cost of low performance

Success Rates Rise

2017

9th Global Project Management Survey

Conducted since 2006, PMI’s Pulse of the Profession® is the

global survey of project management practitioners. The Pulse

charts the major trends for project management now and in the

future. It features original market research that reports feedback

and insights from project, program, and portfolio managers,

along with an analysis of third-party data.

The newest edition of the Pulse features feedback and insights

from 3,234 project management professionals, 200 senior

executives, and 510 PMO directors from a range of industries,

and interviews with 10 corporate leaders and 7 PMO directors

and directors of project management. Respondents span North

America; Asia Pacific; Europe, the Middle East and Africa (EMEA);

and Latin America and Caribbean regions.

PATH TO PROGRESS We are encouraged to see in this year’s Pulse of the Profession® that organizations are making progress—significant progress—as they are experiencing more success with implementing strategic initiatives. For the first time in the last five years of this research, we see that more projects are meeting original goals and being completed within budget.

We have long advocated that project management is essential for any organization’s success, and are excited that others increasingly realize this fact as well. Organizations that invest in proven project management practices waste 28 times less money because more of their strategic initiatives are completed successfully. And, in our latest research, only 27 percent of organizations report low project management maturity.

That is particularly good news because when organizations embark on projects and programs, they do so with a clear mission: to add value, advance strategies, and increase competitive advantage. So, the more mature they are with project manage- ment, the more likely they will achieve their goals. There is, however, still more work to be done.

Completing projects and programs successfully—on time, on budget, meeting goals—is essential. But just as important is a focus on expected business benefits. A broader view of performance includes an organization’s benefits realization maturity level. This more inclusive measure of project success provides insight into what elite organizations— those we are calling “champions”—are doing and how others can continue on this path to progress.

As you consider your organization’s goals for 2017, I strongly encourage you to use this report and other PMI research to continue making significant growth and progress. Be champions for the profession, and let’s do great things together!

Mark A. Langley

PMI President and CEO

E X E C U T I V E S U M M A R Y

REDEFINING SUCCESS Our latest Pulse of the Profession® research suggests a positive change in the way organizations

are managing projects and programs. For the first time in five years, more projects are meeting

original goals and business intent and being completed within budget. There has also been

a significant decline in dollars lost: Organizations are wasting an average of $97 million for

every $1 billion invested, due to poor project performance—that’s a 20 percent decline from

one year ago.*

This report, PMI’s annual survey of project management practitioners and leaders, strives to

advance the conversation around the value of project management. The research represents

feedback from 3,234 professionals globally who represent different levels within organizations

from diverse industries. Our findings continue to show what we have learned in the past:

that when proven project, program, and portfolio management practices are implemented,

projects are more successful.

At the same time, the definition of success is evolving. The traditional measures of scope, time, and cost are no longer sufficient in today’s competitive environment. The ability of projects to deliver what they set out to do—the expected benefits—is just as important. So, for the first time, when determining project success, we looked at levels of benefits realization maturity as well as the traditional measures. Through this wider lens, we identified two new performance levels among responding organizations:

As expected, champions have higher project success rates (92% versus 33% of underperformers) and enjoy more successful business outcomes: They waste significantly less money due to poor project performance. These findings suggest that organizations are becoming more mature with their project management practices and are investing in the following factors that distinguish more successful project performance.

CHAMPIONS: Organizations with 80 percent or more of projects being completed on time and on budget, and meeting original goals and business intent—and having high benefits realization maturity.

UNDERPERFORMERS: Organizations with 60 percent or fewer projects being completed on time and on budget, and meeting original goals and business intent—and having low benefits realization maturity.

2

MAKING PROGRESS

*Figures are U.S. dollar amounts, but represent a percentage that applies to any currency.

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BENEFITS

PMOs AND STRATEGIC EPMOs

There’s growing attention to benefits realization management, which is the collective process of identifying benefits at the outset of a project and ensuring, through purposeful actions during implementation, that the benefits are realized and sustained once the project ends. One in three organizations (31%) reports high benefits realization maturity.

Organizations can bridge the chasm between high-level strategic vision and implementation with a project management office (PMO). Among organizations in our survey that have a PMO, half report having an enterprise-wide project management office (EPMO). And those that align their EPMO to strategy (i.e., have a strategic EPMO), report 38 percent more projects meet original goals and business intent and 33 percent fewer projects are deemed failures.

EPMOs

PERCENT OF PROJECTS DEEMED FAILURES

ONE IN THREE ORGANIZATIONS REPORT HIGH BENEFITS REALIZATION MATURITY

PERCENT OF PROJECTS MEETING GOALS

3

TALENT

Developing the technical, leadership, and business management skills of project professionals continues to receive significant attention. Thirty-two percent of survey respondents consider both technical and leadership skills a high priority—a 3 percent increase over last year.

80%

60%

40%

20%

0%

20%

15%

10%

5%

0%

77%

56%

38% more

12%

18%

33% fewer

High alignment to strategy

Low alignment to strategy

High alignment to strategy

Low alignment to strategy

DEVELOPMENT OF TECHNICAL AND LEADERSHIP SKILLS IS A HIGH PRIORITY— A 3% INCREASE OVER LAST YEAR

E X E C U T I V E S U M M A R Y

4

EXECUTIVE SPONSORSHIP

AGILE

Actively engaged executive sponsors continue to be the top driver of whether projects meet their original goals and business intent. That fact was not lost on survey respondents, who revealed an increase in the percentage of their organizations’ projects with actively engaged sponsors compared to last year—an average of 62 percent compared to 59 percent, respectively.

Organizations increasingly embrace agile as a technique for managing projects. A full 71 percent of organizations report using agile approaches for their projects sometimes, often, or always.

2016 2017

62% 59%

AVERAGE PERCENTAGE OF PROJECTS WITH ACTIVELY ENGAGED EXECUTIVE SPONSORS

In addition to tracking the annual trends in project management, we also surveyed and spoke directly with executive leaders to capture their perspectives on conditions that drive organizational decisions and outcomes. Our research confirms that the C-suite continues to be largely focused on bridging strategy formulation and execution and tackling technology and business disruption. A majority of the executives surveyed also indicated that customer relations (77%) and operational efficiency (75%) would be high priorities for resource allocation over the next three to five years.

The research also aligns with the increased emphasis in many organizations to be more agile, customer focused, and competitive. Throughout 2017, we will explore these goals further in relation to issues of agile transformation, including in the PMO, which are driving business change. We will focus on how people, process, and culture are being impacted in the pursuit of greater agility and the demand for greater innovation.

80%

100%

60%

40%

20%

0%

11%

29%

31%

17%

12%

Always

Often

Sometimes

Rarely

Never

AGILE APPROACHES

DRIVING ORGANIZATIONAL DECISIONS AND OUTCOMES

5

P U L S E O F T H E P R O F E S S I O N ® | 2 0 1 7

Since organizational performance includes an organization’s benefits realization maturity level, we have evolved our measure of success to include the percentage of projects that are completed on time, on budget, and meeting original goals and business intent with levels of benefits realization maturity. The organizations we are calling “champions” enjoy more successful business outcomes. They waste nearly 28 times less money due to poor project performance—and fare better at other measures of project completion (see Figure 2: Project Performance Averages of Champions versus Underperformers).

We have been conducting Pulse of the Profession® research since 2006 to provide evidence that

effective strategy implementation is directly linked to an organization’s capability to deliver successful

projects and programs. This year, for the first time since 2011, we see an upward trend: More projects

are meeting original goals and business intent and being completed within budget. Compared to last

year, fewer projects are deemed failures (see Figure 1: Project Performance Metrics).

2011 2012 2013 2014 2015 2016 2017 10%

20%

30%

40%

50%

60%

70%

Met original goals/business intent

Completed within original budget

Completed on time

Experienced scope creep

Failed projects’ budget lost

Deemed failures

Av er

ag e

pe rc

en ta

ge o

f p ro

je ct

s

Figure 1: Project Performance Metrics

CHAMPIONS UNDERPERFORMERS Organizations with 80% or more of projects being completed on time and on budget, and meeting original goals and business intent—and having high benefits realization maturity (7% of organizations in study).

Organizations with 60% or fewer of projects being completed on time and on budget, and meeting original goals and business intent—and having low benefits realization maturity (12% of organizations in study).

I N T R O D U C T I O N

6

P R O J E C T M A N A G E M E N T I N S T I T U T E

CHAMPIONS UNDER- PERFORMERS

Average percentage of projects completed on time

Average percentage of projects completed within budget

Average percentage of projects that meet original goals/business intent

Average percentage of projects experiencing scope creep

Average percentage of projects deemed failures

Average percentage of budget lost when a project fails

88%

90%

92%

28%

6%

14%

24%

25%

33%

68%

24%

46%

Figure 2: Project Performance Averages of Champions versus Underperformers

Figure 3: Training and Development

MAKING PROGRESS

In our 2016 Pulse report, we called for a shift in thinking and urged organizations to embrace project management

as a strategic competency for success. The results of this year’s research suggest that organizations are listening

because they are becoming more mature with their practices. This progress is likely due to many factors, including

organizational investments in the areas outlined below.

TALENT Projects and programs are the core of any organization’s strategic initiatives—they are how change happens. Having the talent to implement those initiatives successfully is the critical capability that gives organizations a competitive advantage to navigate through necessary change. Excellence in managing that talent is a key differentiator to unlocking that capability.

We are encouraged that the percentage of organizations providing training and development has been stable for the past five years. Three in five organizations provide training on project management tools and techniques, and just under half have a formal process to develop project manager competency and a defined career path for project managers (see Figure 3: Training and Development).

40%

45%

50%

55%

60%

Training on project management tools and techniques

Formal knowledge transfer process

Process to develop project manager competency

Defined career path for project managers

Pe rc

en ta

ge o

f o rg

an iz

at io

ns w

ith e

ac h

ite m

7

P U L S E O F T H E P R O F E S S I O N ® | 2 0 1 7

© Project Management Institute. All rights reserved.

Jeff Zircher, Manager, Global Program Management, Caterpillar Inc., is focused on strengthening his organization’s project management talent pipeline, with a goal to improve recruiting, hiring, onboarding, and development. He calls it “starting at the foundation” because he wants to “get the right people with the right skills and capability well-positioned right from the start.” Some key competencies Caterpillar is seeking include heightened business acumen, great initiative, strong communication and interpersonal skills, and solid leadership abilities. Mr. Zircher said this effort begins with recruiting and hiring capable project management professionals or those that demonstrate the potential to be great project managers, and continues through onboarding, ongoing support for training and development, and career advancement.

“We have a global team—spread across the world with different time zones challenges, cultures, and language barriers,” Mr. Zircher added, “so there is a real challenge trying to maintain very similar expectations of standards or standard work.”

Organizations such as Caterpillar are investing considerably more in leadership and business intelligence competencies that can support longer-range strategic objectives, which contribute to an organization’s financial strength and sustainability. Many start with the right talent in place, but struggle to keep skill sets relevant and employees fully engaged as the needs of the business change. And, according to our 2014 PMI® Thought Leadership Series research on talent, only one in four talent managers consider their organization to be highly mature in overall talent development and retention. So despite better results in our research, there is clear opportunity for improvement.

Retention of project management talent is something Bronwyn Clere, Executive Director for Capital Planning & Delivery, Telstra Corporation, focuses on, because she doesn’t believe project management expertise is a fully valued skill set within many organizations. She recognizes that project managers who have aspirations and ambitions about being senior and very influential may never be promoted into the executive ranks. Ms. Clere appreciates her path to professional advancement, explaining, “I was a project manager who was promoted into the executive ranks because of other capabilities, not because of my project management talents.”

Champions are prioritizing the development of technical skills (76% versus 19% of underperformers), leadership skills (76% versus 16% of underperformers), and strategic and business management skills (65% versus 14% of underperformers)—these are all critical areas illustrated in the PMI Talent Triangle® (see Figure 4: PMI Talent Triangle).

Figure 4: PMI Talent Triangle

JEFF ZIRCHER

Manager, Global Program Management, Caterpillar Inc.,

“[It’s important] to get the right people with the right skills and capability well- positioned right from the start.” Some key competencies Caterpillar is seeking includes heightened business acumen, great initiative, strong communication and interpersonal skills, and solid leadership abilities.

8

P R O J E C T M A N A G E M E N T I N S T I T U T E

BENEFITS

PMOs AND EPMOs

Benefits realization management (BRM) is a powerful way to align projects, programs, and portfolios to an organization’s overarching strategy. But the discipline has intimidated many, because there is no single, widely accepted BRM process to follow. Despite that, more organizations are taking steps to establish procedures for identifying benefits and monitoring progress toward achieving them throughout the project life cycle and beyond. In fact, 31 percent of organizations in our survey report high benefits realization maturity.

Telstra Corporation focuses on capturing one or two critical benefits for every project. The organization has well-formed processes to guide investment decisions to the projects that will deliver a strategy, explained Ms. Clere. “Our largest challenge is to consistently deliver projects that actually address the strategic issues—of course, as per the scopes of those projects or the business requirements,” she said.

Phillipe Husser, Senior Partner of Progress Direction at Michelin, is working to transform the way the initial promise of benefits is delivered in his organization. “If we think we could increase the market sales by 3 percent with a specific customer-oriented project, then we would design and produce the project,” he explained. “However, the problem arises when our people identify the benefit at the beginning of the project, but, at the end, the project is either light or not delivering according to the identified benefits.”

Organizations that report high benefits realiza- tion maturity also report better project outcomes (see shaded box for percentages).

PMOs are well-placed to be the conduit for executing an organization’s portfolio of projects and strategic initiatives. And, the percentage of organizations with a PMO continues an upward trend—from 61 percent in 2007 to 71 percent today (see Figure 5: PMOs).

33 percent more meet original goals and business intent

43 percent more are completed within budget

58 percent more are completed on time

34 percent fewer experience scope creep

35 percent fewer are deemed failures

High Benefits Realization Maturity and Better Project Outcomes

33%

43%

58%

34%

35%

2011 2012 2013 2014 2015 2016 20172007 2009 50%

60%

70%

80%

% o

f o rg

an iz

at io

ns w

ith a

P M

O

Figure 5: PMOs

9

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PMOs are also playing a greater role, compared to previous years, in many aspects of project management. For example, the percentage of PMOs that establish and monitor project success metrics has grown substantially—from 62 percent in 2007 to 80 percent today.

Among organizations that have a PMO, half have an EPMO. And those that align their EPMO to strategy report 38 percent more projects meet their original goals and business intent and 33 percent fewer projects are deemed failures.

The strategic role of the PMO and EPMO is vital. That role often includes responsibility for aligning the project portfolio to strategy, monitoring progress and optimizing delivery of strategy, navigating risk, driving benefits realization, enhancing governance and accountability, and managing talent. Champions recognize the strategic importance of the PMO—81 percent have a PMO, compared to 59 percent of underperformers. Additionally, 56 percent of champions have their EPMO highly aligned to the organization’s strategy, compared to just 12 percent of underperformers.

Killian Kenny, PMO Director for Ireland, Stryker Corporation, confirmed the expanded role of the PMO and how perceptions are changing. “When I first started here, many did not understand and value the PMO,” he said. “The initial step was to paint a picture of what the future looked like, sell the benefits, and fully integrate leadership on that journey. The key was to evolve and pursue the low-hanging fruit where tangible returns were very evident. In a relatively short period, people began to understand the value proposition and, as a consequence, the PMO has grown exponentially in the intervening period.”

Our research consistently shows that an actively engaged executive sponsor is the top driver of projects meeting their original goals and business intent, so the fact that organizations report more projects—62 percent this year compared to 59 percent in 2016—are using executive sponsors suggests project success rates may continue to rise.

The best executive sponsors have detailed knowledge of a project and how it connects to business strategy. They use their position and authority to clear roadblocks, make quick and effective decisions, and influence executive leadership. More than three-quarters of projects at champion organizations have actively engaged sponsors (77% versus 44% of underperformers). Organizations such as Caterpillar and Telstra are focused on driving exceptional sponsor engagement.

“The sponsors are a huge part of driving not just the initial project charter, but also team engagement throughout the life of the project. They manage the politics, break down barriers, and stay engaged,” said Mr. Zircher. “We are really trying to close our gaps with sponsor engagement—and we hope to do that with a healthy dose of training.”

EXECUTIVE SPONSORSHIP

MORE THAN THREE-

QUARTERS OF PROJECTS

AT CHAMPION

ORGANIZATIONS HAVE

ACTIVELY ENGAGED

SPONSORS:

77% VERSUS 44% OF

UNDERPERFORMERS.

AMONG ORGANIZATIONS THAT

HAVE A PMO, HALF HAVE AN

EPMO. THOSE THAT ALIGN THEIR

EPMO TO STRATEGY REPORT 38%

MORE PROJECTS MEET THEIR

ORIGINAL GOALS AND BUSINESS

INTENT AND 33% FEWER

PROJECTS ARE DEEMED FAILURES.

10

P R O J E C T M A N A G E M E N T I N S T I T U T E

The relationship between executive sponsors and project managers must be founded on transparency and trust and must recognize that there is a high degree of interdependence. To accomplish this, champions cultivate a project environment that nurtures collaboration between teams and departments. This kind of culture regards executive sponsors as a critical project resource and recognizes the value they add.

This cultural mind-set also discourages organizations from overburdening executive sponsors and encourages them to provide much-needed training. When sponsors are seen as a vital resource, organizations are also more likely to be strategic with their project assignments. In addition, champion organizations continually create opportunities for executive sponsor training, as seen in the divide in developing skills for executive sponsors—56 percent of champions versus 8 percent of underperformers.

THE RELATIONSHIP

BETWEEN EXECUTIVE

SPONSORS AND

PROJECT MANAGERS

MUST BE FOUNDED

ON TRANSPARENCY

AND TRUST AND MUST

RECOGNIZE THAT THERE

IS A HIGH DEGREE OF

INTERDEPENDENCE.

AGILE Agile is a topic of growing importance in project management, with 71 percent of organizations now reporting they use agile approaches to their projects sometimes or more frequently than in the past. In fact, over the past 12 months, one in five projects has used agile approaches, whereas another one in five has used hybrid or blended approaches. And, perhaps as significant, is the percentage of projects that used something other than agile, hybrid, or plan-driven approaches, which could be a further blend or customization of other approaches (23%).

Champions have a keen focus on using agile approaches to projects—55 percent versus 24 percent of underperformers. Organizations such as Teradyne and Michelin are striving to be more agility focused. “The first and foremost challenge we have is trying to integrate agile into our existing project management framework,” said Kevin Giebel, Engineering Manager,

Teradyne, who is faced with project efficiency questions. When asked for projects to be delivered sooner and for less money, the organization set up a number of pilot projects with project managers who have implemented agile approaches at previous organizations. Teradyne’s team will evaluate the process and determine how agile fits in with the rest of the organization’s project management framework.

Michelin is developing an agile approach to project, program, and portfolio management as well. The organization’s project managers, along with a steering committee and project sponsor, select the best approach for each project together. “We believe that agility could also be used in multiple ways—in everything we do,” said Mr. Husser. “In fact, the world is changing very quickly around us, so much so that we cannot afford anymore to have projects taking two to five years to deliver, because, during this time, the initial requirements have changed.”

Senior Partner, Progress Direction Michelin

“We believe that agility could also be used in multiple ways— in everything we do. In fact, the world is changing very quickly around us, so much so that we cannot afford anymore to have projects taking two to five years to deliver, because, during this time, the initial requirements have changed.”

PHILLIPPE HUSSER

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BRIDGING STRATEGY FORM

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