Insights and Trends

www.pwc.com Insights and Trends: Current Portfolio, Programme and Project Management Practices The third global survey on the current state of project management

Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Special Thanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Survey Participants’ Profiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Project Management Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Project Management Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Contact Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Insights and trends: Current Portfolio, Programme and Project Management Practices 1

Executive Summary In today’s difficult economic times, In 2004, PricewaterhouseCoopers LLP organisations are constantly faced (PwC) invited senior executives and with the challenges of fiercely practitioners to participate in our first competitive and changing environments Global PM survey. The survey’s main driven by regulatory modification objective was to investigate whether a and organisational restructuring. higher maturity level would go hand in Environmental forces - competitive, hand with a higher project performance economic, technological, political, level. In 2007, PwC conducted a similar “CEOs in industries in the legal, demographic, and cultural - survey to determine the current state of throes of disruptive change create challenges and opportunities for PM maturity in organisations across the organisations. They must, therefore, world. The survey’s main objective was require radical innovation; if continuously adapt to the environment to identify current trends in PM, and their business cannot quickly if they are to survive and prosper. Top pinpoint the characteristics of PM that are create new products or management are thus confronted with the applied on higher-performing projects. critical task of analysing and improving Beginning with the first survey in 2004, services that customers will the ability of an organisation to change, PwC sought to find the leading practices buy, they will not survive. survive, and grow in this complex and of successful companies, followed by the However, innovation does changing global economy and volatile 2007 survey that validated three points: world. In order to stay competitive, • There is a link between higher not just mean end product or today’s organisations have been moving maturity levels and high project service changes – it from operations and business as usual, performance. sometimes now includes to project management as part of their • Senior management that supports PM- competitive advantage strategy. driven key initiatives achieves stronger taking costs out of processes The ability to successfully execute projects business results. or forming strategic is what drives the realisation of intended • Effective PM is vital to many alliances to collaborate.” benefits and the achievement of business organisations. objectives. Organisations that execute - PwC 15th Annual Global CEO Survey 2012: projects successfully employ effective Delivering Results, Growth, Project Management practices as a tool and Value in a Volatile World to drive change. Given the strategic impact that projects have on business, organisations must follow effective PM processes that capitalize on innovation; measure progress, value, and risks; and confirm that the right projects can be delivered in alignment with organisational strategy. Insights and trends: Current Portfolio, Programme and Project Management Practices 3

Now, with increased scrutiny over budgets • Employing an organisation’s • The adoption of Portfolio Management and “doing more with less,” efficiency and typical PM approach leads to (PfM) has not increased amongst effectiveness are key factors of successful accomplishments in achieving project organisations, but its use leads to organisations. We have reviewed the data scope, quality, and business benefits; increases in the key performance from the 2012 third edition of the survey however, lower performance levels indicators of quality, scope, budget, to help identify correlations between PM were noted in meeting schedule time, and business benefits. When and organisational success within our five and budget objectives. Survey data implementing PfM, we have found key performance indicators (delivering showed that organisations employing that the three largest ways to be projects on time, within budget, to their typical PM approach would more successful include aligning scope, to quality standards, and with meet or exceed the organisation’s the portfolio with the organisation’s the intended business benefits). In the quality standards 93% of the time; strategy; using an enterprise PM 2012 survey, we continued our analysis deliver within the project’s scope 92% Office (PMO) to manage the portfolio; to determine the current state of PM of the time; and result in meeting and conducting monthly reviews. maturity and the characteristics of higher- or exceeding the projected business Organisations employing these performing projects. The survey also set benefits of the project 89% of the time. approaches should expect to see an out to find out more about current trends While these results are encouraging, increased likelihood of portfolios that and best practices in PM. We evaluated the data also showed lower meet schedule, scope, quality, budget, what was working well, and where areas performance levels in the project’s time, and business benefits. for improvement were needed within schedule and budget. In these areas, • Leveraging efficient and effective the PM discipline. We also observed we find you would miss your project’s communication methodologies the following trends and common schedule and budget objectives positively impacted a project’s quality, practices, based on the survey results and approximately 30% of the time. scope, and business benefits, but subsequent detailed analysis: • Poor estimation during the planning showed a negative correlation with • As many as 97% of respondents phase continues to be the largest budget and schedule. This is the same agreed that PM is critical to business (32%) contributor to project failures. trend noted in the use of employing an performance and organisational • The percent of organisations that organisation’s “typical” PM approach. success, and 94% agreed that PM use established PM methodologies is Data further suggests that Executive enables business growth. stable, and employees are obtaining Management agrees that the use • We found that although PM the applicable certifications. Using of communication methods have a maturity levels are on the rise, these methodologies increases success higher positive effect on success of most organisations desire a higher in the key performance indicators projects than the other respondents maturity level. Approximately 32.1% of quality, scope, budget, time, and within the survey population. Based of organisations are continually business benefits. on their responses, there was a 7% striving to reach higher maturity levels • Private sector organisations with increase in delivering of scope, 4% by seeking to strengthen effective certified Agile practitioners are increase in meeting quality standards, team-building and skill development leading the current adoption and use 4% increase in delivering intended activities to improve team performance of Agile PM methodologies. However, business benefits, and 8% increase and promote high productivity, work organisations have not yet achieved a in finishing within or ahead of quality, and good morale. However, high level of maturity in implementing schedule. The largest increase (17%) most organisations also require Agile values and principles. We in the use of effective communication improvement in organisational found that 34% of respondents methodologies was found in finishing structure, human resource use an Agile PM methodology within budget. management, and quality assurance. within their organisations. Most • A combined total of 65% of our Nearly 30.7% of respondents organisations which employ an Agile respondents reported international believe their organisations do not PM methodology contribute the use of and national level involvement in their have suitable succession plans and Agile toward project success (59%), project which echoes the importance contingency plans in place for key project efficiency (59%), and enabling of organisational inclusion and project resources. We also found business performance goals (49%). collaboration, spanning departmental that higher maturity yielded higher and geographical boundaries. More performance within the five key than 80% of respondents reported that performance indicators. senior management supports their respective project; however, lack of executive sponsorship was the second largest factor that contributed to poor project performance. While a majority of the projects are supported by senior management, it appears that executive sponsorship should be improved in order to help projects achieve success. 4 Insights and trends: Current Portfolio, Programme and Project Management Practices

• 70% of respondents agreed that • Established PMOs result in projects • Earned Value Management (EVM) is suitable project organisational with higher quality and business more heavily relied upon and useful structures exist on their projects, benefits. Respondent feedback in the United States (U.S.), but has which clearly outlines the project team indicates a positive relationship yet to gain popularity or use due to a and reporting relationships. For those between the length of time a PMO lack of EVM expertise and experience who disagreed to the same question, has been established and successful in the remainder of the world. Most survey data reveals an undeniable project performance. In comparison to organisations that utilize EVM, positive correlation between organisations which said they do not contribute its use towards project organisations that do not have a use a PMO, or have had a PMO in place success (62%); as a useful tool to suitable organisation structure in for less than six years, organisations predict project success (73%); and place and those without appropriately who establish a PMO for six years or enabling leaders to use EVM metrics to defined and documented roles and longer reported higher performance assess project status (51%). responsibilities within the governance in delivering high quality (74%) and We hope that this report provides you, the structure. Since organisational achieving the intended business global PM community, with a thorough structure provides the foundation benefits (62%). view of PM trends, including: successful for roles and positions, hierarchical • Engaged, experienced, key staff leads practices, tools, certifications, and levels and spans of responsibility, it is to project success. Approximately training. Additionally, we encourage you not surprising to see such a positive 80%, of respondents agreed that to share this report with your colleagues correlation between these elements. project managers, business unit to help identify best practices across Poor organisational design and managers, quality managers, and your organisation and to promote PM structure can result in unnecessary budget managers have the relevant and its positive influence on business role and responsibility ambiguity and and suitable experience to lead a performance. confusion, a lack of accountability, and project to successful completion. less coordination among functions. • Training and staff development in the • There is evidence of alignments field of PM has grown drastically, in between project scope, project a variety of forums. Approximately portfolio, and organisational business 76% of survey respondents indicated strategy. Approximately 80% of PM training and development respondents agreed that there was opportunities were available, up 32% a strong correlation between their from 2007. Our survey noted 67% organisation’s strategy and the project of participants believe PM training portfolio. Approximately 70% of contributes to business performance. respondents also indicated there was Survey data also showed that a no conflict between project scope and majority of projects performed higher overall business strategy, which may in three of the five key performance prove to impact the performance and indicators - scope, quality, and achievement of project goals. With business benefits. increased alignment of projects with • The use of commercially available business strategy, organisations can PfM software drives higher levels of expect greater project portfolio impact portfolio performance and greater on business success. satisfaction with an organisation’s PM • Quality Management Systems may be practices. The majority of the increase a worthwhile investment for vendors. in performance and satisfaction is Respondents who strongly agreed that obtained by deploying specialized their organisation requires all vendors PfM software. Customization of to have Quality Management Systems Commercial off-the Shelf (COTS) had more projects (90% or greater), packages actually led to slightly lower meet their organisations quality levels of performance and satisfaction. standards versus those organisations • The Scrum process is the predominant that do not have this requirement in Agile PM methodology in use, with place. approximately 43% of respondents leveraging this methodology. At a distant second was the Lean and Test-Driven Development (TDD) methodology (11%). Insights and trends: Current Portfolio, Programme and Project Management Practices 5

Special Thanks PwC would like to thank the PM community, and the 1,524 respondents from 38 countries and within 34 industries who shared their insights with us. The success of the PwC Global PM Survey is directly attributable to the candid participation of these individuals around the world. The demands on their time are many and varied, and we greatly appreciate their involvement. PwC would like to extend special thanks to the Project Management Institute (PMI) for their support of our Global PM Survey. Mr. Jason Dolfi, PMI’s Manager for Organisation Products, led PMI’s reviews of the survey questions and report. Additionally, PMI shared the survey with their membership base, providing invaluable input into the survey. 6 Insights and trends: Current Portfolio, Programme and Project Management Practices

Introduction One of the many questions companies ask us is: Do organisations with a higher level of PM maturity achieve better project results? In 2004, we conducted our first study on this topic, and indeed found a link between higher maturity Increasingly, successful organisations levels and high project performance. employ project management (PM) to In this year’s survey, we continued this drive change and achieve their business analysis to determine the current state of objectives. Policy implementation, PM maturity and its linkages to project along with systems development success, business performance, and and implementation are some of the organisational success. initiatives being managed as projects in The other main goal of the survey was today’s dynamic world. to find out more about current trends As one of the leading professional and best practices in PM. We assessed services firms, PricewaterhouseCoopers whether leading projects scored high (PwC) has worked with numerous in terms of our five key performance organisations of various sizes, industries, indicators. By looking at these key and sectors within the field of PM. performance indicators, we can help Some organisations delivered projects organisations determine areas for growth consistently better than others across and development, or areas of high what we have called the five key performance to help drive business and performance indicators (delivering organisational success through the PM projects on time, within budget, to scope, discipline. As we evaluated organisations’ meeting quality standards, and with PM performance, there are four core the intended business benefits). Our elements that we have taken into account: observations have been that organisations processes, organisational structure, that have projects with higher people, and systems and tools. performance allow the organisation as a whole to perform better. Insights and trends: Current Portfolio, Programme and Project Management Practices 7

Organisation’s Core People Theoretically, finding a good candidate Elements Evaluation to fill a position should now be a very straightforward exercise. There have never been as many educated people in the world, nor has it ever been as simple for employers to tap this vast pool online. The reality is far different. High jobless rates persist in the U.S. and Europe, disproportionately among the young, even as businesses fret that they cannot Processes attract the digitally adept ‘Millennial’ generation to pursue careers in their A systematic and organised set of industries. Too many well-educated processes brings order and efficiency citizens of the Middle East and elsewhere to PM. Therefore, the existence of are not in the workforce at all. This is well-defined repeatable PM processes - the talent crunch. It is a complex and often grouped into a PM methodology frustrating challenge and it is being felt - differentiates those companies that are worldwide. There are challenges in able to consistently deliver high project hiring across most industries, as well as in results from those that do not. retention in some markets and industries, Aspects considered in this area include: as businesses compete for highly talented standardisation and institutionalisation people. of PM processes; prioritisation of Teamwork is an integral component of projects and application of a standard PM; therefore, the ability to manage project life cycle; utilisation of project people is an essential skill for project portfolio techniques; utilisation of managers. When it comes to project PM methodologies; and leveraging success, project or programme managers communication management best carry a great deal of the responsibility, practices. but success is also dependent on the performance of others who are in key project roles (e.g., project team Organisational members, project sponsors, customers, and stakeholders). Therefore, well structure developed people management skills are fundamental to a high PM maturity level. The way an organisation is structured is Aspects considered in this area include: fundamental to the outcome of their PM project staff skills and experience; performance. If organisational alignment development and training programme; is underestimated or completely ignored and an emphasis on PM certifications. by management, it can lead to lower project performance. Aspects considered in this area include: Systems and tools resource ownership; definition of clear roles and responsibilities; support Organisations purchase and create and involvement of senior and top systems and tools to automate and management; and usage of a Project support their PM processes. Oftentimes, Management Office (PMO). a great deal of money is spent on systems that are subsequently not used. Aspects considered in this area include: the use and benefits of leveraging software (PM, PfM, and Agile); and the benefits and use of earned value management (EVM). 8 Insights and trends: Current Portfolio, Programme and Project Management Practices

Methodology We conducted our third survey to identify leading PM practices and trends, and to determine the correlation between PM, business performance, and organisational success. The focus of our third survey was to continue analyzing the use and impact of PM activities in successful organisations. The survey was organised in three main sections. Section 1.0 of the survey focused on the background of survey respondents’ organisations. Section 2.0 of the survey focused on the management of a specific project, and included the following areas: Project Background, Factors Impacting Project Success, Governance, Scope Management, Risk Management, Benefits Realisation Management, Human Resource Management, Cost Management, Quality Management, and Change Control Management. Section 3.0 of the survey focused on the following areas: Project Portfolio Management, PMOs, PM Training, EVM, and Agile PM. From December 2011 through January 2012, 1,524 participants responded to the survey from 34 industries, across 38 countries. The data was gathered via a web-based quantitative survey, which consisted of 146 closed questions. The survey gives us insights into the collective opinions of these groups of people on a wide range of topics (project types, success factors, tools, and people aspects) and ‘best practices’ (organisational structure, maturity level, and project performance). In addition to group opinions and key trends, we calculated two essential indices that have been used for the analysis: maturity level and PM performance. Maturity level has been calculated by combining the answers to 73 of the survey questions within the areas of Governance, Scope Management, Risk Management, Benefits Realisation Management, Human Resource Management, Cost Management, Quality Management, and Change Control Management. The PM performance was computed by aggregating elements of individual performance measured as a percentage of projects that meet our five key performance indicators - delivered on schedule, within budget, to scope, meeting quality standards, and that deliver business benefits. As we evaluated organisations’ PM performance, there are four core elements that we have taken into account: processes, organisational structure, people, and systems and tools. This year’s survey consisted of similar questions to our prior surveys. However, in order to stay current with the PM discipline, some questions have been modified and/or added to draw more insight. In those instances where questions were the same or similar to prior surveys, we drew comparisons in order to show the trends from prior years.

Survey Participants’ Profiles Thirty-eight (38) countries are represented in the survey results: Figure 1: Survey Participants 10 Insights and trends: Current Portfolio, Programme and Project Management Practices

The largest participating industry was Figure 2: Survey Respondents Industries Information Technology (IT) at 22.4%. Consulting was the second largest participating industry at 11.7%. Other* industries included those sectors where <1% of the survey respondents were represented. Please refer to Figure 2 for the complete breakdown of industry representation. We also noted that 67% of participants reported working in the private sector and 33% in the public sector. Figure 3: Survey Respondents Positions Survey results showed relatively balanced representation from all organisation levels. The majority of the participants were Project Managers, Programme Managers, or Executive Managers. Refer to Figure 3 for the complete breakdown of participant positions. Insights and trends: Current Portfolio, Programme and Project Management Practices 11

Project Management Maturity One of the key findings from the 2004 are mainly due to the fact that the used the PwC maturity model used in survey was the correlation between organisational structure neither is suited our 2004 survey to maintain consistency strong PM performance and maturity to, nor supports the capacity of projects with our previous survey. We chose 2004 of PM practices in an organisation. required by the company’s business. as the base year to reflect on our first Generally, a higher maturity level was And, therefore, the organisation is not comprehensive study linking PM maturity linked to sustainable project delivery. aligned and does not fulfil its project and performance. It consists of the The 2004 survey also found that: “Those requirements, and hence is unable to following five levels: few cases where a higher maturity level maximise its performance.” To determine does not represent high performance the current level of PM practices, we Figure 4: PwC’s Project Management Maturity Model Key Finding: Project gain a comprehensive perspective on organisations were operating projects Management Maturity Levels the assessment, we also considered our within Level 1, 2, or 3. In 2012, the are on the Rise. previous research on PM theories and majority (62%) of organisations are economic studies, complemented by our operating projects within the Level 4 or The PM Maturity Level has been Firm’s extensive experience in project and 5 of maturity. This indicates a significant calculated by analysing the answers programme management activities. rise in PM maturity over the last eight to survey questions within the areas We continued the research in our 2012 years. Figure 5 shows a comparative of governance, scope, risk, benefits survey and found that 19.5 % of the study of the PM maturity between 2004 realisation, human resources, cost, respondent organisations are at the and 2012 respondents. As previously quality, and change control management. Level 5-Optimize, and 42.5% are at stated, the current survey showed a We compared this information against Level 4-Monitor, compared to 12.7% greater percentage of organisations at a organisations that report varying levels and 9.2% respectively in 2004. In 2004, higher level of PM maturity from previous of project success within our five key the majority (approximately 78%) of surveys. performance indicators. In order to 12 I n si g hts and trends: Current Portfolio, Programme and Project Management Practices

Key Finding: Most organisations desire a higher maturity level, but require Figure 5: Survey Respondents Project Management Maturity Model improvement in organisational structure, human resource management, and quality assurance. The targeted maturity level is the level that the respondents agree best fits their organisation according to the PM requirements of their business. Almost 50% of the respondents in the current survey indicated that their organisations are striving for continuous improvement in PM practices. Survey data indicated that organisations are seeking to standardize and enhance processes and tools, and thereby trying to achieve higher levels of PM maturity. However, More organisations are implementing order to stay competitive in the turbulent the survey shows that more than half PM tools in the four core elements business environment, but PM standards of the companies are not satisfied with of process, organisational structure, have also significantly increased. their current maturity level. As discussed, people, and systems and tools. In Process, organisational structure, organisations must seek to grow in line the current economic times, growth systems, and tools have all been enhanced with enhancements in PM methodology and process improvements are key to better meet business objectives. as external factors create an increasing factors contributing to the success PM takes costs out of processes and demand for efficiency and effectiveness. of organisations, and PM enables allows organisations to focus on In an ever-changing competitive this growth. As these elements are performance. PM practitioners look environment, a surprising 25% of the incorporated into an organisation’s PM to performance indicators to define respondents were neutral to establishing resources, they are adapted to meet the areas where PM methodologies can be sustainable PM improvements. However, particular needs of an organisation. maximized. Approximately 76% of survey the survey data shows 32.1% of Organisations have found that they respondents reported PM training and organisations are continually striving to still require the greatest need for development opportunities available reach higher maturity levels by seeking improvement in organisational structure, within their organisation, and more to strengthen effective team-building and human resource management, and practitioners are becoming certified in PM skill development activities to improve quality assurance. with an increased adaptation of Agile PM team performance, and stimulate high and EVM. Organisations are enhancing productivity, work quality, and good Key Finding: Advancements in their portfolio management systems as morale. Approximately 70% of survey PM methodologies leading to organisations grow and mature, and are respondents agree that a suitable greater organisational maturity seeing increased success within the five project organisation structure exists have raised the bar for standards key performance indicators. that clearly outlines the project team in project maturity. Effective PM tools create strategic structure and reporting relationships. alliances with vendors as well as other Effective communication methodologies As maturity levels indicate, there businesses as more tools are utilized and enable project teams and organisations have been significant increases in tasks can be outsourced. With the use of to increase quality, scope, and business organisational maturity since our 2004 external tools, resources, and channels, benefits success. report. In this competitive business organisations not only look internally to While seeking to enhance organisational environment, businesses focus on see where PM and process improvement PM maturity, it is important to create maximizing resources, efficiency, and can be adapted, but also look externally to an alignment between the project effectiveness through PM. Effective tools, their vendors to utilize PM methodology. scope, portfolio, and the organisation along with innovation, aid organisations Organisations that require vendors to business strategy. If properly aligned, to measure progress, increase value, have Quality Management Systems the organisational structure is suited to minimize risks, reduce costs, and promote report 90% or more of their projects meet support the capacity of projects required the on-time delivery of projects. Not quality standards. by the company’s business. Therefore, the only have organisations raised the bar in organisation can fulfil its requirements and maximize performance. Insights and trends: Current Portfolio, Programme and Project Management Practices 13

Organisations additionally seek best practices for the implementation of • Cost Management - As budget improvements in human resource organisational strategy through successful assumptions and financial management. Human resource projects. Our analysis showed that as performance are leading indicators management and succession planning respondents are demonstrating higher of project success, organisations seek remains an area to be developed as 30.7% PM maturity, the three main areas where to establish formalized processes to of respondents believe their organisations organisations have formalized processes manage project costs. do not have suitable succession plans and in place to manage performance are the – 54.9% of respondents agree that contingency plans in place for key project following: the underlying budget assumptions resources. Less than half of respondents • Scope Management - The largest have been clearly documented and agreed that the approach to quality percentage of survey respondents assessed, and these are considered assurance is risk-based, and is consistent indicated formal processes in place for to be reasonable. with organisational standards. Scope Management. This statistic is – 57.5% of respondents agree that “Poor estimates during project planning” a clear indicator of high maturity as funds are appropriately allocated is the largest contributor to project organisations have grown to anticipate to the project, consistent with the failure. Furthermore, less than half needed changes throughout the project stage, and are only released (46.5%) of survey respondents agree project lifecycle, supporting changes when board approval has been that an effective, formal process is in within a project, and promoting given. place to manage changes to baseline traceability. As projects anticipate Organisations are focusing on quality plans. This statistic indicates that changes within the project lifecycle, and cost while managing the scope of organisations may underestimate they are better prepared to deliver on the engagement in order to reach higher project requirements and have difficulty time, within scope, and within budget levels of performance. Internal controls efficiently and effectively adapting to without hindrance. and processes allow organisations to changes throughout the project lifecycle. – 66.6% of participants agree that better respond to changing project Changes in scope may have ramifications additional change control processes demands, decreasing the time spent in each performance indicator and PM and deliverable controls are in place adapting to change, and increasing processes, organisational structure, throughout the project lifecycle to project success. people, and systems and tools must be in assure quality of project delivery. place in order to adapt to these changes. • Quality Management - Survey Key Finding: Organisation Without the implementation of these responses indicate that organisations maturity is directly correlated core elements, projects run the risk of not have established organisational with organisational success. meeting schedule, scope, budget, quality, enablers for developing capabilities to and business benefits. aggregate best practices, and methods Organisations that operate at higher Performance indicators allow for evaluating best practices and levels of maturity are on average more organisations to track and record project capabilities. These practices monitor, successful than those operating at lower success. As PM tools are adapted, track, and record quality throughout maturity levels. Organisations that are organisations can better track these core the project lifecycle to indicate where able to implement and optimize effective elements. the project is successful, and where PM tools will receive greater benefits Key Finding: Higher maturity the project seeks to improve. This realisation. When an organisation, which yields higher performance. measurement allows the organisation has a methodology in place to improve to pinpoint areas to focus on, project performance and management Over 62% of organisations are in the encouraging a higher quality of and focuses on continuous improvement, Level 4 or 5 of PM maturity and have performance. it will have a competitive advantage increased standards for PM. We analyzed – 62% of participants agree that strategy in place to remain successful in the data to determine if organisations adoption of quality assurance the marketplace. Successful organisations and their leadership are putting emphasis strategy effectively addresses scope identify the four core elements on sustainable project and programme of testing, timing, responsibility, (processes, organisational structure, management processes, and aiming for approach, pass/fail criteria, people, systems and tools) needed to higher levels of maturity to realise higher corrective action processes, and achieve benefits realisation. Elements performance and other benefits. sign-off. are in place to adapt to performance As project maturity strives to produce – 62.9% agree that document control needs in the areas of time, scope, budget, sustained outcomes in a predictable, processes are in place, including quality, and business benefits. These controllable, and reliable manner, it appropriate identifiers (naming organisations will be better suited to is essential for most organisations to conventions), version control, meet changing environmental factors and establish formal, effective processes to audit trails, reviews, approvals, business needs, as well as to cut costs and promote high performance through the referencing, and confidentiality maximize efficiency and effectiveness. project lifecycle. High maturity identifies labels/controls. 14 Insights and trends: Current Portfolio, Programme and Project Management Practices

Project Management Performance Survey respondents were asked a series of questions related to the projects in their organisational portfolio. Over 67% of the projects within the Figure 6: Average Size of Projects in US$ organisation’s portfolio were valued at less than US$10M. The majority (42%) of portfolios were comprised of greater than 100 projects, whilst 25% of the users have less than 20 projects within their organisations’ portfolios. Time spent on projects and the amount of staff appears to not be affected if an organisation has few or many projects. The majority of projects were less than three years in duration (90%) and required fewer than 50 staff (87%). Only 3% of respondents have an average project team size of more the 200 staff. We also asked respondents to provide the Figure 7: Number of Projects in the Respondent Organisations’ Portfolio primary reason why a project is initiated. Of the organisations that responded, the main drivers for establishing a project is for business imperatives (40.2%) and to generate revenue (30.1%). Due to current economic climate, it is reasonable that an organisation would have a sizeable amount of their projects focused on generating revenue. The remaining three reasons to establish a project, each representing less than 10% of the population polled, included reducing costs, implement changes due to regulatory requirements, and refreshing obsolete technology. Now that we have established that Figure 8: Drivers for Establishing Projects within Respondents’ Organisations projects are being managed at a higher level of maturity, we wanted to evaluate how project management performance scored high in terms of our five key performance indicators. Organisational project management performance includes four core elements: processes, organisational structure, people, and systems and tools. Therefore, we categorized our findings within these four core elements. Insights and trends: Current Portfolio, Programme and Project Management Practices 15

Processes As previously noted, a systematic and area include the following: standardisation and institutionalisation of organised set of processes brings order project management processes; prioritisation of projects and application and efficiency to project management. of a standard project life cycle; utilisation of project portfolio techniques; Therefore, the existence of well-defined utilisation of methodologies in project management, portfolio management project management processes - often and Agile project management; leveraging communication management best grouped into a project management practices; and emphasis on project management certifications. methodology - differentiates those companies that are able to consistently deliver high project results from those that do not. Our key findings in this Figure 9: Key Performance Indicators for a Project Implementing the Typical Organisations Approach to PM Key Finding: Employing an organisation’s typical project management approach leads to accomplishments in achieving project scope, quality, and business benefits; however, lower performance levels were noted in meeting schedule and budget objectives. While not all organisations approach project management in the same way, they do apply certain principles of project management when managing their projects. The global project management survey provides insight into the state of today’s organisational approach to project management. Not surprisingly, an organisation’s approach to project management directly affects the outcome of project’s key performance indicators. Survey respondents were asked to rate a project that best represents their organisation’s approach to project management. Of the projects that met the five key performance indicators, if an organisation was to employ their “typical” approach to a project, it would meet or exceed the organisation’s quality standards 93% of the time; deliver within the project’s scope 92% of the time; and result in meeting or exceeding the projected business benefits of the project 89% of the time. While these results are encouraging, the data also showed lower performance levels in the project’s schedule and budget. In these areas, we find you would meet your project’s schedule and budget objectives approximately 70% of the time. 16 I nsi ghts and trends: Current Portfolio, Programme and Project Management Practices

Key Finding: Poor estimation during the planning phase continues to be the largest contributor to project failures. In order to determine what is contributing to poor project performance, we examined the reasons organisations were failing to meet their desired outcomes. Figure 10 provides some insight into the current contributors to lower performance levels when implementing an organisation’s approach to project management. Poor estimates, lack of executive sponsorship, and poorly defined goals and objectives make up the top three contributors to a project’s underperformance. These three factors account for 53% of poor project performance. The top six contributed to 78% of poor performance when implementing an organisation’s approach to project management. Poor estimates in the planning phase continue to be the single largest cause for poor performance in projects and the single largest worsening trend. For instance, in our 2004 survey, participants contributed project underperformance 17% of the time to poor estimates and missed deadlines, whereas today that number has increased to 32%. Improvements in any of the key factors found in Figure 10 will lead toward better implementation of an organisation’s approach to project management and, in turn, improve project scope, schedule, budget, quality and business benefits performance. The remainder of this report provides insight into both positive and negative factors influencing project performance as an organisation implements its approach to project management. Figure 10: Factors contributing to poor project performance when implementing an organisation’s approach to PM Insights and trends: Current Portfolio, Programme and Project Management Practices 17

Key Finding: Reported use of established PM methodologies is stable and employees are obtaining applicable certifications. Respondents reported using a wide variety of methodologies, as illustrated in Figure 11. The most prevalent methodology was Project Management Institutes (PMI) Project ® Management Body of Knowledge (PMBOK) or modifications thereof, with 41% of responses. A variety of Information Technology (IT) methodologies were reported, with Agile and waterfall being the most prevalent. Many other methodologies were listed, although some would not strictly be considered PM methodologies. A significant number of respondents reported using combinations of multiple methodologies; ® the most common methodologies included in these combinations were PMBOK , ® PRINCE2 , and IT methodologies. The data related to use of established methodologies is predominantly consistent ® with PwC’s 2007 PM survey. Of note, adoption of industry-standard PMBOK and ® PRINCE2 methodologies has increased slightly (38% in 2007 vs. 44% currently). Focusing on these two methodologies, the regions with the highest reported use of ® ® PRINCE2 relative to PMBOK are Australia, Europe, and South Africa, as shown in Figure 12. Employee certification is a common theme among companies that reported using a PM methodology. 90% of respondents from organisations reporting the use of project management methodologies indicated their organisations have individuals certified in the preferred methodology. This indicates general acceptance that individuals must be trained in PM methodologies in order to capture their benefits. Cost performance is an example of the positive impact of individual certifications, especially in light of the budget performance challenges documented through this survey. 38% of organisations with individuals certified in their preferred PM methodology reported successful budget performance, 6% higher than for organisations without certified individuals. Figure 11: Reported use of PM methodologies ® ® Figure 12: Comparison of reported use of PMBOK and Prince2 methodologies in different regions 18 Insights and trends: Current Portfolio, Programme and Project Management Practices

Key Finding: Using Figure 13: Percent of Respondents that Reported their Organisations are Successful in the Established Project Management Five Performance Indicators, for Organisations that do and do not Use Project Management (PM) Methodologies increases Methodologies success in the key performance indicators of quality, scope, budget, time and business benefits. For each of the five performance indicators, survey data indicate that using a preferred PM methodology increases the chance of organisations meeting project objectives. As shown in Figure 13, the percent of organisations that are successful in each dimension is higher for organisations that use methodologies than those that do not. The increase in performance is between 5% and 9%, with scope performance Key Finding: Private sector organisations with certified Agile being the most improved. Similarly, practitioners are leading the current adoption and use of Agile organisations that meet objectives for Project Management methodologies. However, organisations have a key performance dimension less that not yet achieved a high level of maturity in implementing Agile 25% of the time are more likely to not values and principles. use project management methodologies, with performance spreads between 3% A growing project management area is the adoption of an Agile Project Management and 9% between those that do and do methodology. Agile methods emphasize incremental delivery of working products, not use methodologies. Response data focused on maximizing customer value. Through establishing a cycle for intermittent indicate that organisations with the product delivery, Agile Project Management assumes that changes and improvements highest project success rates use in- will be incorporated throughout the product development life cycle. Change is house methodologies or combinations viewed as a welcome opportunity to improve the product and make it a better fit to of methodologies. This result indicates the business. We found that 34% of respondents use an Agile Project Management these organisations may have a greater methodology within their organisations. A majority of these are in the information investment in PM methodologies that technology industry (71%), and have certified Agile practitioners (62%). meet their unique situations. Most organisations which employ an Agile Project Management methodology contribute the use of agile towards project success (59%), project efficiency (59%), and enabling business performance goals (49%). Approximately 17% of projects using an Agile Project Management methodology meet the five key performance indicators. Whilst this is lower than the overall key performance indicators, it is reflective of organisations continuing to understand and refine the use and application of Agile Project Management methodologies within the context of their organisational culture and projects. As shown in Figure 14, the project Figure 14: Project Manager Role on manager currently serves as a traditional Agile Projects phase-based project manager on the majority (67%) of agile projects. In this scenario, the project manager and other team members have specified and distinct functions, which often leads to independent efforts within the project team. As organisations continue to mature their understanding of Agile Project Management methodologies, the role of the project manager should also evolve and align with key agile concepts of integrated, self-directing teams in which team members take responsibility for managing their tasks and commitments. Insights and trends: Current Portfolio, Programme and Project Management Practices 19

Key Finding: The adoption of Portfolio Management (PfM) has not increased amongst organisations, but its use leads to increases in the key performance indicators of quality, scope, budget, time and business benefits. The 2004 survey report addressed portfolio performance as a secondary effect of enhanced PM capabilities. One of the primary conclusions drawn from the survey was that maturity levels did matter and that they improved not just project performance, but that of the portfolio of all projects. The 2007 survey results pointedly defined the emerging practice and stressed that its purpose was to promote the achievement of strategic business objectives. The report highlighted the increase in organisational adoption of PfM (53%, a 7% increase from 2004), and drew attention to the degree to which respondents leveraged various PfM capabilities, with Project Selection being the most common. In 2012, the survey results do not show an increase in adoption (remained at 53%), but they do provide a much more robust look at the effects of PfM and the tools that are available to support it. Since the adoption rate has not increased, we wanted to show where PfM is being used by depicting which industries and sectors are using PfM in Figure 15 below. Figure 15: Adoption of Portfolio Management by Industry The data analysed make a compelling case for the benefits that can be achieved with an effective deployment of PfM processes and dedicated software. 20 Insights and trends: Current Portfolio, Programme and Project Management Practices

Benefits of Adopting PfM • Adoption of PfM has positive effects on both project performance and performance of the overall portfolio at all portfolio scales (portfolios with project investments valued at US$60B). • Combining portfolio scale with the dimensions of average project duration (ranging from < 1 year up to 6-10 years), the number of projects managed in the portfolio (<20 to 100+) and the number of people involved in the average project (teams of 10 or less to 200 or more), we investigated the effect of PfM at varying levels of portfolio complexity; the gains of adopting PfM hold at all levels of complexity. • Users of PfM agreed that their organisation’s project management capabilities were effective and efficient at much higher levels than those that did not use PfM. • The benefits of deploying PfM are compelling for organisations at the margins of performance. Nearly two thirds of respondents that employ PfM reported that more than 90% of their organisation’s projects perform to expectations on the five key performance indicators. In contrast, seven out of ten organisations that do not employ PfM reported that less than 10% of their projects met the key performance indicators. This phenomenon was even starker for highly complex portfolios. Key Finding: When implementing PfM, we have found that the three largest ways to be more successful include aligning the portfolio with the organisation’s strategy; using an enterprise PMO to manage the portfolio; and conducting monthly reviews. The most important factor in the success budget targets, and 40% as likely to Globally, nearly 70% of respondents who of PfM is alignment of managing the report that less than 25% of their projects reported using PfM also reported that portfolio with the organisation strategy. did. Respondents were also asked “Are their Enterprise Project Management The positive effects of strategic alignment portfolio priorities aligned with the Office (PMO) was responsible for lead to higher levels of portfolio organisation’s overall strategy?” Those the effort. Results varied by sector performance, and increases stakeholder who gave a positive response also were and region with private enterprises satisfaction with their organisation’s more likely to report high rates of projects deploying PfM through their Enterprise project management practices at all meeting the key performance indicators. PMO at a slightly higher rate than their levels of portfolio scale and complexity. In all five indicators, respondents with public sector counterparts, and Europe Respondents were asked to judge the a positive perception of alignment having the lowest level of Enterprise statement “There is a strong correlation were twice as likely to report more PMO involvement among the regions between my organisation’s strategy and than 75% of their projects meeting the of the world. With the exception of the our project portfolio.” Respondents who performance targets and less than half smallest scale portfolios, the portfolio gave a positive response reported higher as likely to report less than 25% meeting performance levels of respondents rates of portfolio performance on the targets. Organisations that align their whose PfM programs are managed by five key performance indicators. The organisation’s overall strategies with their an Enterprise PMO are consistently effect was particularly strong for within project portfolios and prioritise their higher than those whose portfolios are budget, where organisations with a high portfolios’ priorities with the strategy are managed by other groups or individuals, correlation between the portfolio and more likely to have portfolios that meet resulting in an increased likelihood of strategy were twice as likely to report schedule, scope, quality, budget, and portfolios that meet schedule, scope, more than 75% of their projects met business benefits requirements. quality, budget, and business benefits requirements. Insights and trends: Current Portfolio, Programme and Project Management Practices 21

More than half of all respondents reported that they reviewed their portfolio on a Key Finding: Leveraging monthly basis. 20% reported more frequent reviews. Only 4% reported reviewing efficient and effective their portfolio less than quarterly. Respondents with monthly review cycles reported communication methodologies significantly higher rates of performance on scope, quality and business benefits. positively affected projects’ Satisfaction with budget and schedule performance did not vary as much with changes in review frequency. Quarterly portfolio reviews and reviews less frequent quality, scope, and business than quarterly are associated with a decline in the benefits of PfM. The risk of reduced benefits performance levels; performance increased in all five performance indicators for organisations with a low however, lower performance review frequency. levels were noted in meeting schedule and budget objectives. Figure 16: Distribution of portfolio management responsibility. We looked at survey questions related to the use of communication in a project to understand its effect on organisational success through the five key performance areas of budget, scope, quality, business benefits, and schedule. In the review of three uses of communication management methodologies, (transparency in projects, status reporting at all project levels, and visibility of governance and leadership to the project team and stakeholders), a majority of respondents agreed communication management is in use in their organisation. Sixty-two percent (62%) of respondents agreed there was transparency and clear communication around key decisions and actions; 66% of respondents agreed that status reporting at all levels is effective and includes relevant, timely, verified and reliable information in the appropriate format, and 59% of respondents agreed that governance and leadership are clearly visible to the project and stakeholders. 22 Insights and trends: Current Portfolio, Programme and Project Management Practices

We further examined the respondents that agreed that these types of communication were evident on their projects, and found that projects that employed effective and efficient communication methods were performing better in the areas of delivering project scope (68%), meeting quality standards (66%) and delivering intended business benefits (58%). While these results are encouraging, the data also showed that projects employing effective communication mechanisms are only finishing within budget 37% of the time and finishing on schedule only 27% of the time. This is the same trend noted in the use of employing an organisation’s “typical” project management approach. As mentioned earlier, respondents indicated that the number one reason for project failure is poor estimates in the planning phase. Effective communication may not alleviate project failures due to budget and scope estimating. Figure 17: Use of Effective Communication and its Impact on Key Performance Indicators (All Respondents) To provide a deeper understanding of the use of communication methods, the Executive Management level responses to the questions related to employing effective and efficient communication methods were examined. Based on their responses, the five key performance indicators improved. There was a 7% increase in delivering of scope, 4% increase in meeting quality standards, 4% increase in delivering intended business benefits, and 8% increase in finishing within or ahead of schedule. The largest increase in the use of effective communication methodologies was found in finishing within budget, which increased by 17%. This suggests that Executive Management agrees that the use of communication methods have a higher positive effect on success and failure of projects than the others groups within the survey population. Figure 18: Use of Effective Communication and its Impact on Key Performance Indicators (Executive Management Responses) Insights and trends: Current Portfolio, Programme and Project Management Practices 23

Organisational Structure As noted previously, the way an organisation is structured is fundamental to the outcome of their project management performance. If organisational alignment is underestimated or completely ignored by management, it can lead to lower project performance. Our key findings in this area include the following aspects: resource ownership; definition of clear roles and responsibilities; support and involvement of senior and top management; and usage of a Project Management Office. Key Finding: Project Management was reported to be critical to business performance and organisational success and enables business growth. For this year’s survey, we asked participants if project management is critical to business performance and organisational success. As many as 97% of respondents agreed that project management is critical to business performance and organisational success and 94% agreed that project management enables business growth. In close association, revenue generation was determined to be one of the top scoring drivers for establishing a project which further demonstrates the critical role that effective project management and execution plays in achieving intended results for the project and the broader organisation. We further probed this area and asked respondents to estimate the percentage of their projects that deliver required business results. Results further validate the declining rate of project failures whereby nearly 58% of the respondents reported that their projects deliver required projected business benefits greater than 76% of the time. Key Finding: The majority of organisations are involved at the national and international levels and the majority of respondents agree that projects are supported by senior management. Globalisation and the economic crisis have forced many organisations to rethink their strategies and change the way they do business in order to thrive in uncertain economic times. Project management is no different and is evidenced in our finding, which suggests that organisations are expanding their sphere of involvement from an internally focused and driven project to a much broader and global approach to accomplishing project and programme goals. For example, as noted in Figure 21, a combined total of 64% of our respondents reported international and national level involvement in their project which echoes the importance of organisational inclusion and collaboration thus spanning departmental and geographical boundaries. Furthermore, approximately 84% of respondents reported that senior management supports their respective project which may be a contributing factor to project success especially for projects that are expanding from departmental to national and international levels. The appropriate level of organisational involvement and stakeholder buy-in and support are important elements of any programme and should not be underestimated and/or overlooked especially given the unique complexities of global and multi-national faceted programs. Figure 19: Levels of Organisational Involvement 24 Insights and trends: Current Portfolio, Programme and Project Management Practices

Key Finding: Projects with Key Finding: There is evidence Key Finding: Quality suitable project organisational of alignment between both Management Systems may be a structures were also found to project scope and portfolio and worthwhile investment for have appropriately defined and organisational business strategy. vendors. documented roles and Organisational business strategy is Quality Management Systems establish responsibilities within the intended to drive all decisions within a framework for how organisations governance structure. an organisation. It provides a direction, manage key processes and are creating All too often, organisations under a rallying point, and basis for decision the next wave of thinking about the estimate the impact poorly designed making. Hence, it only stands to reason management of projects and potential organisational structures can have on that organisational business strategy benefits that can be realised. They can programme effectiveness. In our 2007 should form the basis and drive project also help new projects start off on the Global PM survey, we explored the portfolio and scope. Effective portfolio right foot by ensuring processes meet importance and influence of organisation management should map well to recognised standards, clarify business and structure and overall project performance organisational strategy and business project objectives and avoiding expensive which revealed the higher the alignment goals. Misalignments and conflicts in implementation mistakes which can put between organisational and business these areas can threaten the success of project and business outcomes at risk. needs, the higher overall project a programme with the most effective Within the 2012 survey, we examined performance. We revisited the premise in project manager and staff - this can the extent to which organisations are our 2012 survey. We asked respondents if make or break a programme. We requiring vendors to have Quality suitable project organisational structures asked respondents two questions. Management Systems and its impact on exist on their project(s) that clearly First, to respond to the statement: the achievement of quality objectives in outlines the project team and reporting There is a strong correlation between projects. There appears to be a positive relationships. It was interesting to see my organisation’s strategy and our correlation between organisations such favourable responses where more project portfolio. Approximately 80% that require vendors to have a Quality than 70% of respondents reported the of respondents provided a favourable Management System and their projects’ presence of a suitable organisation response. Similarly, we asked respondents ability to meet the organisation’s quality structure. to respond to the statement: There is no standards. While only 35% of our conflict between the project scope and my respondents reported a requirement For those who responded unfavourably organisation’s overall business strategy. to have all vendors to have a Quality to the same question, we conducted cross Results suggest that approximately 70% Management System, respondents who comparisons to assess the relationship of respondents perceived there was strongly agreed that their organisation between organisational structure and no conflict between project scope and requires all vendors to have Quality appropriately defined and documented overall business strategy, which may Management Systems had more roles and responsibilities within the prove to be impacting the performance projects (90% or greater) meet their governance structure. Survey data and achievement of project goals. With organisations quality standards versus reveals an undeniable positive correlation increased alignment of projects with those organisations that do not have this between organisations that do not have business strategy, organisations can requirement in place. a suitable organisation structure in expect greater project portfolio impact on place and those without appropriately business success. defined and documented roles and responsibilities within the governance structure. Since organisational structure provides the foundation for roles and positions, hierarchical levels and spans of responsibility, it is not surprising to see such a positive correlation between these elements. Poor organisational design and structure can result in unnecessary role and responsibility ambiguity and confusion, a lack of accountability and less coordination among functions. Insights and trends: Current Portfolio, Programme and Project Management Practices 25

Key Finding: Established project management offices result in projects with higher quality and business benefits. Respondent feedback indicates a positive Figure 20: Comparison of Project Success Rates Based on Length of Time Using a PMO relationship between the length of time a PMO has been established and successful project performance. In comparison to organisations which said they do not use a PMO, or have had a PMO in place for less than six years, organisations who establish a PMO for six years or longer reported higher performance in 2 of the performance indicators, as shown in Figure 22. Survey data indicates that using an established PMO will result in projects delivering high quality (74%) and achieving the intended business benefits (62%). Employing a PMO is one of many methods to institute standardized project Key Finding: A majority of organisations do not conduct regular management processes and project controls in an organisation. Although the evaluations of their PMO and also do not consistently measure majority of organisations (66%) currently benefits or returns from the PMO. use a PMO, this is a decline from 2007, when 80% of organisations reported As noted in earlier, using a PMO contributes to improved project performance; having a PMO. However, organisations however, organisations currently do not consistently evaluate and measure the which do not use a PMO reported similar success or returns on investment (ROI) of the PMO. As shown in Figure 23, 29% of success rates in the key performance organisations never evaluate their PMO and 30% conduct evaluations on an annual indicators with organisations than had basis. However, the 14% of organisations which evaluate their PMO on a monthly a PMO for six years or longer, indicating basis also measure their PMO for ROI (65% of the time). Those organisations that that other types of project organisational never evaluate their PMO measure their ROI only 9% of the time. Organisations can structures or methodologies are being benefit from finding similar positive correlations between using a PMO and project employed. This is evidenced by the data, performance, through conducting more regular evaluations of their PMO, as well as, which reports that 23% of organisations measuring for ROI. not using a PMO structure use an agile methodology. Organisations which continue the use Figure 21: Rate of Measuring for PMO ROI Based on Frequency of Evaluating of a PMO for longer timeframes benefit PMO Success Factors from greater familiarity and adoption of project processes throughout the organisation, translating into better project performance. Organisations with a PMO implemented for six years or longer have successfully communicated PMO standards across the organisation at a significantly higher rate (66%) than those with a shorter term project management office (47%). 26 I n si g hts and trends: Current Portfolio, Programme and Project Management Practices

People Despite the challenges facing organisations in hiring highly talented people, it is vital to project success to have a project management team that has the right skill sets, experience and training to enable project success. Our key findings in this area consider the following: project staff skills and experience; and development and training programmes. Key Finding: Engaged, experienced key staff leads to project “Talent shortages and success. mismatches are impacting The project manager is a critical component of meeting the key performance profitability now. One in indicators. 87% of respondents reported successful project budget management within four CEOs said they were their organisation also reported that their project managers have the relevant and suitable experience managing projects similar in industry, project size, and business unable to pursue a market area. In contrast, only 15% of respondents who reported their organisations did not opportunity, or have had have project managers with relevant and suitable experience reported that their to cancel or delay a organisations have successful business unit managers. The data suggests that trained project and business unit managers increases project budget success. strategic initiative because Survey data also indicated that engaged business unit managers have the highest of talent. One in three is correlation with project success. Other key staff types that contribute to project success concerned that skills include dedicated and skilled quality managers, and trained and skilled quality review shortages impacted their staff. Approximately 80% of responses to questions regarding these four staff profiles (See Figure 25) agreed that staff from their organisation meet these success profiles. company’s ability to With these skilled professionals in place, the data suggests that an organisation may innovate effectively.” avoid poor project performance. - PwC 15th Annual Global CEO Survey 2012: Delivering Results, Growth, and Value in a Volatile World Figure 22: Percentage of Respondents that Agree Staff Meets the Success Profiles Insights and trends: Current Portfolio, Programme and Project Management Practices 27

Key Finding: Training and staff development in the field of project management has grown drastically, in a variety of forums. We asked survey participants whether their organisation utilize some form of project management staff development. Approximately 76% indicated opportunities were available to obtain training, up 32% from Figure 23: The Breakdown of Training Options Organisations are Using 2007. Respondents were then asked the question: “Which medium does your company utilize to have project management training delivered?” As shown in Figure 26, classroom settings and online self-studies were the top two training options being used in organisations today. The breakdown of training options organisations are using is depicted in Figure 25. Over half the participants agreed that ample time and adequate technology was provided for PM training and development. Survey data also showed that 55% of respondents felt training was continuously improving from lessons learned and new information. Since these numbers are just slightly over half, organisations may benefit from improving in these areas. The survey also showed that 67% of participants agreed that project management training contributes to business performance. As noted in Figure 26, of the respondents Figure 24: Trainings Impact on Business Performance that indicated training was available, survey data showed that a majority of their projects performed higher in 3 of the 5 key performance indicators - scope (70%), quality (69%) and business benefits (59%). However, respondents that indicated training was available also reported lower project performance within the budget (39%) and schedule (29%) key performance areas. This statistic isn’t surprising since respondents indicated that the number one reason for project failure is poor estimates in the planning phase. Current training programs may not include budget and schedule estimating in the planning phase. Survey data suggests that organisations may benefit from developing robust training programs around the area of estimating. 28 I n si ghts and trends: Current Portfolio, Programme and Project Management Practices

Systems and Tools As noted previously, organisations purchase and create systems and tools to automate and support their project management processes. But oftentimes, a great deal of money is spent on systems that are subsequently not used. The key findings in this area consider the following: the use and benefits of leveraging software (project management, portfolio management, and Agile); and the benefits and use of earned value management. Key Finding: The use of commercially available PfM software drives higher levels of portfolio performance and greater Figure 25: Types of PfM Software in Use satisfaction with an organisation’s project management practices. Commercial off-the Shelf packaged software has grown in sophistication since the last survey and in this edition we asked about PfM software adoption for the first time. 56% percent of respondents who reported using PfM also reported using software, with 21% using Commercial off-the Shelf packages, 19% using Commercial off-the Shelf packages with customization, and 17% reporting use of internally developed software. The majority of the increase in performance and satisfaction is obtained by deploying specialized PfM software. Customization of Commercial off-the Shelf packages actually led to slightly lower levels of performance and satisfaction. Internal development of tailored applications offered mixed results with portfolios at the smaller end of the scale seeing improvements in performance but less consistent gains for mid to large scale portfolios. Key Finding: The Scrum process is the predominant Agile Project Management methodology in use. Most organisations which are using an Agile Project Management methodology employ the Scrum process, as shown in Figure 28, and the second most common is Lean and Test-driven Development (TDD). Data indicates that Scrum practices are the most well-known and/or most frequently used Agile PM methodology. Figure 26: Projects Using Agile Tools/Processes Insights and trends: Current Portfolio, Programme and Project Management Practices 29

Key Finding: Earned Value Management (EVM) is more heavily relied upon in the United States and is found as a useful tool, but has yet to gain popularity or use due to a lack of EVM expertise and experience. In the 2007 Global PM Survey, the top under EVM. EVM is a management three reasons identified by respondents methodology through the integration for project failure were bad estimates/ of scope, schedule and costs used to missed deadlines (schedule), scope objectively measure project performance. changes (scope) and insufficient The third survey takes a closer look at the resources (costs) which are all internal use of Earned Value Management and its project factors. These factors, commonly correlation to the success of projects in referred to as the ‘triple constraint’ in organisations. the project management framework, The survey showed that 40% of are combined and measured under participants use EVM in their organisations with the United States having the most respondents that always Figure 27: Reasons for Not Using EVM in Organisations use the methodology, followed by Australia and Canada. The main reason respondents cited for rarely or never using EVM in their organisation is due to a lack of EVM expertise and experience. This is consistent with the organisations that do not have certified EVM professionals, which were 68% of the respondents. The survey results indicated that project management training contributes to high performance across the key indicators; therefore more training on EVM may be needed within organisations. Other reasons identified for rarely or not using EVM are listed in Figure 29 where the high cost/time commitment, and tedious data collection and reporting procedure were the next main areas. As shown in Figure 30, the main Figure 28: Main Practitioners of EVM by Organisational Role practitioners of EVM within organisations are project managers who are primarily responsible for the project’s scope, schedule and resources, followed by programme managers that manage a portfolio of projects. 30 I n si g hts and trends: Current Portfolio, Programme and Project Management Practices

The top three industries that reported their organisations always or usually use EVM EVM has been used by half of the survey in their organisations were Information Technology (42%), Consulting (26%) and respondents for over 5 years to track Telecommunications (21%) as shown in Figure 31. projects, with the Defense, Energy and Information Technology industries using the methodology for over ten Figure 29: Main Practitioners of EVM by Industry (10) years. The survey data showed that EVM is a requirement for 32% of organisations with projects within US$1 million to US$5 million and 40% for ones that are more than US$5 million. In the Information Technology industry, it is a requirement for projects (21%) in excess of US$10 million to use EVM. The majority (54%) of the Public Sector required EVM for projects valued at less than US$5M. The Public Sector also required EVM (23%) for projects valued at US$20M or more. Most organisations that utilize EVM attribute the use of EVM towards project success (62%); as a useful tool to predict project success (73%); and enabling leaders to use EVM metrics to assess project status (51%). Organisations that are using EVM have projects that successfully met three of the key performance indicators: to scope (82%), meeting quality standards (84%) and delivering business benefits (80%). However, the data showed that organisations using EVM did not show a majority of projects being complete on time (35%) or within budget (45%). This is consistent with the survey findings on project management training, where the results indicated more robust training programs are required in the areas of budget and schedule. While EVM is a preferred methodology for organisations to manage their projects’ scope, cost and schedule, qualified or knowledgeable staff is needed to validate and interpret the data; while proactive project management and risk mitigation is needed to effectively use the information to execute corrective actions to get the project back on track. Having experienced and engaged EVM staff leads to project success. Insights and trends: Current Portfolio, Programme and Project Management Practices 31

Appendix Portfolio Management and Software – The European Perspective The purpose of the European Appendix is to see if there was a greater adoption rate and any further insights into Portfolio Management and Software in Europe. Summary 133 respondents within Europe provided information about their PfM practices. Adoption in Europe is 54% which is in line with the global benchmark of previous years and is slightly higher than the 53% adoption rate from this year’s global survey. Themes which emerged in Europe echoed the Global picture. What was striking amongst European respondents was how critical the role of prioritisation criteria played. Key Finding: Organisations that adopt portfolio management can experience greater satisfaction in their project performance. The positive effects of PfM can be seen Figure 30: Adoption of Portfolio Management by Industry in user satisfaction with each of five key indicators of performance and on additional characteristics of project management (Governance, Risk Management, Resource Management, and Change Control). Overall portfolio management leads to overall higher satisfaction with project performance; however, the European data showed different aspects of improved satisfaction in project performance in portfolios of different sizes of value: • Less than $1M: projects performed better on delivering project quality when using PfM. However, for smaller portfolios (less than 20 projects) the results were more marked where, the use of PfM can improve satisfaction with project performance to deliver on schedule and realizing business benefits. • Between $1M and $10M: (or portfolios of between 20 and 100 projects) PfM can improve satisfaction on project performance on schedule, and on budget. • Greater than $10M: there was improved performance on budget, on delivery of scope and quality when using PfM. 32 Insights and trends: Current Portfolio, Programme and Project Management Practices

Key Finding: Align your portfolio with the organisation strategy to improve satisfaction of project performance around budget, scope, and quality and benefits realisation. Responses in Europe strongly echoed the global picture in that the most important factor in the success of PfM is alignment of the means of managing the portfolio with the organisation strategy. The positive effects of strategic alignment lead to the higher levels of stakeholder satisfaction with project performance around budget, scope, quality and benefits. Key Finding: Apply Prioritization Criteria to improve benefits realization, quality and budget management. Agreed criteria from which to prioritise the portfolio of projects has been a critical factor to be considered within portfolio management. Agreeing criteria improves satisfaction on project performance indicators. In particular it improves satisfaction in the delivery of scope, quality and benefits realization. Key Finding: Conduct Monthly Portfolio Reviews to improve satisfaction with project performance to meet quality standards, deliver to scope and benefits. Performance of the portfolio should be reviewed by all stakeholders to ensure it meets their needs. For respondents who say the performance of their portfolio is reviewed by all stakeholders monthly, there was a positive correlation in regards to the number of projects meeting quality standards, delivering within scope and realising benefits. Where the portfolio is reviewed more frequently than just monthly, each of the five key performance indicators has a positive correlation. This remains consistent with this year’s global survey data. Key Finding: Use Portfolio Management Software and an Enterprise PMO to manage your Portfolio to improve your satisfaction with project performance. Within Europe the use of PfM Software is regarded as a key enabler of Project Portfolio Management. The research concluded that software makes a positive impact on satisfaction regarding project performance, in particular around: budget, scope, quality and benefits realisation. Globally, nearly 70% of respondents who reported using PfM also reported that their Enterprise PMO was responsible for the effort. Results varied by region and sector with private enterprises deploying PfM through their Enterprise PMO at a slightly higher rate and Europe having the lowest level of Enterprise PMO involvement. The portfolio performance levels of respondents whose PfM programs are managed by an Enterprise PMO are consistently twice as high as those whose portfolios are managed by other groups or individuals. This holds true for all indicators of performance. Insights and trends: Current Portfolio, Programme and Project Management Practices 33

Acknowledgements PwC would also like to thank the Anh-Tuan Le following individuals for their Experienced Associate contribution in preparing this Stephen Leftwich year‘s report. Senior Associate Matthew Liberty Public Sector Marketing Director Randy Loyer Director Shobha Mahabir Senior Associate Douglas McNaught Senior Consultant Peggy Sue McNulty Senior Associate Jeffrey Anthony Jason Dolfi John R Merrick Benchmarking & Survey Services Manager Manager of Organisation Products Experienced Associate Melanie Avery Project Management Institute (PMI) Gavin Mitchell Senior Associate Kimberly Easterling Senior Associate Kaushiki M Bagchi Manager Nannette L Mitchell Manager Shannon Espersen Senior Associate Kenneth Barr Manager Robin L Myers Manager Scott G Fass Senior Associate Laura Beet Managing Director Eliza Nagle Associate Steve Genn Director Rob Blumor Director Mary Beth Papadakis Partner Christian Germain Senior Associate Alexandra K Bono Director Jonathan Pollock Experienced Associate Sandie Grimshaw Associate Stephen Crane Partner John Ready Consultant Michael Hall Director Hannah Chung Senior Associate Sae Ro Manager Joigie S Hayes Senior Associate Heather Collins Manager Carly Rockstroh Manager Lauren M Hernandez Senior Associate Angela D’Agostino Senior Associate Anoop Shroof Graphic Design Manager Ime Husken Director Lauren D’Amato Strategy and Operations Analyst Harry Stefano Senior Graphic Designer Sun H. Hwang Project Management Institute (PMI) Kathryn Dame Experienced Associate Christina Vanecek Senior Associate Irene John Public Sector Marketing Manager Amanda Dick Experienced Associate Martijn van Zomeren Experienced Associate Adil Khan Assistant Manager Manager Kim Wolkins Joint Business Relationship Coordinator Insights and trends: Current Portfolio, Programme and Project Management Practices 35

Contact Details Amanda Clack United Kingdom [email protected] +44 (0)20 7804 6930 Scott Fass United States [email protected] +1 (703) 918 1254 Marla Graeber United States [email protected] +1 (267) 330 2517 Darren Honan Australia [email protected] +61 (3) 8603 3104 John Ready United States [email protected] +1 (703) 918 1641 36 Insights and trends: Current Portfolio, Programme and Project Management Practices

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