Leveraging Best Practices: The Results of the 2002 Organizational Project Management Baseline Study

Originally published in the PMI Government SIG Newsletter

The Organizational Project Management Baseline Study has been helping organizations to understand the processes and capabilities by which they manage their projects. The 2002 Organizational Project Management Baseline Study is the fifth annual study of organizational project management practice conducted by Interthink Consulting Incorporated. Originally launched in Canada in the fall of 1997, the study has become an indispensable tool for benchmarking of project management practices world-wide.

While many organizations look to project management primarily as a means of ensuring performance on time and on budget, the ability to deliver to these targets is still today a matter of the quality and perseverance of individuals and teams than it is one of consistent, repeatable process. Process capabilities themselves continue to be less rigorous and mature than many organization managers expect or believe, and while some organizations serve as leading examples of best-in-class process capabilities, many more are still struggling with some of the fundamental principles of project management. As organizations continue to invest money, effort and resources in developing their project management capabilities, they want to ensure those investments produce clear and measurable results, and that they identify those improvement opportunities that will leverage the greatest return on their investment.

In evaluating the results of the 2002 OPM Baseline Study, we have endeavoured to uncover the information of most valuable to our participants and customers. The results are designed to answer two fundamental questions of greatest importance in both developing improvement programs and demonstrating the value of these programs to a senior management audience:

• What are the impact that project management processes have on project results?
• What are the drivers that characterize effective project management processes?

We are pleased to note that the results of the 2002 OPM Baseline Study, as with our previous studies, have continued to reinforce our thesis that effective projects result from effective processes. While the association has long been assumed, this is the first study in which it is demonstrated in a quantifiable manner. The results of this study demonstrate this association in a clear and convincing fashion, but in ways that may be surprising to readers.

While the link between process performance and project results is clearly made through the study, the next – and possibly more important – question is “what are the drivers that most clearly influence being able to create an effective process capability?” While organizations are ultimately seeking a consistent level of process performance, the challenge is where to effectively invest time and attention in order to most significantly realize performance results. The findings of this year’s study offer important insights into how project management can contribute to better organizational performance, and the best-in-class capabilities that differentiate the leading companies. They provide valuable insights into the results that are possible when organizations commit to a solid, reliable process capability, and some of the key steps that influence the attainment of these capabilities.

Some of the key influences on organizational best practices include:

• Program management – the management of portfolios of initiatives to attain a larger strategic goal – is a practice that is gaining wider attention in organizations as they develop the link between their strategic planning and project management capabilities. There is an appreciable improvement in process capability for those organizations that adopt an on-going database of project requests, whether formally or informally, although those organizations adopting a more formal approach also see an improved performance in the organizational capability areas.
• The estimation approach used by organizations to estimate their projects has in previous years had an interesting impact on process performance, and this year’s results are no different. Where a formal, bottom-up estimation approach is adopted, there is a clear improvement in process performance than other approaches – including statistical analyses of previous projects, top-down estimates or comparison to similar projects.
• As with every previous year, the correlation of risk management and overall process performance is one of the strongest ones we have found. Risk management continues to be a practice area that for many organizations is ignored, or is addressed only at the beginning of the project. Our research has consistently demonstrated that an emphasis on risk management can have widespread and significant impacts on how projects are managed organizationally, and it continues to be a leading indicator of organizational success.
• One of the greatest assumptions that has been made about project management is the role and impact of technology in improving organizational capability. Any use of integrated technology that is accessible to the project team demonstrated an impact on process performance, although the greatest impact is on groupware-based or team decision support environments. What is perhaps most noteworthy, however, is the impact on performance where technology is not used: there is a significant decline in process capability and particularly in the Risk Management capability area.

As important as demonstrating the impact of process, however, has been developing a better understanding of what process capabilities most clearly and directly drive overall project management performance: program management, project initiation, estimation, completion and success measures, risk management, technology, organizational structure and resource management. An understanding of these key indicators serves a valuable dual purpose: they identify those key drivers of change that should translate into significant improvements in process and organizational capability, and are leading indicators to look for in evaluating likely process performance. While exclusively focusing on these capabilities to the exclusion of all else will not guarantee overall improvement , they certainly serve as a strong basis for beginning the process evolution.

This year’s study indicated that the size of projects is increasing, their value is becoming strategically more critical, and the risk of failure is growing in terms of both probability and magnitude. More effective project management process is the critical enabler in allowing organizations to better face these challenges and more reliably produce results.