Tuesday Oct 02, 2012

What Poor Project Management Might Be Costing You

For project-intensive organizations, capital investment decisions define both success and failure. Getting them wrong—the risk of delays and schedule and cost overruns are ever present—introduces the potential for huge financial losses. The resulting consequences can be significant, and directly impact both a company’s profit outlook and its share price performance—which in turn is the fundamental measure of executive performance.

This intrinsic link between long-term investment planning and short-term market performance is investigated in the independent report Stock Shock, written by a consultant from Clarity Economics and commissioned by the EPPM Board. A new international steering group organized by Oracle, the EPPM Board brings together senior executives from leading public and private sector organizations to explore the critical role played by enterprise project and portfolio management (EPPM).

Stock Shock reviews several high-profile recent project failures, and combined with other research reviews the lessons to be learned. It analyzes how portfolio management is an exercise in balancing risk and reward, a process that places the emphasis firmly on executives to correctly determine which potential investments will deliver the greatest value and contribute most to the bottom line. Conversely, it also details how poor evaluation decisions can quickly impact the overall value of an organization’s project portfolio and compromise long-range capital planning goals.

Failure to Deliver—In Search of ROI

The report also cites figures from the Economist Intelligence Unit survey that found that more organizations (12 percent) expected to deliver planned ROI less than half the time, than those (11 percent) who claim to deliver it 90 percent or more of the time.

This fact is linked to a recent report from Booz & Co. that shows how the average tenure of a global chief executive has fallen from 8.1 years to 6.3 years. “Senior executives need to begin looking at effective project delivery not as a bonus, but as an essential facet of business success,” according to Stock Shock author Phil Thornton. “Consolidated and integrated visibility into individual projects is the most practical solution to overcoming these challenges, which explains the increasing popularity of PPM technologies as an effective oversight and delivery platform.”

Stock Shock is available for download on the EPPM microsite at http://www.oracle.com/oms/eppm/us/stock-shock-report-1691569.html

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