This paper was submitted for publication July 19, 2010, and is copyright to Jamal Moustafaev, ©  2010
Published on this site September 2010.

Introduction | The Steppe Winds and the "Virgin Lands Project" 
Lessons Learned From the Virgin Lands Project | The Story of Two Project Requests 
Some Project Portfolio Management Statistics | PART 2

Some Project Portfolio Management Statistics

Is improper or a complete lack of project portfolio management an issue in today's corporate world? Based on data released by the Bureau of Economic Analysis, apparently it is.

  • The US public and private sectors combined spend approximately $2.3 trillion on projects every year
  • This number accounts for a quarter of United States' GDP.
  • 84% of companies either do not conduct business cases for their projects or perform them on select key projects
  • 89% of companies are flying blind with no metrics in place except for financial data
  • 84% of companies are unable to adjust and realign their budgets with their business needs

If you extrapolate the figure of $2.3 trillion to the global level, you will arrive at a staggering amount of $10 trillion worldwide being spent on projects. End result? Close to $1 trillion in underperforming projects in the US and $4 trillion worldwide

These numbers clearly demonstrate that modern businesses are less than methodical or systematic when it comes to proper assessment and selection of their project mixes.

A common behavior and problem

Let us imagine a fictional example that demonstrates a common behavior and problem that exists in many organizations. The following is an impromptu conversation between Bob, director of mobile devices and Michael, senior vice president of product development.

Michael: "What's new in mobile phones?"

Bob: "Nothing much on our front; we are preparing for the release of our 'Notebook' product with advanced word editing, spreadsheet and e-mail capabilities. But I read in a press release that our competitor 'Mokia' is introducing a new cell phone with a 15-megapixel camera and 1,000 gigabyte storage for media files."

Michael: "Oh my God! They have beaten us again! We can't let this happen. I want you to concentrate on the improved camera and storage capabilities. There is an industry exhibit in January and I want us to showcase a product that would outperform their device. Get the design and engineering teams to work on it with you. This is a top priority from now on!"

How many times in your professional lives - regardless of what industry you are in - have you witnessed a situation similar to the one described above? How many times have you seen projects initiated based on an "on-the-spot" decision by your superior? In this story, what mistakes did Michael make?

In Part 2 we will explain the essential elements of project portfolio management, from which you may deduce the answers to this question.

The Story of Two Project Requests  The Story of Two Project Requests

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