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.