by Dharam CW2 | May 31, 2024 | General
Many PMOs recognize digitalization as an essential step in their organizations’ journey toward project management maturity. As a result, the Project Management Office (PMO) must shift its focus from project governance and delivery to supporting digital transformation.
To keep up with the evolving demands and needs of an increasingly digitized world, digital transformation has to be drifted through organizations of all shapes and sizes. However, many realize that successful digital transformation entails changing foundational cultures, structures, and methodologies and implementing digital tools. As organizations expand to accommodate this change, the PMO’s role within those organizations must change to do the same.
Digitalizing PMOs
Digital transformation is a familiar idea. Businesses constantly look for new ways to adapt and leverage emerging technologies to improve their business processes. Before the pandemic, PTC research found that 70% of organizations had or were working on a digital transformation strategy.
The PMO is crucial to achieving an organization’s strategic goals. If PMOs are to be an organization’s strategic drivers, they must expand their role beyond its traditional boundaries. They must assume their strategic role by leading change and capitalizing on opportunities in the digital space. PMOs must be at the forefront of emerging technologies, constantly evaluating opportunities and implementing new strategies. The recent pandemic and sudden shift to remote work have highlighted the challenges of developing community and culture through digital spaces. Here are some ways that PMOs can help the organization drive into digital transformation.
Five ways the PMO drives digital transformation
- PMOs can inspire and encourage change.
- PMOs act as the strategic arm
- PMOs provide support and insight.
- PMOs properly manage transformations.
- PMOs enable successful digital adoption.
Five ways the PMO drives digital transformation
How PMOs can aid an organization’s digital transformation
The nature, ownership, and stakeholders of IT strategy, governance, and management activities are changing dramatically due to digitization. According to Gartner research, 87% of organizations prioritize digitization. Furthermore, technology is now responsible for 77% of an executive’s top priorities.
Advantages of PMOs
As a result, PMOs are under intense pressure to transform. Unfortunately, their project, program, and portfolio management processes are designed for predictability and consistency rather than the speed and flexibility required to meet digital demand. Most PMOs have three significant advantages, which are either inherent due to the PMO’s role or location or have been developed through previous experience:
- A neutral enterprise perspective: As capital allocation and portfolio prioritization approaches change to enable the funding flexibility required for digital work, the PMO’s impartial, enterprise-wide perspective on demand, investment, and resource utilization is hugely valuable.
- The ability to operate via influence: As organizational boundaries become more fluid and who “owns” project management becomes less certain, influencing and enabling others, rather than direct ownership, becomes even more critical.
- Stakeholder insight: As digitization spreads throughout the business and accounts for an increasing proportion of work, there are more first-time stakeholders and greater stakeholder complexity for each piece of work. Understanding the preferences of these various stakeholders and experiencing synthesizing their feedback becomes critical in delivering results from digital work.
Elements Driving Digitalization
Traditional businesses worldwide have long recognized that digital transformation is the key to thriving in a fast-paced world. Digital transformation involves integrating digital technology into all aspects of a business. It fundamentally alters how businesses operate and provide value to customers. It increases efficiency, transparency, customer experience, employee engagement, and culture and saves time and money. Modern digital tools have elevated the project management process to new heights.
The following are the seven critical elements of a successful strategic digital transformation framework:
Elements Driving Digitalization
- Strategy and Leadership
An effective game plan is an obvious but frequently overlooked component of a digital transformation strategy. Instead, what matters is “how and who” formulates the strategy. A basic strategy and the appropriate technologies can help you digitize or digitalize your business, but transformation requires the right mindset and guidance. As a result, strategy combined with the right leadership is the first and most important component of an effective digital transformation strategy.
Visionary leadership combined with the appropriate digital transformation strategy can achieve a better, smoother, more cost-effective, and time-effective plan for your business’s transformation.
- Culture Change and Communication
Prepare for a massive cultural shift. A company’s clients and employees are typically resistant to significant changes, making implementing any transformation challenging. However, any successful digital transformation program must include culture. Therefore, giving your employees advanced training in good communication will be advantageous.
- Discuss the digital transformation strategy with your employees and how it will benefit all stakeholders.
- Conduct training sessions with your employees ahead of time to prepare them.
- You can prepare your employees by demonstrating the importance of aligning culture with new initiatives.
- Optimization of the Process
Every business has various processes and operations that can be improved to make workflows more efficient and effective. As a result, when developing a digital transformation strategy, consider business process optimization.
The strategy must optimize the business process while meeting customer and internal team goals. The digital transformation strategy must cover all interconnected business processes to achieve maximum output.
- Data Curation
One of the primary reasons for implementing digital transformation is to eliminate your business’s pain points for your team and your customers. But how will you know what these aches and pains are?
Data analysis and integration can assist you in locating them. People frequently choose their preferred technologies when developing transformation strategies before analyzing their data. Data analysis and the dissemination of its results can assist the team in identifying the best solutions to problems, leading to developing a better digital transformation strategy and making the most of the transformation process.
- Technologies to be Implemented
Finding the right technologies for your business is one of the most crucial steps in creating a digital transformation strategy. Introducing new technologies into your business will necessitate a significant financial investment, so it must be done correctly to avoid the need for additional funds. Any impactful strategy for digital transformation will always include options and budget constraints to help you make the best decision possible. Whether dealing with legacy system updates, application modernization, or implementing entirely new digital systems, you must find the best technology.
Some cutting-edge technologies that must be incorporated into your digital transformation strategy are:
- Cloud and Distributed Platforms
- Data Analytics & Artificial Intelligence
- Digital Experience and Digital Reality
- Team Structure
Harvard Business Review says digital transformation is about people, not tools. As a result, team structure is a determining factor in delivering results by the Digital Transformation Strategy.
The scope of the project should determine the team structure. The following components should be included in the digital transformation initiative:
- Pack of Leaders
- Business Experts
- The cast of Coders and Designers
- Results – How to Measure the Success of Your Digital Transformation Strategy
Your company’s digital transformation outcomes will greatly influence how you lay out your strategy. The outcomes will always vary depending on the practices and technologies used. Your digital transformation strategy’s success is dependent on its agility. First, of course, you must stick to your detailed strategy, but you must also be open to changes if things don’t go as planned.
By developing an effective, clear, and robust digital transformation strategy, you can ensure your company’s digital transformation goes as smoothly as possible. A digital transformation strategy is similar to a personalized road map for significant changes in your business operations. However, it requires significant financial investment, time, and technical expertise.
From Traditional PMO to Agile
Traditionally, PMOs have focused on maintaining project control to complete projects on time and within budget. However, in today’s increasingly complex and changing competitive environments, agile management is gradually displacing more traditional management methods; PMOs that remain anchored in this “classic” management model risk disappearing if they do not set the following objectives:
Transforming the PMO
- Empowering PMOs in the organization’s value streams
Organizations are now focusing on the value they provide to their customers and how different areas and departments contribute to that value creation. Suppose PMOs stick to their command and control model to ensure that projects are delivered on time and within budget. Their contribution to the organization’s value streams will be marginal, and senior management will view them as an unnecessary expense for the company.
- Collaboration and agility at all levels of business
Silo-based organizational models need to gain ground in agile and collaborative environments. As a result, PMOs must evolve beyond simply providing Project Managers with the tools they need to complete the organization’s projects.
On the one hand, PMOs must maintain open lines of communication with senior management to align the Project Portfolio with the organization’s goals. On the other hand, it serves as a reference point for stakeholders and project work teams, providing real-time information on project status and support at all levels for proper project implementation.
- Towards Agile Project Portfolio Management
Change is the norm in this new competitive environment, with highly volatile markets demanding businesses to bring products and services to market as quickly as possible. As a result, company objectives can shift dramatically quickly, necessitating a rethinking of project portfolio prioritization. This phase is where PMOs must adapt to this new environment and manage key project management issues like prioritization, resource management, budgets, or delivery dates in an agile manner, as well as learn to react to changes in their project portfolios in an agile and efficient way without losing sight of the organization’s objectives.
Post-pandemic challenges for PMO
If PMOs establish these three goals, they might avoid extinction because senior management will no longer recognize their value to the organization.
It will be challenging, and the Project Management Office will face several challenges as it adjusts to the new reality. In particular, the PMO will face some challenges for its role to be perceived as critical to the organization’s value streams:
- Coincide the project portfolio with the overall strategy of the organization.
- Resource management is a real challenge for PMOs.
- Responsiveness to changes in the project portfolio.
- Fluent in communication with the organization’s senior management.
- Embrace Agile Leadership.
- Standardization of processes and workflows.
- Renewal of project portfolio management tools.
Mitigating mediocre implementation of Programs
There are always equal chances of success and failure in programs/projects. As a result, it is critical to understand how to avoid and overcome project failure. There are numerous reasons why a PMO succeeds or fails. Still, the most common reasons for failure are often not related to process or technology issues but to “people issues” in an organization.
How to avoid PMO Failures
Here are the most common reasons why PMOs fail:
- Adopt the Proactive Approach
After many years, project managers gain the skills and knowledge needed for the current project from their experience. As a result, an experienced and highly skilled project manager is equipped to deal with customers and avoid project failure. If you are new to project management, consult a professional mentor to discuss your concerns and receive appropriate advice based on their experience. If you have project management experience, you should apply your skills and knowledge to the project and be aware of the common causes of project failure.
- Plan the Project’s Strategy and Project Implementation
The most important stage of any project is planning. Most of the time, proper attention is not given during the planning stage. If you plan properly, you will increase the project’s chances of success. After scheduling your project, use the Project Management Life Cycle to begin project execution.
- Manage the Project Goals
It would be best to document the project’s decisions, actions, and outcomes before beginning, during, and after completion. To avoid project failure, it is always necessary to ensure project deliverables and work appropriately with customer requirements. Never rely on understanding, verbal agreements, or memory for project implementation decisions.
- Avoid Unrealistic Expectations
Always set realistic expectations and time frames with stakeholders, team members, or customers to meet your project’s deadline. This move is related to the proper project start but goes deeper until completion. To avoid project failure, realistic expectations for team members must be set based on their capabilities. It would help if you encouraged them to work enthusiastically and push themselves beyond their comfort zone to meet the project’s objectives.
- Track Project’s Progress
Project planning will assist you in determining where your project should be now. In addition, you should know how much of the work has been completed, whether your work is on schedule, proceeding as planned, and so on. These three parameters govern any project and are critical in preventing project failure.
- Identify Risk Factors
The best way to avoid risk is to identify, analyze, and respond to risk factors. So, if you identify the risks and potential issues early on in the project, your project team can avoid them with appropriate actions. In addition, identifying and resolving risk factors will assist the project manager in lowering the likelihood of project failure. As a result, you can perform proper risk management and avoid project failure.
- Use Correct Methodology
One of the most important decisions a project manager must make is the methodology to use for project management. What you choose will have a significant impact on teamwork. However, each methodology has advantages and disadvantages depending on the project type and scope. Here are some top project management methodologies to consider.
- Waterfall method
- Agile/Scrum
- Hybrid approach
- Critical Chain Project Management
- Integrated Project Management Technique
- Critical Path Method (CPM)
All project management methodologies cannot be regarded as the best for all projects, so one can understand the project requirements and select the best option. The correct methodology will assist you in achieving the project goal within the specified time frame, thereby avoiding project failure.
- Focus on Stakeholder’s Requirements
As we all know, a project will only succeed if it meets its objectives and exceeds the expectations of its stakeholders. Therefore, to be successful in project management, all team members must be actively involved in the project and committed to its success. Devoting entails writing down the following stages:
- The competent initiative assists the team in implementing various tasks throughout the project life cycle.
- Adequate funding ensures the organization’s cost-generating department has enough money to fund the projects.
Final Thoughts
In today’s fast-paced and dynamic business environment, agile working methods might provide significant added value that should be noticed.
Digitalization is making projects more complex. As a result, the use of technology to manage projects is growing, and project teams must be cross-functional to achieve project goals. Agile project management provides an opportunity to respond quickly to new requirements and be more visible in the market. For organizations that use a traditional approach to project management, the transition to an agile PMO is part of their digital and agile transformation.
It should be noted that this is not an evaluation of “better” or “worse” methods. When used correctly, each project management method can reveal its strengths. It is critical to think about, use, and improve them.
by Dharam CW2 | Mar 15, 2024 | General
Managers who practice both strong management and effective leadership skills are successful project managers. Management skills are different from leadership skills. Effective leaders develop new leadership skills to enhance the ones that help them succeed as managers.
Organizations require effective leaders to achieve their strategic goals through programs and initiatives. Therefore, organizations need successful project/program managers who are also effective leaders. But what kind of leadership skills do project managers require? Are project management skills insufficient?
Project management differs from leadership. However, although project management differs from leadership, the two have some similarities. For instance, the performance of a project manager and the leader’s efficacy are both judged in terms of the performance of the followers—the team’s performance. As a result, focusing on team performance is a critical component of building project managers’ leadership skills.
Leadership Effectiveness
Leadership Effectiveness
On a macro level, leadership effectiveness is defined by a leader’s ability to gain support and influence throughout an organization to guarantee that everyone is going in the same direction to achieve common goals. It effectively measures a leader’s ability to lead, influence, manage, advice, and build their team members. The total growth and performance of the teams may be used to assess leadership effectiveness. Those who report high levels of productivity, performance, employee happiness, and well-being indicate high levels of leadership effectiveness.
A good leader inspires the best in others. These leaders understand how to create the ideal corporate vision, establish the proper values, and assist employees in focusing on and improving their skills. Great leadership reflects great performance, not just complex numbers. Workers and the organization will improve if leaders establish a great corporate culture and help employees thrive.
Program management
According to the Standard of Program Management – Fourth Edition, Program management is “the application of knowledge, skills, and principles to a program to achieve the program objectives and to obtain benefits and control not available by managing program components individually.” Program management involves aligning program components to ensure goals are achieved and benefits are optimally delivered. Program management is performed by a program manager authorized by the organization to lead the team(s) responsible for achieving program goals and objectives.
Ways to improve leadership effectiveness in Program Management
Ways to improve leadership effectiveness in Program Management
- Ensure clarity and visibility of goals
You may begin your path to improve leadership effectiveness in your business by encouraging leaders, managers, and executives to focus on objective clarity and visibility. This move has multiple aspects. First and foremost, the goals must be very clear. As a result, goals must be SMART for effective leadership, and adopting an OKR approach will make sense.
Second, for comprehensive visibility, the goals must be communicated to everybody. On the one hand, everyone in the team has to understand the organization’s goals and their role in attaining them.
- Facilitate accountability and responsibility
Second, exercising accountability and responsibility is critical for leadership success. Encourage your leaders to take accountability for their actions. The goal is to encourage them to be interested in increasing their leadership effectiveness. This aspect requires determining which skills and abilities to be acquired, as well as aspects such as emotional intelligence and empathy. When your leaders seek to improve themselves, they usually set a good example for others to follow, increasing their effectiveness as leaders since they may start a positive trend.
- Create a culture of feedback
Leadership effectiveness is heavily influenced by a leader’s desire to improve oneself. It is optional to self-assess the deficiencies and work on upskilling in this situation. Instead, it is critical to foster a feedback culture. First and foremost, it is vital to provide feedback to employees on their performance and to assist them in improving and growing along the way. This move will immediately influence organizational goals and define increased effectiveness.
Second, encourage your leaders to be receptive to employee input as well which will assist them in seeing and comprehending the gaps in their leadership style that may impede their success as a leader. Creating a feedback culture can promote improved outcomes, eventually enhancing leadership effectiveness.
- Build trust and transparency
Trust and openness are required for leaders to influence, direct, and build their teams to success. When employees trust their supervisors or leaders, they will follow them fully and offer their all. If not, following their manager will be a pointless exercise limiting leadership effectiveness.
Similarly, it is critical to be open and honest with all employees. Secrets, nepotism, preferences, and biases will be self-defeating if you want your leaders to inspire everyone collectively. Instead, everyone must be treated equitably, and all processes must be transparent to acquire team trust and influence them.
- Focus on continuous performance management
Effective leadership is not just about motivating and encouraging team members to follow a leader or manager but also about doing so in a way that leads to achieving a certain objective or high level of performance. As a result, boosting leadership effectiveness necessitates emphasizing continuous performance management.
Employees grow and develop when their leaders or managers regularly monitor and track employee performance and give frequent interventions and corrective steps to minimize risks or problems. As a result, they can motivate and inspire their team members, resulting in increased leadership effectiveness.
- Respect differences and promote inclusion
Members of each team come from various backgrounds, bringing with them different perspectives, ideas, and opinions. An effective leader accepts these differences, appreciates them, and recognizes their value. To boost leadership effectiveness, you must cultivate an inclusive culture. In addition, your leaders must understand the important skills and competencies each team member brings to the table and how the multiple views and perspectives offer the ideal breeding environment for creativity and success, resulting in leadership effectiveness.
- Foster a growth mindset
The last recommended practice for increasing leadership effectiveness is cultivating a growth mindset. It would be best to encourage your leaders to have a growth mindset during all interactions or choices they make. For example, when dealing with a team member, they must keep the employee’s personal and professional development in mind. Likewise, when making a strategic choice, they must link it with the organization’s goals and how it will eventually contribute to its success. With a development mentality, your leaders will guarantee that they lead effectively, strategically, and in the greatest way possible.
Leadership in Project Management
Leadership in project management is a vital ability for completing the project effectively. Leadership in a project setting, like leadership in other areas of business, necessitates demonstrating many talents and behaviors. Leadership is essential to ensure your initiatives’ success, from team direction to project governance.
Leadership and project management go hand in hand. You oversee the project and lead the team as the project lead. Setting the vision and encouraging the team to work together to accomplish it is a vital component of leadership. You can see how significant that is in a project environment. Delivering any project requires a team effort. While some teams work without a clear leader, in today’s business, it is more customary for someone to be in the leadership role, guiding and directing the team toward their goals.
5 Essential Project Leadership Skills
Influential leaders draw on many essential project management skills and competencies. The top five project management leadership skills are:
5 Essential Project Leadership Skills
- Communication
One of the essential project management characteristics is communication skills. Communication skills are essential for project leaders since their job requires collaboration. You can only collaborate efficiently if you can communicate clearly. Leaders can communicate ideas to people and groups in person, over the phone, or through other modes of communication. Therefore, communication is one of the most important abilities of a program manager, especially in a leadership role.
- Team leadership
The leader establishes the vision. They motivate others around them. Someone with outstanding project leadership skills fosters team agreement and togetherness while managing day-to-day team activities.
Team leadership on projects entails establishing an atmosphere in which everyone may thrive. People are drawn to the project culture that surrounds them. Stakeholders want to participate in the project because they know you will complete the task while creating a pleasant working environment.
- Motivation
Leaders inspire people to act even when they are not technically in control. As a program manager, you figure out what makes the other team members feel like they’re doing their best, and you do your best to deliver it to them.
Everyone is driven differently, and a person’s motivation can shift over time. Great leaders realize these distinctions and enable their employees to accomplish their best by fostering a happy work environment.
- Crafting solutions
Empowering the team and the larger stakeholder community to participate in developing solutions is part of fostering a positive working culture. That entails removing obstacles so each team member may fulfill their work and contribute new ideas without worrying about something getting in the way. Empowering leaders will also drive decisions down the hierarchy to the lowest possible level, allowing specialists to judge the solutions required to keep the project going.
- Conflict resolution
Conflict is inevitable when introducing or altering anything. However, effective leaders understand how to use conflict for good since the finest solutions emerge when ideas are challenged.
Conflict may benefit teams because it allows all voices to be heard and opposing viewpoints to be expressed, frequently leading to a better solution and more effective project outcomes. However, leaders must be prepared with conflict resolution tactics to recognize and address conflict before it becomes a problem for the team.
The Challenges of Leadership Effectiveness
The Challenges of Leadership Effectiveness
- Development of managerial effectiveness
To improve their leadership effectiveness, project leaders must acquire the following skills:
- Time management
- Task prioritization
- Strategic thinking
- Goal-setting ability
- Good judgment
These are essential skills for a project leader to deliver effective projects and handle the possibly competing demands of many duties. Without them, a leader is more prone to burnout from focusing on irrelevant matters and achieving little of the planned tasks and objectives.
- Inspiring and Motivating the Workforce
Motivating and inspiring others to follow you and act in a specific manner is a skill that some people appear to be born with, and others must learn. However, whether you have an inherent talent for motivating others or not, it is a skill that every project leader must have to motivate their worldwide workforce.
Passion is an important aspect of inspiring and encouraging people. Passionate leaders ignite the fire in their team members, allowing innovation to flourish and encouraging everyone to participate. In addition, effective leaders can naturally share and correctly convey their team’s and stakeholders’ enthusiasm and drive.
- Developing Employees and the Rise of “Servant Leadership.”
“Servant leadership” is based on the idea that leaders should not just delegate responsibilities but also consider themselves servants of the people they manage. As a result, their actions are driven by what is best for their team or workers rather than by what is best for themselves, which might manifest itself in the following ways:
- Close collaboration between management structures and employees
- Active participation in the growth of their teams
- Leading by example and embodying the ideals that leaders want to see in their team dynamics
- Using value systems to motivate teams to act rather than spreading fear
- This managerial style is infused with sincerity and humility.
A project leader who can find a balance between the servant-leader management style and more antiquated, authoritarian methods will be able to inspire and encourage their workforce.
- Leading a Team
All diverse cultures and viewpoints must cooperate and contribute to leading a project team effectively. Whether forming a new team or taking over an existing one, leaders must be able to give the support their team requires to cope with and navigate change or to create something entirely new.
Determining the sort of assistance required might take time and effort. Teams are as distinct as the individuals that comprise them. Project leaders must be extremely attentive to detect the demands of their workforce. What works for one person may not work for another. Leaders must be able to modify their management style in response to the demands of their teams.
Final Thoughts
In today’s firms, competent project managers must also be effective leaders. Therefore, successful project managers may use their inventive and creative skills to assist them in acquiring leadership skills that will complement their project management skills by recognizing the difference between project management and leadership and adopting the roadmap to becoming effective leaders.
The shared component of project management and leadership is the yardstick by which the performance of the project manager and the leader is measured. The performance of a project manager and the efficacy of a leader are both judged in terms of the performance of the followers, i.e., the team’s performance.
As a result, improving leadership skills for project managers with an emphasis on skills to increase team performance should be an essential factor in the project management leadership skill development process. Project managers’ essential leadership skills begin with motivating and inspiring teams and individuals. These aspects can be developed via negotiation and communication, listening and influencing, and team-building skills, emphasizing leveraging these talents to improve overall team performance.
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by Dharam CW2 | Jan 19, 2024 | General
Project management is becoming an essential aspect all around the world. But, many businesses need help to complete projects successfully owing to a mismatch between business strategies and project management. They require assistance in determining the relationship between business strategies and project management. Alignment is essential to get a competitive edge and meet business objectives. Therefore, project management has grown its importance and is now critical in many firms.
Constraints Confront Projects
Projects are any temporary activity with a start, an endpoint, and specific performance objectives. Three constraints confront projects:
(1) Time
(2) Budget
(3) Performance
To achieve the organization’s goals, it is considered that the above three constraints need to be fulfilled. Therefore, project management is critical to attaining corporate objectives and is regarded as the organization’s backbone. And it is critical to achieving strategy, company goals, and intended outcomes.
Project Management
Project management uses specific knowledge, skills, tools, and techniques to deliver value to people. Project management has emerged as a critical concern for many worldwide businesses. Many project management implementations have been effective, while others have been deemed a failure. Projects are seen as the organization’s backbone, with success implying a great deal for an organization’s ability to compete. A project is described as a planned set of related tasks that must be completed within a specific time frame and particular costs and other constraints.
A Six-Step Technique That can be Useful in Avoiding the Worst Disasters in Project Management
A six-step technique that can be useful in avoiding the worst disasters in project management is:
Step 1: Determine the project’s scope.
Step 2: Establish the intended goal
Step 3: Describe each project component task.
Step 4: Determine the key players.
Step 5: Establish schedules for each project component.
Step 6: Evaluate, revise, and reallocate.
The successful beginning and execution of initiatives are largely dependent on strategy. Many businesses need help with misaligned projects and a systematic approach to aligning project management with business strategy. Organizations are better equipped to achieve their organizational goals by linking their initiatives to their business strategy. Project strategy should be linked to the project’s goals and objectives to achieve its desired competitive position.
Business Strategy
Business strategy is a complete collection of actions or activities that direct the use of a firm’s resources to achieve the vision and goals of the business and provide a long-term competitive advantage. Strategic management involves translating strategy into action to operationalize strategic objectives and gain a competitive advantage.
To ensure that strategies are translated into actions, they must be operational, which includes characteristics such as structuring an organization to support successful performance and enabling success through the way an organization’s various resource areas, such as people, information, Finance, IT, and so on, are managed. As a result, companies that implement their strategic plans may do better in sales growth, profits growth, deposit growth, return on assets, return on equity, return on sales, and return on total invested capital than those that do not.
Levels of Strategies are Offered by Different Levels of a Business
However, different levels of strategies are offered by different levels of a business in every organization, including:
- Corporate Planning:It requires a high degree of strategic decision-making to meet the stakeholders’ expectations.
- Strategy for Business Units:The goal of this strategy is to acquire a competitive edge for the services and goods provided, and choices at this level are focused on product selection, acquiring a competitive advantage, meeting consumer requirements, and creating new possibilities.
- Operational strategy:It is concerned with resource coordination and improvement, resulting in the effective and efficient implementation of the business unit-level strategy.
Strategy implementation requires taking activities and accomplishing tasks and should concentrate on how to materialize these strategies.
The following major points must be considered during implementation:
- Work execution necessitates distributing resources such as finances, people, and equipment. The organizational resources are limited.
- The implementation phase necessitates the creation of a project-supportive organizational structure.
- A project selection and prioritization framework guarantee a solid relationship between projects and the strategic strategy.
Managerial challenges include:
- Connecting project management with corporate strategy.
- Encouraging individuals to collaborate in developing new ideas.
- Renew existing strategies.
Aligning Business Strategy with Projects
Aligning the company’s projects to optimize their contributions to strategic goals necessitates a highly coordinated effort. Integration requires a strategy for selecting initiatives based on their value to the strategic plan. Organizations will need business and project management experts to collaborate to achieve business objectives to become more competitive, efficient, and lucrative. Both business and project management specialists will collaborate to connect initiatives with company objectives. The alignment of company strategy with project management is a fundamental problem for every organization.
Such alignments are challenging to achieve because business strategy objectives are only sometimes explicit, adequately articulated, or compatible with project management activities. Misalignment can lead an organization to fall short of its aims and objectives. Understanding the alignment may be one of the most challenging aspects of the project management process. Alignment is a process that requires dominating leadership, top management backing, effective communication, a collaborative work atmosphere, trust, correct prioritizing, technical setup, and a thorough understanding of the business’s operations. To obtain the intended outcomes from the selected projects, the company should be able to develop capabilities and then distribute those competencies to the recommended projects. To ensure that corporate projects are linked with corporate strategy, keep the following in mind:
- Is the company committed to strategic project management?Most businesses have hundreds of projects running at any given time; therefore, there must be a corporate commitment to the art and science of project management.
- Is there a policy in place for formally preparing project charters?Because projects are the methods through which corporate plans are implemented, they must adhere to the original business philosophy, strategy, and objective. Project charters are the tool for doing so.
- Is there collaboration between the business group and those in charge of project implementation?Early engagement of project implementation personnel is required. While this theory appears logical, putting it into practice is difficult. First, corporate planners may choose to prepare without the assistance of considered “outsiders.” Then there’s a good probability that the right individuals are doing something other than brainstorming and assessing the early stages of a business strategy.
Benefits of Aligning Business Strategy with Projects
Some benefits the organizations include:
- Saved money and resources
- Increased profitability
- Retained customers
- Increased market share
Prioritizing a project based on its contribution to strategy achievement does not ensure project success. Still, consistent resource allocation is also a big responsibility. Therefore, a significant point to ensure alignment between project management and strategy is as follows:
- To carry out the suitably chosen projects efficiently
- Companies must ensure that they can implement the projects and programs.
Therefore, the alignment of projects is strongly influenced by top management.
Why Should Project Managers Care About Business Strategy?
A project manager must be able to connect their project within the larger context of the company to be truly effective. Understanding the basic business strategy is critical to achieving a great outcome. Strategic alignment and delivery should be wider than senior-level executives because the outcomes influence everyone in the business. On the other hand, a project manager should be wholly involved in all aspects of the project, including understanding and being concerned about business strategy.
Why Should Project Managers Care About Business Strategy?
Although it may appear counterproductive to focus on larger goals rather than the project itself, there are many significant reasons why project managers should be concerned with business strategy:
- Boosts Team Morale
A team will follow the project manager’s instructions. Connecting your project to a larger company goal offers everyone a feeling of purpose and connectivity. It helps people realize they are contributing to a more significant cause rather than just completing the work. It enhances team morale in this setting because it offers employees a feeling of purpose.
Furthermore, when individuals believe there is a greater good at risk, persuading them to pivot on a project is simpler. Finally, when teams can see the larger picture, they can better recognize when there is a break in activity or when resources need to be reallocated.
- Establishes Stakeholder Support
Understanding executive jargon provides you greater leverage when requesting and securing stakeholder support. A project manager will gain more cooperation if they can explain to senior team members how their participation will benefit the organization. Understanding the company’s strategy enables a project manager to structure requests in ways that are more likely to receive approval and favorable feedback. If a project manager can instill value in their team members and senior stakeholders, the odds of project success increase significantly—the greater the level of support, the more likely a favorable result.
- Outputs and Outcomes
Business strategy is about taking a step back and looking at the big picture. The traditional approach to project management held that the end of a project was about output, and what someone did with that data was their responsibility. Modern project management requires a professional to analyze the overall company strategy and what will happen with the project’s output when it goes out of your hands. It’s about remaining business-aware throughout the project so that the company’s best interests can always guide it. This awareness is how great employee morale and stakeholder support are achieved. Today’s most effective project managers can relate project outputs to successful corporate outcomes.
Final Thoughts
A good project manager should be familiar enough with their company’s strategy to utilize it to increase team morale and create a broader picture for their team. Once the team is on board, the same interactions may be used to obtain stakeholder support. Finally, the ability to link output to outcomes will guarantee that the project is successful at every step. Project managers and business leaders must formally understand how to establish, explain, and maintain strategic focus. This view will give project execution a new dimension and bring project management closer to being a competitive weapon for organizations. Choosing the right strategic focus at the start of a project and making it consistent with the company plan can help the project succeed and lead to better business results.
Projects offer an excellent opportunity to obtain a competitive advantage and bring value to the firm. Strategic project management is thus essential. Therefore, one of the most critical parts of project strategy is having a sufficient strategic focus.
Lastly, an understanding of business strategy makes for a well-rounded project manager.
Feel free to check out my discussion on this topic with Thomas Walenta in YouTube
For any questions related to your Project Management career, training, and certifications, you can book an obligation free 15 minutes session with me by visiting https://bit.ly/2SbhTOK
You can subscribe to the vCare Project Management YouTube Channel to catch future videos of our Q&A series and certification success stories: https://bit.ly/2YF0wJl
You can subscribe to and follow my podcasts and interviews with Project Management Experts on YouTube at https://bit.ly/2NDY8wd
by Dharam CW2 | Nov 24, 2023 | General
The world is becoming more aware of the destructive impacts of climate change, and many businesses have started realizing the critical importance of sustainability to their future operations. Making the projects more sustainable is important to build a more sustainable world. But how to establish it?
Consumer Shift to Sustainability
According to Deloitte research, 28% of customers have stopped purchasing specific items owing to ethical or environmental concerns, increasing to 45% among Gen Z consumers. Approximately half of the consumers are prepared to spend extra money on more ethical and ecologically friendly brands.
However, keeping track of and being open about an organization’s sustainability initiatives is difficult if these metrics and methodologies are not evaluated and integrated into project processes. Unfortunately, what frequently happens is a lot of greenwashing, over-promising, and under-delivering sustainability goals, which may lead to even more distrust in brands and corporations.
As a result, many organizations are adding and integrating new sustainability features into their pre-existing project processes to meet the growing need for accountability and transparency in sustainability activities. However, as regulations evolve and customers grow more attentive, this strategy may no longer be adequate. That is why the organization needs sustainable project management.
Sustainable project management
71% of the world’s top 500 companies openly disclose their greenhouse gas emissions, among other energy metrics. Sustainability has become a commercial priority for all industries, and organizations recognize that it is not responsible for ignoring the problem.
Broadening Project Management for Sustainability
However, sustainable project management is more than just being green and combating climate change. It is a duty to ensure that resources are utilized appropriately, that individuals are treated equally and fairly, and that communities are considered when making choices. Therefore, project managers in this sector will adopt a comprehensive approach, evaluating environmental, social, and economic aspects. They collaborate with environmental planners, hydrogeologists, and geotechnical engineers, to name a few of the ecological professions helping to remake our planet for the better.
Principles of Sustainable Project Management
Sustainable project management is an approach that:
- Takes into account the complete Triple Bottom Line viewpoint.
- Considers the complete life cycle of a project, from project-related activities through final deliverables.
- Engages stakeholders actively and openly rather than merely managing their expectations.
- Accepts responsibility for its actions to society and the environment.
- Considers the short and long-term consequences of all project operations and results.
Building sustainability into projects
Project managers are responsible for supervising the project delivery and support procedures. They will both strive to ensure client satisfaction while inspiring their team to deliver excellence. That is the essence of the role of a project manager.
Meanwhile, a project manager concerned with sustainability will take a more comprehensive approach. They will consider resource use, climate change mitigation, property rights, community engagement, and human rights. It’s a complicated profession that, when done correctly, can have a huge influence on civilizations. The project manager’s objective is to produce value and complete a project on time and within budget, but also to do it ethically and fairly.
Environmental management and responsible resource use have never been more popular. As a result, companies worldwide are seeking methods to cut waste and lessen the environmental effect of their operations. Being environmentally responsible not only helps firms appeal to customers, but it may also assist save costs by reducing resource requirements and minimizing exposure to potential regulatory fines.
When a company implements a “green” mindset into its project management approach, the positive impacts may spread across the organization, resulting in increased efficiency, less waste, and increased employee morale. Here are some ideas for building and carrying out sustainable projects in any industry.
Strategies for Project Sustainability Across Industries
- Start by assessing your current project’s sustainability.
Before taking measures toward increased sustainability, you must first understand where you are now. A sustainability analysis can assist the project manager in identifying the most significant development areas and measuring success as the sustainability project takes shape. First, determine if the concept of sustainability applies to a project or project management technique, and then assess the costs and effort necessary to improve.
- Develop a sustainability strategy
Once the evaluation is complete, the next stage is to develop a strategy that describes the business’s goals for enhancing sustainability, like how the goals will be achieved and what the organization wants to gain from the process. Like a project plan, the strategy should identify the people, roles, or departments that will drive the sustainability effort and the degree of power they will have in establishing project priorities.
Every day, modern organizations face new and growing obstacles. On the other hand, sustainable businesses have proven to be more resilient. But where do you begin? What steps can be taken to take your efforts to the next level? Here are the four critical steps in developing a sustainability strategy.
Crafting a Sustainability Strategy in Four Steps
Step 1: Identify the impact factors
Before developing a sustainability strategy, you must determine which factors are important to your company. Each company is unique based on the following:
- The industry you operate in
- The size of your company
- The location
- Your place in the supply chain
Different aspects will be relevant to your business.
The four pillars of sustainability
To ensure that your sustainability strategy has the greatest potential impact, you must first determine which aspects are most important to you. Companies should undertake a materiality analysis to do this. Here are the four sustainability pillars to consider in the analysis:
Core Aspects of Sustainability
- Environment
- Labour and Human Rights
- Business Ethics
- Sustainable Sourcing
Collecting data
Starting a stakeholder engagement with internal and external stakeholders is an excellent strategy for discovering your impact factors. In addition, conducting a survey or interviews will give you more profound knowledge.
Step 2: Determine the long-term vision and mission
After recognizing the crucial material issues, determine which ones you can genuinely influence. It is now time to develop a long-term purpose and vision. These two steps are critical for good strategic planning. They may give consistency and establish limits for your business and its employees.
The ideal future
A mission statement focuses on your company’s present position and briefly explains its main purpose, focus, and goals. On the other hand, a vision statement summarizes an organization’s goals and the larger influence it hopes to have in the future. As a result, your vision and mission statement must represent your fundamental materials challenges and expand on your materiality assessment results. In addition, your company’s distinct traits must be taken into account. This aspect may assist you in prioritizing the impact elements and creating long-term alignment in your organization.
Step 3: Formulate the sustainability strategy
Finally, in the third step, you can begin designing the real strategy, which is a more immediate translation of your vision and goal. It should include all of the impact elements (identified in step 1) that are relevant to your business. More precisely, you must determine short- and mid-term objectives to realize your long-term vision and purpose (identified in step 2). Breaking down these long-term high-level statements will make each step more concrete and manageable.
Setting goals
The goals should be SMART:
- Specific
- Measurable
- Achievable
- Realistic
- Timely
After you’ve chosen a set of relevant targets, you’ll need to decide what steps your organization will take to reach them. Project outlines and processes must be outlined in detail. It is critical to ensure that your approach promotes both horizontal and vertical cohesion.
- The alignment of multiple departments and sustainability pillars is called horizontal coherence.
- Vertical alignment, on the other hand, refers to the consistency of choices made at the management (group or entity) and operational levels.
Step 4: Implement the sustainability strategy and track success.
The next stage will be to put your thoughts into action. Developing a great plan begins with collecting relative insights and understanding your primary material concerns. Then, by following a step-by-step approach, you can create a framework that will allow you to focus on investment and drive performance while also engaging internal and external stakeholders.
- Adopt a sustainability standard
As interest in project sustainability grows, companies have established guidelines to assist senior leaders and project managers in determining if they are reaching their sustainability objectives. For example, Green Project Management has issued the P5 Standard for Sustainability in Project Management, a set of goals and measurements that businesses may use to drive their efforts.
- Look for sustainability in partners and vendors.
The larger an organization, the greater leverage it has on the firms with whom it does business. So asking vendors and suppliers to raise their sustainability can lower the organization’s environmental footprint and lead to broader changes among the vendors and customers.
- Spread the word
Communication is the key to success in every organizational activity. Begin including your project teams in the process as soon as your sustainability strategy is determined. Solicit input on your sustainability goals and fresh suggestions from staff based on prior efforts. The more engaged your team is in the sustainability project, the more determined they will see it through.
- Be adaptable
One critical component of project sustainability is the capacity to adapt to changes in the organization, technology, and competition. Because these factors might shift a company’s goals while responding to them can help you succeed. This move might also include modifying project criteria or responding quickly to problems to execute projects on schedule and budget.
- Ensure projects are manageable
Projects become sustainable when they are manageable. While you may have larger ambitions, breaking them down into smaller, more manageable tasks might help you with expenses and resource allocation over time. You may also check your ability to implement manageable initiatives, such as having the necessary teams and approval processes. When planning for the future, be sure the organization can support any system or process modifications that a project manager wants to deploy.
- Review scalability
The ability to raise or reduce your resources based on your project’s demands is called scalability. This need frequently occurs when the scope of a project grows greater than intended, necessitating the use of additional tools, funds, people, or other resources to execute it. Ensuring that you can handle changes in scale may aid in developing a long-term sustainability strategy since it provides that the result will still be worth any additional demands.
Why should every project manager prioritize sustainability?
As governments worldwide establish net-zero carbon objectives, project managers are being charged with rethinking work processes to reduce emissions. Everything from planning to procurement to team structures is being re-evaluated to achieve sustainability goals. However, it is important to realize that sustainability covers more than climate change. It entails balancing projects’ environmental, social, economic, and administrative components to fulfill the requirements of present stakeholders without compromising the needs of future generations. Far from being a burden, sustainability provides an opportunity for project professionals to demonstrate their value by connecting with company strategic objectives centered on net zero. By incorporating sustainability into all aspects of their projects, project managers may make a significant difference and increase their visibility to the organization’s leadership.
Final Thoughts
Project Sustainability Management necessitates a more comprehensive strategy. It considers resource utilization, climate change mitigation, property rights, community engagement, and human rights. The project manager’s mission is to provide value and complete a project on time and under budget and do it ethically and fairly. The intertemporal character of sustainable project management contributes to its complexity. As a result, the lifetime of a sustainable project should not end after completion; environmental and social impacts must also be monitored and regulated afterward.
Project managers are in charge of managing the project delivery and support procedures. Both will ensure client satisfaction while inspiring their teams to produce greatness.
Project managers must consequently arm themselves with new indicators, such as ISO, SA, and others, for monitoring and managing these environmental and social issues. In the end, initiatives serve as a tool for effecting change, introducing new goods and services, and shaping society. As a result, sustainability should not be an afterthought but rather one of the primary aims of any project.
Feel free to check out my discussion on this topic with Thomas Walenta in YouTube
For any questions related to your Project Management career, training, and certifications, you can book an obligation free 15 minutes session with me by visiting https://bit.ly/2SbhTOK
You can subscribe to the vCare Project Management YouTube Channel to catch future videos of our Q&A series and certification success stories: https://bit.ly/2YF0wJl
You can subscribe to and follow my podcasts and interviews with Project Management Experts on YouTube at https://bit.ly/2NDY8wd
by Dharam CW2 | Oct 13, 2023 | General
Organizations may stay profitable and competitive using project management practices that help identify process improvements or cost-cutting opportunities. Metrics may assist in discovering areas for improvement, data to focus on, and how to quantify the success and efficacy of a company’s efforts. Knowing more about project management metrics that can assess performance will help one acquire professional skills for any business and advance their career in project management.
Every organization needs to ask,
- “Are we getting the outcomes we want?”
- “Are we accomplishing our project objectives?”
- “Are we meeting the requirements for customer success?”
- “Are we getting the intended return on investment?”
Project Management Metrics May Assist
Success depends on the ability to forecast and meet product and service commitments. With projects becoming more common, it is critical to show additional value to the business using project management strategies, tools, and procedures. Therefore, a metrics program is required. Metrics may assist in identifying significant events and trends, distinguishing between challenges and opportunities, and guiding companies to make wise decisions.
How can we know whether the project management efforts make a difference and contribute to corporate success?
- It has long been known that suitable measuring methods are essential to basic management tasks, including project planning, monitoring, and control, and metrics are present at all stages of project management.
- As project management grows prominence and more firms embrace a project-based management approach, objective and performance-based management highly depend on measurement processes.
- To assist decision-making, project selection, portfolio management, and lead product and process improvement, metrics must be integrated into project life-cycle activities.
- In addition, metrics may be used to assess an organization’s project management maturity.
- Metrics aid in understanding capacities, allowing for developing strategies based on creating and delivering goods and services. They also enable people to recognize significant events and patterns and distinguish between challenges and opportunities.
- Metrics can assist in improved cost and schedule management, decrease risks, increase quality, and guarantee that objectives are met.
Measuring is an end goal in some businesses. Individuals in such businesses who have obtained project management certification and use specific project management tools and processes are the ones who often recognize the significance of project management. At the same time, individuals at the top may only accept this value partially. A metrics practice put in place is one of the best methods for successfully explaining the benefits of project management to top executives.
What are Project Management Metrics
What are Project Management Metrics?
Project management metrics are data sets, algorithms, and calculations that allow businesses to assess the performance of a project. They assist managers and organizations in reviewing how a project progresses, evaluating team productivity, project completion deadlines, and costs, and identifying, reducing, or eliminating risks. Project management metrics are numerical instruments that firms use to build successful strategies, carry out continuous improvement initiatives, and assess employee and customer sentiment.
Benefits of using metrics in project management
Project management metrics are an efficient approach to assessing a project’s progress. Measuring the project’s performance against key parameters helps to understand the management process. These indicators in project management also assist in steering project objectives, allowing teams to assess success and make improvements as needed.
Following and evaluating the right indications can provide the company with critical insights regarding the team’s performance – from both a high-level and individual standpoint. In addition, you’ll be able to identify process bottlenecks and other inefficiencies, which one can subsequently fix, adding to the project assumptions list and enhancing future project performance.
Furthermore, tracking and collecting this sort of data might be useful when the time comes for the project management performance review. Taking responsibility for the team’s work by analyzing project outcomes, identifying inefficiencies, and developing improvement plans sends a strong message to management. It displays that one can be a real leader committed to the business’s success.
Benefits of Using Metrics in Project Management
- Measure team productivity
Relevant metrics in project management can reflect a team’s productivity. For example, the on-time delivery (OTD) rate or service level agreement (SLA) rate might be used to calculate the project’s ROI.
- Optimize team performance
While it is critical to maintain the team’s performance, forward-thinking management seeks development opportunities. Relevant project metrics enable one to broaden their understanding of project-related aspects. Project performance measurement reduces uncertainty and allows individuals to make better, more informed decisions.
- Track ongoing progress
Management performance metrics also track a project’s progress over time. These metrics are critical to discover obstacles early and help adjust the track as needed.
Project Management Metrics: How to Measure and Track Success
Relevant project management metrics will help enhance our understanding by eliminating uncertainty and making well-informed decisions.
Metrics prove value
Cost-related project management indicators may demonstrate the value of a team—for example, a rate of on-time delivery or a rate of satisfying SLA. Return on Investment (ROI) is a popular statistic for demonstrating this value. If a department fails to generate or contribute to a firm’s measurable objectives, a smart business would dissolve the department and redirect resources to another area that provides results.
How to choose the Metrics
Metrics improve performance
While demonstrating value is crucial, forward-thinking management prioritizes performance improvement. Relevant metrics help you have a better grasp of project management. This aspect reduces ambiguity, allowing all parties involved to make informed decisions. For example, assume that the given slack time is causing the completion of the following task to be delayed. You can adjust the slack time to keep the project deadline.
How to choose the metrics?
Each business or project requires metrics specific to its purpose or aim. Metrics are determined in three steps:
- Understand the project’s objective or goal.
- Determine which crucial success elements must be met to succeed and reach the objective.
- Consider how you will measure the achievement of each key success factor for the project or program.
What makes a successful project?
What makes a successful project?
Before starting any project, you and your team should know what constitutes a successful project. After all, you want to avoid being known for a famous failed project. So what makes a project successful? First, you should establish a set of success criteria for your project, including the following:
- Delivers on time: Completing a project on schedule and under budget is one measure of success, especially for external parties, such as clients.
- Stays within budget: A budget is in place for all initiatives. You will have succeeded if you can finish yours without incurring more fees and expenses.
- Achieves its objectives: If your project was completed and met its objectives — as stated at the outset — that’s a huge accomplishment.
- Gets positive feedback: Assessing a project’s internal and external success is simple. But how did it fare? If stakeholders and clients offer positive feedback, the project will be considered a success.
Key Project management metrics
Project management metrics may be established based on the purpose and complexity of the project. However, the ten key project metrics listed below often cover the most important measurements:
Key Project management metrics
- Productivity
This indicator examines a company’s total skills — how well it uses its resources. Productivity demonstrates the connection between inputs and outcomes. For example, how much do you get out of a project after your efforts? The optimal productivity outcome is to produce more with less.
Productivity = Units of Input/Units of Output
- Gross Profit Margin
Numbers are more powerful than words. Indicators directly related to the bottom line indicate success or failure faster than other metrics.
The larger the profit margin, the better the business. Any program or effort done should add to a company’s financial profit. The margin is the proportion of each dollar generated after expenses are deducted.
Gross Profit Margin = (Total Profit-Total Costs)/100
- Return on Investment (ROI)
Return on investment especially considers the dollar amount earned for the amount spent on a project. This metric is a financial calculation similar to gross margin. However, instead of focusing on a total profit, it considers the specific benefit of the project divided by the costs.
To use this metric, a dollar value must be assigned to each unit of data to calculate the net benefits, which may include:
- Contribution to profit
- Cost savings
- Increased output
Costs may include resources, labor, training, and overhead.
ROI = (Net Benefits/Costs) x 100
- Earned Value
Earned value provides strategic guidance by displaying how much you have derived from the money invested in a project to date. It compares the value of work performed by a given date to the project’s approved budget.
Earned value is often called the Budgeted Cost of Work Performed (BCWP). This statistic serves as a reality check during the project’s execution.
Earned Value (EV) = % of Completed Work / Budget at Completion (BAC)
- Customer Satisfaction
A customer satisfaction score is a quality indicator for your service or product—the findings of a customer survey influence this metric. In addition, the product or service should perform as intended and meet genuine client demands.
Each organization may create a unique score by weighing each component depending on its value. Customer survey results, money earned from clients, repeat or lost clients, and complaints are examples of variables.
The Customer Satisfaction Index (CSI) is the most extensively used metric for customer satisfaction. Another technique for measuring customer satisfaction is the Net Promoter Score (NPS). NPS measures customer loyalty by determining the chance of a consumer suggesting a product or service.
Customer Satisfaction Score = (Total Survey Point Score / Total Questions) x 100
- Employee Satisfaction Score
Survey data determines employee satisfaction in the same way that customer satisfaction is. So why should workers be included while evaluating project management? The answer is straightforward: employee morale is directly related to project performance.
In the end, a satisfied employee does better work and more efficiently. In addition, the high costs of employee turnover for a firm — which may range from 50% to 200% of an employee’s salary — should be motivation enough to focus on the people closest to the project.
The Gallup Q12 Employee Engagement Survey is a well-known data collection tool. An ESI procedure yields an index score.
Employee Satisfaction Score = (Total Survey Point Score / Total Questions) x 100
- Actual Cost
The Actual cost is a simple statistic that displays how much money is spent on a project rather than simply an estimate. This cost is calculated by adding all the expenses for a specific project across the timeline.
Actual Cost (AC) = Total Costs per Time Period x Time Period
- Cost Variance
Cost variance describes the difference between the intended budget and actual expenses during a given time period. Is the estimate higher or lower than the actual costs?
- A project is over budgetif the cost variance is negative.
- A project is under budgetif the cost variance is positive(a standard measure of success).
Cost Variance (CV) = Budgeted Cost of Work – Actual Cost of Work
- Schedule Variance
The schedule variance examines both budgeted and scheduled work. Is the project running ahead of or behind schedule?
The schedule variance is the difference between work scheduled and work accomplished, calculated as the budgeted cost of work executed minus the budgeted cost of work scheduled. A negative schedule variance indicates that the project is running late.
Schedule Variance (SV) = Budgeted Cost of Work Performed – Budgeted Cost of Work Scheduled
- Cost Performance
Cost performance is a cost efficiency metric. Divide the value of the work performed (earned value) by the actual costs incurred to get the earned value. Forecasting cost performance provides for more precise budget estimates.
Cost Performance Index (CPI) = Earned Value / Actual Costs
Implementing Project Metrics
Once project metrics have been established to meet the company’s goals, it’s time to apply them. First, interact with users to help them understand the process, its value, and how analytics may enhance projects. Then, provide specific examples, such as “the dashboard will indicate where we need documentation, so we may prevent delays by gathering the necessary information.”
Create a project management metrics strategy with criteria everyone can understand to help you get support. Explain the significant indicators you’ll be measuring, how you’ll track them, and the goals you intend to achieve. The strategy should then be put into action. Understand that project metrics should lead to action; else, they are worthless. As you discover unusable metrics, revise the plan.
Final Thoughts
Project management metrics are critical to the success of any organization. They track the progress of initiatives, assist managers in defining success, and verify that the team is heading in the right direction.
It is complicated to analyze and evaluate a project’s development without appropriate metrics in project management. With precise, trackable KPIs, the company can assess project progress and identify when it’s time to change strategy or where the team is experiencing difficulty. If the company does not make the essential changes, it may face serious obstacles and lead to failure. As a result, measuring important project management metrics is vital to the company’s success.
Feel free to check out my discussion on this topic with Justin Buckwalter in YouTube
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