Thank you for asking me to speak on a topic I feel passionate about: the value of project management. I’d like to talk about “value” in three senses: The value to the world economy in the broadest sense… The value of PMI’s work to your professional careers… And some examples of bottom-line value to specific organizations. (Photo: Madrid, European Space Imaging)
Around the world, we see that effective project, program and portfolio management is more essential than ever. Projects are more complex than ever before, involving technologies that change even as they are implemented. Globalization and worldwide competition make planning ever more challenging. And both internal and external stakeholders are ever less tolerant of mistakes in planning and execution.
The response to that demand is reflected in spending, in staff commitments, and in a growing framework of knowledge, professionalism, and proven methods: About one-fifth of the world’s GDP, totaling more than $10 trillion, is spent annually on fixed capital projects alone (1) More than 20 million practitioners worldwide – although most without the formal title In China alone, 106 schools have been authorized by the education ministry to offer masters degrees in engineering project management. In 2006, more than 16,000 people applied for these degrees, making it the most popular engineering master’s discipline in the world. (1)Source: World Bank World Development Indicators database, 2005 figures extrapolated to 2007 world GDP ($50.6T) (2) Source: PMI Research Dept. 2006
A 2007 PricewaterhouseCoopers survey (1) substantiates the rewards of project, program and portfolio management. It demonstrated that: Project management is closely linked to project performance. Investing in staff development for PMs can pay off. Project management certification is linked to high-performing projects. Using a project management methodology increases the likelihood of higher-performing projects. (1) “Insight and Trends: Current Program and Project Management Practices” – a 2007 survey by Pricewaterhouse Coopers, page 9 (213 organizations in 26 countries completed the survey. Industry sectors surveyed were technology, information, communications and entertainment; consumer and industrial products and services; financial services; public sector and pharmaceuticals)
The survey also showed that: A positive correlation exists between project management software and project performance. 6. Overall, project improvements are needed. Portfolio management is of significant value. Project Management Offices (PMOs) perform back-office/coordination functions. The survey recognized that there is a clear shift away from in-house methodologies and certification. It identified PMI credentials as the most widely accepted worldwide.
On the PMI Board of Directors, we get a unique opportunity to “look both ways” – to see the many contributions of thriving PMI chapters and regions, and the world-wide progress of project management as a profession. PMI now has more than 260,000 members in 171 countries – a figure that has more than doubled in five years. Last year, more than 5000 members and others attended our four Global Congresses, in Atlanta, Hong Kong, Budapest and Cancun. They took advantage of those meetings as educational and networking opportunities. Sponsors and exhibitors responded with new levels new levels of participation. Last year, we opened a service center in New Delhi, India, to serve more than 13,000 PMI members in India, like those we operate for membership support in the United States, Brussels and Singapore. In March 2008 we opened a market development office in Mumbai, India, joining the one already operating in Beijing. The PMI Board of Directors and executive team have participated in international leadership meetings around the globe, including the Forbes Global CEO Conference in Singapore and other Forbes events that we have sponsored. We also hold our own government and business roundtables. All gain us access to the top decision makers in business and government.
Two decades ago, PMI was mainly a North American association with moderate growth. Now, growth has accelerated in all regions: We maintain a strong presence in North America, with 70 percent of our membership and 57.2 percent of our Project Management Professional or PMP® credential holders residing there. In the Asia Pacific region, we have seen a surge in growth as well, holding 14.4 percent of PMI’s overall membership, and the second largest concentration of PMP credential holders. 11 percent of our membership resides in the Europe-Middle Eastern-Africa region, along with 9.3 percent of PMP credential holders. Latin America has 4.2 percent of total membership and 3.5 percent of PMP credential holders.
PMI certification was the first such program in the world to earn ISO 9001 recognition. PMI credentials include: Project Management Professional (PMP) -- recognized and transferable worldwide.. currently about 268,000 PMPs in 171 countries. Certified Associate in Project Management (CAPM) – currently about 4,000 CAPMs Many organizations coordinate multiple projects in programs . In 2007 PMI introduced certification for the Program Management Professional (PgMP). Although its requirements are very demanding, PMI has already received more than 11,000 inquiries about certification. And we are just launching the new Scheduling Professional (PMI-SP) credential.
Professional development is a strong element in our career advancement offerings as well. Many organizations do not have clearly defined career paths for successful project managers to move up. There can be a “glass ceiling” separating them from senior executive positions. PMI’s Career Framework is an interactive tool that helps members plan for career advancement. It is available at no charge to organizations that want to make the most of their project managers’ talents. More than 600 have already done so. It allows PMs to: Determine where their skill-set and experience place them on the project management career ladder Assess their strengths and weaknesses Learn what they need to do to advance their careers Determine professional expectations for other project managers at the same career stage.
How do these trends and initiatives pay off for you?. These figures from Brazil, my home, show salaries in reais from the most recent PMI salary survey. Salaries are consistently higher for those with the PMP certification. This confirms the value of the PMP. A s projects grow in complexity, visibility and cost, so does the need for highly trained professionals to manage them. So, who is hiring these professionals?
The industries where project management practitioners are most in demand are: Information technology Computers/software Financial services Telecommunications Business management services Engineering Other primary recruiters of project management practitioners are the education/training, defense, aerospace and utility industries.
Information Technology is the biggest adopter of project management methodology so I will single it out for some statistics. According to Atlantic Systems Guild consultants, 33 percent of all money spent on software is used to repair poorly executed projects. Standish Group International, a research organization, reports that 56 percent of projects have cost overruns of more than 50 percent and 84 percent are not completed on time. Project management plays a key role in ensuring that more projects are completed on time and within budget.
More importantly, consistent use of a project management discipline within an organization reduces the variability in cost and schedule performance. The Standish Group’s most recent study has some good news about project success rates. This chart focuses on the factors that contribute to the rising degree of project success. Notice the changes in cost and time overruns. In 1998, cost overruns were at 69 percent. In 2006, they had fallen to 47 percent. During the same time, time overruns were going through a similar change. This improvement coincided with explosive growth in PMI’s membership and the number of certified project management practitioners.
We’ve seen time and cost overruns dropping as organizations have adopted unified methodologies and hired credentialed project managers. Businesses see project management as the key to improving efficiency, reducing costs and ensuring on-time delivery. The result is more and more organizations are adopting a common project methodology, a cornerstone of sound project management practice, and employing more certified project managers. This is backed up by the fact that more and more companies are requiring employees to have PMI credentials.
In order to maximize the achievement of an organization’s strategy, it is important to broaden the scope beyond project management to embrace program management and portfolio management. These move planning and execution from single projects to multiple projects while further aligning projects with strategy. Integrating project, program and portfolio management and advancing your organization’s capability in them is project management maturity. Project management maturity empowers companies to minimize risk with predictable and repeatable outcomes, making project management indispensable for business results. Project management maturity requires senior level involvement and a higher level of engagement. Project management maturity in thinking is what distinguishes successful companies. Project management maturity positions them so they can seize the moment when opportunities arise. CLICK
As projects, programs and portfolios get larger, more expensive and more complex, mature project management practices are increasingly vital to organizations. They align projects with strategy with results that improve performance, through better time and cost management. Project management focuses on performance to deliver predictable, repeatable results. More and more of those at the executive level believe that project management is vital to business success. They back this up by hiring experienced, highly trained project managers. Further mature organizational project management attracts and retains personnel because they feel that their profession is recognized and valued by their employer.
Fluor Corporation, the 2007 Project of the Year Award recipient from PMI, is a company that has demonstrated the value of project management. Fluor Corporation provides global services in engineering, procurement, construction, operations, maintenance and project management. Headquartered in Texas, USA, Fluor is a FORTUNE 500 company. The U.S. Department of Energy contracted with Fluor to clean up a uranium processing facility outside of Cincinnati, Ohio, USA. The cleanup and restoration effort, begun in 1992 by Fluor, was one of the largest environmental cleanup operations in U.S. history. In 2007, the former processing facility’s 1,050 acres were opened to the public as the Fernald Nature Preserve. Using project management standards and methodology, Fluor completed the project 12 years ahead of schedule and $7.8 billion below initial estimates. Fluor understands the bottom-line value of project management.
Another company recognized for project management excellence is Madrid’s own Indra Sistemas SA, which was featured as an “Outstanding Organization” in last October’s PM Network magazine. According to Indra’s managing director Regino Moranchel, “excellence in project management is the required condition for success.” As a forward-looking company, Indra offers free project management training to all employees, not just those currently working as project managers. And the employees know the value of that training, because there is a clear and convincing career path to the company’s highest levels for them within the profession. CLICK
Not all successes are measured on the bottom line. Ericsson, the world’s foremost supplier of mobile telecommunications systems, has created the Ericsson Response program for pro bono disaster assistance. Built around project management principles, it is designed to work in close cooperation with organizations such as the International Federation of Red Cross and Red Crescent Societies and UN humanitarian organizations. Ericsson improves their relief work by bringing skilled staff and additional technology to be used in relief operations. After the October 2005 earthquake in Muzaffarabad, Pakistan, on a request from the UN, Ericsson Response supported the relief operation over a nine-month period. Ericsson Response deployed its WIDER system (WLAN in Disaster and Emergency Response) and on-site volunteers. For the first time, relief organizations shared a telecommunications infrastructure. This improved the coordination and efficiency of relief work in remote and difficult terrain. Ericsson’s commitment shows the power of project management combined with social responsibility.
PMI’s Global Accreditation Center works with graduate and undergraduate schools worldwide to certify the highest standards of academic training in project management. In March, the GAC accredited the Masters in Program Management program at La Salle Universitat Ramon Llull – the first to be accredited in Spain, and only the third in Europe.
However you look at the value of project management, successful organizations, such as Fluor, Boeing and Ericsson, recognize it. They seek out qualified, credentialed project management practitioners. They cultivate mature project management practices within their organizations, and they reap the benefits of their commitments in projects delivered on time and on budget. We can learn from their successes. Every organization - from small, family-run businesses to large, multi-national corporations - can benefit from the practice of project management. Decision-makers at every level, from human resources to the executive suite, see project management as the key to success and future growth. In support of this trend, PMI continues to work toward its envisioned goal: “ Worldwide, organizations will embrace, value and utilize project management and attribute their success to it.”
That’s the result we aim for, and the bottom line – for an association like ours just as in business and government -- is results. That’s what project management professionals are paid for; that’s what makes organizational strategies succeed. Thank you. I’d be happy to take your questions.
The Value of Project Management Ricardo Viana Vargas Chair, Strategic Planning & Program Alignment Committee PMI Board of Directors PMI Madrid 12 May 2008
Global Demand <ul><li>More complex projects </li></ul><ul><li>Globalization and heightened competition </li></ul><ul><li>Increased accountability </li></ul>
Global Response <ul><li>$10 trillion spent on capital projects </li></ul><ul><li>>20 million project managers </li></ul><ul><li>Explosive PM growth in Asia </li></ul>
Global Results <ul><li>“ 80 percent of projects classified as higher-performing use a certified project manager.” </li></ul>2007 PricewaterhouseCoopers global project management maturity survey
Global Results <ul><li>“ Portfolio management is of significant value.” </li></ul>2007 PricewaterhouseCoopers global project management maturity survey
PMI growth <ul><li>260,000+ members in 171 countries </li></ul><ul><li>250+ chapters in 70+ countries </li></ul><ul><li>30 SIGs, two colleges </li></ul>
PMI Family of Credentials Organizational Strategy Successful Projects <ul><li>PMI certification: ISO 9001, widely recognized </li></ul><ul><ul><li>Certified Associate in Project Management (CAPM®) </li></ul></ul><ul><ul><li>Project Management Professional (PMP®) </li></ul></ul><ul><ul><li>Program Management Professional (PgMP SM ) </li></ul></ul><ul><ul><li>New: PMI Scheduling Professional (PMI-SP SM ) </li></ul></ul><ul><li>Many organizations encourage PMI certification or base their internal training on PMI standards </li></ul>
Career Advancement <ul><li>“ Glass ceiling” problem: project managers cannot rise to senior executive positions </li></ul><ul><li>PMI Career Framework lets project managers: </li></ul><ul><ul><li>Determine where their skill-set and experience place them on the project management career ladder </li></ul></ul><ul><ul><li>Assess their strengths and weaknesses </li></ul></ul><ul><ul><li>Learn what they need to do to advance their careers </li></ul></ul><ul><ul><li>Determine professional expectations for other project managers at the same career stage. </li></ul></ul><ul><li>Free to organizations </li></ul>
M edian PMP ® Salary in Canada* $ 96,500 P MP $ 86,000 P MP <1yr. $ 95,000 P MP 1-4 yrs. $ 105,000 P MP 5-9 yrs. $ 85,000 N on-PMP S ource: PMI Project Management Salary Survey-Fifth Edition *In Canadian Dollars PMI Project Management Salary Survey, Fifth Edition 2007 Median PMP ® salaries
Need for Project Management in IT Industry <ul><li>33% of software investments used to repair projects* </li></ul><ul><li>56% of projects have cost overruns of >50%** </li></ul><ul><li>84% of projects have time overruns** </li></ul><ul><li>53% of organizations do not operate PMO** </li></ul>*Atlantic Systems Guild **Chaos in 2007, Standish Group Challenged 53% Succeeded 29% Failed 18%
Project Management Impact Reduced Time & Cost Overruns Chaos Chronicles, The Standish Group 2007 0% 20% 40% 60% 80% 100% Cost 69% 45% 43% 56% 47% Time 79% 63% 82% 84% 72% 1998 2000 2002 2004 2006
Organizations Recognize Value of Project Management <ul><li>Project management improves: </li></ul><ul><ul><li>Efficiency </li></ul></ul><ul><ul><li>Budget </li></ul></ul><ul><ul><li>Timing </li></ul></ul><ul><li>More organizations adopting common methodology </li></ul><ul><li>More organizations hiring credentialed project managers </li></ul><ul><li>Companies Requiring PMI Certification </li></ul>CHAOS Chronicles, The Standish Group 2007
Project Management Program Management Portfolio Management + The Maturity Progression
Why Organizational Project Management Matters <ul><li>Aligns projects with strategic goals </li></ul><ul><li>Focuses on performance </li></ul><ul><li>Improves project time and cost management </li></ul><ul><li>Delivers predictable, repeatable results </li></ul>
Ahead of Schedule and Under Budget <ul><li>Fluor’s clean up of nuclear site </li></ul><ul><li>Completed 12 years ahead of schedule </li></ul><ul><li>Completed $7.8 billion below initial estimates </li></ul><ul><li>Used project management standards and methodology </li></ul>
Outreach <ul><li>Ericsson Response program </li></ul><ul><li>Assists international disaster efforts </li></ul><ul><li>Supports relief agencies </li></ul><ul><li>Applies project management standards </li></ul>
Acceptance in Education <ul><li>First Accredited Masters Program in Spain </li></ul>
<ul><ul><li>Worldwide, organizations will </li></ul></ul><ul><ul><li>embrace, value and utilize </li></ul></ul><ul><ul><li>project management, </li></ul></ul><ul><ul><li>and attribute their success to it . </li></ul></ul>PMI’s Envisioned Goal