The losses associated with project disasters are overwhelming. A classic example would be Coca-Cola’s launching of the New Coke in 1985. The beverage giant, upon successfully testing a new recipe, launched the new version. However, the product failed to garner the expected response from buyers, causing the company $4 million in development costs and a loss amounting to $30 million in back-stocked inventory that couldn’t be sold.
Such catastrophes are not exclusive to Coca-Cola. One needs to simply look back in the past to realize that any business — even huge enterprises and big brands — can fall into the pitfalls of project failures.
What are the reasons for such epic failures?
According to PMI’s Pulse of the Profession survey, the top five causes of project failure are-change in the organization’s priorities (39%), change in project objectives (37%), inaccurate requirements gathering (35%), inadequate vision (29%), and poor communication (29%).
In another survey conducted by Wellingtone, poorly trained project managers, attempting too many projects, and a lack of project funding emerged as the top three project management challenges.
This is where the importance of strategic project management comes into play. Tying projects to strategy allows teams to set proper expectations around what can be delivered, by when, and for what cost. Without a strategy, projects can derail and go horribly out of scope.
The need for strategic project management is echoed in PMI’s report as well. It suggests that modern projects must be benchmarked beyond just traditional measures of time, scope, and budget. A higher strategic goal and “benefits, tangible or intangible, should be considered in the equation” when planning, running and delivering a project.
Why Is Strategic Project Management or Strategic Planning in Project Management Important?
Project management in this new enterprise era needs to be smarter than traditional approaches. To go deeper into the root causes of project failures, companies must develop a broader vision and look at business planning and project management from a strategic perspective.
Optimal business performance depends on high-quality project management, and companies can achieve that only through the implementation of strategic planning in project management. To ensure the best results from strategic project management, it is also crucial for organizations to create a culture that promotes strategic goals.
What Organizations Can Do to Implement Strategic Project Planning and How They Should Go About It
Although the initial tasks might seem daunting, a phased approach will simplify the process and help you achieve favorable results in business planning and project management. Here are four key strategies that will transform your project management efforts from good to great.
Ensure Strategic Alignment of Projects
One of the primary reasons for project failures is the lack of alignment between projects and core business strategies. Studies show that the success rate of projects dramatically increases when companies implement strategic project management by aligning projects with their corporate strategy.
How Do You Align Business Goals With Your Projects?
For strategic project planning, review the findings from completed or ongoing projects to identify criteria for project success and prioritization issues. For instance, if multiple projects fail because of resource constraints, you need to consider the resources needed to finish future projects as a criterion for determining project viability.
To implement strategic project management, list all your projects, and set the criteria necessary to estimate the impact of each project on departments, customers, and the organization at large.
Make strategic project planning to proceed only with projects that are in line with corporate strategies. Terminate the ones that are out of sync with corporate goals or have little impact on business plans.
Develop a Culture That Upholds Strategic Project Management
When organizations strategically align projects and integrate strategic project management into their corporate culture, all project stakeholders will have no trouble understanding the role they need to play in the successful execution of projects. Creating a corporate culture that incorporates strategic planning in project management will embed competence in all PM roles.
How Do You Build a Strategic Project Management Culture?
To develop a culture that facilitates strategic project planning, it is crucial for companies to design strategies specific to building the culture. This requires the creation of specialized cross-functional committees tasked with articulating the processes and approaches needed to achieve a cultural change.
A corporate culture that embraces a strategic project management environment will automatically educate the entire organization about the best practices required for efficient project management.
Implement the Best Project Management Practice for Strategic Project Management
From developing methodologies to identifying project roles and creating tools for carrying out training programs, most Project Management Offices are task-driven, rather than strategy-oriented.
Even though organizations generate vast amounts of day-to-day knowledge, there is no knowledge management or stakeholder management strategy in place to improve accuracy, budgeting, or resource allocation.
How to Enforce the Best Project Management Practice?
Retaining project knowledge promotes continuous learning, which helps avoid repetition of mistakes. To retain knowledge, project managers should hold a formal meeting immediately after the completion of a project and document the lessons learned so that teams can apply the fresh knowledge in future projects.
Create a Strategic Project Management System to Boost Project Performance
Project Management Offices set up by organizations often follow traditional metrics for illustrating project performance and success, rather than implementing strategic approaches.
How to Implement Strategic Project Management to Secure Project Success?
- Develop a system to perform strategic planning in project management
- Determine the resources needed and make arrangements in advance to avoid project delays
- Track whether projects are meeting their quality, budget, regulatory and delivery targets
- Hold regular meetings and discussions to confirm that strategic project management processes are operational.
- Ensure a hassle-free and successful project launch
How Can You Take Advantage of Strategic Project Management?
Companies are in search of skilled project management strategists for their teams. If you desire to become a high-profile project management professional, or if you are an organization seeking to upskill your project management team, Simplilearn is your go-to place.
The world’s leading certification provider, Simplilearn, offers top-notch Project Management Certification Training, including PMI-RMP® Certification Training, PRINCE2 Certification Course, and CAPM® Certification Training that teach the most-popular methodologies for strategic project management.