Recession: an opportunity

Most countries are officially in recession by now. This technically means 2 consecutive quarters with negative growth. That cannot be said of China who still enjoys about 6% growth, that is nevertheless too low to absorb the flow of new workers coming out of universities.

2008 kicked off the recession, 2009 – if we are lucky – will be the bottom of it. We are in it for the long run, and maybe from 2010 we will see a very stagnant world economy, producing no growth for a few years.

Companies feel the pain of this recession on their outputs and have already started to get rid of valuable staff. For a lot of them survival is not granted and the weakest will probably disappear as we have seen Woolworth closing down in the UK.

Companies should however take the recession as a opportunity to change themselves in order to survive, for most of them changing is not going to be an option for survival, it will be a must.

But let’s be optimistic here: there is an area where powerful changes are possible that could significantly participate to the survival of a lot of companies and it is project management governance.

Indeed, I was at a workshop the other day organised by Microsoft (that was about their EPM solutions), the speaker was referring to some figures from the Chaos Chronicles: 51% of projects come in over budget or past their original deadlines, 15% of projects fails altogether, 84% of projects could not show the link between IT/Capital budget and business needs. Those figures though kind of anecdotic show nevertheless that projects could be better selected and executed and if one trust those figures the improvement potential is huge.

Companies should invest in project management governance to bring improvement in two areas:

Better project selection

With cash being an issue and growth perspective another one, project selection criteria are going to get tougher and so they should. Companies should think really hard before committing money to projects, harder than before.
In the TMT sector – the one I know best – there is a clear need to develop honest business cases, without figures being twisted to show that the project has some business sense. That would stop money being wasted.

Companies should build some sort of project scoring method in order to objectively compare projects between each other to better support the project selection process.

Better project execution

Project get selected because they will bring positive financial returns to the organisation (or at least in most cases). However the previously mentioned statistics show that about half of them are running over budget and/or time (running overtime usually means over budget as well). Therefore it is not only the project budget that is threatened here but the overall financial benefits from running the project.

This crisis is an opportunity for companies to put in place a project methodology, adapted to their individual needs, in order to better control project execution and lower uncertainty risks by creating standards in product development and project execution that will bring the benefits of repeatability.

It is kind of obvious to say but I saw so many companies in the TMT sector without defined processes that I came to wonder if that is finally so obvious.

The project management office needs to drive those two axis of improvements: better project selection and better project execution. Now is the time for companies to set-up PMOs.