Weathering the Financial Storm: Why Project Management Resources are Essential in Difficult Times
With the current global economic downturn biting (or when the money starts running out) organisations are under immense pressure to save money. Often, one of the first areas to be culled is project management infrastructure and resources. Whether its Project Portfolio Management (PPM) tools, Project Portfolio Management Offices (PMOs) and/ or project managers themselves they are often seen as “quick wins” when budget cutting. However, eliminating these resources is a short sighted decision that can have significant long term consequences.
The False Economy of Cutting Project Management Resources
Retaining your project management capability is crucial for successfully navigating economic downturns and emerging stronger on the other side. Here are some real world examples of the negative impact culling project management infrastructure can have:
- Poor prioritisation and Strategic Alignment: PMOs are at the heart of ensuring the organisation delivers on their strategic goals. Without them there is no oversight of initiatives, resources, budget or progress.
- Significantly Reduced or No Reporting: By removing PPM tools organisations lose most, if not all, of their project, programme and portfolio reporting. This negatively affects coordinators who have to go back to collating project data manually, which significantly increases their workloads. It also hampers the organisation’s ability to see exactly what is going on with the projects that survive the cull.
- Increased Project Failure Rates: Without robust project management practices, organisations experience a higher rate of project failures. These failures translate into wasted resources, missed deadlines and lost revenue. Studies by the Project Management Institute (PMI) have shown that organisations with mature project management practices experience a 67% success rate compared to only 33% for those with weak practices.
- Poor Resource Allocation: Without a holistic view of the entire project portfolio, organisations risk misallocating their limited resources, potentially investing in less valuable initiatives at the expense of more critical projects. This can lead to increase costs, overruns and staff burnout.
The Value of PPM Infrastructure in Economic Downturns
Why should you retain your PPM infrastructure? During a downturn is exactly the time that good PPM resources comes into their own:
PPM Tools
As PPM tools are specifically designed to help organisations manage multiple projects, programmes and portfolios simultaneously these tools become even more valuable. Depending on the data in the tool, it can show you exactly where you should be focusing your resources and efforts as well as where you should cut back.
- Strategic Alignment: When money is tight it’s essential to focus on initiatives that align closely with organisational goals. PPM tools help prioritise projects and programmes based on strategic objectives and organisational alignment, ensuring that limited resources are invested in initiatives that deliver the most value.
- Resource Optimisation: PPM tools provide a comprehensive view of all projects and resources, allowing organisations to allocate their limited resources more efficiently. This visibility helps ensure that critical projects receive the necessary resources and projects that are not contributing to the bottom line are stopped and their resources reallocated elsewhere.
- Cost Control: With built-in budgeting and financial tracking features, PPM tools allow organisations to monitor project, programme and portfolio costs closely. This level of oversight is crucial when every dollar counts and helps to prevent cost overruns as well as identifying potential cost saving opportunities.
- Data-Driven Decision Making: PPM tools provide real-time data and analytics, enabling leadership to make informed decisions quickly. This agility is crucial when navigating uncertain economic conditions.
PMOs
Project Portfolio Management Offices (PMOs) are at the heart of organisational efficiency. Their very reason for being is to help organisations identify, score, prioritise and allocate resources to ensure they meet their goals.
- Standardisation and Best Practices: PMOs establish and maintain project management standards and best practices across the organisation. This consistency leads to improved efficiency, reduced errors and ultimately, cost savings.
- Portfolio Optimisation: PMOs are responsible for overseeing the entire project portfolio, ensuring that projects are aligned with strategic goals and that resources are allocated optimally. This holistic view is crucial when resources are limited.
- Project Prioritisation: PMOs provide the framework and methodology for objectively evaluating and prioritising projects based on their potential value and alignment with strategic goals.
- Knowledge Management: PMOs are the home of project knowledge and lessons learned. By removing this institutional memory organisations risk repeating costly mistakes and reinventing the wheel.
- PPM tool management: All of the above is supported by PPM tools. Cutting costs by discontinuing funding PPM tools hamstrings the PMO and makes the organisation less efficient.
Project Managers
Project managers are ultimate MacGyver. If anyone knows how to get something done with little, to no money, time and resources, it’s a project manager! They are exactly the people you want around during a downturn for a number of reasons:
- Efficient Resource Management: Skilled project managers excel at optimising resources and making sure they can deliver with what they have.
- Cost Control and Budget Management: Project managers are trained to closely monitor and control project costs. Their expertise in budget management is invaluable when organisations are operating under tight financial constraints.
- Risk Mitigation: Experienced project managers are adept at identifying, assessing and mitigating risks. This proactive approach helps prevent costly issues that could derail projects and strain already limited budgets.
- Stakeholder Management: In challenging times, effective communication with stakeholders is crucial. Project managers are there to manage expectations and ensure alignment between project outcomes and stakeholder needs.
- Adaptability and Agility: Skilled project managers can quickly adapt to changing circumstances, pivoting strategies as needed to keep projects on track despite financial constraints or shifting priorities.
- Problem-Solving: When issues arise, project managers are the front-line problem solvers, finding creative solutions to keep projects moving forward without incurring additional costs.
Optimising Project Management for Financial Advantage
Instead of eliminating project management resources entirely, organizations can adopt a more strategic approach by focusing on optimisation:
- Leveraging Technology: Modern PPM tools offer a range of functionalities that can automate routine tasks, improve data visibility, and facilitate collaboration. By utilising these tools effectively, organisations can free up project managers’ time to focus on strategic initiatives while improving overall project visibility and control.
- Right-Sizing the PMO: The PMO’s structure and functions should be tailored to the organisation’s specific needs and project portfolio complexity. During challenging economic times, consider streamlining PMO processes to ensure maximum efficiency without compromising on core functionalities.
Project Management: A Strategic Investment for Long-Term Success
While it’s acknowledged that economic downturns necessitate cuts, by retaining and optimising project management infrastructure and resources, organisations will be much better placed to weather financial challenges and emerge stronger on the other side.
Psoda’s comprehensive PPM solution is designed to support this critical need, offering the tools and insights necessary to maintain strategic alignment and operational efficiency during tough times. By leveraging Psoda’s platform, you can ensure your organisation not only survives but thrives amidst economic uncertainty.
Schedule a personalised demo with our CEO to discover how Psoda can empower your organisation to navigate financial storms and emerge stronger.