Why do Projects (Still) Fail?

By Jen L. Skrabak, PfMP, PMP, MBA

Chief Strategy Officer, Strategy + PM LLC

It’s been 54+ years since the founding of PMI in 1969, but project success rates remain stagnant.  One widely used estimate is that approximately 70%+ of projects fail (don’t meet its scope/objectives, experience cost or schedule over-runs, or fail to achieve business outcomes), wasting Billions annually.

With the advent of adaptive (Agile) replacing or adding to predictive (Waterfall) methods, the PMBOK(R) Guide in its 7th edition (with estimated 30M+ in circulation), and over 1.2 million PMPs, why haven’t project success rates improved?

While we’ve focused on improving project management execution, we still haven’t focused on Portfolio Management Execution, which is ultimately about selecting the right projects.  Portfolio execution hinges on five key performance domains that I rarely see the focus on when we discuss improving project success rates and ultimately the Strategy to Execution link.

The 5 Portfolio Management Domains are:

1. Portfolio Strategic Alignment:

• Definition: Aligning the portfolio with the organization's strategic goals and priorities.

• Key Activities: Defining strategic portfolio goals, analyzing portfolio alignment, prioritizing initiatives based on strategic fit.

• Outcomes: Increased efficiency, resource allocation, and portfolio effectiveness in achieving strategic objectives.

2. Portfolio Governance:

• Definition: Establishing processes for effectively overseeing, managing, and making decisions on the portfolio.

• Key Activities: Defining portfolio roles and responsibilities, setting performance metrics, establishing decision-making procedures, implementing risk management practices.

• Benefits: Improved decision-making, transparency, accountability, and risk mitigation.

3. Portfolio Performance Management:

• Definition: Monitoring and evaluating the performance of the portfolio and individual initiatives.

• Key Activities: Setting performance goals/KPIs, tracking progress, measuring results, analyzing variances, identifying improvement opportunities.

• Benefits: Increased visibility into portfolio health, informed decision-making, improved resource allocation, and maximized return on investment.

4. Portfolio Risk (and Opportunity) Management:

• Definition: Identifying, assessing, and mitigating risks and capitalizing on opportunities associated with the portfolio.

• Key Activities: Identifying potential risks and opportunities, analyzing their impact, developing mitigation strategies, monitoring residual risks.

• Outcomes: Reduced risk exposure, improved decision-making, increased confidence in portfolio success, and maximized benefit realization.

5. Portfolio Communication Management:

• Definition: Effectively communicating portfolio information to stakeholders.

• Key Activities: Defining communication channels, developing communication plans, tailoring messages to different audiences, providing regular updates.

• Outcomes: Increased stakeholder engagement, improved understanding and transparency, greater buy-in and support for the portfolio.

Conclusion:

By neglecting these five critical portfolio management domains, organizations miss out on achieving significant improvements in project success rates and realizing the full potential of their strategic initiatives. We must shift our focus towards holistic portfolio management to select the right projects, manage them effectively, and engage the right governance for accountability in order to deliver on the business outcomes.