Project failures worryingly high in Asia-Pac, says KPMG
Project failures worryingly high in Asia-Pac, says KPMG
Significant cost blowouts on failed projects are costing corporates in the Asia-Pacific region tens of millions of dollars per annum, according to the results of a survey of project and programme management activity by KPMG Information Risk Management.
KPMG believes that in an environment of increasing accountability to stakeholders and corporate governance, this is an important call to action for Boards in the Asia-Pacific region.
The KPMG's International 2002-2003 Programme Management Survey - the first of a series of such surveys to be undertaken by KPMG - found that the average cost of project failure in Asia-Pacific for the past 12 months was A$13.7 million, compared to A$17.8 million in the Rest of the World. Disturbingly, of those organisations that had experienced a project failure in the past 12 months, 59 percent could not determine the magnitude of this failure.
According to KPMG, the results clearly indicate that an effective Programme Management Office (PMO) is an important and integral contributor to an organisation's success and can have a major impact on the bottom line through project performance.
It was found that the Asia-Pacific region is lagging behind its international counterparts in embracing the PMO concept and resultant benefits. In the Asia Pacific region only 64% of organisations surveyed had a PMO against 86% compared to the Rest of the World.
"One of the key outcomes of the survey was that the high proportions of project failure relates to a lack in managing project performance and greater transparency is required in project performance to overcome this problem," said Egidio Zarrella, KPMG Asia-Pacific Partner in Charge, Information Risk Management. "Clear definition of project outcomes is vital in evaluating project success or failure and when the average PMO in the Asia-Pacific region is managing a portfolio of A$56.3 million compared to A$163.4 million in the Rest of the World, it should not come as a surprise that accountability for project performance is key, to a senior level at that."
Zarrella continued: "Project management is a major issue for all corporates as large amounts of money are invested into projects each year and these projects need to be managed competently to ensure the investment channelled into these projects meets the Board and Audit Committees' desired objectives."
Mark Tims, KPMG Asia-Pacific Leader, Project Risk Management added, "PMO maturity is also an important factor in project success. Not only do corporates need increased levels of skills and technological tools with programme and project management to improve the project success rates, but the reporting lines of the PMO also needs to be elevated to a senior level within the organisation, even if this means to the CEO.
"The key reason we are seeing so many failures in projects in Asia-Pacific is due to the lack of this maturity in programme management. Demonstrating the need for improvement, only 6% of the respondents in the Asia-Pacific region rated their PMO as mature.
"PMO and project success is attributable to a combination of factors with significant influences including executive sponsorships, stronger compliance processes and a structured governance framework. The key to achieve maturity is to adopt a 'continuous improvement' ethos, with processes established to learn from mistakes, capitalise on successes, conduct best practice research and make use of technological advancements."
Tims added that achieving PMO maturity is an iterative process which is unlikely to happen overnight. It will require commitment to enhancing infrastructure, investment and people.
Meanwhile, Zarella said that the results must send a message to senior industry figures to keep a tighter control on projects.
"It is clear and important for corporates to realise that projects are a core facet of business that are increasingly subjected to a high level of accountability.
"The good news is that with the right disciplines, structures and governance, organisations can improve their project and programme performance."
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