Seventy per cent of companies experienced at least one major project failure in the past year, says a survey by tax and business advisory firm KPMG. That figure was up on the previous New Zealand Project Management Survey, conducted in 2005, when 49 per cent of organizations reported a project failure. The survey found three main reasons for failed ventures – scope changes, competition for resources in the firm, and unrealistic deadlines.
The survey found that only one-third of companies always prepared a business case – a plan drafted before the beginning of a project, setting out what benefits needed to be achieved, at what cost.
Perry Woolley of KPMG said that many New Zealand companies were starting projects with only a vague assumption, or hope, of achieving a return !
If a firm made a plan, it could then make regular checks throughout the course of the venture, that the objectives set out at the beginning were being accomplished. The firm could then pull the plug on the scheme and avoid wasting capital if it was not proving successful, he said.
The survey also found that 60 per cent of organizations did not have a formal system in place to measure the benefits of an individual venture.
Gina Barlow of KPMG said “The lack of benefits measurement is particularly concerning – if organizations do not measure the benefits of their projects they cannot understand if the investment was worthwhile.”
KPMG says the results of the survey reflect an incapability of New Zealand firms to translate project investments into valuable returns.
“The productivity and profits of New Zealand companies are being impacted by their inability to consistently deliver projects that fulfill the expected objectives” said Woolley.
Forty-four per cent of the firms surveyed spent more than $15 million on their projects during the 12-month period. About 100 companies from public and private sectors took part.
KPMG’s survey found that high performing firms were characterized by high-quality business cases.
Source : New Zealand Herald Dec 7th 2010