Project Management

Putting the Pieces Together

March 2012
Nuris Ismail, Nick Castellina


This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and
represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.
and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.




March 2012
Project Management:
Putting the Pieces Together
A volatile economy and global competition leave project-based firms with
little room for error today in managing projects for profitability. The key to
project profitability is delivering projects and milestones on time and under
budget. Between January and February 2012, Aberdeen conducted a survey
of over 290 companies to understand the best practices in project
management. From this research, Aberdeen finds that as the number of
moving parts increases, so does the difficulty in maintaining visibility and
control. This Analyst Insight explores the extent to which the added
visibility and control afforded by technology solutions, such as enterprise
level project management tools, can directly impact the profitability of
projects and the businesses that rely their success. Particular attention will
also be paid to the impact that organizational structure and business
capabilities have on the delivery of projects on-time and under budget.
Business Context
In project-based business, there is a unique set of challenges when it comes
to managing both customer-facing requirements and operational processes.
Many projects are complex and have a large number of milestones and
process checks. The wide range of tasks may include bidding and estimating
project costs, working collaboratively across distributed teams, and
managing multiple resources (whether people or assets). These processes
must be managed effectively in order to deliver projects successfully on-
time and under budget to increase customer satisfaction in a highly
competitive environment.
Based on the feedback of over 290 respondents, Aberdeen finds that
compared to its 2010 study, Executing the Project Plan: When Projects are your
Business, not much has changed (Figure 1). Today's high unemployment rates
do not guarantee that skilled resources are available for projects. In fact,
companies are still finding it extremely difficult to acquire the right skills for
their projects, followed by increased competition and increasing risk
exposure across their project portfolios. It is important to note that
compared to 2010, more companies are pressured by increased
competition (33% versus 27%). This is a reflection that even in a difficult
economy; competition is still fierce, whether it's from local or international
markets. Indeed, organizations are asked to work smarter, deliver the same
high quality of work, and with fewer resources. All of these pressures create
a business climate that forces project-based businesses to focus their
attention on managing costs for all projects.
Analyst Insight
Aberdeens Insights provide the
analyst's perspective on the
research as drawn from an
aggregated view of research
surveys, interviews, and
data analysis
Project Management: Putting the Pieces Together
Page 2


2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
Figure 1: Top Business Drivers

Source: Aberdeen Group, February 2012
These external business pressures also combine with very specific project
pressures (Figure 2). Indeed, the top project specific pressure directly
correlates with the top business driver. Lack of available skilled resources
leaves many project-based businesses challenged with managing these
resources properly. Additionally, in many instances, customers and senior
management add to the pressure on project-based companies by frequently
changing their minds mid-project. Combined with this is the fact that many
companies are still delivering too many late projects. In today's market,
companies are often asked to do more with less, and the consequence of
not having the right resources and changing priorities often leads to
delivering projects that are late and over budget.
Figure 2: Top Project Specific Pressures

Source: Aberdeen Group, February 2012

21%
29%
33%
27%
37%
20%
29%
30%
33%
36%
0% 10% 20% 30% 40%
Volatile business conditions
Global / distributed teams create the
need for collaboration
Increasing risk exposure across project
portfolios
Increased competition forces us to
lower or freeze prices
Lack of available skilled resources
needed for projects
Percentage of Respondents,n=297
2012
2010
20%
29%
31%
34%
34%
0% 10% 20% 30% 40%
Senior management frequently change
priorities mid-project
Contention for specific limited
resources
Too many late projects
Customers frequently change their
mind mid-project
Need to use project resources more
effectively
Percentage of Respondents, n=297
All Respondents
"The most beneficial thing our
organization has done when it
comes to project management
has been migrating from a
shared file server for
documents to a collaborative
platform environment tailored
for project management. In
doing so, we have been able to
ensure that everyone is
working on the latest version
of the data and it enables
greater collaboration across
the organization."
~Project Manager
Industrial Product Manufacturer

Project Management: Putting the Pieces Together
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2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897

The Maturity Class Framework
Aberdeen used four key performance criteria to distinguish the Best-in-
Class from Industry Average and Laggard organizations. These KPIs were
selected because of their influence on an organization's ability to deliver
projects on time and under budget.
Table 1: Top Performers Earn Best-in-Class Status
Definition of
Maturity Class
Mean Class Performance
Best-in-Class:
Top 20%
of aggregate
performance
scorers
94% of projects delivered early or on time
94%of projects delivered within budget
If projects are late, on average how late: 3.5 weeks
19% improvement in project profitability year over
year
Industry
Average:
Middle 50%
of aggregate
performance
scorers
70% of projects delivered early or on time
86% of projects delivered within budget
If projects are late, on average how late: 2.5 months
3% improvement in project profitability year over year
Laggard:
Bottom 30%
of aggregate
performance
scorers
36% of projects delivered early or on time
52% of projects delivered within budget
If projects are late, on average how late: 4.5 months
8% decline in project profitability year over year
Source: Aberdeen Group, February 2012
Strategic Actions
In order to combat these pressures, the Best-in-Class are differentiating
themselves from their competitors in three distinct ways (Figure 3). First,
they understand the importance of identifying the various risks within their
projects at all stages, and are building contingency plans in case of the event
occurring. By knowing the probably of an adverse event occurring, as well as
the impact that these events may have on the project, project managers can
more effectively plan and budget, as well as react accordingly if those events
do occur.
Project Management: Putting the Pieces Together
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2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
Figure 3: Strategic Actions of the Best-in-Class

Source: Aberdeen Group, February 2012
Secondly, Best-in-Class companies understand the importance of customer
relationships. This involves soliciting customer input as well as informing
them of project timelines (and sticking to them). In project-based
businesses, customer interaction is crucial because the ultimate result of the
project is tied to the customer's specific needs. The Best-in-Class have built
strategies to ensure happy customers to induce repeat business.
Finally, Best-in-Class organizations also understand the role that partners
play when it comes to delivering high quality projects, and therefore have
built standardized processes for gaining the best value from their partner
network. Standardized processes ensure that all employees are following
organizationally-defined best practices when carrying out tasks, in hopes of
leading to improved results.
In the next section, we will see what the top performers are doing to
achieve these gains.
Key Business and Technology Capabilities
The success of an overall business or even individual project requires
people, tools and technology to work together. A highly effective project
management execution requires a combination of strategic business
capabilities and technologies to effectively achieve Best-in-Class
performance.


12%
18%
23%
7%
23%
27%
21%
29%
34%
0% 10% 20% 30% 40%
Standardize procurement and supplier
contracting processes
Develop client relationships to foster
repeat work
Build assessment of risks into various
stages of the project
Percentage of Respondents, n=297
Best-in-Class
Industry Average
Laggard
"Before we accept new clients,
we go through a rigorous
process of identifying all the
potential risks and problems
that may arise from delivering
the project on time and under
budget. With this information
we make decisions as to
whether to accept new clients.
Going through this process has
enabled us to effectively bid for
projects that would not bring
us over budget."
~Consultant
Small Legal Services Boutique

Project Management: Putting the Pieces Together
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2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
Table 2: Differentiating Business Capabilities
Business Capabilities
Best-in-
Class
Industry
Average
Laggard
Project management best practices are
implemented and standardized across the
enterprise 62% 39% 40%
Ability to embed risk information into
project plans 68% 40% 30%
Social networking practices are
incorporated into project processes 30% 22% 14%
Project management operations are
integrated and coordinated with customer
service and delivery organization 79% 60% 33%
Customer satisfaction is monitored and
measured 84% 71% 54%
Monitoring of social media to solicit
customer feedback 47% 19% 13%
From summary project data, decision-
makers can drill down to transactions that
form the fiscal and operational audit trail 81% 36% 25%
Central visibility to resource workload
across projects 59% 41% 31%
Central visibility to skill sets of available
resources 65% 43% 30%
Source: Aberdeen Group, February 2012
In the previous section, it was identified that one of the ways that the Best-
in-Class differentiated themselves from their competitors was their ability to
build risk within their project execution plans. The Best-in-Class are
accomplishing this by defining and executing standardized processes across
the enterprise. In addition, they also have the ability to embed risk
information within project plans. Embedding risk information will enable all
personnel visibility into all risks and thus defer from them. In a volatile
market, where there is a substantial element of risk, organizations that are
not embedding risk into plans are setting themselves up for failure.
A lot has been written about social media, and the role that it can play in
marketing and sales, but in the case of project management, its benefits have
not been nearly as publicized. Interestingly, the adoption is relatively low,
with 21% of all respondents identified as using it. This does not tell the
whole story, however. Best-in-Class organizations are 58% more likely than
all others to be using social networking practices in project management.
Additionally, in order to keep a constant pulse on their customer
satisfaction, the Best-in-Class are monitoring social media to solicit
customer experience. While still nascent, Aberdeen suspects that in the
years to come, social media will play a bigger role in project management
and enable greater collaboration across the organization.
Project Management: Putting the Pieces Together
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2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
Organizationally, the Best-in-Class understand the importance of keeping
customers happy and have put in place business capabilities to ensure
proper delivery of projects. First, they have integrated their project
management operations with the service and delivery organizations to not
only guarantee that any problems are properly addressed but also to
capture the voice of the customer to ensure greater service for future
projects. Additionally, the Best-in-Class are also measuring and monitoring
customer satisfaction and using this valuable information to improve internal
processes.
Making effective project decisions requires project managers to gain central
insight into project status. The Best-in-Class are providing their decision
makers real-time visibility into fiscal and operational costs. By providing
summary level inquiries that allow executives to selectively and successively
drill into more detail, culminating in seeing the transactional detail that
forms the operational system of record for a business, you remove the
barriers to a full understanding of status and profitability. As a result of this
improved visibility, decision-makers are better equipped to more proactively
manage possible exceptions, therefore containing schedule and budget
overruns.
One of the top project specific pressures was the need to use project
resources more effectively. The Best-in-Class overcome this challenge by
providing project managers with visibility into not only the resource
workload across all projects in the enterprise, but also the proper skill sets
of the resources available. Half the battle of resourcing a project is getting
the right skills sets to work on the project and ensuring that these
resources have the time to work on the project. Overcoming this battle
could partially explain how the Best-in-Class are able to deliver projects
almost three months earlier than Laggard organizations.
Technology Enablers
Investment in technology to gain access to project status and details is one
of the major differentiators for Best-in-Class performance. These top
performers use a project management solution to bring all the different
moving parts of their projects together, whether in scheduling resources,
reporting against the project plan or project costing. The majority of Best-
in-Class performers use a combination of these solutions:
Project scheduling (85%)
Project management and reporting (82%)
Project costing (87%)
In addition, the Best-in-Class are also supplementing these applications with
other technology enablers such as: collaboration tools, workflow
automation, procurement tools, and applications for quoting and estimating.
While every project-based business may not require each and every one of
these solutions, most will definitely benefit from many; tools such as
document management, change management and resource/workforce
We have improved the
discipline of execution. Plans
and intentions are great, but
the real difference is made in
execution. The challenge there
of course is to get everybody -
that is: including (senior)
managers - to behave in a
disciplined manner, even when
operational pressures mount.
~Project Manager
Consulting Services

Project Management: Putting the Pieces Together
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2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
scheduling have universal application across any industry. Again, all these
applications are being used by Best-in-Class companies.
Where the Best-in-Class are truly differentiating themselves is their ability
to take their applications off the desktop and implement enterprise level
tools (Figure 4). The alternatives to enterprise applications are desktop
tools, spreadsheets, and manual processes, none of which support making
decisions from a single source of data, a characteristic of Best-in-Class
performance. An enterprise project management solution enables
organizations to gain central insight, control, and accountability into project
management processes. Indeed, this level of control contributes to the
ability of these organizations to accurately quote, source, and deliver their
work, generating greater consistency and predictability in how they do
business. The added visibility and control afforded by enterprise level
project management tools can directly impact the profitability of projects
and the businesses that rely on them for growth and profit.
Figure 4: Enterprise Level Tools

Source: Aberdeen Group, February 2012
To go along with the wide variety of tools available to project managers is
the wide variety of delivery methods for those tools. It is interesting to note
that the most favorable method of deployment is still on-premise (Figure 5).
Many project-based businesses work on sensitive subject matter and
companies feel more secure if the data is hosted in-house.
42%
37%
37%
40%
46%
34%
56%
60%
64%
0% 20% 40% 60% 80%
Project Costing
Project Management and Reporting
Project Scheduling
Percentage of Respondents, n=297
Best-in-Class
Industry Average
Laggard
Over the years, we have
placed emphasis in changing
internal processes in order to
benefit from adoption of new
software (as opposed to adopt
software to speed up/support
traditional processes). We have
gained better control of project
execution processes and
enabled better decision making.
One of the challenges of
implementing this change was
convincing people of the
benefits and to factually
cooperate in their own
interest, at all levels of the
organization."
~Consultant
Engineering Services

Project Management: Putting the Pieces Together
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2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
Figure 5: Method of Deployment

Source: Aberdeen Group, February 2012
What's interesting to note is that when it comes to the latest technology,
such as cloud, enabling mobile access and integrating project management
with other enterprise-level applications such as ERP and CRM, the Best-in-
Class are more likely than their competitors to leverage these capabilities.
As the vendors within this space are able to ensure the same level of
security and data availability as hosting the solution in house, more
companies will be likely to invest in these solutions. These delivery methods
allow for constant connectivity for decision-makers. In today's 24x7
business world this is essential in order to make agile decisions while taking
advantage of opportunities and mitigating disasters. The quicker reaction
times may just be what these organizations need to get ahead of their
competitors. Theoretically, investing in these latest solutions will lower the
total cost of ownership for the technology solution, however, only time will
time if they will, and if companies feel secure in doing that.
Key Takeaways
The key to project profitability is delivering projects and milestones on time
and under budget. While that sounds simple enough, with so many inter-
connected moving parts, this is very difficult to do without the necessary
organization and tools to schedule resources, manage and report against
project delivery and control costs. As shown throughout this analysis, Best-
in-Class companies are using a combination of business capabilities and
technology to successfully deliver projects to meet customer expectations.
For companies looking to improve their project management initiatives,
Aberdeen suggests the following:
Standardize and implement best practices across the
enterprise. This capability will enable organizations to ensure that
13%
10%
12%
26%
52%
23%
26%
22%
35%
58%
26%
30%
38%
49%
68%
0% 20% 40% 60% 80%
Off-Premise
Software-as-a-Service (SaaS) / Cloud / On-
Demand
Mobile access to project management
applications
Embedded Project Management as a module
or extension within other enterprise
applications (e.g. ERP, CRM)
On-Premise
Percentage of Respondents, n=297
Best-in-Class
Industry Average
Laggard
Definitions:
On-Premise - Software is
installed on-site or centrally at
a company office location, and
is deployed to users through
your internal network
infrastructure
Off-Premise - Software is
installed off-site or at a rented
data center, and is deployed to
users through your internal
network infrastructure
Software-as-a-Service- software
is hosted and accessed via a
third-party web-based service
Project Management: Putting the Pieces Together
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2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
their employees have a clear understanding of the project
management best practices and how these processes are connected
to timely delivery of projects.
Collaborate across the enterprise. From a strategic
perspective, cross-functional collaboration is critical. Enabling
collaboration will ensure that project decisions are made
intelligently to prevent adverse events that can result in poor
project performance. Leveraging applications such as collaboration
tools for electronic communication, conferencing and management
will also help with the collaboration.
Leverage social media to capture the voice of the
customer. To get a better pulse on customer satisfaction, tools
such as social media applications will enable greater visibility into
gathering customer intelligence to improve the delivery of projects.
Take full advantage of implemented solutions to provide
better visibility. Limiting access to project data to only select
project members and project managers also limits the ability of the
business to respond cohesively to challenges in managing projects
for profitability. Providing access to project data to all project stake
holders at all levels in the organization, will enable better project
decision making needed to contain project costs.
Expose the project to the enterprise, invest in enterprise-
level solutions. For companies that still use desktop-bound
project management solutions, elevate these solutions beyond the
confines of the desktop. Some solution providers will provide both
desktop and enterprise level solutions. For those working with
solutions that are only available at the desktop level, it may be
necessary to replace these and/or supplement them with tools such
as workflow automation, document management, and collaboration
tools. The added visibility and control afforded by enterprise level
project management tools can directly impact the profitability of
projects and the businesses that rely on them for growth and profit.
For more information on this or other research topics, please visit
www.aberdeen.com.
To take part in Aberdeen's 2012 Project Management and Portfolio
Management research, click here.






We implemented an operation
reporting system, which
consolidated all of our
desperate systems into a
centralized platform. Our new
system shows real time status
of on-going and in-coming
projects and stock inventory
status. In addition, we
implemented a regular program
for soliciting customer feedback
regarding project and service
satisfaction levels, which
provides us valuable insight into
how to improve our business."
~CEO
Engineering Services Company

Project Management: Putting the Pieces Together
Page 10


2012 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897
















Related Research
Project Portfolio Management: Selecting
the Right Projects for Optimal Investment
Opportunity; March 2011
Executing the Project Plan: When
Projects are your Business; December
2010
The Impact of Project Management
Technology in the AEC Industry; March
2010
Delivering Project Profitability: On Time
and Under Budget; January 2010
Author: Nuris Ismail, Research Analyst, Manufacturing
(nuris.ismail@aberdeen.com);
Nick Castellina, Research Analyst, Enterprise Applications
(nick.castellina@aberdeen.com)
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This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc. (2012a)