Blog Post Image

Can Project Management Success Be Measured In Terms Of ROI?

Paul Naybour Paul Naybour

Published: 20th January 2016

Given the predominance of projects in almost all large organisations, their value to an organisation is understood and appreciated but can that value be accurately measured and defined? And more importantly can it be equated to a company’s return on investment (ROI)? Certainly most major organisation are investing more and more in professional training for their project managers and the project management profession as a whole is gaining in stature and recognition. So there is little doubt of the importance to businesses of projects and the people who manage them.
Nevertheless, it remains difficult to quantify the benefits and value of projects because most businesses do not actually, or accurately, measure the financial cost of project implementations – they are simply part of their everyday business.

project management improves ROI

But ask a professional project manager what value their project might provide and there will be no shortage of answers. These will, of course, depend on the scale and complexity of the projects they are involved in and also on the size of the organisation and its corporate culture but are likely to include the following:
·    Implementation of standard practices and terminology across the organisation
·    More efficient working practices
·    Better defined roles
·    Clearer lines of accountability.
·    Enhanced communication between departments
So effective project management that delivers successful projects can improve the working practices of an organisation in a number of ways and an efficient organisation will be more successful in terms of its profits. But how might these valuable project effects be translated into more tangible benefits?
There are so many different types or organisations, from large to small, running projects on a range of scales and complexities that the way in which projects are implemented will vary enormously. But if there are many different ways of implementing projects how can an organisation decide which is most appropriate for them? Some large companies use an in-house project management framework that has evolved over time through the experience of many projects, some employ one of the recognised formal project management methodologies such as APM, PMP or PRINCE2, and others use an informal approach. Using the right method is important to be able to measure value but the method that is right for one organisation is not necessarily best for another.
Studies by the Project Management Institute have shown that the value delivered by a project is affected by the method chosen to implement the project but that there is no direct correlation. So there is no magic wand to wave over projects to ensure they are all successful and deliver measurable value. But maybe organisations should review their approach to project management if they want to be able to measure value more effectively and to determine whether the approach they are using is a good cultural fit for their types of projects and for the people working on their projects.
Project management processes are not static processes that can be put in place once and never changed. They should be reviewed on a regular basis to ensure they still meet the needs of the organisation’s projects, technological capabilities and staff. They should always be reviewed in the light of the benefit they provide and any processes that no longer deliver a tangible benefit to the project should be modified or replaced. Some overly bureaucratic processes not only fail to add value to the project but can be a drain on project resources.
But given the right fit of project management methodology (whether a formal method such as APM, PRINCE2 or PMP, or a less formal internal project framework) to corporate culture will add value to the organisation. And whilst that value may not easily be measured it will indirectly lead to increased revenue, competitive advantage, market share and customer share, and to internal cost-savings.