Few financial services companies have the formal, rigorous and tested project management processes in place to meet their project goals consistently, according to new research from the Economist Intelligence Unit.
This is particularly critical as regulatory oversight has been tightened in the wake of the global financial crisis. Financial organisations that can meet compliance requirements while simultaneously providing their customers with innovative new products and services can flourish in this environment, and strong project management practices are an effective tool to help achieve this.
The research, sponsored by Oracle, explores how financial services firms identify and deal with at-risk projects and which strategies help them to achieve greater project success. Key findings of the new report, Proactive response: How mature financial services firms deal with troubled projects, include:
· A surprising 35% of project sponsors in financial services either wait until a project is in serious trouble before getting involved, or never get involved at all. This is despite the belief of most executives surveyed (61%), that early action on troubled projects enables companies to better use limited resources. Failure to do so leaves project managers to deal with whatever issues occur and neglects to provide the structure or support to address distressed projects.
· Nearly half (47%) of surveyed firms do not respond to troubled projects until they have officially missed their time and budget targets. A further 15% of financial services firms have no formal process to address project failure at all. This lack of proactive process leaves businesses responding at a late stage, making problems more costly and difficult to solve.
· Unrealistic goals are the most common cause of unsuccessful projects in financial services firms, according to the survey. Others include poor alignment between project and organisational goals, and a lack of necessary human resources. Mature project portfolio management can help identify and address these problems during the planning stages of a project, increasing the likelihood of success.
· Smaller firms tend to have the most rigour in their project management process. Companies with less than US$500m in annual revenue respond to signs of trouble earlier than their larger peers. This early action pays off as smaller firms deliver significantly higher rates of project success than larger businesses.
· Financial services companies with rigorous project management practices are less burdened by regulatory demands. These organisations more often deliver projects on time and on budget. As a result, a majority of respondents that rate their organisation’s project management highly regard regulatory projects as a necessary part of their business functioning, compared with less than one-third of poorer performers. The latter are more likely to exceed their allocated budgets on these projects.
Proactive response: How mature financial services firms deal with troubled projects is available free to download from:
image: © John Trainor