Do you regularly see overspend and under-delivery in your change projects?
If so, you’re certainly not alone.
University of Oxford research conducted on over 5,400 projects showed that, on average, large IT projects run 45% over budget while half deliver 56% less value than predicted.
Among the causes, the research cited outdated approaches such as manual reporting (project managers can spend up to 30% of their time compiling manual reports), along with process-driven cultures where outcomes aren’t clearly linked to business objectives.
But what might these inefficiencies look like in real monetary terms?
Assuming the average project management salary is £45000 and the average contractor / consultant day rate is £750, based on an average 200 days per year.
How many project management resources does your business employ?
How many project management contractors/consultants does your business have?
Therefore your total amount of spend per year on project management resources is
Amount spent on manual reporting per year
How much budget does your organisation allocate to change per year?
As a rough guide, organisations typically spend 20% of turnover on internal innovation, transformation and change projects and initiatives across technologies, people and process.
First, the simple calculation. Your organisation spends £ per month on change. If your business experiences just one month of project overrun, the potential cost of that overrun is £
What if your average overrun was two or more months? Enter different scenarios to see the impact (number of months)
Therefore your potential overrun cost is:
£
And if that's happening in 45% of projects, the likely cost of the overrun to your business is:
Now lets look at the '56% less value' part... Assuming the same £ spend on change and an internal rate of returns is 3x (i.e for the business case to be approved, it calls for a 3x return on the cost of the project), the expected benefit from the investment is £
Enter the different multiple to see the expected benefit (x):
Each year, the expected benefit from the investment is
£
Assuming all the projects can be treated equally (which is obviously an approximation), if half of those projects deliver 56% less value, the potential lost benefit opportunity of under-delivery is:
From predictive analytics to real-time reporting, Sharktower's intelligent features give your teams the tools they need to reduce project waste.
Request a personalised demo to see how Sharktower can help you update and streamline your processes to achieve better outcomes.
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