What is the real value of a professional PM?
Organisations often consider a professional project manager (PM) to be an unnecessary expense, choosing instead to entrust their projects to someone that does not possess the necessary skills and experience to successfully manage the project. But no matter how well-intentioned an individual is, if he does not have the proper project management skills he could scupper the entire project.
IT projects are inherently expensive and a professional project manager will certainly add to the project’s cost but it’s shortsighted to see only the cost, without considering the many benefits.
It’s difficult to put an exact figure to what a project manager will add to a project’s cost because there are so many variables but one thing is certain, the benefit of having a professional PM in charge of your project will almost inevitably save you more (much more) than you’re paying for these services.
No doubt one of the most challenging aspects of successfully managing any project is the ability to deliver the finished project within budget. And this is one of the key contributions professional PMs can make, because that is exactly what they are trained to do. Any PM worth his salt should bring the project in within 10% of approved budget and schedule.
Consider the stats provided by global management consulting firm, McKinsey & Company and the value of a competent PM is patently clear: on average, large IT projects run 45% over budget and 7% over time. They also say that the longer a project is scheduled to last, the more likely it is that it will run over time and budget, with every additional year spent on the project increasing cost overruns by 15%.
Sobering though these stats are, when considering the value of a PM it’s not just the money and time saved that should be figured in. The calculations should also take into account the value of the long-term business benefits expected from the project. For instance, if a project is going to provide a return of R500m over a period of five years, that’s R100m a year that the business is losing out on if the project is delayed. Take that a step further: an annual R100m return on investment equates to around R8m a month – compared to a senior PM earning around R1m a year – and the value of a professional PM is patently clear.
So, project delays not only cost more in terms of going over budget, they also cost in terms of delayed revenue to the business and, in determining the value of a professional PM, it’s important to evaluate the cost of the PM against the expected business benefit of the project.
© Tony McManus, McManus Consulting.