Benefits of Project Management in Developing India’s Infrastructure

Raj Kalady, Country Director, Project Management Institute

Capacite
During the past couple of years, India has enjoyed the privilege of being amongst the most favored investment destinations of the world. With the sharp vision of Prime Minister Narendra Modi and compelling faith in technological advancement as a key driver of modernization, India is expected to grow at a faster rate. The International Monetary Fund (IMF) recently forecasted accelerated economic reforms for India to achieve a higher growth trajectory, while retaining its GDP growth projection of 7.2 percent for 2017-18. According to multilateral funding agency estimates, India’s medium-term growth prospects are favorable, with growth expected to rise to about 8 percent due to implementation of key reforms, loosening of supply-side bottlenecks, and appropriate fiscal and monetary policies. India’s economy has grown at a strong pace in recent years owing to the implementation of critical structural reforms, favorable terms of trade, and lower external vulnerabilities.

There is also a huge emphasis on infrastructure development as it is considered to be one of the key growth drivers. Performing qualitative and quantitative risk analysis and developing risk management strategies is important to execute big infra projects successfully. These activities require a lot of time and considerable coordination to complete because they can range from simple to sophisticated and complex, depending on project, scope, size, and other factors. The more risk points or the greater the consequences, the more planning is required.

However, a huge skill gap remains in the country with only 1,00,000 project managers. At the current rate of growth, India requires 4,00,000 more managers every year in the next 5-7 years. It is surely time to address the acute shortage of skilled manpower and absence of leadership capabilities in the domain.

With digitalization coming actively into picture after demonetization, the need has accentuated for adequate and relevant capacities of people at all levels. People, who are expected to design and deliver projects under Digital India, need to be trained in appropriate areas. This has also underscored the need to have a competent framework developed.

Common issues facing most projects, particularly government-sponsored projects, are time delays and cost overruns. Any industrial activity in India requires multiple clearances from the time of project incorporation until its completion and launch. For successful implementation of any project in the country, hands-on involvement is essential to obtain project-related clearances. The implementation status of most projects points out the gaps in the application of project management practices. Therefore, learning and utilizing project management is crucial for India to continue on its high-growth trajectory in the coming years.

PMI studies reveal that project management practices across the country differ according to the size and complexity of the project and whether it is a public or private sector initiative. Capital-intensive sectors such as power; steel; engineering, procurement & construction (EPC); and the IT sector that handles multidimensional projects, displayed a higher maturity level of project management practices in their organizations. Although, project management practices have been more widely adopted by the private sector, the public sector is now opening up to these practices. Presently, many public sector organizations are emphasizing on training programs and strengthening their existing project management units and professionals. “Lack of clarity of benefits” and “Lack of client-led demand in India” are the main barriers to the adoption of project management practices in the country.

With the infrastructure boom expected to continue in the coming years, there is a predictable rise in the number of more complex projects, thereby, fueling the demand for structured project management processes. This in turn, feeds the demand for additional certified project management professionals.

As an increasing share of the Indian IT sector moves to the global IT market, the need for structured project management practices increases. This calls for a larger induction of certified project managers.

A recent trend that is on the rise in the infrastructure sector, is funding of large projects by donor agencies. As this continues, it is likely to popularize project management practices and methods. Implementing projects under the public–private partnership mode is expected to create a new demand for project management practices, which is likely to be the largest among all non-IT sectors.

In such a scenario, project management becomes essential for India’s growth story and we believe, the way forward for industry and academia to work in tandem to reach the country’s goal of being ranked as an economic superpower and a developed nation. Though organizations are realizing the growing need for structured project management, many are looking at short-term training programs to enhance the skill sets of their project teams. However, the situation warrants a more serious approach.

PMI Report

Project Management Institute’s (PMI) latest research shows that for the first time in five years, more projects are meeting original goals and business intent while being completed within budget, and that fewer projects are deemed failures.
Raj Kalady, Country Director, Project Management Institute
All change in an organization happens through projects and programs. When a project and program management mindset is embedded in an organization’s DNA, performance improves and competitive advantage accelerates. We need to strengthen the conversation around the importance of project management and the issues essential to improving project and business results—the right skill set, the EPMO, and executive sponsors.

Raj Kalady, Country Director, Project Management Institute
 

Findings unveiled in PMI’s 2017 Pulse of the Profession®: Success Rates Rise: Transforming the high cost of low performance demonstrate that last year organizations around the globe reduced the average amount of money they wasted on projects and programs by 20% compared to the previous year. Specifically, the study found that, globally, organizations wasted an average of $97 million for every $1 billion invested in projects and programs in 2016, compared to an average of $122 million per $1 billion in the previous year.

According to the report, India reported the lowest average monetary waste on projects ($73 million per $1 billion), followed by both China and the Middle East ($82 million per $1 billion). Conversely, Europe reported the highest average waste on project spending at $131 million per $1 billion.

Commented Raj Kalady, “As organizations face increasingly complex challenges from forces such as innovation, disruption, uncertainties, and the demands of a global business environment, the inextricable link between strategy and implementation must be addressed. What’s also critical is an understanding of how change occurs. Operations run the business, but projects change the business. A formal approach to project and program management can be the link that ensures that an organization has the capabilities for change and strategy execution that it needs.”

The report further determines that organizations are becoming more mature with project management and are distinguishing themselves by:

Developing project management talent: Developing technical, leadership and business skills for the management of projects continue to draw significant attention. 32% of survey respondents consider both technical and leadership skills a high priority — a 3 percent increase over last year

Managing project benefits: There’s growing attention to benefits realization management, which is the collective process of identifying benefits at the outset of a project and ensuring, through purposeful actions during implementation, that the benefits are realized and sustained once the project ends. One in three organizations (31%) reports high benefits realization maturity

Establishing Project Management Offices (PMOs) and strategic Enterprise Project Management Offices (EPMOs): Organizations can bridge the gap between high-level strategic vision and implementation with a PMO. Among organizations in the survey that have a PMO, 50% report having an EPMO. And those that align their EPMO to strategy (i.e., have a strategic EPMO) report 38% more projects meet original goals and business intent and 33% fewer projects are deemed failures.

Driving executive sponsorship: Actively engaged executive sponsors continue to be the top driver of whether projects meet their original goals and business intent. The fact was not lost on survey respondents, who revealed an increase in the percentage of their organizations’ projects with actively engaged sponsors compared to last year — an average of 62% compared to 59%, respectively.

Addressing agile approaches: Organizations increasingly embrace agile as a technique for managing projects. A full 71% of organizations report using agile approaches for their projects sometimes, or more frequently.

“We are encouraged to see that organizations are making significant progress and experiencing more success with implementing strategic initiatives and delivering intended project benefits,” said PMI President and CEO, Mark A. Langley. “We have long advocated that project management is essential for any organization’s success and are excited that others are increasingly realizing this fact as well. Organizations that invest in proven project management practices waste 28 times less money because more of their strategic initiatives are completed successfully.”

Of the industries included in the study, healthcare reported the highest average waste on project spending. A more detailed breakout of several key industries included in the study, ranked from highest to lowest, demonstrates the range of efficiency achieved:
  • Healthcare – $112 million per $1 billion
  • Telecom – $106 million per $1 billion
  • Energy – $101 million per $1 billion
  • Manufacturing – $98 million per $1 billion
  • Government – $97 million per $1 billion
  • Financial Services - $97 million per $1 billion
  • Construction – $94 million per $1 billion
  • IT – $78 million per $1 billion
Note: The 2017 Pulse of the Profession features feedback and insights from 3,234 professionals globally who represent diverse levels of experience and industries, including government, IT, telecom, energy, manufacturing, healthcare and construction. The global totals in the report represent feedback from North America, Latin America, Europe, the Middle East and the Asia Pacific region.

NBM&CW July 2017

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