As businesses are under pressure to grow revenue and improve the bottom line in an unstable global economy, they look for innovative ways to improve the efficiency of projects and programmes. How organisations improve the success rate of complex projects by predicting their performance is the secret sauce in strategic management.

Current challenges

The key elements of growth today include how well we manage major capital investments, handle changes to business processes, manage new business acquisitions, and adopt fast-changing technologies. Most of these initiatives take the form of what we commonly call “capital projects”. These are also a cause of major concern to business executives because poor management frequently results in cost overruns, delays, and even failures. In 2010 alone, according to the ‘CHAOS Summary 2011 Report’ by Standish Group International Inc,

21 per cent of the projects were cancelled prior to being delivered or were never used;

37 per cent of all projects delivered on time and within budget;

46 per cent of the projects exceeded budget;

63 per cent of projects were either cancelled or had failed;

71 per cent of the projects were delivered late.

Predictive Analytics

Research has shown that complex projects are more likely to fail. Strangely, it is not the complexity per se that contributes to failure, but the lack of right people and controls. The tendency to “file away” the risks associated with the complexity is a major cause of failure.

Predictive Project Risk Analytics (PPRA) provides insight into potential risk factors and the corrective measures needed to mitigate risks. It can predict the outcome of the project based on 28 common attributes using a quantitative, data-driven approach, rather than an intuitive one. In the case of a project that is floundering, PPRA can help identify the risk causal factors and provide a solution, thereby averting cost and time overruns.

The PPRA is built on the Navigator engine developed by the Herman Institute’s database, which contains over 2,000 projects across industry sectors. One of the key outcomes is the development of the Herman’s Complexity Scale for projects across multiple domains and industries, to predict potential risks throughout the lifecycle of a project.

The analytical engine correlates project complexity factors and execution characteristics to identify the level of management practices executed by projects of a similar complexity. The database continues to be refreshed through ongoing research. The PPRA

compares project control maturity against the maturity needed for success in certain key parameters;

analyses project assessment capability, which examines project characteristics and assesses whether or not a project resembles a similar successful project;

provides insights on the level of governance required throughout planning and execution to achieve project objectives;

provides capability to identify governance execution characteristics that need to be adjusted, implemented, monitored or enforced to enhance the likelihood of success.

PPRA can also help define the level of governance and oversight needed for success across the areas of governance, ownership, delivery management, business unit, resource management, risk management, and contract management.

Value drivers

The goal of the PPRA approach is to predict a project’s potential risks and provide an early warning signal, so that time and cost are managed effectively. The value drivers are

Rapid objective assessment of project complexity to determine expected level of control based on comprehensive research;

Project agnostic ;

Low cost, high value;

Provides value early on in the project;

Predicts results that are automatically prioritised.

PPRA works effectively at the start of a project by building competencies that ensure success, and adds value during the project lifecycle by helping bring a floundering project back on track. It also provides foresight through forward analysis, thereby preventing the launch of premature projects.

The author is Senior Director, Deloitte Touche Tohmatsu India Pvt Ltd

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