The Role of Analytics in Projects

Most project management software solutions are excellent at capturing project detail. Simply capturing data points, however, has limited strategic value. Strategic value comes from turning data into reports that inform strategic decisions by illustrating the relationship between all of an organization’s projects, their effect on resources and ultimately profitability.

Most project management environments only inform tactical decision making. They help project teams ensure their projects are on time, within budget and done to specifications. They answer questions such as:

• Where do we stand on plan vs. actual activities?
• Are we meeting milestone and deliverable dates?
• Are we exceeding planned budgets?
• What is the overall status and where are the bottlenecks in the project?

Project management professionals live and die by project status reports that track these issues. There is a common thread that ties these reports together. They deliver monolithic views of project environments. Although this tactical data is necessary for a project’s success, status reports focus on individual projects in isolation. This siloed view does not portray the impact of a project on the rest of the organization and the other projects, programs and portfolios it may affect.

Most projects do not work in a vacuum. Actions taken on one project affect cost and available resources throughout the company. Singly and together, projects affect organizations’ strategic objectives.

A broader view of project management analytics can provide a wealth of information to turn projects into strategic activities that elevate organizations.

For organizations to take their basic project reporting from status reports based on siloed data to true project analytics, they must consolidate and organize data across all projects. Project analytics need the same ground-level data now collected at the tactical level – time sheets, budget records, plans and schedules – but they need it for all projects in progress. For analytics to have strategic value, executives and project managers need to have the ability to see the workloads and resources assigned to multiple projects. A consolidated view of that information enables project stakeholders to:

• Assess the viability of projects within a portfolio;
• Decide whether projects are meeting Key Performance Indicators (KPIs); and
• Provide clients access to relevant data for checking on their projects’ progress.

To effectively merge data analytics into project management, companies must be able to mine all of the information entered into both unstructured data sources (documents, spreadsheets and email) and structured sources (such as a project database). That breadth of data gives companies visibility across projects, resources and portfolios. It also empowers managers and executives to gauge projects’ performance and their impact on corporate objectives. Project analytics based on broad data capture also provides the strategic metrics for organizations to make well informed decisions based on a complete picture of their project activities.

Tunnel vision

Project managers must often make decisions based on partial information. This “project tunnel vision” might push projects ahead, but it does not consider the impact these tactical decisions can have on the organization as a whole.

Project tunnel vision is more than just a lack of data and limited reporting. The tunnel vision syndrome begins with the people and culture of running projects. Many project management organizations work reactively. Project leaders are assigned whatever projects are deemed most important. They are directed to focus on delivering the best possible outcome—which at the individual project level means a tactical outcome.

Strategic project management concepts are new to most organizations, and many of them are not prepared to move to a strategic mindset. This shift can only begin by first evaluating their current state of affairs and developing a plan of action to take projects to the next level.

Turning project management into a strategic asset means including analytics in Project Portfolio Management (PPM) and governance frameworks. Business Performance Management (BPM) technologies and methodologies can help.

BPM is a discipline that grew out of the Business Intelligence world. BPM allows companies to mine business data from various sources, analyze it and take appropriate action. By continuously reviewing dashboards, BPM delivers strategic information businesses need to balance specific business activities against predefined goals. BPM enables companies to identify problem areas quickly and forecast results more accurately. BPM is also used for risk analysis and to conduct what-if scenarios to improve future performance.

Although BPM is commonly used in areas such as operational performance, sales performance and financial performance, the project management world has not used it consistently. The concept of a balanced scorecard is an excellent example of a BPM methodology often not employed by project management groups.

Balanced scorecards have been at the center of the BPM world since its beginnings. They incorporate financial and non-financial metrics to monitor performance against specific targets. In addition, methodologies such as Activity-Based Costing (ABC), also popularized by BPM, can provide excellent insight to projects by assigning cost values to all activities and resources impacting projects and their stakeholders. These BPM methodologies are commonly employed by businesses to make strategic decisions and ensure that projects are performing to expectations.

In light of this, to develop a solid performance management and analytics strategy, project management professionals need to ask themselves the following questions:

• How easily accessible is project data? Is data siloed or centralized?
• What are the primary components that need to be assessed across all projects? Is it resource driven? Is it budget driven?
• What are their organizations’ goals and targets? How will they be measured? Do they have defined KPIs in place?
• What is their risk management strategy? What kind of tools do they have in place to conduct what-if analysis?

A well-thought-out governance framework and a PPM strategy is the first step in identifying what metrics and analytics are needed to improve project performance. PPM means mining the mission-critical project data captured throughout your organization and measuring it against corporate goals and KPIs. Although many models of measurement are available, the biggest challenge lies in quickly accessing the data from multiple sources, processing the information, then providing the results to the appropriate decision makers. Consequently, true project analytics means that organizations need to respond to their project information with the same conviction and care as their colleagues are currently doing in sales, operations and finance.

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Neil Stolovitsky has 10 years of IT experience with end-user, consulting, and vendor organizations, along with extensive expertise in business development, software selection, and channel strategies. Neil is a Senior Solution Specialist with Genius Inside and can be reached at [email protected]. For more information, please visit www.geniusinside.com.