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NavigatingComplexity

In-Depth Report


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PMI’s Pulse of the Profession In-Depth Report:Navigating Complexity September 2013

2 ©2013 Project Management Institute, Inc. PMI.org/Pulse

INTRODUCTIONOrganizations that undertake ambitious programs and projects have always encountered the unforeseeable, the

unexpected, and the complicated. However, today’s world of expanding globalization, rapid pace of change, intensecompetition, and continual innovation in a “do more with less” market environment is forcing organizations torecognize that their strategies—and the projects executed to implement them—are becoming increasingly complex.

So are organizations prepared to deal with this increasing complexity? IBM’s 2010Capitalizing on Complexity:Insights from the Global Chief Executive Ofcer Study 1 reported that the complexity of operating in an increasinglyvolatile and uncertain world is the primary challenge of CEOs. However, more than half of CEOs expressed doubt intheir organization’s ability to manage it and when they were asked to look ve years down the road, four in ve CEOexpected the level of complexity to increase.

PMI’sPulse of the Profession™ In-Depth Report: Navigating Complexity explores the steps that organizations aretaking to improve the success of their complex projects and programs. It reveals that, regardless of the degree ofcomplexity, standardized project management practices, effective communications, and a strong talent base arenecessary for project and program success. But there is more.

High-performing organizations recognize another key ingredient in their talent pool—project executives withsuperior leadership skills necessary to ensure that complexity in their projects and programs is navigatedsuccessfully. This ingredient assumes even greater signicance in organizations that deliver a higher percentage ofhighly complex projects since typically there are more dollars at risk for these projects. Recognizing it is one thing, ocourse, but acting on that recognition to create organizational capability is quite another.

This report identies several strategies that are pursued by high-performing organizations to develop appropriateorganizational capability: strategies that together reinforce two important points. First, they demonstrate the vitalneed for “joined-up” thinking that relates the successful mastery of complexity to both mature organizationalprogram and project management processes and to the development of a program- and project-capable workforce.And second, they highlight the need for sustained and committed leadership from the very top of the organization ifsuch “joined-up” thinking is to be implemented intelligently.

The successful creation of an organizational capability to navigate complexity leads to more successful projectsand programs, fewer dollars at risk, and staying ahead of the competition. If your organization wants to be in thatsituation, then this report provides essential pointers to what is involved in creating such a capability.

Terry Cooke-Davies, PhDGroupChairman, Human Systems International


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3©2013 Project Management Institute, Inc. PMI.org/Pulse

THE NATURE OF COMPLEXITYComplexity has different meanings for different people and in different

organizations. In the end, there may not be much value in wasting a lot ofprecious organizational time and resources dening complexity. Instead,if an organization thinks its work is complex, then it has to function in away that best navigates that complexity. Ultimately, how organizationsanticipate, comprehend and navigate complexity determines theirsuccesses and failures.

There are many ways to characterize complexity (Figure 1).


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“I think ambiguity derives froma lack of planning. I think every

project starts off with a good idea but we don’t necessarily always nail down that idea.”

~ Matthew Handi , Project ManagementSpecialist in a large insurance rm

“Well, the starting point ofambiguity is scope: what is this

project about, and why are we

doing it? When I sit down with stakeholders to learn what the project’s about, I ask about scope,and value. And if we haven’t hada chance to do a really thoroughexpectation study up front, thatwill make the project ambiguous.”

~ Bailie FossProject Manager in a Fortune 100nancial services company

InRedening Program Management for the Unique Challenges of ComplexPrograms, Booz Allen Hamilton identies complexity in projects as “theexponential increase in ambiguity surrounding stakeholder expectationsespecially regarding the certainty of program outcomes and schedules.”2

An organization’s portfolio—its set of strategic initiatives, which aredelivered through projects and programs—determines the natureof complexity. Our research nds that there are several commoncharacteristics of complex projects (Figure 2a). This in-depth reportfocuses on the strategies necessary to managing two of the most deningcharacteristics of complexity in projects:multiple stakeholders and ambiguity.

Not surprisingly, ambiguity is central to the complexity conversationfor organizations dealing with a high percentage of complex projects.Sixty-four percent of organizations whose portfolios are lled withmostly highly complex projects3 report that ambiguity is the mostdening characteristic, compared to just 44 percent of organizationswhose portfolios have few projects that are highly complex (Figure2b).4 This suggests having a portfolio lled with complex projects forcesorganizations to search for effective methods to deal with ambiguity.

Most Dening Characteristics of Complexity in Projects

29%

28%26%

25%

23%

18%

Multiple stakeholders

Ambiguity of project features, resources, phases, etc.

Signicant political/authority inuences

Unknown project features, resources, phases, etc.

Dynamic (changing) project governance

Signicant external inuencesUse of a technology that is new to the organization

Use of a technology that has not yet been fully developed

Signicant internal interpersonal or social inuences

Highly regulated environment

Project duration exceeds the cycle of relevant technologies

57%

48%

35%

33%

10%

Figure 2a: Characteristics of complexity.


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“In terms of the current projectswe do for big companies in thenancial world, ambiguity seemsto be the norm because until the

project is underway, it seems likethey cannot dene it well enough

for the scope to be signed off.Regardless of that, they do signoff. And always they have this

nomenclature in scoping that says‘this is an estimate and the actualwill be billed later.’ What this

means for the team—and this tiesup with resources (how many andwhat type of people are needed onthe team)—until the scope is clear,

you have to estimate the resources,as well. And everything else is anestimate, including time.”

~ John ManickamProgram Manager in a large nancialinstitution

Another common characteristic of complex projects is managing multiplestakeholder demands. Research on complexity conducted in 2010with PMI’s Global Executive Council5 found that dealing with multipleinterfaces was one of several factors that have an impact on the ability tonavigate complexity.

PMI’s practice guide on navigating complexity6 details several reasons whyeffective stakeholder engagement is an important focus area:

z The diversity of stakeholder agendas may have an adverse impacton assumptions about and constraints upon a program or project.

z Social and political stakeholder interactions may produce difcultconditions for the program or project manager and the team.

z Stakeholders may have strong and diverse opinions regardingprocesses and methods for managing a program or project.

Understanding, managing and connecting this diverse set of internaland external stakeholders in a project or program can be enormouslychallenging even for the most experienced project manager. And thechallenge clearly exists; nearly three out of ve organizations report thatmanaging multiple stakeholders is a dening characteristic of complexityin projects (Figure 2a).

There are potentially many risks and repercussions for organizationsfrom poorly managing complexity: scope creep, time and cost overruns,communication breakdowns and outright project failures.

The bottom line is that organizations must address the nature ofcomplexity for three very critical reasons:

Complexity is not going away and will only increase. Just three years ago, IBM’s 2010 reportCapitalizing on Complexity:Insights from the Global Chief Executive Ofcer Study revealed thatthe complexity of operating in an increasingly volatile and uncertainworld was the primary challenge of CEOs. More than half of theCEOs expressed doubt in their organization’s ability to manageit. And four out of ve CEOs expected the level of complexity toincrease within the next ve years.

Most DeningCharacteristic of ProjectComplexity–Ambiguity

of Project Features,Resources, Phases, etc.

64 %44 % Fe w P ro jec t

s H ig h l yCo m p le x

Mos t P ro jec ts

H ig h l yCo m p le x

Figure 2b .


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“For any large bank, you have your business stakeholders. And

your business stakeholders areusually kept apart from the rest ofthe bank’s business so there is noconict of interest. So you havethe stakeholders that proposethe project. Then you’ve got your

project managers and your ITteam who evaluate it. The IT team

looks at a project to see if it’s a sound decision, if it makes senseor not. They look at it as a bottom

line. So as a project manager, you sort of straddle the line of having to appease both sets of stakeholders.”

~ Marketing Manager in a global mortgagelending bank

“I think when multiple stakeholders are coming from

different backgrounds or even from different perspectives interms of how they are lookingat something, that does causeambiguity. And I think that’swhere communication plays a

huge role.”

~ Julie TuttleProject Manager at one of the largestbanks in the U.S.

Large budgets are at stake. PMI’s 2013Pulse of the Profession™research reveals that the average budgets for projects that arehighly complex are nearly twice as large: there are more dollars atrisk for projects that are highly complex.

Effectively navigating complexity delivers a competitiveadvantage. Research from McKinsey supports a mature view thatwhen complexity is viewed as “a challenge to be managed andpotentially exploited, not a problem to be eliminated, businessescan generate additional sources of prot and competitiveadvantage.”7 These added values may also mean that organizationshave more strategic options, are better able to manage theirportfolios and are in a more prominent position to enableinnovation. McKinsey also suggests an additional competitiveadvantage: “Companies that manage complexity are arguablyharder to imitate, since doing so requires their competitors toreplicate their organizational and operating-model decisions indetail.”

With complexity increasing, more money at risk and the realpotential for added value, the imperative to successfully navigatecomplexity is critical. Research reveals that successful organizationsimplement specic techniques or approaches to proactively defycomplexity in their projects and programs and, ultimately, improve theirproject success rates.


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SPOTLIGHT:HOW YOU HANDLEAMBIGUITY CAN MEAN SUCCESS OR FAILUREFOR COMPLEX PROJECTSAmbiguity can mean many different things toproject managers. However, how it is handledcan mean the difference between a successfulproject and one that falls short of the stakeholders’requirements and expectations.

“I would dene ambiguity as when we havestakeholders that aren’t really quite sure themselveswhat they want,” said a marketing manager in aglobal mortgage lending bank. “So the challengeas a project manager is trying to dene what yourclient wants—not having solid requirements is thebiggest problem.”

John Burbank, a project manager in a large assetmanagement rm, says that ambiguity cancome from stakeholders who may have a strongbackground in a specic eld, but may not have asstrong an understanding of the business and projectmanagement as a discipline.

“So very often that ambiguity comes from the ITmanager who says we’re doing it this way, while thelegal and compliance people say we have to do itthat way. And you have to have a lot of discussion toat least get on a similar page, if not the same page,”says Mr. Burbank.

Communication also plays a big role in handlingambiguity. And project managers need to facilitatediscussions between individuals of varyingbackgrounds, says Julie Tuttle, a project manager inone of the largest banks in the U.S.

“I like bringing all these people into the sameroom or on a phone call, saying ‘This is what weactually mean,’ and asking them, ‘Is this what youunderstood?’ And the questions that come out,time and time again, indicate that this meeting wasrequired,” she says.

This meeting can often lead to a clearerunderstanding of the requirements of the projectand may even lead to new requirements that noneof the stakeholders had even considered before thediscussion, says Ms. Tuttle. She also recommendsthat this discussion happen earlier, rather than later,in the project cycle.

“I think you are taking a huge risk if the stakeholdersare only involved in the last stage, or validation, andthen you nd that they are not happy because thiswas not what they expected. They were thinkingapples and you give them oranges. I think that’s ahuge reason you should talk about it,” she says.

For Mr. Burbank, ambiguity can always be settled bydeferring to whoever may be funding the particularproject that is in question.

“What it comes down to is… who is funding theproject? Which group is funding it? They havethe nal say. In a way that makes for some moreclarity,” he says. “So, in a way, a lot of my work isnot all that ambiguous. I know that all I have to dois go to a high enough level within that organizationand get an answer.”


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TURNING COMPLEXITY INTODEXTERITYWhile there may be a perception that successfully implementing complexprojects requires a different set of skills or capabilities, research continuallshows that’s not so. PMI’sPulse of the Profession™ research, among otherPMI studies, shows that regardless of the number of highly complexprojects, when organizations use techniques at the same frequency andhave the same level of project management maturity, they have similarproject success rates (Figure 3a).

Project Management Techniques, Methods andPractices, and Maturity

Organizations wheremost projects arehighly complex

Organizations wherefew projects arehighly complex

Percent using always or often

Risk management practices 78% 66%

Project performance measures 75% 71%

Change management practices 74% 62%

Resource management to estimate and allocate resources 73% 61%

Program management 69% 57%Project portfolio management 50% 48%

Agile/Incremental/Iterative project management practices 32% 30%

Mature benets realization process 11% 11%

Mature portfolio management practices 13% 9%

High organizational agility 14% 12%

Average percent of active project sponsors 66% 59%

Organization has a PMO 69% 66%

Average percent of projects meeting goals and business intent 58% 63%

Figure 3a: Regardless of the number of highly complex projects, organizations are managing projects with relatively the same set of projectmanagement techniques, methods and practices, and have relatively the same amount of project management maturity. (Note: There are nostatistical differences between the two groups at the 95% condence interval.)


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PMI’s research conrms that organizations that manage projects successfully,whether they are very complex or fairly standard, use the same capabilitiesbut more frequently .

High-performing organizations8 are applying key project managementtechniques, methods and practices much more frequently, and have muchhigher levels of project management maturity. Accordingly, they experiencedramatically higher project success rates (Figure 3b). Of note, the projectportfolios of high performers are no more complex than low performers (seeFigure 3c on page 10).

Project Management Techniques, Methodsand Practices, and Maturity

High Performers Low Performers

Percent using always or often

Risk management practices 81% 51%

Project performance measures 80% 57%

Change management practices 76% 64%

Resource management to estimate and allocate resources 82% 51%

Program management 80% 48%Project portfolio management 76% 39%

Agile/Incremental/Iterative project management practices 53% 24%

Mature benets realization process 29% 3%

Mature portfolio management practices 28% 3%

High organizational agility 28% 4%

Average percent of active project sponsors 79% 43%

Organization has a PMO 78% 67%

Average percent of projects meeting goals and business intent 90% 34%

Figure 3b: High performing organizations are using project management techniques, methods and practices signicantly more than lowperformers and have higher levels of project management maturity. (Note: All differences are statistically signicant at the 95% condenceinterval.)


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Average Percent of theProjects with Following

Levels of Complexity

HIGH 45%

LOWPERFORMERS

HIGHPERFORMERS

39%

34% 36%

21% 25%

MEDIUM

LOW

Figure 3c: Average percentage of projectswith different degrees of complexity

Thus, the capabilities used by high performers are best practices thatshould be used by all organizations, regardless of the level of complexityin their projects. Doing so results in more projects meeting their goals—the hallmark of project success (as shown in Figure 3b).

While the nature of complexity varies depending on the organizationand its projects and programs, our research shows that performing in acomplex world requires a certain degree of dexterity.

High-performing organizations have mature project managementpractices, align their talent management with organizational strategy,and are signicantly more likely to be highly effective communicators.And the payoff is huge:High-performing organizations achieve anaverage project success rate of 90 percent, and risk 14 times fewerdollars than low performers .9 Considering that average budgets forhighly complex projects are nearly double those with less complexity,this translates into a big boost to the bottom line—and requires moreattention from organizations.

Additionally, our complexity in-depth research nds that high performerare focusing on specic capabilities within these three broad areas tomanage highly complex projects—measures that have been proven tohelp them effectively manage ambiguity and multiple stakeholders.

Assess anddevelop talentwith a focus on

fosteringleadership skills

Communicateeffectively

with allstakeholder groups

Competencies to Manage Complex Projects

Create a culture ofproject and program

managementwith engaged

project sponsors

So, in a world with not enough time or resources, focusing on these areaimproves the delivery of complex projects.


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CREATE A CULTURE OF PROJECT ANDPROGRAM MANAGEMENT WITH ENGAGED

PROJECT SPONSORSOrganizations with mature project management practices in placeaverage a signicantly higher percentage of projects meeting originalgoals and business intent (Figure 4). A key strategy to matureproject management is creating a culture of project and programmanagement with engaged project sponsors.

PMI’sPulse of the Profession™ research on complexity reveals that asponsor who actively supports the project is the second factor with thegreatest impact on the success of projects that are highly complex—

second only to effective communication.

PMI’s practice guide on navigating complexity dedicates a section to keyenterprise enablers that impact the outcomes of projects and programswith a high degree of complexity. Paramount to creating that enterprisemindset is “providing executive sponsorship and commitment.” However,research sponsored by PMI—Why Good Strategies Fail: Lessons for theC-Suite, developed with The Economist Intelligence Unit—shows oneout of eight (12 percent) organizational leaders do not believe that

Projects Meeting Goals and Business Intent

Have a dened career path 71%

Standardization used throughout organization 70%Have a process to develop PM competency 69%

Have a process to mature PM practices 69%

Have ongoing PM training 66%

Study average 62%

Mature benets realization processes

79%

Mature portfolio management practices 76%

High organizational agility 74%

Have active sponsors on 80%+ of projects 74%

Figure 4: Mature project management practices result in more successful projects(Source: PMI’s 2013Pulse of the Profession report).


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“We are living in a projectworld dened by complexity

of interfaces. To be successful it is vital that we build strong relationships with sponsors and stakeholders based upon respectand inclusion.”

~ Dr. Edward J. HoffmanChief Knowledge Ofcer, NASA Academyof Program/Project and EngineeringLeadership

Percentage of Projectsthat were Completed

MeetingGoals/Intent

WithinBudget

On Time

ExperiencingScope Creep

Projects Deemed Failures

80%+ of Projects Have Active Sponsors

74%

45%

66%

44%

62%

40%

39%

53%

25%

12%


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T e c h n i c

a l P r

o j e c t

M a n a

g e m e

n t

L e a d e r s h i p

Strategic andBusiness Management

Figure 7: “The Talent Triangle” illustratesthe skill sets of the next generation ofproject managers.

ASSESS AND DEVELOP TALENT WITH AFOCUS ON FOSTERING LEADERSHIP SKILLS

According to research with PMI’s Global Executive Council, managingcomplex projects requires project managers who are able to establish thevision, mission and expected outcomes in a way that is broad enough tobe complete yet simple enough to understand. It also requires the skillto align the team to that vision. These are project managers who havebecome project executives with the leadership skill and business acumento drive success. Additionally, PMI’s research on talent managementshows that organizations that report signicant or good alignment oftheir talent management to organizational strategy average a signicantlyhigher percentage of projects meeting original goals and business intent

compared to organizations with moderate or weak alignment (Figure 6).

Alignment of Talent Managementto Organizational Strategy

Signicant/Good Alignment

Moderate/Weak Alignment

72%

58%

Figure 6: Percentage of projects meeting original goals and business intent.

The key strategies that assist in ensuring a successful alignment are:Foster exceptional leadership skills and assess and develop your talent

Foster exceptional leadership skillsProject or program managers with appropriate skills, knowledge andexperience effectively manage projects and programs of all degrees ofassociated complexity. PMI’s Pulse of the Profession™ In-Depth Report:Talent Management illustrates the three skill sets required for thesuccessful management of projects, otherwise known as the “The TalentTriangle”: technical project management skills, leadership skills, andstrategic and business management skills (Figure 7).


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“An organization’s ability to navigate complexity depends upon

its ability to manage its talent.”

~ Terry Cooke-Davies, PhDGroup Chairman, Human SystemsInternational

PMI’s research further shows that among the three skill sets within “TheTalent Triangle,” leadership skills have a direct inuence on the success ofproject managers and projects:

z 75 percent of organizations rank project manager leadershipskills as most important for the successful navigation ofcomplexity in projects.

Additionally, 66 percent of organizations rank leadership skills as mostimportant for the early success of project managers and 71 percent oforganizations rank leadership skills as most important for the long-termsuccess of project managers.

PMI’s research on complexity with its Global Executive Council dened

exceptional leadership as being most adept at managing emotions, actincourageously, maintaining presence, inspiring teammates and building aculture of accountability, trust and continuous improvement.

Among successful organizations, leadership development is oneof the areas of talent management most aligned to organizationalstrategy. In fact, 70 percent of organizations that have aligned theirtalent management to organizational strategy report that leadershipdevelopment is one of their talent management programs most alignedto organizational strategy (compared to only 37 percent of organizations

with weak alignment of talent to strategy). Aligning talent managementto organizational strategy leads to better project success (see Figure 6 onpage 13).

Four out of ve high performers (81 percent) report that the mostimportant acquired skills for project managers to successfully manageprojects that are highly complex are leadership skills (Figure 8).


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Most Important Skills to Successfully ManageHighly Complex Projects

Leadership skills

Strategic and businessmanagement skills

Other

Technical projectmanagement skills

81%

1%

9%

9%

Figure 8: Skills most important for successfully managing highly complex projects.

These critical leadership skills include advanced skills in negotiation,persuasion and collaboration as well as the experience and skill set to dealwith ambiguity, one of the most dening characteristics of complexity inprojects:

For complex projects, mastery of traditional dimensions of project

management such as cost, schedule, and performance is necessarybut insufcient. With international partnerships, decentralized teams,and working alliances among government, industry, universities, andnonprot organizations all increasingly common, complex projectsalso require leaders with advanced skills in areas such as negotiation,persuasion, and collaboration. (Hoffman and Kohut)10

These ndings strongly suggest that project management talent withhighly developed leadership skills can considerably manage projects andprograms that have high degrees of complexity.


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Assess and develop your talentIt is no surprise that experienced project leaders drive more successfulprojects and that is particularly true of complex projects. Subject matter

experts recommend assessing project manager experience and talentbefore assigning project leaders to projects that are highly complex inorder to ensure success.

z Step 1: Conduct a resource gap analysis comparing availableresources with those needed for a complex project. A resourcegap analysis assesses the resources, talent, software, alliances,processes and practices readily available to successfully completeproject or program. Experts recommend conducting this importananalysis, particularly for projects with higher levels of complexity

to ensure critical business objectives are met. Our research oncomplexity shows that organizations that perform this analysisaverage 71 percent of their projects meeting their original goalsand business intent—signicantly higher success rates than thoseorganizations that do not complete this assessment (67%).

z Step 2: Conduct a skills assessment to aid in assignment ofproject managers. It seems intuitive that organizations shouldmatch the skills of a project manager to a project that is highlycomplex. Yet our research shows that less than one third of

organizations are performing this assessment for projects that arehighly complex. However, organizations that conduct this analysisaverage signicantly more projects that meet original goals andbusiness intent compared with those that do not (72% vs. 67%).

z Step 3: Maintain and consult a talent portfolio of projectmanagers’ skills and past experiences. The introduction of Aspects of Complexity: Managing Projects in a Complex World (Editorin-Chief Terry Cooke-Davies, PhD),11 suggests that successful projecand program managers develop the valuable skill set of leadership

through years of experience.

Our research shows that organizations agree: high performers report thatproject manager work experience is the attribute most likely to fostersuccessful completion of complex projects, signicantly more often thannatural aptitude and formal education and training. Fifty-seven percentof high performers recognize project management work experience as thattribute most likely to foster successful management and completion


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of projects that are highly complex, as opposed to natural aptitude andformal education and training (Figure 9).

Project manager attributes most likely to fostersuccessful management and completion ofprojects that are highly complex

Project managerwork experience

Project managerformal education

and training

Other

Project managernatural aptitude

57%

22%

16%

5%

Figure 9: Over one-half of high performers recognize project management workexperience as the attribute most likely to foster successful management andcompletion of projects that are highly complex.

Knowing the experience and skills of an organization’s project managersis crucial. Experts recommend that organizations keep and frequentlyconsult an updated inventory of project managers’ skills and pastexperience. Doing so allows organizations to most effectively assess talentfor highly complex projects, and select project managers for projects andprograms that are best matched based on their skills and experience. Ourresearch shows that organizations that consult an updated inventoryof project managers’ skills and past experiences average 72 percent ofprojects meeting original goals and business intent compared to only 68percent for those that do not.

z Step 4: Develop your talent. An organization’s talent is itsprimary competitive advantage—and effective talent managementis a strategic competency.

McKinsey’s “Cracking the Complexity Code” substantiates the importanceof developing an organization’s talent to navigate complexity, notingthat, “Once a company knows where its complexity lies… it must build


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“The greatest competitiveadvantage is a talented and

adaptive workforce. The most important role for a PMO is toensure a continuous and optimal

learning system.”

~ Dr. Edward J. Hoffman Chief Knowledge Ofcer, NASA Academyof Program/Project and EngineeringLeadership

the capabilities of the individuals who will assume the roles that may bepivotal to managing that complexity.”

Our research shows that it is critical to develop a centralized functionto ensure that project professionals receive appropriate education andprofessional development. In some organizations, this function is calledproject academy or a project center. And further, some organizations mahave this function as part of their project management ofce (PMO).

Many organizations use this centralized function to track the professionadevelopment of project managers and distribute relevant information toproject teams, the organization overall, as well as the individual. Specifunctions may include:

z Advocating for the knowledge requirements of project managers z Aligning projects with organizational strategy z Promoting sustainable organizational capability z Dening concepts and vocabulary for the project community z Promoting communities of lifelong learning z Aligning projects with external stakeholders

Our research on complexity shows that organizations that have thiscentralized function average 72 percent of projects that meet originalgoals and business intent compared to only 66% for organizations that d

not have this in place.

High performers recognize the critical need for a centralized functionto ensure that project professionals receive appropriate education andprofessional development. In fact, they are signicantly more likely thanlow performers to have this function in place (Figure 10).


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These strategies for aligning talent management to organizationalstrategy (fostering exceptional leadership skills, assessing talent anddeveloping talent) allow only 66% for organizations to better selectproject managers for all projects, including those that are highly complex.

TracksProfessionalDevelopment

via CentralizedFunction

5 5 % 3 8 %

Y e sHigh Performers

Low Performers

Figure 10: High-performing organizations are signicantly more likely to have in place a centralized function thatsupports project manager development.


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80%Highly-effectivecommunicators

Minimally-effectivecommunicators

52%

Figure 11: Effective communications havea direct effect on project success rates.

COMMUNICATE EFFECTIVELY WITH ALLSTAKEHOLDER GROUPS

Organizations that are highly effective communicators average asignicantly higher percentage of projects meeting original goals andbusiness intent compared to organizations that are minimally effectivecommunicators (Figure 11). The key strategy here is communicatingeffectively to all stakeholders.

As revealed in PMI’s Pulse of the Profession™ In-Depth Report: The EssentiaRole of Communications, the failure of one out of two projects that failsis related to poor communications. If failure is a result in a project witha high level of complexity and the characteristic high budget, the risk fo

the organization is immense. Organizations that recognize the impact ofeffective communications to all stakeholders on the success of complexprojects average success rates of 71 percent which is signicantly highethan their counterparts. Organizations that place high importance onsuperior communications experience more successful projects.

High performers report effective communications to all stakeholders,more than any other factor, as having the greatest impact on highlycomplex projects (Figure 12), and place more importance on effectivecommunications than low performers (38 percent versus 25 percent). Th

suggests that high-performing organizations recognize that placing suchhigh degree of importance on effective communications, and consistentlensuring that the communications are done, effectively addresses theadded complexity of multiple stakeholders.

Factors reported by high performers as impacting the success ofcomplex projects

7%

5%

Effective communications to all stakeholders

A project sponsor who is actively supportive of the projectA clear linkage between the project and the strategy of the organization

The agility of the organization

Effective change management practices

Support and buy-in from the C-suite

38%

25%

16%

8%

Figure 12: High performers recognize effective communications to all stakeholders has the greatest impact on highlycomplex projects.


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Findings from PMI’s research with its Global Executive Council further justify the essential need for effective communications for projectsthat are highly complex. Superior communications as detailed by theseexperts in their elds include seeking diverse perspectives, tailoringcommunications to the audience, multi-dimensional communications,promotion of project objectives and ability to inuence multiplestakeholders.

These subject matter experts believe that these highly developedcommunications skills and behaviors enable project managers to bettermanage diverse internal and external stakeholders who are often ahallmark of complexity in projects, leading to more successful projects,and ultimately, risking less money.

Organizations ranked“effective communications to

all stakeholders” as the factor having the greatest impact onthe success of projects that are

highly complex.


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SPOTLIGHT: IN FINANCIAL SERVICES,COMPLIANCE CREATES COMPLEXITYAdditional record-keeping and reportingrequirements can add multiple stakeholders andambiguity to any project. But what if one of thosestakeholders is a federal commission with theauthority to subject your organization to enormousnancial penalties or—at worst—shut you downentirely?

Within the nancial sector, the possibility of severe

consequences for improper record-keeping orreporting is an everyday reality, with the onset ofrecent U.S. federal regulations such as the Dodd-Frank and the Sarbanes-Oxley (SOX) Act. As aresult, nancial services organizations view theseregulations with the utmost seriousness.

“We’ve formed whole teams and whole divisionsdedicated to making sure that we are compliant,”said a marketing manager in a global mortgage

lending bank. “The head of our bank is completelydedicated to this—he doesn’t want us to just meetthe requirement, he wants us to surpass it.”

As a result, the bank has dedicated vast resourcesto storing documents and making sure that they areretrievable, as well as creating an entire complianceand risk organization tasked to ensure that thebank’s employees are following the law.

In order to deal with this level of complexity, projectmanagers need to pay a ne attention to detail andlearn how to “interpret the spirit of the law, not justthe letter of the law,” said a marketing managerin a global mortgage lending bank. “Integrity iskey. And communication is important… and then you also have to work with your internal team toconvey the importance of this and to make sure theyunderstand that everyone’s job is on the line.”

John Burbank, a project manager in a large assetmanagement rm, said that strong communicationsskills were paramount in handling complex projectsthat involved federal regulations.

“You have to have the business understanding; youhave to have the IT understanding; you have to havethe ability to explain highly complex things in a verysimple way to make sure everybody understands

them—kind of the innate ability to understandpeople’s backgrounds and their understandings so you [can] bring them in on the same page,” said Mr.Burbank.

For Bailie Foss, a project manager in a Fortune100 nancial services company, his organization’scompliance department provides a line of defenseagainst a potentially damaging regulatory action.But, as a result, he must keep them engaged

throughout the project life cycle in order to ensuresuccessful deployment.

“We have to demonstrate to [the compliancedepartment] that our requirements have beenapproved by the necessary stakeholders, and thatwe’ve worked with our information and compliancepartners… If they don’t give the thumbs up, wedon’t get to [deploy],” said Mr. Foss.

“Dealing with multiple stakeholders andcommunicating effectively with them is importantto project success in today’s nancial regulatoryenvironment,”said Matthew Handi, ProjectManagement Specialist in a large insurance rm.

“You’re dealing with a whole range of different typesof people. Instead of technical (IT) managers, you’recertainly dealing with lawyers, people interpreting


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the regulations—constant feedback between thosefolks—and that leads to sometimes changingcourse within the middle of the project—either theirinterpretation of the regulation changed, or theywere able to successfully lobby so that a portion ofthe regulation is delayed, or something else,” saidMr. Handi.

However, regardless of whether governmentcompliance or another factor is creating complexityin a project, increased focus on strong projectmanagement principles can help practitioners reachsuccessful completion of their projects.

“One of the things we do is more monitoring forhighly complex projects. For example, we needto monitor closely highly complex governmentprojects through frequent status reports. And when you are creating a plan for a highly complex project, you have to ensure that you have clearly denedmilestones and to be sure you are checking whathas been accomplished against those milestones.And anything which is a deviation from a denedmilestone has to be corrected by assigning moreresources,” said Sanjay Sharma, an IT Manager in anancial services rm.


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CONCLUSIONRegardless of the degree of complexity, standardized project manageme

practices, a strong talent base, and effective communications arenecessary for project and program success. Our research demonstratesthat the differential for successfully navigating complexity is seenbetween high and low performing organizations, not between general ancomplex projects.

The way forward is to successfully navigate complexity by focusing onspecic capabilities, which can transform complexity into dexterity:

z Create a culture of project and program management withengaged project sponsors

z Assess and develop talent with a focus on fosteringleadership skills

z Communicate effectively with all stakeholder groups

Turning complexity into dexterity allows organizations to improvetheir project success rates, risk fewer dollars, and stay ahead of thecompetition.


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ABOUT THIS REPORTResearch for PMI’sPulse of the Profession™ In-DepthReport: Navigating Complexity was conducted in July2013 among 697 project management practitionerswith three or more years of project managementexperience and who are currently doing professionalproject, program, or portfolio management workon a full-time basis. Additional in-depth telephoneinterviews were conducted for the purpose ofobtaining deeper insights into practitioner opinionsand examples of situations illustrating the nature ofcomplexity and tactics for its mitigation.


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REFERENCES1 IBM Global Business Services.Capitalizing on Complexity: Insights from

the Global Chief Executive Ofcer Study.2010. http://www-304.ibm.com/

businesscenter/cpe/download0/200422/ceostudy_2010.pdf2 Booz Allen Hamilton.Redening Program Management for the Unique

Challenges of Complex Programs . 2013.

3 Dened as organizations where more than 75 percent of projects are highlycomplex.

4 Dened as organizations where less than 25 percent of projects are highlycomplex.

5 PMI’s Global Executive Council is a community of decision makers, subjectmatter experts and inuencers who believe that shared learning, along withprogram and project management, can bring about real change and improvebusiness results. The Council contains representatives from approximately80 globally recognized and inuential organizations, ranging from nancial

institutions and IT to aerospace, defense and energy.6 PMI’s practice guide for navigating complexity will be released late 2013/early

2014.

7 Suzanne Heywood, Jessica Spungin, and David Turnbull. “Cracking theComplexity Code.” McKinsey Quarterly , May 2007.

8 High performers are organizations that achieve 80 percent or more of projectson time, on budget and meeting original goals.

9 Low performers are organizations that achieve 60 percent or fewer projectson time, on budget and meeting original goals.

10 Edward J. Hoffman and Matt Kohut. NASA’s Journey to Project ManagementExcellence. November 2012. http://www.nasa.gov/sites/default/ les/709495main_NASA_Journey_to_PM_Excellence.pdf

11 Terry Cooke-Davies, PhD, editor-in-chief. Aspects of Complexity: ManagingProjects in a Complex World . Contributing editors: Lynn Crawford, DBA,John R. Patton, PMP, Chris Stevens, PhD, and Terry M. Williams, PhD. ProjectManagement Institute, 2011.


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