Business Strategy: The "Best Determinant" of Project Success

New project management research indicates that to be successful, projects must tie directly to business strategy, and project managers must understand how the project supports the strategy.

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Tue, November 17, 2009

CIO — Many factors influence project success and failure, including schedules, resources and funding. But new project management research from training company Insights Learning and Development, certain chapters of the Project Management Institute* and a strategic execution consultant suggests that the single most important factor influencing project success is the project's link to the organization's business strategy and the project manager's understanding of how the project supports the business strategy.

In other words, the tighter a project's connection to the business strategy, the smoother it will progress. Conversely, the more tenuous the link between the project and strategy, the more challenges the project will encounter.

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Insights Learning and Development and the Project Management Institute came to this conclusion by comparing two different data sets: the number of challenges project managers who participated in a research study cited vis à vis their projects, and the number of project managers who said that their projects have direct strategic value.

Respondents' rankings of the various challenges their projects face broke down into two groups: One that perceived few project management challenges, and another that saw several challenges strongly impeding project success.

Among the group that cited fewer problems, 68 percent said that their project was performing "better than OK." By contrast, only 47 percent of the other group believed their project was performing at the same level.

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Meanwhile, more than three-quarters (77 percent) of the 609 survey respondents stated that their projects "have direct strategic value for achieving their organization's objectives," according to the research. Nearly one in five (17 percent) indicated their projects have indirect strategic value; 2.7 percent said their project was initiated to meet a regulatory requirement; 1.8 percent said their project had no apparent strategic value; and 1.2 percent didn't know.

"By looking at which groups are having the most challenges and which ones are having the least, it is clear that the connection of projects to strategy is the best determinant of project progress," write Suzanne Dresser and Mark Morgan, authors of the research report. "Projects with more challenges were less likely to have clear strategic value."

Project Managers Need to Understand a Project's Value

Strategic value alone is not enough to ensure project success, as the data suggests. Project managers need to understand the business strategy and how the project supports it. Unfortunately, Dresser and Morgan note, project managers don't always understand the strategic nature of the projects they're overseeing. Of the 77 percent of project managers who think they're working on something strategic, only 24 percent knew it was strategic because someone told them or because they saw it in a written document.

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