Appropriate PMO practices based on the size of implementation to ensure the right governance
What’s common among construction contracts, IT contracts, or other projects? If left to themselves, they are more prone to fail than succeed.
Yes. In 2019, the Society of Construction Law-India and the Chartered Institute of Arbitrators-India held a conference where it was noted that almost 68 percent of all construction law disputes pertain to delay.
Not far away, as per some previous findings from The Standish group, only 16.2 percent of IT projects were deemed successful – as per completion on time and budget, with all the promised functionality. With a majority of projects found struggling over cost, over time, or lacking promised functionality, there were 31.1 percent of IT investments classified as failed ( thus- abandoned or canceled). And in The Standish Group 2020 Chaos Report, it appears that just one in three software projects is considered successful today – something that hasn’t changed much since the first report in 1994.
Delays, bottlenecks, and disappointments are part of a lot of contracts. And no enterprise wants to start a contract with those fears. A contract is supposed to be about business value and impact – not about missed timelines, poor quality, or penalties. That’s where one starts thinking of CLM (Contract Lifecycle Management)? So what’s the formula for ensuring the right PMO approach with CLM?
Contract lifecycle management (CLM) – done right
It all traces back to a good PMO setup when you intend to strengthen your contract lifecycle management (CLM) with precision, impact, and rigor. That’s where one needs to put in place four key pillars: Measurement, Improvement, Collaboration, Technology, and Improvement (MICT).
Let’s break down this MICT formula.
Measurement is a must
Any contract lifecycle management (CLM) implementation should rest upon having a reasonable degree of clarity on ‘how will you know whether it is working right’ and ‘how will you measure it. That is where advanced mapping and planning will fall into place. This part will need a good grip on key expectation areas and the thresholds they should live up to.
Global research by Project Management Institute (PMI) also indicates that innovation in measurement is a crucial feature of PMO maturity. Its PMO maturity index highlighted a group of 230 PMOs, which comprise the top 10 percent of organizations. This ‘Top 10 Percent’ chunk is bringing in a greater variety of measures and using technology to increase the number and variety of metrics and the frequency of measurement. These Top 10 Percent organizations also outperformed organizations overall in 2020 in revenue, customer satisfaction, and acquisition as well as on Environmental, Social, and Governance (ESG) indicators.
On the other hand, these findings also unlocked the other side beyond this ‘top 10 percent. For example, only 41 percent of PMOs consistently measured and reviewed their performance. Also, just over half were regularly communicating project milestones and impacts to the C-suite. So again, it’s a reminder that measurement and communication are very critical to the success of contracts.
Improve, improve, improve- all the way
As we have explained in another blog (link), incremental CLM roll-out is bound to bring great results. This is because one gets to see what’s missing or causing friction – and then gets to fix it. But, on the other hand, it’s impossible to know what features will overlap, what other pieces of the tech stack will collide with CLM, or how compatibility will be achieved in a complex environment.
That’s, perhaps, why an incremental approach to measurement, implementation, and management works well.
As shown in some reports, highly-skilled project managers have a success rate of only 23 percent but a failure rate of 19 percent, while projects with no project manager at all show a success rate of 58 percent and a failure rate of only nine percent. It’s not so much about management experience but also about the agility to make quick decisions, take risks, and avoid all that project management bureaucracy – as indicated in the Standish Group Chaos Report (2020) Beyond Infinity.
The Standish Group also predicts the project economy will start fading in 2022. As a result, it may happen that organizations will begin to reduce the number of new projects on their dockets, thus, moving to a more continuous process. As a future-forward organization, you should be equipped for this continuous model.
Collaborate – for higher impact in lesser time
Any contract lifecycle management (CLM) is as good as the ease with which it is helpful across the functions and people it is supposed to benefit. So the involvement of all stakeholders is essential to achieve true impact. An enterprise should encourage, and enable, a lot of room for collaboration among various business areas, solutions, and features – to remove fragmentation and silos.
When everyone works in a symphony, the result is music instead of noise. A holistic view of all strategic points in the contract value chain is essential for this to happen. An exemplary implementation partner can also solve this complexity and accelerate organization-wide collaboration.
Technology- An enabler, an accelerator
For contract lifecycle management (CLM) to succeed, one needs excellent and timely data for sure. Without automation, visibility, and real-time feedback – it is impossible to think of a smooth lifecycle.
As the PMI study also found out – One-third of people in this global survey stated that their organizations were using technology to effectively measure the impact of projects and programs. Among many things, strategy execution management technology is helping these organizations capture more metrics – about 8.3 metrics, compared to just 6.5 metrics among those not using technology to assist measurement.
Technology is beneficial because it has now empowered artificial intelligence (AI), machine learning, and data science. Data-driven insights can genuinely enrich a CLM solution. For example, they can assist massively in identifying risk, predicting trends, gaining insight into client behaviors, and evaluating potential business scenarios. Today, advanced CLM solutions can use AI to review and redline documents in minutes. And technology can speed up all phases of contract management with natural language processing algorithms and neural network technology; This can shrink the amount of time spent on all stages of contracting without sacrificing the accuracy of the contracts and the analysis of their contents.
Just remember this MICT approach, and you can learn to enhance the possibility of your CLM’s success profoundly. As a result, you will be more prone to succeed with your project, no matter what.