Crucial Role

The Crucial Role of Communications

Good communication is crucial to project success — this may seem obvious, but where’s the proof?

As revealed in a new report from PMI Pulse of the Profession®, 55 percent of project managers agree that effective communications to all stakeholders is the most critical success factor in project management. In fact, for every US$1 billion spent on projects, US$135 million is at risk — and a startling 56 percent of that amount — US$75 million — is at risk due to ineffective communications.

Meanwhile, high-performing organizations risk 14 times fewer dollars than their low-performing counterparts. If on average 80 percent of your projects finish on time, on budget and on goal, you’re a high performer. This success goes hand in hand with effective communications. Highly effective communicators are 5 times more likely to be high performers than minimally effective communicators.

What characterizes effective communications and what challenges do organizations commonly face? What key initiatives can improve communications and foster success in complex and risky environments?

In the context of organizational project and program management, communications is a core competency that, when properly executed, connects every member of a project team to a common set of strategies, goals and actions. Unless these components are effectively shared by project leads and understood by stakeholders, project outcomes are jeopardized and budgets incur unnecessary risk.

An organization’s ability to meet project timelines, budgets and especially goals significantly impacts its ability to survive—and even thrive. As they address the urgent need to improve project success rates, organizations are faced with a complex and risky environment that includes:

A “do more with less” economic climate
Expanding global priorities
Necessity to enable innovation

The most crucial success factor in project management is effective communications to all stakeholders—a critical core competency to all organizations. In a complex and competitive business climate, organizations cannot afford to overlook this key element of project success and long-term profitability.

Business research from Forbes, PriceWaterhouseCoopers and Towers Watson shows that organizations are very aware of the positive impact that effective communications has on projects, programs, and portfolios. However, what hasn’t been clear until now is how much of an impact ineffective communications has on project outcomes and subsequent business success. PMI’s Pulse of the Profession In-Depth Report: The Essential Role of Communications provides that eye-opening insight.

PMI’s report revealed that US$135 million is at risk for every US$1 billion spent on a project. Further research on the importance of effective communications uncovers that a startling 56 percent (US$75 million of that US$135 million) is at risk due to ineffective communications.

Despite this risk, many organizations admit that they are currently not placing adequate importance on effectively communicating critical project information, especially when explaining the business benefits of strategic initiatives to stakeholders at all levels of a project. Organizations cannot execute strategic initiatives unless they can effectively communicate their strategic alignment and business benefits.

PMI’s Pulse communications research finds that effective communications leads to more successful projects, allowing organizations to become high performers (completing an average of 80 percent of projects on time, on budget and meeting original goals). These organizations risk 14 times fewer dollars than their low-performing counterparts. The report also focuses on communications challenges that prevent organizations from accomplishing more successful projects, and identifies key initiatives that can help organizations improve their communication as they face their own unique challenges in such a complex and risky environment. Two in five projects fail to meet their original goals, and fully half of those misfires are because of ineffective communications.

Effective communication serves as the very bedrock of business. Yet true communication both inside and outside the enterprise walls remains a rare commodity—much of which comes down to a fundamental difficulty in communicating with the appropriate clarity and detail. To bridge the communication gap, organizations must help everyone learn to say the right things to the right people in the right channels.

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