# Presentation: 752926

## The Value of 

**Project Management**

- Fred Arnold, PMP, PMI Fellow
- PMI Board of Directors
- Dept of Energy 2006 Project Management Workshop
- Alexandria, Virginia
- 14-15 November 2006

**Notes:**
Thank you for welcoming me back to the DOE today. Having spent three decades on power generation and transmissions projects, as well as regulatory affairs, DOE is familiar territory to me. 

I’m happy to talk to you today about how project management helps complex projects – not only energy-related projects. I’m pleased to talk to you about the meteoric growth of the profession over the last decade.

## How do we know 
that society values 
project management?

- that society values
- project management?

- How can we make
- project management
- even more valuable?

**Notes:**
Since project managers are trained to ask questions, I’ll preempt a few: 

<CLICK>
How do we know that society values project management, and...

<CLICK>

Why should you and your organization bother to develop practice of project management?

There’s a lot of research on the subject, which I’ll share with you today.

Then I’ll talk briefly about what organizations can do to make sure that society continues to value us in the future.

## Usage Trends 

- Rising trends in:
- Use of and value placed on professional project managers
- Common project methodology
- Number of government agencies                                   and corporations that depend on                               project management
- PMI portfolio of project                               management case studies

***Worldwide, organizations will embrace, value and utilize project management, and attribute their ***
***success to it. ***

**Notes:**
First, I’ll describe some usage trends. 

These trends -- in governments and in businesses -- are consistent with the way PMI envisions the future.

Our identification of these trends is based on PMI research and empirical information gathered from the market.

## 2005 Global Thought Leadership Survey:Growth in PM Size and Acceptance

- Since 2004 benchmark survey
- Current employment of full-time professional project managers rose from 73% to 76%
- Leaders of project management divisions almost always have access to top management
- Senior executives significantly more likely to assign trained, certified, full-time project managers to change initiatives
- More projects managed using a common methodology

**Notes:**
Here’s some research about the growth and value of project management. 

We finished our most recent Executive Suite Thought Leadership Survey of 225 executives in US, Europe & Asia. This three-year series of surveys confirms the anecdotal evidence that project management is rising in prestige and utilization.

It reports some encouraging developments:

<CLICK>
76% of executive in our sampling of large global corporations reported that they employ full-time professional project managers. That number is up from an already-high 73% in our 2004 Benchmark Survey. 
<CLICK>

And the leaders of project management divisions enjoy influence and prestige: they almost always have access to the top executives.
<CLICK>

Last year, just 26% of executives put project managers in charge of new projects. This year, 40% report doing so.
<CLICK>

And more and more projects are managed using a common methodology. That percentage rose 17% -- to 34% from 21% last year.

## 2005 Global Thought Leadership Survey:PM Enhancement/Spending ($US)

- Companies spent average $177,000 on PM in 2005

- Healthcare led spending ($345,000)
- Professional services ($292,000)
- Construction/manufacturing ($147,000)
- IT ($82,000) and energy ($60,000) spent least

**Notes:**
And companies are committing resources to their project management programs. While healthcare is leading the way, construction and manufacturing also contribute significantly to project management spending worldwide.

## 2005 Global Thought Leadership Survey: Key Findings

- Executives volunteered top-of-mind benefits of PM
- Efficiency (60%) is leading benefit
- Budget (30%) and timing (24%) also cited
- Common project methodology used more
- Professional project managers used and valued more

**Notes:**
Not surprisingly, the executives perceived project management as delivering benefits in efficiency, budgeting, and timing.

More and more, organizations are adopting common project methodology, a cornerstone of sound project management practice.

In a few minutes I’ll show you some results from our annual salary survey, which shows a rising salary trend – the final word on how much a society values a profession.  

## PMI  estimates...
16.5 million potential global practitioners
4.5 million potential U.S. practitioners
$10 (US) trillion/year spent globally on project management

**PMI  estimates**...
**16.5** **million** potential global practitioners
**4.5** **million** potential U.S. practitioners
**$10 (US) trillion/year** spent globally on project management

**Profession’s Large **
**Growth Potential **

*Source: PMI Factbook*

**Notes:**
With the rise in prestige...
And utilization...
And embrace of project management principles, the profession’s potential appears almost unlimited.  In fact, PMI  estimates that there are...
4.5 million potential U.S. practitioners
16.5 million potential global practitioners
We also estimate that about...
$10 trillion (US) is spent globally on projects yearly

These numbers come from estimates of the number of people in the U.S. who might be able to use project management. We then extrapolated to other areas based on economic factors and labor information.

We took a similar approach to estimating that projects consume about one-quarter of the world’s Gross Product.

## Change in Total Compensation Over Past/Next Year (US)

| Years as PM | n= | 25th % | Median | 75th % | Mean |
| --- | --- | --- | --- | --- | --- |
| ≤3 | 199 | 59,000 | 72,120 | 85,000 | 72,688 |
| 4−5 | 402 | 68,329 | 80,000 | 94,250 | 82,096 |
| 6−10 | 636 | 76,000 | 90,000 | 102,544 | 91,317 |
| 11−15 | 328 | 86,083 | 101,056 | 120,000 | 105,720 |
| 16−20 | 183 | 89,500 | 110,000 | 130,000 | 111,805 |
| ≥21 | 100 | 90,500 | 105,000 | 129,636 | 113,560 |

**Notes:**
This table tells you what to expect regarding your salary prospects. Here, “n” equals the sample size.

97% of the sampling group received compensation raises in 2005, and they got good raises, too – 74% saw their compensation go up by at least 3%.

99% expect that trend to continue even more strongly. 81% expect to make at least 3% more in 2006 than in 2005. 

## PMI Salary Survey: Annualized Salary by PMP® Status (US)

| PMP Status | n= | 25th % | Median | 75th % | Mean |
| --- | --- | --- | --- | --- | --- |
| Hold PMP®  | 1316 | 79,625 | 91,100 | 110,000 | 95,676 |
|     <2 yrs | 762 | 75,000 | 88,550 | 105,000 | 91,752 |
|     2-4 yrs | 425 | 81,500 | 95,000 | 110,000 | 98,419 |
|     5-9 yrs | 107 | 90,000 | 101,000 | 120,000 | 107,529 |
|     10-19 yrs | 22 | 95,400 | 115,000 | 135,000 | 121,676 |
| Don’t hold PMP®  | 531 | 69,040 | 83,000 | 100,000 | 86,738 |

**Notes:**
This table from the same survey shows that you can expect a higher earning potential if you hold the PMP. It rises more the longer you are credentialed.

## Value of Project Management Maturity

- Organizations with more mature project management
- Experience better project performance (estimating accuracy)
- Benefit from
- Better cost/schedule predictability
- Lower project management direct costs
- Organizations with less mature project management
- Miss budgets by 20%
- Miss schedules by 40%

- (W. Ibbs, J. Reginato, *Quantifying the Value of Project Management*, PMI 2002)

**Notes:**
We increase our value to organizations by doing our jobs better – one reason that organizations reward PMPs with higher salaries. 

William Ibbs, a professor of civil engineering at UC Berkley and founder of The Ibbs Consulting Group, published a research series entitled “Quantifying the Value of Project Management.” He found these benefits of project management maturity.

## Greater PM Maturity = Better Project Performance

**Notes:**
This graph, also from Professor Ibbs, demonstrates that efficiency gains rise in lockstep with maturity gains – to the point of diminishing returns. 

## Developing Project Management Maturity: Why and How

- Why do it?
- Improves project alignment with strategic goals
- Improves project performance
- Improves project cost management

- How to do it
- Adopt unified methodology
- Pursue certifications
- Develop career paths

**Notes:**
My goal today was describing how we know that society values project management, and...

Why developing your practice of project management is worthwhile.

I noted some trends in usage...
And growth...
And investment.

I talked about the business results that can accrue from well-developed professional practices...

And why project management maturity benefits organizations.

I hope to return ...

And talk to you about how project management can help you align projects with strategic goals. 

I’d like to talk to you about the ways PMI can help you develop DOE’s project management maturity.

As you know, “maturity” can take many forms. It can mean certifications...

And career paths...

And standardized processes...

And a host of other programs and methodologies that can produce successful and more efficient projects.

I hope to come back and talk to you more about them.

## Thank youQuestions?

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