Project Management is the art of delivering a scope at a certain level of quality with a defined budget and during a determined schedule. Successful project delivery can be achieved only with good project management practices. There are many consequences of poor project management due to the bad implementation of project management practices.
There are five fundamental consequences of poor project management:
- Project Cost Overruns
- Schedule Delays
- Demotivated Project Team
- Bad Reputation
- Sustainability Risk for the organization in long-term
Let’s go over these one by one now. You can read further on the signs of poor project management.
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Consequences of Poor Project Management
When we surveyed our 425 participants who attended our corporate training programs, schedule delays, incompetent resources, and project cost overruns are the most common issues in project delivery organizations.
As you can see, project schedule delays and project cost overruns make up more than 50% of the issues that organizations face. There are short-term and long-term consequences of poor project management in an organization. Therefore, the project management officers or the project management office of an organization must be very well aware of the consequences of poor project management practices.
Consequences of Poor Project Management #1 – Project Cost Overruns
One of the most important consequences of poor project management practice is project cost overruns. If appropriate project management skills cannot be applied, the estimations will not be accurate, and in the end, activities will cost more than planned.
Estimating accurate cost requires a systematic approach, extensive leadership skills and thorough planning. When project managers are estimating activity costs, they have to look at all the ways to save maximum money and stay under budget. For instance, they should look at buy vs make cost. They should take estimates from multiple vendors and select the most economical one. Also, they should use the existing resources as much as possible and bring in more resources only if it’s really necessary.
In addition to these commonly used cost-saving strategies, project managers can also consider hiring cheaper resources and avoiding waste or redundant activities to save money. These are some of the things that a competent project manager must do in order to stay under budget and save maximum money.
Often in projects, however, there is a lack of proper cost planning, and it is due to the lack of technical skills of the project manager. As a result, the project cost exceeds the budget and the organization has to face the consequences of poor project management. Often, in large projects, if such a situation occurs, organizations have to get loans for their survival. And, they may even have to lose their clients and damage their reputation.
Read more about good vs bad project managers.
How to prevent cost overruns?
Therefore, proper cost planning, monitoring, forecasting, and control must be an integral part of required project management practices. A competent project manager should have the right knowledge, information, and data to help them create a realistic cost baseline. Furthermore, project managers should follow recommended project management processes to help them effectively monitor the cost and report on any variance. A competent project management team would consider all the ways to save money and never let money go wasted.
On the other hand, poor project management practices would result in cost overruns and losing gobs of profitable money. Furthermore, no one would accept the excuse of poor project management. Hence, organizations must put the effort into developing competent project management to help them achieve the project targets and be successful in their goals.
Master of Project Academy offers virtual, in-person, and online training courses in PMP (Project Management Professional), CAPM (Certified Associate in Project Management), and Core PM classes where our experienced instructors explain with real-life examples how to avoid cost overruns.
- PMP® Certification Training – 35 Contact Hours Online PMP Training
- PMP® Online Class Virtual Training – 4 Days – 35 Contact Hours
- PM Core™ – Project Management Training for Business
- CAPM® Certification Training – 23 Contact Hours Online CAPM Training
- CAPM® Online Class Virtual Training – 3 Days – 23 Contact Hours
By attending our award-winning courses, your employees will get practical guidelines on how to prevent cost overruns and how to monitor the budget expenditure on the project. The participants will gain confidence in planning and monitoring the project budget and will learn how to control the budget using different analytical techniques to measure the health of the project. Based on the analysis, the project managers can forecast the budget expenditures and determine if the project would be completed within budget, with savings, or if there would be a cost overrun requiring additional funding.
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Consequences of Poor Project Management #2 – Project Schedule Delays
Another consequence of poor project management is project schedule delays. Unclear tasks, conflicts, scope creeps, etc. will all cause project schedule delays. If you want to have a realistic project schedule, you need to thoroughly estimate your project activities. And that estimation must primarily be based on the scope of work, number of available resources, and productivity of each resource. Just one activity with an incorrect estimate can result in project delays. Imagine, if you estimate many activities incorrectly, how much delay these activities can cause to the project?
The Project Manager has the responsibility to produce a realistic project schedule and also verify their calculations to ensure correctness. Where poor management is in place, you will end up with an unrealistic schedule for your projects. Not just this, but scope creep and gold plating might also happen, causing project schedule delays. When you don’t define the scope clearly or do not control it well, your team or the customer may easily find many opportunities for scope creep and gold plating. The team may be doing it with good intentions, which are to please the customer. However, this will impact your project schedule and will cost you more. If the project management practices are efficient, you will find it very easy to control or even avoid such things and fulfill the schedule targets.
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How to prevent project schedule delays?
Often, projects have tight deadlines and penalties are fine even with a one-day delay in the project. When a project delays, you lose your reputation with your client as well as with other stakeholders. They will not trust you again for future projects and it may be difficult for you to win more projects.
Hence, it is very important for project management to carefully estimate the project schedule. Also, monitor and control it in order to complete the project on time. According to Levelset report 2020, about 70 percent of contractors say delays are due to poor project coordination. It is the Project Manager who is responsible for coordination and communication. Without proper information exchange, there will be miscommunications or misunderstandings, which may result in unrealistic project estimations as well as improper schedule monitoring.
It is true that some delays are justifiable, such as delays caused by bad weather or the client. However, other delays that are in control of the Project Manager must be monitored and properly managed. If these delays are not managed well, then this is a direct consequence of poor project management practices.
By attending a PMP, CAPM or Core PM training course, the participants will receive an in-depth understanding of how to plan, manage and control project schedules. Furthermore, participants will be able to understand triggers that might cause schedule delays, will gain confidence in how to manage and mitigate schedule-related issues, and apply successful tools to bring project schedules back on track.
Consequences of Poor Project Management #3 – Demotivated Project Team
When the targets of the projects are not met, this will demotivate the team members. The team may lose focus on the work and not remain productive as before. In a situation when the project is going off track, the team tends to think that this situation may result in layoffs, cancellation of incentives, delayed promotions, or even demotions. So, a project that is going to fail will demotivate the team members and they may stop giving 100% to the tasks at hand. On the other hand, when the team members see that the project is progressing well and there are positive results, it is natural that they will be motivated.
Sometimes, there are other factors too that cause team demotivation. For example, project goals are not clear. Without clearly defined project direction or goals, the employees will have difficulty aligning their efforts. Hence everyone will have their own sense of project success. Lack of praise and recognition is also a cause for a demotivated team. Organizations that do not recognize the team’s efforts will fail to gain the team’s full support and commitment. Other than these, lack of discipline in the team, non-dynamic work styles, lack of communication, unfair use of policies, and lack of communication are also the reasons for the demotivated team.
How to motivate your team?
Poor project management can result in project resources that are not motivated. Therefore, it is critical that Project Managers understand not only the project objectives but also the needs of the project team. They should provide the project team with proper plans, guidelines, and processes to follow. Furthermore, a good Project Manager will lead their team towards clearly identified project goals by guiding, mentoring, and helping them along the way. If these project management characteristics are missing in your organization there will be challenges and obstacles for your projects to succeed.
Knowing how to manage a team is an art. If you do not provide direction, clear project plans, or do not manage your team well, this will cause your team to easily become demotivated and lose interest in their work. The demotivated teams have no passion for work. If you have such a team, there will surely be a hindrance in achieving the project objectives.
Every Project Manager needs to develop a set of soft skills to successfully manage their project team and other stakeholders. We, at Master of Project Academy during our PMP, CAPM, and Core PM training courses, discuss in depth how to motivate, develop, and properly manage the project team. High-functioning and supported teams are paramount to a successful project.
Consequences of Poor Project Management #4 – Bad Reputation
One of the irreparable consequences of poor project management is a bad reputation within the organization and in the marketplace. If a project manager is failing projects because of poor project management execution, their reputation within the organization will suffer over time. Similarly, an organization known for poorly executed projects will have a hard time acquiring new clients or work. Customers will avoid organizations that deliver poor-quality products or services.
The consequences of poor management that would result in a negative reputation for the organization must be avoided at all costs. Imagine, your organization has several customers, and many of them are impacted by the organization’s poor project management practices. What do you think will happen? Your customers, who may be having issues with their services or products that you sell to them, will be looking for alternative providers. The negative reputation of the organization will also link to increased challenges in resource hiring and retention. Once an organization has a bad reputation, people would be hesitant to work for that organization.
How poor project management could cause the reputation of the organization to go from good to bad?
Well, if the Project Manager fails to properly apply project management practices, properly plan the project, direct, or control the project work, this would damage the organization’s reputation as well as the project’s success. An unrealistic initial schedule will lead to project delays. Similarly, incorrect cost estimates may result in cost overruns, resulting in a weakened reputation. So, there could be so many things that could directly or indirectly link to poor project management.
Once a project fails to meet its targets, the organization will lose its reputation to its customers, sponsors, or even to the public. Therefore, you should make sure your organization’s reputation is always positive as it is critical to business success. Once you have lost your reputation, it will be very hard to regain the same reputation and trust.
Once managers or departments develop a bad reputation, it will become difficult for them to manage their work or achieve work objectives. People in the organization would lose trust in their management and would not consider them as relevant decision-makers. The project manager is responsible for taking the projects from planning to closing. However, if their reputation has been compromised, there will be challenges in managing the projects as well as the resources.
During the training courses offered by Master of Project Academy, the Project Managers or other participants will receive in-depth guidance on how to be reputable, trustworthy project managers or decision makers. Our instructors, who have extensive practical project management experience leading and managing project teams, will provide you with lessons on how to gain and maintain your reputation in the organization and help improve your technical, leadership, and business acumen skills.
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5- Sustainability Risk for the Organization
An organization with several failing projects cannot survive in the long run. Therefore, the long-term inevitable consequence of poor project management will be the closing of the organization. Organizations initiate projects to create products, have advancement in the market, and make a profit. Failing projects will cause a monetary loss for the organization and may even cause bankruptcy in the long term.
It is true that not only one person contributes to the project failure. There are many people or several factors that are the reason why organizations fail. However, organizations that usually couldn’t survive are due to repeatedly failed project, and failed projects are a direct consequence of poor project management.
How poor project management could be a risk to an organization’s sustainability?
Well, a project that exceeds its cost more than the set budget is a failed project. When an organization overspends, its underlying financial stability becomes weakened, and it could be challenging for the organization to survive in a competitive marketplace. Similarly, a project which delivers products or services that are not acceptable may result in the client requesting contract termination, which may lead to business or reputation loss.
There are many other reasons why a business could fail, such as project delays, competitive market, high operations, and resource costs, etc. When there is a lack of planning or lack of a clear business strategy, which includes understanding the competitive market or having a solid project vision, then the impact on the organization may not only be a lack of growth but could possibly cause the business to fail.
Similarly, if management is not aware of market trends, and the needs of the customers, or if management are unaware of what competitors are doing, then the business will struggle to keep up. Weak corporate leadership, lacking in good communication processes and clear directions can also negatively impact the organization’s performance.
It is the responsibility of the project management team to effectively manage the business across all ups and downs that arise in the market. The management has to be strong, effective and rigorous to make the business survive in today’s market.
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Summary
We explained in this post that there are five major consequences of poor project management. The consequences are bad reputation, project cost overruns, project schedule delays, demotivation of the project team, and sustainability risk to the organization. Several researchers confirm the fact that poor project management is a major reason for business’ failure. Several surveys also cite poor project planning and management for negative business performance.
If you have good Project Managers in your organization, what can you expect? Good Project Managers are skilled at fast decision-making and creating realistic and thorough project plans. Furthermore, they are inspirational, have a clear project vision, are effective communicators, and creative problem solvers. The Project Manager will be working as a servant leader to guide the team through all the phases of the project.
Remember that good project management can also take the business to new heights. Bad project management practices on the other hand can bring about an organization’s demise. Therefore, it is important that you have strong project management practices in place in your organization. This is of paramount importance these days in a highly competitive business market.
At Master of Project Academy, we can help your organization and your employees manage successful projects. The key to successful organizations is well-trained and skilled employees. Let us train your employees and have them learn from our skilled instructors on how to apply the best project management practices. Your organization and your employees can choose from several certification training courses such as CAPM (Certified Associate in Project Management), PMP (Project Management Professional), and Core PM courses.
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