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. In case of wrong project management practice implications, there will be severe consequences of poor project management.
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.
Consequences of Poor Project Management
When we’ve 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 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 the project management.
Consequences of Poor Project Management #1 – Project Cost Overruns
One of the most important consequences of poor project management 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 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 the 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 procure more resources only if it’s really necessary.
In addition to these commonly used cost-saving strategies, the project managers can also consider hiring cheaper resources and avoid 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 the budget and save maximum money.
Often in projects, however, there is a lack of proper cost planning, and it is due to the incompetency of the project manager. In turn, what happens is that the project cost exceeds the budget and the organization has to face its consequences. Often, in large projects, if such a situation occurs, organizations have to borrow loans for their survival. And, they may even have to lose their client as well as the reputation.
Read more about good vs bad project managers.
How to prevent cost overruns?
Therefore, proper cost planning, monitoring, forecasting, and control must be a dedicated part of project management. The project management that is competent must make sure that they have the right knowledge, information, and figures to help them create a realistic cost baseline. Furthermore, they should have the 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 any 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.
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 management 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, scope creep and gold plating will also start to take place, causing project schedule delays. When you will not define the scope clearly or do not control it well, your team 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 consume your project schedule and also 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.
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 to your client as well as to 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 project management then 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 excusable, such as delays caused by bad weather or the client. However, other delays that are in control of the project management must be monitored and properly managed. If these delays are not managed well, this is the direct consequence of poor project management practices in place.
Consequences of Poor Project Management #3 – Demotivated Project Team
When the targets of the projects are not met, this will cause demotivation in 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 jobs in hand. And, in the other scenario when the team members see good project progress and 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. When the direction or the goals are unclear to the team, the employees may not be putting their effort towards one direction. 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 their team’s effort in fact cause hindrance in their team’s effort. 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?
So, does not matter what caused demotivation to your team, if your resources are not motivated, it is one of the major consequences of poor project management. Therefore, the project management should first ensure that they understand well not only the project needs but also the needs of the team. They should give them proper plans, guidelines, and processes to follow. Furthermore, good project management leads its team towards the goal, guiding, mentoring, and helping them all the way. If these characteristics are missing in your organization’s project management, there will be challenges and obstacles to success.
Knowing how to manage the team is an art. If you do not give project plans to your team, or do not show them directions, or do not manage them well, this is the weakness of the management. It may cause your team to easily demotivate and lose interest in 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.
Consequences of Poor Project Management #4 – Bad Reputation
One of the irreparable consequences of poor project management is a bad reputation in the organization and in the market. If there is a project manager failing several projects because of poor project management implications, their reputation in the organization will hamper over time. Similarly, an organization creating bad results will have a hard time acquiring new clients or projects. It is natural that customers will avoid the organization that delivers lesser quality products or services.
Consequences of poor management that would result in a bad reputation of the organization must be avoided in all cases. Imagine, your organization has a multitude of customers and many face the consequences of poor project management practices. What could you expect to happen? Well, your customers, who may be facing issues in their services or products that you sell to them, will start to look for alternative sellers. A poor reputation of the organization also links with increased challenges in resource hiring and retention. Since the organization has a bad reputation, people would be hesitant to work in that organization.
How poor project management could cause the reputation of the organization to go from good to bad?
Well, if the project management practices fail to properly plan the project or direct or control the project work, this would damage the project’s reputation as well as its success. An unrealistic schedule will lead to project delays. Similarly, incorrect cost estimates may result in cost overruns, resulting in impaired 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 community. Therefore, you should make sure your organization’s reputation stays high enough as it is critical to business success. Once, you have lost your reputation, it will be very hard to gain the same reputation and the trust back.
Similarly, the bad reputation of managers or a department will be a hindrance for them in managing their work or achieving the work objectives. People in the organization would not listen to them and would not trust them as they should be trusted. The project management 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.
5- Sustainability Risk for the Organization
An organization with several failing projects cannot survive long. Therefore, the long-term inevitable consequence of poor project management will be the termination 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 one person contributes to the project failure. There are several people or several factors that become the reason for organizations to fall down on their knees. However, organizations that usually couldn’t survive are due to repeatedly failed projects. And the failed projects are a direct consequence of poor project management.
How poor project management could actually be a risk to an organization’s sustainability?
Well, a project that exceeds its cost more than the set budget is a failed project, for instance. And, when an organization has to overspend, its foundations may become weak and it may be difficult for it to survive in a competing market. Similarly, a project which produces deliverables unacceptable by the client may have to face contract termination, which may lead to business or reputation loss.
There could be many other reasons too that may cause a business to fall, such as project delays, competitive market, high operations or resource cost, etc. And, more importantly, when there is a lack of planning or organization strategy from project management, which includes understanding competitors, creating a vision, your organization may fail to grow.
Similarly, if the management does not know what is happening in the market, what customers want or they are unaware as to what other organizations are doing for growth, you may be very much left behind in your business. A weak leadership, which is not good in communication, giving directions can also easily impact the organization’s performance.
This is the responsibility of project management then to effectively manage the business in all the ups and downs that come down the road. The management has to be strong, effective as well as stringent to make the business survive in today’s market.
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 responsible for a business failure. Several surveys also blame poor project planning and management for bad business performance.
If you have good project management in your organization, what can you expect? You will see that the management is fast in decision making, it creates realistic and thorough project plans. Furthermore, it will be inspiring a vision, be an effective communicator, be a creative problem solver. The management will be working as a servant leader to guide the team through all the phases of the project.
So, as we have learned the many consequences of poor project management, remember that project management can take the business to new heights or it can even bring about an apocalypse to the organization. Therefore, it is highly important that you have strong project management practices in place in your organization. This is also very much necessary these days in a highly competitive business market.
Unlock the undiscovered project delivery competence of your organization.
We’ve helped 200,000+ professionals enrolled from 100+ organizations including these reputable organizations.
We can enhance your organization’s competence too! View our corporate services and training.