On Time & Under Budget Delivery Takes a Hit - Deltek Clarity Study Serves Up Project & Risk Management Trends to Watch
By Amy Champigny, Senior Product Marketing Manager, Deltek
By Amy Champigny, Senior Product Marketing Manager, Deltek
For months, the United States has faced a plethora of uncertainties due to the COVID-19 pandemic. It has shifted the paradigm on everything imaginable, including a host of project and contract management processes and deliverables, which according to the 11th Annual Deltek Clarity Government Contracting Industry Study results, were already showing signs for concern.
With 5% of participants reporting a decline in projects completed on or under budget and 48% citing accurate project cost forecasting as a top challenge, red flags were already being raised pre-COVID-19 by many a project and risk management professionals.
Because the Clarity Government Contracting Survey concluded on March 2, 2020, the data did not detail the preliminary pandemic effects on government contractors. The results did not predict the need for intense focus on managing complex projects in the face of unprecedented, uncertain times. They did, however, provide a comprehensive snapshot of the market based on 2019 performance reviews and 2020 forecasts by government contracting leaders. More than 380 completed survey responses across nine business areas provided the backdrop for this year’s Study, with Deltek experts providing some additional predictions based on potential pandemic ramifications.
Clarity on Project and Risk Management Trends
Project Management Challenges
As detailed during the in depth webinar Clarity on Project and Risk Management Trends, small (less than $20 million in revenue), medium ($20 to $99.9 million in revenue) and large (more than $100 million in revenue) businesses averaged 81% of projects on or under budget, a 5% decline year-over-year. Though up 2% from 2019, of equal concern is an average of only 78% of projects on or ahead of schedule. These numbers highlight another reported challenge, inexperienced project managers and a lack of clear and timely visibility within a project.
Additional project delivery effects, as identified by the survey, include:
- Accurate project cost forecasting
- Collaboration and communication
- Inexperienced project managers.
What potential pitfalls could be leaving these project managers ill equipped for project success? High turnover rates reported by contractors could be a culprit – 47% of large contractors saw rates in excess of 16% – as could a lack of investment in individual development and success.
In response to these challenges, many leaders identified developing internal project management best practices, investment in project manager training, and development and tracking of formal key performance indicators (KPIs) and project status as investment priorities for both the business and internal morale. However, with 79% of contractors reporting they have no formal career development plan in place, either because of expense, priorities or lack of bandwidth, a continued lack of investment could be contributing to the struggles with attracting and retaining talent and consistent project delivery.
Project Lifecycle Execution and Risk Analysis
Of the four primary stages of the project lifecycle identified within the Clarity Study, the bidding/proposal (contract award) and execution phases were the two that posed the biggest challenge for small, medium and large businesses alike. Small and medium businesses named bidding/proposal as their main challenge (55% and 43% respectively), with large businesses identifying the execution phase as their main struggle point (31%).
As to when organizations are performing schedule risk analyses, small businesses primarily worked them into the bidding/proposal and planning phases. Medium firms were more inclined to evaluate in the execution and bidding/proposal phases, with their large counterparts using the execution and initiation phases most frequently for review. And though, for the most part, all organizations surveyed listed company-wide as the reach of their scope of risk and opportunity management, it was not an overwhelming majority for each firm. This sparks questions about standardization and a lack of focus on mitigating the risks both identified during risk analysis and those other unexpected realized risks that can derail project delivery and result in mounting cost overages.
Key performance indicators (KPIs) are an essential part of project management, but many government contractors are not measuring some of the more actionable metrics. Instead the focus remains on the metrics traditionally tracked such as:
- Profitability (96%)
- Net revenue (91%)
- Average collection period (days sales outstanding) for A/R aged 81%
- Client satisfaction (79%)
- Cost variance (71%).
Project Schedule Recovery and Realities of COVID-19
As contractors navigate these next months, it will be important to keep three tenets in mind.
- Manage – Understand risks and how events have impacted schedule assumptions.
- Mitigate – Modeling risk to suss out options and their impact on delivery timelines.
- Accelerate – Know where projects can step on the gas with activities.
Staying engaged with available resources and continued research into areas impacting business will be vital as the contracting market and the entire country address COVID-19. Equally important will be a connected and engaged workforce, as audits are still taking place, making metrics and KPIs even more crucial for recovery and success.
Even More Results
Unfortunately, the 5% decline in projects completed on time and under budget cannot be blamed on COVID-19. Project and risk managers were already feeling the pinch from 2019 into 2020, as noted in the 11th Annual Deltek Clarity Government Contracting Industry Study. Because leaders reported already shifting into problem-solving mode pre-pandemic, however, it seems many are already making strides toward rectifying time and cost constraints for effective project course correction.
Don’t miss out on additional results from the in-depth Clarity on Project and Risk Management Trends webinar. Download the complete session to hear takeaways like how average billing rates and estimates to complete can factor into more successful project management, the average rate of change order wins being experienced, and estimate at complete (EAC) and estimate to complete (ETC) forecast accuracy needs.
Still hungry for additional Deltek Clarity Government Contracting Study results? Explore the complete, in-depth webinar series.
You can also download the full Deltek Clarity Government Contracting Industry Study at any time.
About the Author
Amy Champigny is a Senior Product Marketing Manager at Deltek who works with government contractors, architecture & engineering firms and consulting firms around the world. Amy helps improve their business processes through technology and thought leadership with resources like Deltek Clarity and Deltek’s leading project-based software solutions. Connect with Amy on LinkedIn.
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