Project Management or Change Management?

The objective of most businesses is to deliver a service or produce a product to make a  profit.

As competition and the market pressures increase, businesses need to transform and adapt to stay competitive  and continue to operate profitably. The typical way to do so is to modify processes or enter into  “projects” that transform the company’s offerings.

Projects in the Oil and Gas industry range from major capital projects costing billions of dollars to more modest efforts that provide growth, reduce costs, improve service and generally increase competitive advantage.  This all seems relatively straightforward and logical; businesses must either change or risk going out of business.

The business environment of the Oil and Gas industry is continuously changing. More recent examples are the Shale Oil Revolution, the Arab Spring, new deep-water technologies and the recent sharp drop in oil prices. When we add new field digitization and big data capabilities with the Great Crew Change, the challenge to adjust and manage change becomes almost insurmountable.

The recent Project Management Institute report, The High Cost of Low Performance 2014, indicates that only 56% of corporate change efforts are successful in meeting companies’ strategic goals. On average organizations are losing $109 million for every $1 billion spent on projects.

Certainly no one would embark on transformational efforts to improve their organization with the intent of failure. But the dismal fact is that low success rates of projects have remained constant since 1995.

We are told that three main capabilities are required to achieve success: (1) better project management, (2) effective talent management, and (3) successful change management processes... Surprisingly, only 20% of organizations report having highly effective change management processes.

It is clear that this must change. Organizations should no longer approach change management in an ad hoc manner; instead, they should focus on having a systematic and solid change management process framework embedded into all of their projects.

The benefits of project management have been well documented for some time, but change management is an evolving practice that is now maturing and becoming a profession. It is now possible to be certified as a specialists though the Association for Change Management Professionals.

New change management standards, procedures and processes were published within the last two years by the Project Management Institute, and the Association for Change Management Professionals.

By focusing on improving change management processes in all of its projects, an organization will enhance performance and realize its strategic objectives. While the focus of project management is the control of project schedule and budget, the focus of change management is project success.

So the answer to the question, “Project Management or Change Management?” is that both are required. All projects should have elements of change management built into their project processes to deliver more successful projects.

These facts remind me of the time when my mother scolded my little brother and asked him, “If your brother, Kevin, told you to jump off the H Street Bridge, would you do it?” My brother just looked up at her and sadly said, “Not again.”

One Reply to “Project Management or Change Management?”

  1. Great article. Excellent follow-up to Neeraj Nandurdikar Guest Editorial in the October 2014 JPT: “Wanted: A new Type of Business Leader to Fix E&P Asset Developments.” The O & G Industry is so conservative it shoots itself in the foot after failing to fully realize the realities of a risk based business.

    This blog is an excellent initiative by IHRDC. Thanks. Bob

Leave a Reply

Your email address will not be published. Required fields are marked *