Broadly speaking, there are two types of projects: development projects and delivery projects. The former always develops something new, such as a new operating model, process, or product, while the latter always delivers to the customer a project defined to a specific scope in the contract. These project types differ enormously, even much more than people think. Especially when considering what factor is behind success in the project world, one should ask more precisely what the fundamental factor is for the success of the entire project organization. One should not think about a single project but what is essential for the whole project organization.
Before a more detailed analysis, it would be good to define what success is. Let's take the easiest measurable thing as the perspective, namely money. There are, of course, other metrics, such as staff well-being, but this time let's stick to what remains on the bottom line. So what are the most decisive factors for succeeding in a project or, rather, in the entire project organization, when the metric is money? Let's leave other factors out of consideration, such as good leadership, which of course has a major impact on an organization's success. Let's now examine specifically what the bottleneck to success is in both development and delivery projects. The metric is therefore cold, hard cash.
The bottleneck to success in development projects
In organizations that run development projects there is a bunch of projects at different stages. Some are already far into the implementation phase and some are only in a preliminary study phase, meaning their start is still uncertain (project seeds or ideas). A separate business case, i.e., a profitability forecast, should be made for each such project idea. It can be done formally, for example with a cash flow calculation, or in some other way that identifies each project's expected profitability.
Now we come to the main theme of this article for the development organization, namely the bottleneck to success. In a development organization, projects selected for implementation should always be those with the best business cases. You should look across the entire pool of projects to see which projects can be taken to implementation. From the top of the pile you should take the very best and most appetizing project seeds. Of course this is a simplified model, since there are always projects that are mandatory, such as regulatory changes. A clear example familiar to everyone this spring is GDPR, which comes into force in spring 2018. In that case you cannot choose whether to implement the related development projects or not.
So the bottleneck in development projects is how many projects can be carried out. The weaker development project business cases are left, or at least should be left, simply unimplemented.
The bottleneck to success in delivery projects
The world of a delivery project organization is quite different from the development project organization described above. Essentially no project is left unimplemented. Lawyers call this 'Pacta sunt servanda', meaning contracts must be kept. When the name is on paper the project is executed. This is dictated, among other things, by business ethics and contractual penalties. Viewed from a high level, the business case of delivery projects is therefore completely different. For a delivery organization the company's revenue can be calculated as the product of three factors, i.e., the number of people multiplied by the average utilization rate and the average hourly rate. Pretty simple and straightforward.
The important question for a delivery organization is: what is the easiest way to start improving profitability?
You can increase revenue by hiring more people, but costs also rise so profitability itself doesn't really change. You could also raise the hourly rate, but that may lead to weaker success in competitive bids. And raising the hourly rate does not significantly increase profitability. By raising the utilization rate you can considerably improve the numbers. This brings us to the delivery organization's bottleneck to success: by optimizing the delivery organization's utilization rate, profitability can be pushed into entirely different realms.
If we summarize the lessons, we can say that in both types of project organizations everything comes down to resources and their optimization. In a development project organization the bottleneck to success is the simultaneous implementation capacity of projects, whereas in delivery project organizations the bottleneck to success is increasing profitability, i.e., raising the utilization rate.