The Crime of Poor Project Management

Poor Project Management: Why some consider it a Crime

The Sarbanes-Oxley Act makes senior executives criminally liable for misrepresenting financial information and for relaying fraud to shareholders. After several corporate accounting scandals, Congress passed a law referring to the SOX Act of 2002. If the company manages projects, then if projects are mismanaged it could leave your senior management legally exposed. Keep in mind the stories in the press about companies with large projects facing huge cost overruns. If this kind of cost overrun is not foreseen and anticipated, the financial effects could seriously impact the projected profit for a given period. It is reported that 77 percent of companies will spend more on IT, business process change, governance, and consulting to insure project management compliances. Management Assessment of Internal Controls must be established by CEOs and maintained at an adequate internal control structure of procedures for financial reporting. Companies undertaking large projects will need a process that provides a detailed cost and schedule metrics for all projects with time based cost reporting and continually updated completion estimates. Senior management must have visibility into project performance data at all times along with the confidence that the underlying process is sound.

No methodology or process will suddenly make projects profitable. If a problem is not identified before the budget is depleted, a corrective action cannot be applied to improve the outcome and the profit margin begins to disappear. Management by exception, variance analysis, and the calculation of accurate estimates at completion all help to maintain project profitability and ensure confidence on the part of management and share holders alike. Complying with the many factors of the SOX Act is already an enormous challenge for today’s companies. When it comes to project management, companies can overcome the challenges mandated and adopt practice for project control and further peace of mind.

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