The effect of project and portfolio management on share price

Another day, another report! But, it’s not simply the same failure/success report. This one focuses on the impact of successful project and portfolio management (PPM) on a companies share price. 

Stock Shock, is written by Phil Thornton of Clarity Economics for the EPPM Board (sponsored by Oracle). Thornton points out in his introduction that a survey by the Economic Development Unit in October 2010 showed only 11% of companies could claim they delivered expected return on investment (ROI) on major capital projects 90% to 100% of the time and 12% reported planned ROI delivery less than half the time.

I guess there are few surprises in the above figures however, what Thornton does in Stock Shock is to spotlight three projects:

  • Terminal 5 Heathrow
  • Greyhound Link
  • Woodside Petroleum Ltd

These 3 projects were all large scale capital projects and did not deliver as predicted. All had share price falls – not totally linked to PPM but according to Thornton, but the link is clearly there – a link that impacted on the reputations of each company.

A number of studies are mentioned and he also gives some ingredients to project success.

Thornton says: “project delivery is only one aspect of maintain reputation and share price stability. However, poor project management is becoming increasingly damaging, with over 60% share price drops, delays over a number of years and losses in billions as real possibilities. Senior executives need to begin to look at effective project delivery not as a bonus, but as an essential facet of business success”.

This is an 8 page document which should be read by all Chief Executives and Board Directors. It is available on line at http://bit.ly/AaTmQm – you will need to register to get the report, however it is well worth it

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