Capital projects are complex undertakings, and a company’s future can often hinge on their resulting success or failure. Decades of research and experience, from the Construction Industry Institute (CII), Independent Project Analysis (IPA), Pathfinder, LLC, and others, have taught us that organizations that execute their capital projects well often meet or exceed their business objectives, with better return on investment for their shareholders and increased growth potential. On the flip side, companies with poor project execution track records experience reduced financial returns and lag behind higher-performing peers in their ability to remain competitive. Drawing on decades of industry research, we explore why sponsorship matters and what organizations stand to gain when this role is truly engaged..png)
Because capital execution is of such high importance to a business’s success, organizations will often invest millions of dollars and thousands of hours to improve their project processes, systems, and procedures, thereby increasing the likelihood of successful projects that preserve business value. As a result, it has become increasingly commonplace for organizations to have well-developed and experienced internal project capabilities, with many achieving world-class capability.
But even with all this investment in improving execution capability, project failures still occur, even in the best, most mature project organizations. Over the years, research and findings from a multitude of organizations, including Pathfinder, have identified many potential causes of project failures. A lot of these may sound familiar - poor or misaligned engineering, constant scope changes, HSE / Regulatory delays, contractor performance issues, etc..... the list goes on and on. Most of these are “obvious” issues that stand out when looking through the data, as they all have a clear impact on the cost or the schedule metrics. They also all offer an easily identified “culprit” for the problem, and thus can be assigned a clear lesson and improvement plan for future projects. Much of the aforementioned investment to improve project execution has historically been directed towards these types of failures.
But what about the project issues that aren’t so obvious? The ones that are buried within an organizational culture and don’t get the attention they need, and yet still end up causing project failures. These types of issues are more difficult to pinpoint and address because they don’t stand out in the data, and they can’t be fixed with a new procedure or by changing execution partners. Yet they can be just as, if not more, devastating to achieving successful project outcomes. Pathfinder’s decades of experience in supporting hundreds of capital projects has identified one theme that consistently comes up as a major reason for project failure -the lack of a strong business sponsor from the Owner organization.
Effective project systems and technical expertise can enable project teams to do all the right things, but a Project Sponsor’s role is to ultimately ensure that a project will deliver on its promises to the business. The Project Management Institute (PMI) highlights that executive sponsorship is the number one driver of success, making this role indispensable. Yet fewer than two-thirds of projects have an assigned sponsor. It is one of the most critically important positions that is overlooked and under-supported. Perhaps this is why McKinsey found that less than a third of projects meet their original goals on time and budget, but projects with strong Owner sponsorship consistently outperform this average. Furthermore, research from IPA indicates that projects with active sponsors achieve up to 30% better cost predictability and fewer schedule overruns. The research is clear that having a dedicated and actively involved sponsor is no longer optional; it is paramount to achieving project success.
A sponsor acts as a project champion who can help clear roadblocks, align stakeholders, and accelerate decisions. They provide the “drive” that will make a project happen. Their leadership fosters better communication and alignment between the project team and decision makers. To be effective, a sponsor must:
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- Own the project charter and business case – ensuring that the reason for doing the project is well documented and understood
- Engage regularly with the project team to understand needs and clear roadblocks
- Advocate for the project with senior management to “grease the skids” and keep it moving forward
- Provide strategic guidance to the project team, but without micromanaging.
- Facilitate Business and Engineering team alignment through early engagement in the project planning process
Doing all of these effectively requires active involvement from the Sponsor, not just being a name or figurehead that’s plugged into a spreadsheet or project org chart. Being active means spending 10-20% of their time supporting project activities, with potential for even more during early development phases or critical decision points (such as gate reviews). Yet, it’s all too common for a sponsor to barely get involved at the level that they should. This leads to:
- Slower executive decision-making that delays schedules
- Scope recycle and frequent changes that result in costly overruns, and
- Unclear expectations and unresolved roadblocks that stall project progress.
All of these issues have a devastating impact on the viability of a project. Want better projects? Have an active and involved sponsor.
The evidence is clear: even the strongest project teams and the most mature processes cannot overcome the absence of an effective sponsor. As we’ve outlined, active engagement at the sponsorship level directly influences alignment, decision‑making, and overall project momentum. In our next issue, we’ll bring this concept to life through real‑world examples and explore what distinguishes an effective sponsor from an ineffective one.
