Achieving PM performance maturity by engineering your PM process improvement program

roadmap to PM excellence

Abstract

Maturity is not an end in itself. Performance improvement and the need for regulatory compliance drive the desire for PM maturity. This presentation will focus on the transformation of PM maturity into measurable performance improvement and the integration of PM as a business process into the fabric of the organization. Using case examples from firms in engineering, IT, and professional services, we will explore the process of implementing a PM culture in an organization. The PM improvement scope includes the full range of enterprise or organizational PM issues – portfolio management, resource management, managing multiple projects, collaboration, communication, and individual project and program management and how they relate to project life cycle performance methodologies.

PM improvement begins with the recognition of the need for better project performance by key people who then drive the acknowledgement of that need throughout the organization. A well planned, executed, and controlled program is the means for implementing the change needed to deliver consistent high quality project results that are on-time, on budget, and that satisfy business needs. The program to improve PM performance, using the principles of maturity models such as OPM.3®, CMMI, and the Kerzner model, will be described in terms of its activities and their dependency relationships to one another, organization, roles and responsibilities. In particular the role of the Project management Organization (PMO) will be addressed. The relationship between the PM improvement program and quality programs like Six Sigma and Lean will be addressed. The need for integrated organization change management to manage the people side of the improvement process will be stressed.

Introduction

Does anyone really want project management (PM) maturity? Organizations want performance improvement – more new products, faster and cheaper, increased profits, greater customer satisfaction, less risk and greater market share. They want to comply with requirements for controls and reporting. PM process maturity is a means to these ends. The goal is performance excellence.

At recent talks on the business value of EPM, (Pitagorsky, 2004) less than 5% of the attendees had a clear vision of their PM “end-state.” When asked if PM improvement efforts were great example of how to manage projects, there was an embarrassed silence.

This paper provides a framework for how to achieve measurable and valuable PM improvement. Case examples from HP, CA and Microsoft Services, the technology areas of three global financial institutions, and an engineering consulting firm highlight best practices and barriers to PM improvement.

Key Concepts and Strategy

Project management is a business process and a shared competency. Business process improvement is achieved through a change program with a series of iterative refinements. Engage the organization. Acknowledge the critical importance of PM and the degree to which current performance needs to be changed to meet expectations.

Avoid simplistic thinking. There is no cookbook; no magic bullet. Recognize the complex nature of PM. Cultural issues like blaming, accountability, “turf”, and role and responsibility changes add to program complexity.

Since some organizations are healthierthan others at the onset, there may be more or less change. As the process improves the improvement program transforms into a continuous improvement process embedded into the fabric of the organization.

Use quality improvement techniques (e.g., Six Sigma, Lean) and apply project management to create the right mix of radical and incremental change in a comprehensive program that addresses technical, cultural, and human relations issues.

Take a process and systems oriented perspective. A definable sequence of events (process) takes place to achieve any outcome. Changes to the process improve performance. Every process is within a system that, in turn, is within a higher order system. Any change can impact the entire system. The more complex the system, the less predictable the impact of changes. Don't “shoot from the hip”.

PM Performance Improvement Program

PM improvement is a program to improve performance by acknowledging the strategic importance of project management and integrating PM principles into the organization.

Expect a multi-year organizational change with projects to implement tools and formal processes, make role and relationship changes and institute to supporting policies and values.

The following framework describes the program. The steps overlap and are performed iteratively.

  1. Acknowledge the need,
  2. Prove the concept,
  3. Identify goals and objectives,
  4. Plan the program,
  5. Plan and execute projects, and
  6. Sustain the gains.

Program Scope

To deliver expected value, go beyond simply improving the project management toolset and the skill levels of project managers to address all aspects of Enterprise PM (EPM):

  • Governance
  • Portfolio management
  • Program management
  • Multiproject management
  • Resource competency and availability
  • Tools
  • Methodology
  • Organization and relationship issues.

Address the relationship among PM and other business processes such as engagement management, quality/process improvement, research, and product development. Dr Harold Kerzner points out the need integrating process strategies such as project management, concurrent engineering, quality management (e.g., Six Sigma, Lean, etc.), scope change management and risk management. (Kerzner, 2001, p. 22-23) He has found “that more and more companies (e.g., Johnson Controls, Visteon, among others) are integrating their EPM processes into their business. Project managers are managing part of the business, not just a project.”

Many projects are managed by people who are not, and have no intention of being, professional project managers. The scope of PM improvement must include incidental project managers as well as professional PMs.

1. Acknowledge the Need for Improvement

Improvement begins with an acknowledged need for change. Pain avoidance and pleasure acquisition are the fundamental motivators. PM improvement is motivated by the desire for greater profit margins and customer satisfaction.

Industry and “Target Firm” Performance

By now most serious PM professionals are familiar with the results of numerous industry surveys. “According to independent surveys conducted by META Group, Gartner Group and Standish Group, the cost of strategic initiatives and project failures…ranges between $80 and $145 billion annually…. More than 70 percent of all projects…are canceled or have major problems before completion.” (Gounds, 2000) Projects are often late, over budget, never finished, etc.

Michael McGrath reports that over the past twenty years companies have reduced their time to market by 40 to 60 percent by applying more effective and realistic scheduling approaches, project team organization approaches (e.g., cross functional teams), phase based decision making, portfolio and pipeline management, and standard development processes. (McGrath, 2004, p. 17)

He predicts that cost per project can be reduced another 30 percent through better strategy and portfolio management, resource management and other improvements, like networked project teams, context based knowledge management, enhanced phase reviews among other elements. (p. 39)

Studies and expert predictions are useful, but the numbers in your firm, the “target” organization are what really make a difference. What are the costs of project shortfalls? What is the level of client and performer satisfaction? What are the opportunities? What would it cost to remediate? Can you afford not to address the PM issue?

Acknowledge Opportunities, Problems and Issues

Describe the current state and assess performance. A services firm analyzed its profit margins and surveyed customer satisfaction to identify a performance baseline and opportunities for improvement. The firm found that 70% of its clients said they want cost and quality issues addressed – issues related to project management. This firm went on to describe the way they managed projects in terms of tools, templates, procedures, roles and responsibilities. Some firms perform formal maturity assessments to identify process improvement opportunities based on a maturity model while others operate more informally.

During International Institute for Learning (IIL) courses and consulting engagements, we discovered that problems and issues are common across thousands of project managers from companies across all industries and government, world-wide:

  • Late and over budget projects linked to scope, estimating, resource management, and risk management issues
  • Inconsistent methods and processes, including project approval and reporting with little or no process improvement.
  • Insufficient sponsorship for effective PM practices;
  • Too many projects for PMs to handle effectively;
  • Insufficient infrastructure and support (e.g., tools, training, coaching, administrative assistants, reviews, etc.) for PMs;
  • Conflicts arising out of fuzzy role and responsibility definitions and lack of accountability.

Acknowledging the need for PM improvement requires candid critical analysis of current performance. What are the opportunities for further delighting clients? What are the probable causes of client and sponsor dissatisfaction caused by projects delivering inconsistent results and not meeting expectations?

Establish a performance baseline and a business justification for improvement as the foundation for moving forward.

Commitment to Act

There are organizations that assess PM performance to death and never do anything more. Others take decisive action. Renee Speitel, the Global PMO director for HP Services said, “We didn't use dollars to justify the need for a focus on PM excellence. It became obvious to us that project delays, problems, and failures, were negatively impacting our company's ability to satisfy customers, and to generate repeat business with those customers. So we did something about it.” (Pitagorsky)

Resistance and Denial

Improvement is organizational change. People and organizations naturally seek to maintain their current state; there is resistance. There may be reticence to own up to problems and performance shortfalls. Remember, “Denial is not just a river in Egypt”. Acknowledge the dysfunction that is often obvious to business partners and most of the staff.

Once denial is overcome, there are other forms of resistance.

Increased accountability is often resisted. The Microsoft® Corporation (Bulmer, 2004) identified the following organizational impacts from EPM toolset implementation:

  • Project schedules are no longer private,
  • Project data is easily shared,
  • Users' routines must change, and
  • People's skill levels are exposed.

Blaming is a sure way to inhibit performance analysis and accountability. Make accountability normal and valued by focusing on the causes of performance issues and correcting the process to eliminate them. Most performance problems are related to the process as opposed to individual performance.

Cut through resistance caused by fear of rigid bureaucracy and overhead by stressing flexibility within structure. Sell PM to the stakeholders; it is more effective than forcing it on them. Acknowledge that PM can be implemented as “just more bureaucracy and paper work that gets in the way of doing the real work” and plan to avoid that trap.

Resistance can come from the myth of being free-wheeling experts who can solve any problem on the fly. “Why plan when we all know that the plan won't be adhered to and we know what to do?”

Resistance is a fact of life. Working with it is a critical part of PM improvement. Address resistance by acknowledging the need, proving the concept, planning, implementing changes, and continuously improving the results while communicating, training within strong sponsor driven values and policy changes.

An organization may not be ready for change. If resistance is too strong or too high up in the organization, be patient. Make the case for improvement in concrete business terms. Do what is feasible given the maturity of the organization.

2. Prove the Concept: Is Improvement Possible?

Proof of concept or feasibility is a well-accepted step in product development and process improvement. Benchmarking, maturity models and capability models may be used to prove that improvement is possible. Improvement champions must also overcome attitudes like “That can't work here.” They may have to prove feasibility several times in the course of the program; at first by articulating a logical approach and benchmarking. Later in the program, feasibility may be proven using pilot projects and reviews of their performance. Testimonials and performance improvement tracking are used to further prove the effectiveness of PM improvement.

One global financial institution has been working to improve its PM process for several years. They implemented a PM methodology and complete toolset, trained people, and set up PMOs, but have seen little improvement. This firm's executives will continue because they “know” that improvement is possible. They know because the change champions have shown success in pockets of the organization and analyzed the reasons for shortfalls. They have mapped out a plan for moving forward, renewing expectations and overcoming the resistance that is slowing progress. They are managing the change.

PM improvement is not simple. The process is non-linear. Goals and objectives “set the bar” and the height of the bar is directly related to the getting over it.

3. Identify Goals and Objectives

Program objectives must be compelling for business reasons. The goals of PM improvement are to improve project performance, ensure that controls satisfy regulatory and internal requirements, and to minimize and manage risk.

Performance improvement ensures that project results – products, processes and events – meet expectations for return on investment (ROI); stakeholder satisfaction and alignment with strategy. ROI comes from productivity improvement, cost reduction, increased revenues and profits, customer service, risk reduction, etc.

Specific program objectives (with associated metrics) may be to:

  • Increase the number of projects delivered on time and within budget;
  • Increase the consistency of client satisfaction;
  • Reduce the number and cost of product changes during and after project life;
  • Improve the quality and availability of information to support project control and portfolio management;
  • Reduce costs.

Adjust goals and objectives across the life of the program with respect to the cost and complexity of meeting them. Raise the bar, more or less gradually, but realistically.

Objectives such as training specific numbers of people or having PM's certified as Project Management Proffessionals (PMP®), installing a PM Toolset or instituting a PMO or methodology are important. They are means to the end of meeting the program's goals and objectives.

Vision – What is the desired end state?

The description of the envisioned end state is an important motivator. An accurate description helps to dispel fears and enables the improvement team to identify relevant goals and objectives and the means of achieving them. If you know where you are going the probability of getting there is high.

Be careful. It is difficult to express the dynamic nature of a complex process like PM. A continuously improving process is the vision. This implies dynamic change based on performance feedback and changing environmental conditions. In effect there is a series of future states.

Express the vision in levels of detail. The example that follows is from a professional services firm.

High-level Vision

The high-level vision (see Exhibit 1) is for a continuously improving, flexible, and disciplined PM process integrated into the firm's engagement management process. The PM process has a set of minimum PM requirements, standards and recommended proven practices that are supported by awareness, education, an integrated suite of tools, and a process “owner”. These are adapted by strategic business units (SBU) and by individual project managers and project officers to their respective needs.

Vision: Transition from the Current to Future State of PM

Exhibit 1: Vision: Transition from the Current to Future State of PM

Mid-level Vision

The mid-level vision expresses how the improved environment will look and feel. In our example the following aspects of the PM process were each described: (IIL, 2005, from a proprietary client report)

  • Culture and Environment, including recognition of PM as a critical business process and profession, organization, project management office, community of PM practice, and systems support and tools,
  • Project Origination and Initiation, including Requirements definition and scoping, early estimates and proposals and contract review,
  • Planning, including estimating and scheduling methods, tools, responsibilities and data,
  • Monitoring and Control, including reporting standards,
  • Project Closing, including review processes and transition, and
  • Ongoing Improvement, including measurement and action projects.

An example of the description of a scenario regarding part of the planning process follows:

“Proposals and estimates will be prepared collaboratively among representatives of PM, performance communities, sales, and customer relations people. Estimates will be made based on relevant past performance drawn from the firm's knowledge base and experience.

Price negotiation will be realistic, recognizing that cost does not automatically change when price changes. Sales will be accountable for setting achievable margins with the project manager responsible for meeting the realistic estimates and schedules upon which pricing is based. Risk assessments and planning will be performed and documented for each project and reflected in the estimates. Those responsible for negotiating contracts with clients will have an appreciation for all these elements, and will be schooled in the art, science, and psychology of negotiation.

Scheduling is based on the nature of the work, staffing availability, MP resource capability and estimated client decision-making times, among other factors. Target dates that are set by client or other needs will be evaluated closely to determine feasibility based on realistic scheduling. Scheduling is done in the context of the dynamic multi-project, multi-client environment so that decisions to expedite a project to meet a deadline will be made in light of impact on other project commitments.”

Vision Details

From the mid-level vision, the detailed “how-to's” are developed and become the objectives of change projects in the improvement program. These address specific tools, techniques, training plans, etc.

The PM infrastructure is described as a means to sustain effective PM:

  • Communication and change management plan,
  • Electronic tools architecture and toolset,
  • Methodology: policies, procedures, common language, templates, etc.,
  • Knowledge management, including training and ongoing learning,
  • PM capability, career path and job definitions,
  • Organization and staffing, and
  • PM process ownership and recognition.

PMI's Organization Project Management Maturity Model (OPM3®) and the Kerzner PM Maturity Model (KPMMM), and the ISO 9000 model, among others, provide a good starting point for describing the vision. However, they can not be seen as a definitive description for a specific organization. Adapt the models to the current situation to address the most critical issues in the most effective sequence.

Getting There: 4. Plan the program and 5. Plan and execute projects

The initial program steps – Acknowledge the need, Prove the concept and Identify goals and objectives – set the foundation for “getting there”, achieving the vision, goals and objectives.

The next steps are Plan the program and Plan and execute projects. These are relatively straight forward if there is a solid foundation of shared and realistic expectations, the right people, tools, common language, etc. The earlier steps are critical for managing the organizational change that is a vital part of the PM improvement process.

Projects are planned to achieve the vision in a sequence that makes sense for the target organization. There are many approaches and many possible project sequences. For example, following an assessment at one firm, PM competency and career model implementation coupled with appointing a PM Profession Owner were the first steps. Another firm started by creating a PM support area, implementing a PM methodology framework and a basic toolset supported by training and consulting in pilot projects.

The decision regarding program strategy depends on the organization's current state, including resistance to change, problems, tools and the position of project work in the organization. In some cases the shortest way to immediate results is through awareness building and skills training; in others the resistance to change in the organization requires a more pointed attack based on the introduction of methodology in a formal program.

Projects in the Program

The projects in the program address PM infrastructure, portfolio management, individual program and project management, resource management, and multiproject management, as identified in the vision.

A sample set of projects is:

  • Initiate a PM improvement program;
  • Assess PM performance and maturity;
  • Raise PM awareness;
  • Establish a PMO;
  • Implement a PM tool set;
  • Define the PM career path and competency model;
  • Implement a PM methodology.

Within and across these there is training and knowledge management and organization change management.

The time it takes to improve depends on the initial state, the intensity of the change process and the desired end state. It may take 2 – 5 years to institute professional project management in an organization in early stages of maturity, assuming a reasonably well managed program with sufficient sustained senior management commitment.

Project Team (Staffing and Staff Development)

People make “getting there” possible. In the PM improvement program the key players must be identified and given the time required to fulfill their responsibilities.

From the earliest stage of the project there should be clear definition of the role of a PM process owner and program manager. Other roles including sponsor, various subject matter experts and the staff that will create, edit, accept, and perform the process can be fleshed out as the program is initiated. There may be a mix of consultants and internal staff. An interesting measure of the level of support for the improvement program is the quantity and quality of staff and the degree of their involvement.

In the following model there are four groups within the program team: The Core Team, Senior Project Steering Group, Working Group, and the Project Management Office. In this model, the core team that drives PM improvement is differentiated from the PMO. This is to highlight the differences between early improvement initiatives and the ongoing improvements and operational activities that are part of the stable state PM process.

The Core Team manages and facilitates the improvement program, creates PM baseline plans and materials (methodology, training plan, etc.). It both facilitates and takes direction from Senior Project Steering and the Working Groups.

The Senior Project Steering Group actively sponsors, sanctions, and legitimizes PM change. It creates an environment that enables the PM improvement program success, monitors performance and alignment, providing guidance and course correction. The group vets plans, changes and decisions to make key trade-off and termination decisions and supplies financial resources. Generally, quarterly involvement at reviews is required with strategic interventions as needed. Members are senior management from strategic business units (SBU) and core business or functional areas.

The Working Group members represent SBU's, functional groups and service providers. They are agents of change that diagnose potential problems and effect change. They design, review and/or vet PM tools, processes, and templates, and provide organizational, cultural, and political guidance.

The Project Management Office (PMO) is the organization unit that becomes the PM process owner/custodian. It is created by and supports and enables the PM improvement program. The PMO performs operational activities that include administration, governance and portfolio management, compliance monitoring, methodology and process management and facilitation, coaching and other support of PMs. It may be the responsible functional area for project managers. The PMO ultimately replaces the core team as the owner of PM.

6. Sustain the Gains

There is a soft line between implementation and ongoing operations. The final stage of process maturity is continuous improvement (Kerzner).

There is a tendency to slip back into poor practices as pressure for day to day productivity conflicts with longer range strategic needs. The key elements needed to sustain performance improvement are measurement, analysis, process maintenance, improvement, and knowledge management.

Apply lessons learned from performance reviews and benchmarking through improvement projects. Toolset upgrades, training programs, methodology improvements, and organizational role and responsibility changes are among these projects. Continuous improvement is the extension of the improvement program.

Continuously measure the degree to which the infrastructure supports performance. Service level agreements for the PMO and other groups help to promote accountability. This coupled with communications with stakeholders regarding performance and reinforcing the strategic importance of PM sustains the gains. Show bottom line results – both financial and in terms of customer/stakeholder satisfaction – in a form that is tailored to the needs of each stakeholder.

Compliance monitoring is critical to success and should be accomplished with the minimal amount of top down authority and with strong reliance on professional integrity and the effectiveness of the process's tools and methods. A useful strategy is to link compliance to performance evaluations and project gate reviews.

Conclusion

People want results – more for less, better performance and more control. Focus on these motivates to sustain support from all stakeholders.

PM improvement is not simple. It is an organizational change program made up of interlinked projects and ongoing operational activities that consider career and competency, turf, training, coaching, tools, among other issues. The program addresses the needs of professional and incidental PMs.

The “end state” is dynamic; it evolves as series of improvement projects in an ongoing continuous improvement program. A well managed program that exemplifies the highest level of applied PM and transforms into an ongoing process is needed:

  1. Acknowledge the need,
  2. Prove the concept – is improvement feasible,
  3. Identify goals and objectives,
  4. Plan the program,
  5. Plan and execute projects, and
  6. Sustain the gains.

Recognize the complex nature of enterprise PM and the interplay among portfolio management, program management, resource management and individual PM in the context of business processes like engagement management and product development.

There is a need for a process “owner” with the understanding that ownership implies the responsibility to be the custodian of the PM process to serve the needs of PM stakeholders including shareholders, sponsors, clients, project managers, other managers and project performers.

Measure success as the degree to which project performance and control are improved and continue to improve over time. Performance is ultimately measured in the satisfaction of key project stakeholders, particularly, shareholders, sponsors, clients, regulators, project and functional managers, sales and customer relationship managers and performers.

References

Kerzner, H. (2001) Strategic Planning for Project management Using a PM Maturity Model, Hoboken, NJ: John Wiley

Bounds, G. (2000, February 18) Managing Organizational Transformation, DM Direct Newsletter Retrieved from http://www.dmreview.com/editorial/newsletter_article.cfm?nl=dmdirect&articleId=1956&issue=1192

McGrath, M. (2004), Next Generation Product Development: How to Increase Productivity, Cut Costs, and Reduce Cycle Times, Columbus, OH: McGraw Hill

Bulmer, J., Overview of the EPM Planning and Design Guide, PowerPoint presentation, 2004.

Pitagorsky, G. (2004) The Value of EPM. New York: IIL

Pitagorsky, G. How to Advance PM Improvement in Engagement Management: Learning from Computer Associates and Hewlett-Packard Services Unpublished article

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2005, George Pitagorsky
Originally published as a part of 2005 PMI Global Congress Proceedings – Toronto, Canada

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