From 0-100 kph in under 6 seconds--rapidly building project management capability in a complex organisation

Introduction

The National Australia Bank (NAB) is Australia's largest bank, and one of the largest financial services institutions in the world. The NAB has over 10 million customers globally and is currently implementing a transformation program that will result in a project investment portfolio for the Australian region of up to$1.8B over the next 3 years. The Technology Operations (TOps) group at NAB has ultimate responsibility for all non-application information technology and communications infrastructure. It is one of the largest technology operations running in the Southern hemisphere, and the largest technology group in the financial services industry in Australia.

Technology Operations (TOps) runs an “in-house outsourcer” model for the provision of Infrastructure Services to 5 business units. TOps has a budget of over $400M and a headcount of more than 400. Outsourcing arrangements are in place for a significant part of the services provided. It has a significant level of project expenditure of more than $30M per annum and runs between 60 – 80 projects per year.

In late 2003 TOps was delivering excellent and cost competitive operational services. However, TOps was experiencing significant customer satisfaction issues due to systemic problems regarding the delivery of projects. Recognising that TOps did not execute projects well an expert consulting organisation, Knapp and Moore, were engaged to carry out a review of the project management practice. The purpose of the review was to identify the issues causing sub optimal project performance and to recommend a comprehensive plan to address these issues.

The review was led by Michael Knapp and it focused on the organisation's project management maturity. The assessment involved a series of interviews with sponsors, key stakeholders and the project management teams. Additionally project methodologies, management plans, status and performance reports and post-project reviews were examined. Organisational project management maturity was assessed against 18 attributes which, collectively, positioned maturity as being at one of four levels (Knapp & Moore, 2003):

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Exhibit 1

* - ‘Success Rate’ measures the number of projects which meet all success criteria (such as on time, within budget and delivering the claimed business case) within given tolerances.

Typically, an organisation scoring ‘5’ puts them in the middle of level 3 (‘Competent’), which can be regarded as the lowest score an organisation planning on running successful projects should achieve (see Exhibit 2, below, to see how Technology Operations was rated). Any score less than 5 should be a concern, as it probably means a substantial level of project investment is wasted, either through poor project performance, unrealised business cases – or both. The assessment was carried out between September - October 2003, with a detailed report presented to TOps management in December 2003.

The overall performance of Technology Operations against attributes which collectively define Project Management Maturity

Exhibit 2: The overall performance of Technology Operations against attributes which collectively define Project Management Maturity

The findings from that assessment were conclusive:

  1. The level of customer satisfaction was very low. TOps was not viewed as being competent at running projects.
  2. Compared to peer technology operations in other financial service organisations, TOps sat at the bottom quartile in terms of project management maturity: that is, 75% or more of similar technology organisations had superior practices and performance. Overall, the competence of project managers was low (with several notable exceptions). The following chart describes the level of management practice being carried out, compared to what is regarded as ‘excellent’ and ‘good’ levels of practice:
  3. Governance was a key area to be addressed. Whilst Project Boards were established, Sponsor and Project Board roles were inconsistently executed. The Governance structures did not effectively cater for the matrixed services model used meaning that those who could most effectively support good project outcomes were not involved in this critical process. Additionally, there was no single point of accountability for the delivery of projects and the improvement of project management capability. This resulted in a number of issues including the absence of a consolidated end-to-end view of the project portfolio. Another issue was the Senior Leadership Team did not have the necessary information to make sound decisions, and the constraints that may impact projects were not understood and most often surfaced as project issues identified by the client groups.
  4. There was a very significant disconnect between demand management (managing the requests for TOps services), resource management and project management. Commitments to delivery against time and cost were being made with little or no regard for the capability of TOps to meet such commitments. The constraints within the supply chain (some intentionally implemented through bank wide financial management policies) were not understood. Accordingly, the need for a mechanism to manage these constraints and resolve conflicting priorities to enable the optimal delivery of services was not understood.
  5. The needs, concerns and issues of stakeholders were not being effectively managed. TOps was often seen as a risk to those projects requiring their project based services.
  6. Few project metrics were captured, analysed or used to measure or improve project performance. What was obvious, however, was that projects consistently ran over time and over budget.
  7. Resource management was a particularly weak area, with project resources being re-directed to ‘business-as-usual’ activities on a regular basis. One conclusion was that, overall, TOps was running with resource demands exceeding capabilities.
  8. Project management practices, processes and toolsets were immature. A “one size fits all” methodology was in use, and that methodology did not reflect the matrixed service model used by Tops, nor did it support the different types of projects requested by the business units. In the absence of a Portfolio Management capability the methodology encouraged a rigid, functional-silo based culture resulting in the inability to meet customer needs with regard to responsiveness, flexibility and agility. The methodology was not integrated with organisational processes such as resource, financial and vendor management. In essence, the methodology did not reflect the needs of a customer-focused, utility service provider.
  9. A total transformation was required for TOps to meet the substantial challenges technology groups were to face across the National.

The Challenge

Understanding The Problem

The way TOps managed projects was not sustainable. TOps was not able to deliver the project based services required by the business units and was seen as an impediment to the success of business projects. Fundamental and transformational change was required across the whole organisation to ensure that projects were successful.

Accordingly, care was taken following the review not to confuse the symptoms of a problem with the causes of that problem. The deficiencies did not reside in just the operational aspects of project management – such as poor scheduling techniques or minimal metrics capture and analysis. Deeper, more intransigent problems lay at the management and governance levels. These had to be addressed in a systemic, whole-of-organisation, end-to-end manner. Some of the areas specifically requiring attention included:

  1. The need to appoint an executive accountable for project management and performance to the leadership team. This person needed to be skilled and experienced in project management, organisational change management and delivery of capability uplift programs.
  2. The engagement and support of the leadership team in both raising the overall capability of Tops, and in actively sponsoring any improvement initiatives to flow from the results from the capability review.
  3. The way in which solutions to be delivered by projects were designed required particular attention. This included improving requirements gathering and baselining of business, architectural and technical requirements so that appropriate and fit for purpose solutions could be developed
  4. The management and governance of demand for projects, including balancing supply and demand.
  5. Improving responsiveness to client groups so that requests for solutions and project commencement were actioned in the required time frames.
  6. Ensuring that the resourcing requirements of projects were understood so that resources were managed in accordance to business unit priorities. This included the active engagement of resource managers.
  7. The need to construct a complete view of all projects and programs being run in the organisation.
  8. Implementing and enforcing standards for Project Management, in particular the use of a contemporary, fitness-for-purpose Project Management methodology. Such a methodology would cater for the needs of the business and would be integrated with corporate project management standards and key TOps functions (ie resource management, risk management etc).
  9. Educating the leadership team in their roles as sponsors and stakeholders in projects. This included providing coaching and support in the chairing and participation of Project Boards and the review of troubled projects.
  10. Defining a new set of project professional job roles, and assessing individual's competencies such that the right people were carrying out the right jobs.
  11. Given the issues associated with the performance of projects, the role of Project Manager was a very difficult one. There were very significant morale and teaming issues within the Project Management department. It was critical that these were addressed.
  12. Developing and implementing and end-to-end process to manage the request for project services from the point of request to completion and close out of the project
  13. Tactically managing business unit issues until such time as the above items were addressed.
  14. Developing and implementing an integrated governance system for Demand, Projects, Programs and the Portfolio

Overall, the problems facing TOps had a number of common attributes:

  • They were systemic in that one problem could not be effectively addressed in isolation.
  • They were complex in the breadth and depth of their scope.
  • The nature of the problems was unclear to stakeholders, as stakeholders tend to view problems from the perspective of their accountability, skills and experience.
  • The solution to these problems required all departments in TOps to collaborate.
  • The problems appeared overwhelming to the leadership team, stakeholders and project management professionals.

The Strategy

Approach

Given the findings of the maturity assessment and subsequent situational analysis it was decided that the issues would be addressed through a program.

The operating environment required the program to:

  • Manage uncertainty and ambiguity
  • Embrace emergent change (many were expected) as this presents both risk and opportunity
  • Engage stakeholders by focussing on the realisation of benefits rather than the production of products or deliverables
  • Provide decision making techniques
  • Deal with changing constraints
  • Deliver early wins to the stakeholding group

It was decided to use the Thiry ‘FOrDAD’ program life cycle model (Thiry, 2002), which is comprised of 5 program phases (Exhibit 3):

Michel Thiry's 5 Phase Program Life Cycle Model

Exhibit 3: Michel Thiry's 5 Phase Program Life Cycle Model

The Thiry approach to managing programs is to focus on the value-generating opportunities the program creates. In this sense, programs are benefits-driven and as the program proceeds, the benefits being targeted are reviewed and, if necessary, the program is finely tuned to ensure benefits are optimised. The delivery vehicle for these benefits are projects, with each project operating in an integrated program governance framework, ensuring consistency of operation and coordination across all the projects making up the program.

One other reason in choosing this model (apart from it representing contemporary thinking in Program Management) was that it would representative a pilot of the Program Management methodology to be designed as part of the program.

Principles Under-pinning The Strategy

A new set of skills were required by TOps to meet the challenge. In late July 2004, a key appointment of the Portfolio Services Manager was made, whose job it was to lead the transformation process. In the early days of shaping the strategy to deliver the transformation initiative, the following were agreed as the principles to support the strategy:

Holistic Approach The root causes of poor project delivery were broader than a poor project management methodology and project manager competence. Focusing only on these areas would not have delivered the required outcomes. A systemic approach was taken addressing each critical area of the 3P environment. Ie Demand Management, Portfolio Management, Program Management, Project Management and Governance
Delivery Through a Program In recognition of the need to manage uncertainty and ambiguity Program Management was chosen as the delivery mechanism. Specifically Thiry's FOrDAD life cycle and methods were chosen as their Benefits orientation and value based approach best addressed environmental factors. The program model adopted was quite straightforward: each program goal was to be delivered via one or more projects, with many projects running concurrently
Early Wins A number of capability uplift programs had previously failed. It was imperative that stakeholder needs were understood and early benefits be delivered and recognised by key stakeholders to ensure ongoing support for the program
Respect and empower the team The team that would deliver the change had experienced a number of failed capability uplift programs in the past, so they were encouraged the embrace the program and its outcomes. Their belief and support in the program was an essential pre-requisite to success.

Critical Success Factors

In achieving the objectives for the Program, a number of critical success factors were identified:

Sponsorship The Program Sponsor (General Manager, Technology Operations), needed to demonstrate a willingness to engage, be educated, empower and lead as appropriate
Leadership Delivery approach Strong, visible leadership by all those taking on a governance or management role.
  • Use of Thiry's FOrDAD Program Management model as the delivery mechanism
  • Benefits orientation and value management approach
  • Viewing the problem and organisation systemically. Accepting and pragmatically dealing with the reality of the situation
  • Identifying and managing the team as critical stakeholders. Engagement for the journey
  • Removal of heroes and re-skilling for needs
  • Insisting on high professional standards
  • Active use of methodologies and standards a condition of membership
Team
Stakeholders Understanding and managing differing needs to ensure program validity and support within the stakeholding group. Recognising the failure of key stakeholder to buy-into the program would represent a substantial hurdle for program success.
Expertise Seeking and using appropriate consulting expertise – partnership
Governance Proper governance of Program, Portfolio, Demand and Projects

Program Goals

Technology Operations needed a major cultural transformation in how it managed its business – in particular how it managed its programs, projects and processes and the substantial level of technology investments.

The overall improvement initiative was called the “Endeavour Program” (named after the ship Captain James Cook sailed on his historic voyages of the South Pacific in the 18th century). The program had five major goals:

  1. Demand Management Create a set of practices which would improve how TOps managed its key relationships with service providers, partners and vendors. Better manage the pipeline of all service demands, creating a portfolio view of all work and investments to be undertaken by TOps, with clear understanding of the capabilities (technology, resource, funding, operations etc) needed to deliver on all service commitments.
  2. Governance and Management Put in place appropriate governance arrangements (specific roles, accountabilities and fora) to assure efficient, targeted technology management.
  3. Project Performance Improve project performance, reducing project costs and delivery schedules and improving business case realisation. Raise the overall level of governance and management practice and maturity so as to position TO in the top quartile of like-organisations in terms of overall maturity: that is, to perform better than 75% of like organisations. Raise the overall competency of project professionals.
  4. Program Management Introduce Program Management for large, strategic investment programs.
  5. Request for New Service Management. Completely re-engineer the end to end processes used to receive project requests, design solutions and generate estimates.

Defining Program Success

As mentioned above, the program was driven by optimising a set of benefits to be derived from the program. A Benefits Register was established which worked like this:

Program Goals -> Objectives -> Benefits - > Achieved By -> Performance Targets

Essentially, the discrete program goals were defined as a set of objectives aligned to specific benefits. These benefits would be realised by specific achievements and deliverables, the success of which would be managed by performance indicators and targets. Thus, as the activities making up the program proceeded, their success was monitored by how well the benefits were being realised. If it was identified that certain performance targets were not being met, the activity scope was changed to ensure targets were being met.

The following Exhibit defines the benefits framework for the Endeavour Program:

The Benefits Register showing how program streams were related to specific objectives which created measurable benefits

Exhibit 4: The Benefits Register showing how program streams were related to specific objectives which created measurable benefits

How The Program Ran

The ‘Formulation’ and ‘Organisation’ phases of the Program were undertaken in December 2004 and completion was targeted for September 2005.

The following Exhibit describes the make-up of each program phase for the Endeavour Program:

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Exhibit 5

The Results

The strategy has been very successful, and the challenges set in 2004 have all been met.

In particular, the following have been achieved:

Demand Management. A fully integrated demand management system was implemented allowing TOps and its subcontractors to establish and maintain a balance between demand and supply. There is a strong and consistent focus on meeting the client group's demands and expectations.

All benefits and performance targets associated with the Demand Management program goal were either met or exceeded.

Governance. All levels of governance have been restructured, from the Senior Leadership Team through to technology and service management and programs and projects, to include all involved groups. In this way everyone involved in ps's business is fully knowledgeable of their accountabilities.

All benefits and performance targets for Governance were either met or exceeded.

Project Performance
  • A portfolio view of all investment and project work has been set-up, managing all work from initial demand and request for service, through to delivery and customer hand-over.
  • All projects are run along contemporary, ‘best practice’ lines. A Project Management Methodology (‘Paragon’) based on the Knapp and Moore project management methodology was developed and implemented and is being used on all projects.
  • All project professionals have undergone competency assessments, with many being re-deployed to new roles, or they have left the organisation. A substantial new-hire program has seen headcount increase from 17 to 43, filling such roles as Project Manager, Project Controller and Project Analyst. This reflected the increased demand for project services in line with the increase in the quality of service being delivered. As improvements were made the TOps leadership team enthusiastically supported the further dedication of scarce resources to the project function. This was a clear reflection of the value they perceived coming from the program.
  • Overall project management maturity has been raised to ‘Competent’, which is a 55% (compared to where was assessed in December 2003) overall improvement in practice, which positions TOps in the top 30% of like-organisations. Projects are managed in a highly professional and effective manner. The following Exhibit compares the maturity rating in September 2003, compared with September 2005:
A comparison of project capabilities before the Endeavour Program commenced and at its completion

Exhibit 6: A comparison of project capabilities before the Endeavour Program commenced and at its completion

  • Overall project performance has improved (‘red’ and ‘amber’ status projects have been reduced from 63% to 18% of the total projects run). The following Exhibit represents this performance improvement:
Project Health summary throughout the period the Endeavour Program ran

Exhibit 7: Project Health summary throughout the period the Endeavour Program ran

  • Client Satisfaction. The key client groups for Tops are the Heads of Technology for the major business units – really, a group of Chief Information Officers who have significant demands on Tops resources, services and projects. The following Exhibit shows the Project Delivery satisfaction rating by the Heads of Technology:
The Project Delivery satisfaction ratings given by the key client groups throughout the period the Endeavour Program ran

Exhibit 8: The Project Delivery satisfaction ratings given by the key client groups throughout the period the Endeavour Program ran

There was a significant improvement in project delivery satisfaction in May and June 2005, which corresponded with targeted improvement initiatives being run in the Endeavour Program.

All benefits and performance targets for Project Performance were either met or exceeded.

Program Management. Working with leading industry experts, a Program Management Framework has been developed and is being used on all major TOps programs. Program Management job roles have been defined, and Program Managers hired and have undergone competency development programs.

All benefits and performance targets for Program Management were either met or exceeded.

Request for New Service Management. This process was totally re-engineered and an end-to-end management process created with reduced handovers, improved controls and optimised request routing resulting in earlier and more accurate quotations. The average time to process requests was reduced from more than 12 to 4 weeks

All benefits and performance targets for Business Engagement were either met or exceeded.

References

Knapp, M. (2003, January). Assessing Project Management Maturity. www.knappandmoore.com.au

Thiry, M. (2002, June) “FORDaD”: A Program Management Life Cycle Process. PMI Symposium Europe 2002, Europe, Cannes, France.

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.

© 2006, Rod Gozzard and Michael Knapp
Originally published as a part of 2006 PMI Global Congress Proceedings – Madrid, Spain

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