Project Management Institute

Start-up company managing chaos by program office--lessons learned

Introduction

A Program Office (PO) is normally introduced in organizations that are mature in their Project Management. This paper looks at a totally new approach—how to introduce the PO to the start-up company where far away from maturity of project management culture in a case where there exists many project cultures and where incoming people bring their project cultures with them. This example describes the lessons learned from introduction of this type of organizational structure and the way to work into fast moving and the new field of operations.

The Case Background

The company was established with 34 different owners that have worked in mature markets locally. The aim of the new company was to bring into market a new choice with new set of services. The owners had now a new business entity, which works more or less globally, and targets into new market segments and a new customer base within a very mature and competed market. At the same time personnel growth was 10 times as much within few months.

The PO was introduced five months after the start-up of the company by outsider consultants. The original idea was to manage the launch of services and time-critical market entry with the PO. The main tasks were to provide structure/processes to ensure that service development work is done, to facilitate service portfolio review meetings, and to provide overall visibility on service portfolio development status with adequate reporting tools. Also, traditional business reporting was part of the PO's functionality.

The PO created milestone plans on a daily level to each launch release. So the rest of the organization was able to keep track of the overall plan of the big launch. The relationships between different departments in the schedule level were also put into “BEAST” (A massive brown paper on the wall with milestones for the next four to six weeks). Weekly update meetings was established to follow the big launch program and daily level Nerve Center updates to report the operational success of the launch program to the executive management team. No other plans were on project level and almost a half of the company was sitting on weekly launch updates.

A Typical Life Cycle of a Company: Start-up, Growth, and Maturity

In the initial stages of a new business (start-up), objectives are set, baselines are defined, forecasts for growth are outlined, and the gradual filling of a pipeline of customers started. Setting up a company's infrastructure to accomplish the aggressive objectives is vital. However, the infrastructure must be set for long-term operational success.

As the Growth stage is entered, rapid climbs in sales occur, income may begin to match or surpass expenses, and effort generates improved results.

In the Maturity stage of successful companies, income significantly exceeds expenses and efforts are overcome by results. Efforts focus on fine-tuning operations. Sophisticated and effective mechanisms and procedures are in place to guide the organization.

In this case the company was still in the start-up phase in its life cycle when the PO was introduced. The PO was seen as part of the infrastructure and strategic tool to achieve long-term operational success. Some quite sophisticated mechanisms and procedures were also introduced by the PO. The speed of the change in all areas hindered the ability to see the improved results in project management. The only thing that was visible at that time was the effort put in the PO function.

The Growth of the PO

The Levels of the PO and Project Management Maturity

The PO evolution goes through different phases and some of the phases are connected into project management maturity. At level 1, the PO is to help in controlling projects and focus is on individual project management. At level 2, the PO does the organizational level project control and the focus is on division- or departmental-level project management. At level 3, the PO works as tool for enterprise project management and the focus is on strategic project management. A PO may exist at any one of three levels in the organization—or the PO may exist at all three levels concurrently.

In this case the PO was established at level 1 even some of its focus was on strategic project management. Project management maturity was different throughout the organization. The company was very low in project management maturity, as mature as the weakest part is. The time frame was also so short that any big cultural changes cannot happen in this time in project management (Crawford, 2002).

The Goals for the PO Set by Consultants and Hand Over to Permanent Staff

The PO was established to accomplish very specific goals in the big launch program and the growth of the company was also overestimated. The goals for PO were communicated: to facilitate program management by reinforcing the vision behind the program, to be a nerve center by providing cross-functional visibility to each project manager as well as to the Management Team and to provide a set of project management tools/best practices to each project manager/department's PO. The PO (in a transition mode) extended the post-launch reporting support to a medium-term support because implementing the reporting tools can take months and the Management Team as well as key managers need to have visibility on the company's post-launch and operations performance.

The original idea was also facilitating cross-functional events and ensuring consistency (e.g., review meetings), taking some burden from each project manager (meetings preparation and followup) and tracking program progress and facilitating risks identification, and issues resolution. The PO facilitated the ongoing new product development (NPD) and introduction. The NPD process was a key and cross-functional process within the organization. Apart major launches (e.g., initial set of services), there was a need for an ongoing coordination of each functions involved in the NPD. Consultants also set the goals for staffing the PO function.

The permanent PO staffs were recruited two months later to run all PO functionality. The hand-over period was a month. During that month the launch was divided into separate releases with additional services to each one. The PO focused additional fire fighting to establish a basic project management process and to find out the amount of projects. One hundred and forty-two projects were discovered with no owners, no budget, and no schedule and without plans.

The PO Was Setting Their Own Goals

When permanent employees staffed the PO, some of the goals were reviewed and redesigned. The goals were divided in three different areas: people and skills, process and action, and tools. The idea behind division into different areas was maturity of each area. It was recognized that first there needed to be focus into people and skills inside organization and outside the PO. The PO staff was experienced in project and program management and skills were at a high level. The rest of the organization had a huge variety in project management skills. The goal was to bring skills in such a level that PM training could be organized in different target groups. Process development was also started from scratch. The goal was to establish a basic process. The idea was to introduce tools after the basic work was done in two other areas. The last step was to support those areas with adequate tools. Staff in some parts of the organization was requesting tools without thinking about the other two aspects. Also, there was the belief that a set of tools can solve all other challenges.

The PO's purpose was stated to increase and to facilitate each team's ability to communicate and manage their projects, processes, and people. The PO's role is to build relationships, communication channels, and bridges inside the company so that the right decisions can be made. The PO's mission was communicating vision and strategy, linking road maps, programs, projects, processes, and people to the strategy and vision. The other role was in area of education and learning by sharing best practices, templates, tools, and methods. The PO had also a role in knowledge and change management. The coordination and facilitation function was done by managing programs based upon strategy, so that right projects were done right.

The concrete goals for the one to three months were: give project managers basic training needed to establish common understanding, establish project management processes, and start using the processes with new projects. A part of the short-term goals was also to implement short-term tools and deploy them, meanwhile start collecting needs for the PM tools. Other goals were to establish roles in project teams and to build the basic company way to do projects—foundation. One short-term goal was to nurse and grow the project portfolio by reviewing the present project portfolio, identifying next programs and key/core projects for the company, and identifying the connection between projects. The overall goal was to move from launch mode into structured and organized way to do things.

Also goals for three to five months were set: deployment of PM methodology more deeply, PO Info Channel Implementation, project planning and control workshops, templates for different purposes, project management training, process training and tools training. The goal was to take into use summary reports and metrics, to review and audit, to support and improve project management initiatives, and to acquire long-term PM tools.

The PO's added value was seen in different areas like giving the big picture of all projects and connecting projects to strategy. The Nerve Center and its published WoW Meter were considered as valuable tools to manage this type of business. Time-to-Market was also improved so that projects were implemented effectively and efficiently. The PO was considered as neutral, centralized office for planning and analyzing projects because it was reporting to Senior Management. It did not take too long before it was seen as the centralized “fire-fighting department” and the “internal police department.”

What the PO did not do is to manage individual projects even project managers, who reported to the other parts of organization that expected PO to do so.

PO Functions

In the Growth phase, the PO's staffs' work concentrated in different project phases, project process itself, and operative reporting.

The project management process was divided into three different sections. The first phase was from idea to project, the second was the project phase itself, and the third was the post-launch phase. The starting of new projects was connected into strategy and vision through the PO with business cases. Two people screened new ideas and business cases before it became a project and prepared material for go/no-go decision-making. Meanwhile the process and tools staff was recruited into PO. The focus was set into starting a project, controlling it, and introducing this project life-cycle approach into everyday operations.

After the last big release, which was done without documented planning, all new projects were started according the new project process. At the same time New Product Development Process and set of project templates were introduced. Two other persons were concentrated into ongoing projects whether it was started according to “the launch approach” or project process. A project audit was conducted to see the viability of the business case or to see if there exist one behind the project. Also the audit helped to reduce the amount of projects running at the same time from 147 to 27. At the same time the prioritization of the projects was introduced. Different departments prioritized their own projects and after that the management team prioritized the whole project portfolio cross different business units. No relationships between project and project were considered in that time. The RAG (red-green-amber) status was introduced into project reporting and project reporting came as a mandatory part of the project manager's work.

Two people struggled with post-launch and reporting activities and one person with process and tools. All eight people also fought fires as part of their job. The most assignments were to rescue runaway projects and facilitating all cross-functional activities. There was no time for coaching project managers left after everyday activities or building up, at least, some projects either management culture or developing PO functionalities. The most time was spent in everyday activities and there were no dedicated people to development work. Also some of the PO staff was assigned to “help” in runaway projects (started in “launch” mode) and we realized that soon they were managing almost half of the projects left after the audit. The PO staff was overburden with work.

The communications was handled through everyday activities and no communication plan was created. The management support was mainly the one strong management team member and the CEO of the company. Both of them felt that this PO activity was their own idea and they used the PO as tool for accomplishing a lot of hidden agendas. At the same time a lot of political issues was raised and power plays started. Some members in the management team felt trended by the PO and its power and influence.

The PO's Info Channel Project

A group of business school students was hired to make the project for the PO. This project was called the “PO's Info Channel.” The objective of the project was to create a plan for developing a web-based project information channel for the company. The purpose of the system was to make the project information flow structured, efficient, and user-friendly. The channel was thought to serve the project information needs on different levels of the organization. Also the PO acted as an information distribution channel for the rest of the organization.

The PO's areas of interest were ongoing projects, but also the idea phase of future projects and the post-launch phase of projects where the aim to follow already closed projects, their success, and feedback. So, on a high level, the PO was keeping track on how the company was doing. The PO was responsible for reporting to the top management of the company, which makes it a crucial department in carrying out the vision and strategy of the company.

According to a 2000 thesis about project management, 31% of the interviewed Finnish firms identify projects and project needs during strategic planning processes. Only 12% of firms always document project needs into an integrated information system and as few as 8% of firms use knowledge from previous projects when initiating new processes. In 55% of companies the projects are not at all followed-up by a project office or its equivalent (Juusela, 2000). In the light of these figures, the company seemed to be well ahead of the average company in Finland when it comes to project management and project communication. The PO's project information channel was planned to be focusing straight on those areas.

Along the new communication channel, the requirements for project information will become more standardized, which will ease the definition of projects and the organization structure related to different projects. The new channel will not be a project management tool, but will be supporting the project managers in their everyday tasks. The channel will also act as a medium for the PO to deliver project document templates and best practices regarding project documentation and management. The information needs were well specified and a model was created to fulfill those needs.

Exhibit 1. Project Information Needs Model

Project Information Needs Model

The groups of people that are interested in project information were identified (see Exhibit 1).

Management—Loop/Owner—Interested in the overall picture of the company's activities and the activities' link to the vision and the strategy of the company. Since most of company's work is done through projects, status information of the projects is the most important information for the management. The information is mainly gained from the PO so there is ongoing interaction between the PO and the management.

The Program Office—Loop—The party that keeps track of the ongoing projects, screens the possible forthcoming projects, and evaluates the results of finished projects. Therefore, the PO needs information from the project team itself. From the project information gathered, the PO formulates a weekly summary for the management in their preferred format.

Steering Group's—Loop/Owner—Key members or a project owner who has originated the project idea and who is responsible for the costs of the project, as well as the group leader. The steering group may also include other line managers. The steering group needs operational level information from the project manager and there's both way communications with the PO.

Project Group—Implementer—Consists of a project manager and his or her team. There is ongoing information flow between the team members and the project manager throughout the project. In addition to that, the project manager has to communicate with the steering group, the PO and other interest groups such as other project managers who are interested in the project.

Other Interest Groups—Loop—Any other employees within the organization who are interested in a particular project. Since a project usually has effects on other projects and vice versa, other project managers are distinct interest groups. Other interest groups include, for example, people from IT, billing, marketing, and customer care.

The three-level structure of the information channel was planned. It was based on the idea that once the user gets high-level information on projects, she or he can dig into the more detailed levels of project information. The idea is that the summary level gives only rough guidelines of the company's activities and performance regarding ongoing and closed projects as well as created ideas. However, the summary level does not present any information on project level, but on a higher level combining all the projects. The semi-detailed level makes it possible for the user to follow particular projects and get more detailed information. The detailed level consists of documents that belong to each of the PO's section, whether they are ideas, ongoing projects or already closed projects.

The Info Channel project was closed. And the implementation was planned within next few months. The information needs about the PO itself and its accomplishments were not considered nor was clear communication given. The assumption was that good work talks about itself (it is also part of Finnish culture).

The Fall of the PO

The Next Budget Round

Six months later project management was established and the process flowed smoothly; projects were on time, on budget and on scope. Projects had solid business cases and direct linkage into the strategy of the company. So the next budgeting round started. The PO continued its operations without any massive communication actions with low profile. When there were problems—the PO was asked to solve those and move forward.

Then came the announcement; the organization needed desperately product management and project management skills in different parts. So the PO was at its end, six months than it was stuffed with permanent employees. PO staff was reassigned in different parts of the organization. The next week the CEO called the former PO director to check the project status on the corporate level. After the discussion the CEO was informed that no one knows the project portfolio situation anymore.

Organization Did Not See the Added Value

When pressure came outside the PO, the added value was not so visible and not communicated (to be considered as part of the infrastructure). It seems evident to move skilled people where they were needed without thinking too much about the consequences. Some people were considered to be the thread by the PO. They saw its people to have too much influence in the organization and its political games.

Also some of the project managers did not see the added value because the way of starting projects was in place but it was considered as too much work to fill all planning documents to get the project started (business case, project proposal, project plan, investment plan, budget, schedule). There were no processes in place when the PO started and the project process was the first one to be introduced with NPD process. So, people felt the processes were too tight after being without those. People were getting used to the launch mode freedom and chaotic environment without any documented planning. The PO could not to make the project team members' or project manager's life easier. In some cases even more administrative tasks were added in. Bringing tools in was not the solution in this case. There was speculation among PO people that it could make the situation even worse.

When the projects were audited some PMs felt it was not done on a coaching purpose. After the audit no hard decisions to kill or delay more projects were done fast enough to be able to focus into the most important ones. The project review group did not have the authority to kill projects so the decisions were made in the line organization.

The project management communication needs were collected in the info channel project but the PO could not implement it within the time frame. Also the PO role was not clarified or communicated to the rest of the organization. The PO was considered as the CEO's own tool to implement his goals. The sponsorship of the PO was only in some hands. The corporate project managers were not reporting to the PO and they had conflicting goals, priorities, and schedules from their line managers and from the PO.

What role the communication plan plays in this type of organization in this life-cycle phase it can be said for sure that it helps a lot in all actions. Some PO's functions, procedures, and working methods need piloting before they are taken into use. That was not done—everything was taken into use through the corporation.

The Assessment of the project maturity or the situation itself was not done and when it was planned to be done it was too late. So the PO did not have the proper baseline to show the added value, even when most of the benefits were so visible.

The level three PO is more suitable for a company bigger in size and more mature in project management culture. The benefits of the PO, even in a start-up company, are clear in this case. The evolution to level two needs more time and effort and it is a cultural change. On the other hand, people are more willing to implement new ways of doing things in a company that is in the start-up phase with less resistance. There also need to be a reward system to support the change and to encourage the new way of doing business. On the other hand, senior management needs to require the use of the PO created methodology.

Lesson Learned

The implementation of the PO was like a classical textbook example (Block & Frame, 1998; Crawford, 2002):

•  Name leader of the PO

•  Start collecting list of ongoing programs/projects

•  Map programs/projects with strategic objectives (matrix)

•  Define role and responsibilities of the office (includes also defining decision-making structure)

•  Define PO practices and tools

•  Set-up the office (name staff)

•  Plan like you are planning a project…etc…

The speed of the implementation was too fast and magnitude of the change was too big. If you consider setting up a PO, plan small steps and plan a communication in each step. Try to get hands around the scope and time frame needed for required change. Also get the acceptance from the whole senior management group whether your implementation is in whatever level in organization. Get the buy in through piloting and show the difference and the value with concrete measures. Show the PO's benefits instead than giving the “rules and procedures to follow” for the rest of the organization. Focus on project management maturity level and life cycle phase of the company. Project management practices need to be in place before you get benefit out of program management.

The both short- and long-term need to be considered and planned. It might be good idea to divide the PO staff to those who make PM and project teams life easier and to those who concentrated on development as a whole. Focus on high-priority projects first by doing so you can avoid overburdening the PO with work.

In this case the PO had very specialized functions and goals mixed with strategic level thinks, even on operational level. The chain is as strong as the weakest link of the chain. The organization, project culture, and PO are as mature as the weakest area is!

References
Books

Pelin, Risto. 1996. Projektihallinnan käsikirja. Espoo: Projektijohtaminen Oy Risto Pelin.

Project Management Institute (PMI). 1996. A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Newton Square, PA: PMI.

Block and Frame. 1998. The Project Office. Menlo Park: Crisp Learning.

Crawford, J. Kent. 2002. Project Management Maturity Model. Providing a Proven Path to Project Management Excellence. New York: Marcel Dekker Inc.

Crawford, J. Kent. 2002. The Strategic Project Office. A Guide to Improving Organizational Performance. New York: Marcel Dekker Inc.

Article

Telleen, Steven L. July 5, 2001. IntraNet Methodology, http://www.iorg.com/papers/amdahl/concepts1.html.

Thesis

Juusela, Krista. 2000. Project and project portfolio management with an emphasis on development projects: Case Development project portfolio management in Finnish organizations.

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.

Proceedings of the Project Management Institute Annual Seminars & Symposium
October 3–10, 2002 • San Antonio, Texas, USA

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