How do I create enterprise project management? Insights from the experts

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Introduction

Organizations have been actively deploying Project Offices for the better part of a decade and are still looking for quantitative results to prove Project Office value. This team of experts have worked with the world's largest corporations to build Project Offices that represent some of industry's best and proven practices. The process of building to their current position has represented many successes but also numerous challenges along the way. This paper and panel discussion explore development of the Project Office at the enterprise level from both practical and real-world practices.

A growing number of industry analysts are adding their insights on Project Offices, Portfolio Management, and Enterprise Project Management. In a Computerworld article, Thomas Hoffman questioned the value of Project Management Offices in IT organizations. Tom Pohlmann, an analyst at Forrester Research, Inc., suggested in this article that too many PMOs serve as “process cops and report compilers” for executive teams and often “lose sight of what they're supposed to be doing – to make sure projects are running effectively” (Hoffman, 2003, p. 7). So the questions remain: a) Are Project Offices providing value to the organization? b) For those experiencing project success, what have been the critical elements to achieving effective project delivery? and c) Are the delivered projects making a significant impact on corporate strategy?

While our panel will discuss and debate all three areas, I have asked each of our experts to provide their insights and experiences. For this paper, Ms. Janet Burns, Director of Project Management for The New York Times Company addresses the first topic; Measures for Defining Success. Ms. Jeanne Childers, Systems Project Office Director for State Farm Insurance responds to Topic 2; Critical Elements for a Successful Project Office. For our third topic, Mr. Mark Philhower, Vice-President, CIGNA Healthcare Program Management Office, discusses Corporate Strategy and the Project Portfolio.

Topic 1:        Measures for Defining Success: Janet Burns, PMP, Director of Project Management, The New York Times Company

Question:

The industry analysts have become more focused on metrics for evaluating the success (and possibly the failure) of project management initiatives. The Center for Business Practices (CBP) recently published a research report that strongly recommended building key metrics for evaluating the contributions of project management to the enterprise. According to the CBP, only 51% of organizations measure the value of project management and those Project Offices primarily focus on meeting delivery dates and budgets. Several questions arise in understanding the appropriate and valuable metrics for defining Project Office success in an organization:

▪    What metrics are important for measuring project management performance?

▪    How frequently should project management be evaluated?

▪    Who is responsible for measuring project management results?

▪    Should management be involved in tracking progress? Who should be informed of the results?

▪    What impact should be expected from building an effective enterprise project management culture?

▪    Is there a way to determine the value we provide with all this effort?

Response:

The metrics used for evaluating project management performance really depend on the goals of the PM initiative, the maturity level, and the culture of a company. At the New York Times Company, we started out with a very ad-hoc approach to projects. Therefore, a key metric was the rate of adoption and usage of the methodology, PM Roadmap, which we created for use enterprise-wide. PM Roadmap was not mandated initially, which is a cultural issue with us. Frequent evaluations were needed so we could find out who was or was not using it and why.

The frequency of evaluation must be coordinated with the goals of the initiative and the budget cycle in order to continue providing justification and funding for the program. At the New York Times Company, after 2 years of training and methodology deployment, we did a comprehensive assessment of the progress and maturity of the organization in project management. This helped us to zero in on areas, either by business division, or by PMI knowledge areas, where we still needed to improve. The assessment also identified gaps in usage of PM Roadmap. Since the assessment, we have been working to fill those gaps by concentrated training and communications. Based on the amount of training and new processes we are rolling out this year, we anticipate another maturity assessment late this year or early in 2004.

Our PMO has been responsible for tracking performance results because we own the process. However, one significant change since we began our initiative is that project management goals and objectives have become part of other employees’ goals. As a result, the job of tracking and making sure that project management is working is spreading beyond the PMO members. Management is ultimately responsible for all project results, so it is also management's job to evaluate the success of project management. In our case, the positive results of project management need to be communicated to all stakeholders of the initiative – the sponsors, project managers, project teams, and potential users of PM Roadmap. Communicating progress is as much an exercise in public relations as anything else.

The impacts of an effective enterprise PM system must extend beyond budget and schedule compliance – after all, the best run projects in the world still come in late and over budget. In our case, increased communication is an important positive impact. Project stakeholders get more frequent updates on projects so issues can be addressed in a more proactive way. A major goal of our initiative was to create a common project management vocabulary so we could share project information across business units and departments. That goal has now been realized. Perhaps the most important benefit of improved and consistent communications is improved scope management. Our previous informal processes did not include artifacts such as a Project Charter to define a project. Because no Project Charter existed, there were often multiple impressions of project goals, scope, etc. Developing a Project Charter now enables early and frequent conversations about the content of projects; leading to improved scope, schedule, and budget adherence.

Question:

Is there a way to determine value of these practices?

Response:

Yes. For the New York Times Company, the data is anecdotal at this point, but the examples cited have shown positive value to the project sponsors. We will begin to track projects more diligently in the near future and compare the results of projects using our project management methodologies and techniques. We expect to capture data which reflects actual savings in time resulting from improved management, project selection, and leveraging information across our business units. While we currently enjoy a great amount of support from senior management, showing the value to our bottom line is expected to sustain and bolster that support in the future.

Topic 2:      Critical Elements for a Successful Project Office. Jeanne Childers PMP, Systems Project Office Director, State Farm Insurance

Question:

So often we hear of organizations investing significant resources in project management – with limited results. “We trained numerous project managers”, “we have built a project management methodology”, and “we installed a project management software program” are frequent comments heard as major steps taken to build a project management system. Yet, the Standish Group still reports that only 34% of our projects are considered truly successful.

▪ What are the most critical elements of enterprise project management success?

▪ With limited resources, all items cannot be deployed at once. Is there an optimal sequence or phasing to stage these critical elements?

▪ We are project managers so we like to Initiate, Plan, Execute, and Control. How should project management processes be utilized in developing enterprise project management?

Response:

Comments on this topic are based on my experiences with Information Technology (IT) projects at State Farm Insurance. We have evolved over the last 6 years to an organization that fully supports professional project management. Some perspective on our IT department includes:

  • Over 7000 employees and contract workers
  • 600+ projects active at any one time, totaling over 4 million hours of work
  • 270 project managers
  • IT Project Office in existence for 3 years
  • Recently assessed at a Level 2 (2.7) against the PM Solutions Project Management Maturity Model

In my opinion, the following items must be in place to ensure success with enterprise project management:

  1. Executive level support for professional project management. It must be clear from the top down, that project management is how we do business. That expectation must be backed with funding for staffing, training, tools, and support for the project organization.
  2. The organization should clearly define business priorities and manage the project portfolio in accordance with these priorities. It is also important that the organization remain flexible enough to change project priorities as business needs change.

    For years at State Farm the IT Department had the responsibility to prioritize projects for the company. With such a large project portfolio, there was a danger that IT wasn't working on the projects which would further the goals and support the strategies of the company. Over time, State Farm IT had made significant headway in engaging our Chairman's Council to prioritize corporate initiatives so we can ensure IT is working on the things that will ensure financial success for the company.

Assuming your organization has support on the above items, I suggest ordering your project management initiatives as follows:

  1. Implement a consistent project methodology. Care should be taken to ensure the methodology doesn't get bogged down with redundant processes and overhead.

    We've learned the hard way in IT at State Farm that it is important to keep the methodology streamlined and flexible and that all organizational process expectations for projects should be integrated into the methodology.

    We let this get very out of control over the last few years with some of our process expectations being contained within the methodology and other processes residing outside the methodology. This created a state of confusion for project management. We are now in the process of investing quite a bit of time and money to streamline the methodology and integrate all process expectations. Our goal is to make the methodology an enabler to project management, not an inhibitor. We are desperately trying to instill a process management and integration philosophy in our large department, but it has been difficult.

  2. Formalize the role of project manager. Set clear expectations and job responsibilities for the project managers. Promote professional certification through the PMP and provide mentorship along the way.

    In addition, project managers must understand their role as leaders and the authority that comes with being a leader. Sometimes the leadership/authority role involves delivering bad news to project sponsors, reality checks on what can be accomplished in what timeframe, and holding staff associates accountable to delivery against the schedule.

  3. Train project managers, sponsors, and project team members on their roles in the project. Clear expectations must be set with each on the project team and players must be held accountable to fulfilling the expectations of their role.

    Project sponsors specifically must understand that they, too, are accountable for the success of projects. Project sponsors must engage to establish clear project vision/direction and they should actively break down organizational barriers that impede project success. Sponsors cannot disengage by “throwing the project over the wall” and hoping the project manager hits the target. The sponsor must stay actively engaged throughout the life of the project and understand the discipline of project management sufficiently to verify the project is still on track to meet its stated goals.

    Project sponsorship is an area I think we could have improved at State Farm. We did a good job of training our project managers in the early days of project management, but we neglected training our sponsors and project team members on the value of project management and on their role in ensuring successful projects. This lack of sponsor training resulted in the project manager being perceived by the team as an administrator and being viewed by others as the only accountable party for project success. Unfortunately, lack of role understanding made it easy for other team members and sponsors to abdicate their responsibilities and blame failures on the project manager.

    Over the last few years, we have made modifications to training and understanding of project sponsor roles/responsibilities, but we still have numerous improvements planned. After some project failures, we learned project sponsors needed training in project management basics. Our training included project sponsor job expectations, the triple constraints, schedule basics, and how to use earned value.

  4. Implement tools to support the project environment (tools for scheduling, resource allocation, progress reporting, etc.)
  5. Implement a Project Office. It is very hard to mature the project management discipline without dedicated staff to focus on long-term project management strategy, development, and execution of tactical plans. In addition, a Project Office will aid in mentoring project managers and recovering failing projects.

    As you build and manage the Project Office it is important to “walk the talk”. You must use the processes and tools to manage the Project Office that project managers are required to use to manage the projects. Be the model and ask for feedback frequently from the project managers. This practice keeps the Project Office in touch with reality and shows the project managers that you stand behind the processes and tools the Project Office is delivering to the organization.

  6. Mature the project management discipline through advanced project management training and professional certification. Projects continue to get more complex and there is more and more pressure to deliver those projects faster while reducing expenses. Given these pressures, it is important to continue maturing the project management team in the discipline by building their skills and helping them manage in a more complex world.

In summary, start small and gain successes along the way. Over time we have seen the credibility of our project management team soar. We can articulate to the organization the value of professional project management, but until the successes are seen and recorded, our words will not be credible.

We are now at the point in State Farm where the value of project management is visible. Now we have other State Farm departments asking to “borrow” our IT project managers for assignments into their departments. In addition, we are seeing some departments establish internal project offices themselves and beginning to build and develop their own project managers.

Topic 3:      Corporate Strategy and the Project Portfolio Mark Philhower, Vice-President, CIGNA Healthcare Program Management Office.

Question

Meta Group recently published an analysis that states, “By 2006, 40% of Global 2000 enterprises will focus on enterprise portfolio optimization to strategically and tactically deliver business values…” (Bittler, 2002, p. 1) We know it is important to provide projects producing the required results, on time, and within budget. Yet, if we are completing projects disconnected with corporate/organizational strategy we are not delivering against corporate expectations.

▪    How does corporate strategy effectively drive the project portfolio?

▪    What techniques are valuable for integrating strategy into project delivery?

▪    Who is responsible to develop systems and manage strategy to portfolio integration?

▪    Is this a one-time exercise or should strategy/portfolio integration be an ongoing process?

Response

The critical first step in effective project delivery is “working on the right projects”. On time, within budget, project delivery is immaterial if the project doesn't contribute to the strategic directions and priorities of the organization. At CIGNA we've instituted a project “Alignment and Prioritization” process that defines an individual project's impact on the corporate and divisional objectives and strategies. CIGNA has established quantitative impact metrics for each project, with those metrics then being used as indicators for alignment and project prioritization.

While we are in the beginning phases of this effort, those metrics will follow the project through the development of its business case, funding and approval process, and ultimately, production and operations. Once in production, our plan is to track operational returns and compare those returns to the original estimates and assumptions used to justify the project in the first place. This use of pre-established metrics ensures a greater degree of financial accountability in realizing the projected business benefits of the project.

The Program Management Office has been given responsibility and ownership of the alignment and prioritization process together with project portfolio management. Projects and initiatives are derived both strategically (top down) and operationally (bottoms up). Strategic initiatives are evaluated against the longer-term strategic objectives of CIGNA Healthcare and operational initiatives are evaluated against the shorter term operational needs on the organization. Both strategic and operational initiatives are then evaluated against capital and resource constraints. Each of the two portfolios will be evaluated and reviewed periodically (at least monthly) for any changes in project status, organizational changes, or market dynamics. Resource allocations will also be reviewed and evaluated periodically for adjustments and modifications due to availability, changing project status, and/or changes in project demand.

The alignment and prioritization process is an on-going, dynamic process that is continuously managed. Changing market dynamics, operational necessities, resource and organizational dynamics require the continuous monitoring and management of both the demand side and supply side of project portfolio management at CIGNA. While CIGNA is just starting to get our arms around managing this effort, we see significant opportunities for improving organizational focus and performance. This effort is expected to magnify the benefits anticipated from implementing project management methodology and disciplines to result in significant project delivery improvements.

Summary

Three advanced and maturing Project Offices – three key insights into what makes a successful Project Office “tick”. Each Project Office must establish metrics to define the value of a Project Office and its associated “overhead”. Key metrics must be identified, regularly measured, and reported to organizational leadership. The Project Office must show tangible results to justify continued investment and support of this project management practice.

Several critical elements exist for building a project management culture in your organization. Executive support and project portfolio management are key to building a project management culture and delivering projects that support corporate strategy. Consistent project management methodology, project manager role descriptions, appropriate training, proper tools, and a Project Office are important components to operationally deploying an effective project management culture.

Finally, organizations must establish corporate alignment and prioritization processes to ensure projects satisfy organizational objectives and strategies. Regular re-evaluation of project alignment and prioritization continuously measures project performance against organizational expectations. This process establishes an important communication and analysis loop to ensure the organization is working on the “right projects at the right time”.

Three experts – three insights. Learn from those who have gone before you. Their insights are invaluable in building your Strategic Project Office!

Bittler, S. (2002, October). Enterprise program management in the context of total portfolio management. Stamford, CT: Meta Group.

Chaos chronicles. (2003). West Yarmouth, MA: The Standish Group.

Hoffman, T. (2003, July 21) Value of project management offices questioned Computerworld, 37(29) p 7

Pennypacker, J. (2003). Project management: The state of the industry. Havertown, PA: Center for Business Practices.

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 PMI® Global Congress 2003 – North America
Baltimore, Maryland, USA ● 20-23 September 2003

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