Introduction
Ford Financial, a wholly owned subsidiary of Ford Motor Company, generally followed an unstructured approach to identifying, authorizing and executing projects until the late 1990s. As the U.S. organization grew—from one location in 1958 to encompass operations in 35 countries, 25 currencies and 20,000 employees—it became imperative that the company gain the ability to assess resources and react quickly to the rapidly changing global environment. Its global expanse required a solution that provided economies of scale, met the diverse cultural needs of the organization, and increased performance with fewer resources—a typical scenario for the majority of Fortune 500 companies.
Barriers to Success
Ford Financial's ability to act with speed to market changes was hampered as critical information was tracked by functions such as human resources, information technology (IT), marketing and global risk. While a global company, it operated with a decentralized regional and/or department-centric approach. As such, there was not a clear approval process and the full corporate cost, benefits and risk of a project were difficult to ascertain.
Without the ability to coordinate vertically and horizontally across functions and departments it was also difficult to determine the maximum return on the company's investment, forecast the minimum resources necessary and achieve alignment with the overall business plan. Scope, complexity and workload balance for a project and between projects were difficult to establish.
IT was usually responsible for project management and served in the various project team roles. Their approach used a one-size-fits-all solution. Acceptance from the business-side was limited, as IT processes didn't relate to the business needs and vice versa. These disconnects strained resources, caused conflicts and impacted the scope and timing of the deliverables. Efforts to sustain and institutionalize project management best practices were minimal. While senior management recognized the success of projects that were well run, their focus was more on the results obtained than on the formula for success.
Senior management also felt formal project management was useful but expensive—an additive set of tasks that were hard to apply to small efforts and did not easily integrate into other business management activities. Managers and supervisors, who were assigned project management responsibilities in addition to their regular management roles, also shared this belief. This was a fair assumption as most projects still eventually delivered some or all of what they set out to do.
A 1999 project management study by Robbins-Gioia Inc., program management consultants, reveals that Ford Financial's challenges were typical. Of the participants surveyed:
• Ninety percent responded that project managers often underestimate their projects' size and complexity
• Forty-four percent had cost overruns of 10% to 40%
• Fifty percent of respondents indicated lack of buy in from key stakeholders as the major issue preventing formal project management implementation
• Seventy-two percent of survey respondents reported that a perception of cost was a barrier to implementing a project management system.
What steps did the company take to realize the global benefits of project management and overcome these challenges?
Regional Best Practice Leads to Global Implementation
In 1997, European managers recognized the regional advantages of improving project management and introducing a more structured process. Their goal was to create a scalable process that would provide benefits for all of Europe's stakeholders—the project manager, team members and the company.
Europe's creation of standard templates reduced project times as it minimized rework and created consistency. Management realized improvements to master planning and resource allocation through better planning, standard processes and enhanced communications. Consequently, Asia-Pacific and North America piloted Europe's project management methodology in 1998 and also obtained positive results.
As a corporation, Ford Financial valued the best practice and named it Enterprise Project Management (EPM); however, usage was still optional and regional or department-centric. Consequently, the corporation still did not receive the full-value that a robust global approach could provide. It did assist project managers with improving their estimates regarding project size and complexity as well as contain costs. However, critical capabilities such as integrating project and business management processes with accounting practices and a controlled central list of projects were missing. These capabilities were necessary to achieve senior management buy-in and to overcome their perception that project management was additive.
Exhibit 1. Project Portfolio Management
In order to achieve global adoption and realize the full capabilities that project management could offer, the company launched the global Enterprise Project Management Office (EPMO) in March of 2000. The EPMO was developed with a business-driven approach and given a twofold objective to develop and implement both an enterprisewide project management methodology and a project portfolio management methodology. To be successful, it had to clearly answer the question for project managers, senior executives and impacted departments: What's in it for me?
Enterprisewide Project Management
The first goal of the EPMO was to institutionalize business-driven Enterprise Project Management. As such, it needed to accomplish the following objectives:
• Develop, deploy and promote global standards for project management
• Standardize project processes and resources in a way that provided global economies of scale and allowed for regional flexibility
• Build the organization's core capability by coaching and training project managers
• Provide monthly/quarterly status reports for senior management decision-making
• Create simple user-friendly web-enabled support applications to manage projects
• Answer the project manager and project team's question: What's in it for me?
One of the keys to answering the above question was to make the process as painless and cost-effective as possible. “Cheap and cheerful” became the EPMO slogan. Whenever possible, standard desktop tools such as Excel, Word and PowerPoint were used to create templates. Very little IT programming was required to support a simple interface with these programs. These desktop tools made it easy for the project office to modify the templates and reports and be responsive to customer requests for enhancements.
This also allowed the team to focus resources on the areas that required unique solutions such as the online EPM Toolset Application, an internally developed project management software application.
As is standard with project management principles, a hierarchal structure of roles was created (Executive Sponsor, Project Sponsor and Project Manager). The difference at Ford Financial is the business side most often serves in these roles. This increases the commitment of the major stakeholders and facilitates a more holistic approach that encompasses the idea stage through project development and concludes with the full project implementation. This includes all aspects of a project such as training, technology, procedure changes, and communications. The net result is smoother project integration into the business functions and increased results. This is a win-win for everyone.
Project Portfolio Management
The second objective, with which EPMO was charged, was developing a project portfolio management capability. This would establish a global framework of processes for project proposal, approval and funding resource allocation that would satisfy higher-level operational needs such as business planning. To satisfy senior executives, a successful project portfolio management system needed to:
• Integrate project and business management processes in the business planning and financial forecast
• Adapt regionally to local business practices
• Keep the project aligned with department/business unit management activities
• Provide regionally accepted practices to ensure that project changes are properly funded
• Maintain and control a globally accessible central list of projects
• Keep project business cases current with project status and aligned with department calendar year budgets
• Report monthly on the project portfolio to management. A cross-functional team, including various business areas and regions around the globe, with sponsorship from critical stakeholder areas such as Strategic Planning, IT, and Finance, was formed to develop the global framework. A prototype was created based on the regions of the company that were already using Enterprise Project Management and integrating it into their standard procedures. It then became an iterative process of fine-tuning, asking questions such as:
• What questions do management and the project teams want answered?
• What are the new process quality issues?
• How do we determine approval levels of control?
• How can budgeting concerns be resolved?
• How can we facilitate culture change?
Exhibit 2. Project Proposal Process
As mentioned earlier, there was a negative perception of the project management methodology as an “additive,” which was hampering adoption. To neutralize this stance, time was spent examining disconnects in the organization to identify the variety of reporting methods and perceived or real redundancies. The goal was to create a multidimensional perspective that incorporated the needs of project development methods, business management and project management. This resulted in two key benefits. Reporting was streamlined and a link between project budgets and funding was created.
In order to streamline the reporting methods, project management and project development methods were overlaid to synchronize their steps. Similar actions were taken with business management methods such as the cost and profit forecast. EPM reports and processes were adjusted to accommodate the various needs. To link project budgets and funding, EPMO was positioned in the organization as a part of finance.
The final outcome was full acceptance of EPM tools as the corporate standard for reporting. Senior executives were pleased with the improved level of data, consistency of information and forum for decision-making. They now have one-stop shopping for data, which allows them to make more informed decisions regarding project costs, resources and benefits.
To support the integrated approach, the project portfolio management framework was called the “Enterprise Project Life cycle.” The life-cycle nomenclature supported the positioning of the process within the current business structure and organization's culture. It was not a separate “thing.”
Enterprise Project Life Cycle
The Enterprise Project Life Cycle allowed the EPMO to incorporate the project management processes and tools into the regular business planning and budget/forecast processes. Budget development, financial forecasts, and department resource plans rely heavily on the five stages of the Enterprise Project Life Cycle. This blending was critical to institutionalizing project management in the business. It moved it from being thought of as “bureaucratic overhead” to being an integral part of the way Ford Financial does business.
A regional governing structure of Project Portfolio Boards composed of senior management (CFO, COO, and other company officers) from both line and staff organizations were created. These boards provide a clear forum for approval and direction for their respective area (Asia Pacific, Europe, North America and Latin America). It also provides senior managers with important and timely information regarding the projects and their related commitments.
Throughout the various stages, the Project Portfolio Board monitors their project portfolio in relation to the performance of the business. They conduct monthly reviews to:
• Establish IT system priorities
• Examine implications for competing resources and interdependencies
• Prioritize and commit IT systems resources out beyond a rolling 12-month period.
To support senior management, representatives from EPMO, Finance, Information Technology, Operation Support and Strategic Planning prescreen the project status reports to keep the senior management decision-making high-level. This prescreen board acts as a filter for elevating issues and large variances to the Project Portfolio Board as necessary. They approve smaller projects and ensure project interdependencies and resource constraints are identified.
Project Proposal Stage
In this stage, a project idea is structured and assessed, providing an early opportunity to investigate and select the projects with the most potential for success. The project is registered and sponsor agreement is obtained on the initial project proposal. During this phase the project complexity is reviewed, as small efforts may not require formal controls or Project Portfolio Board approval in any of the stages.
Additionally, the project details are documented in an Executive Summary and reviewed with all involved areas to obtain their support in principle. Preliminary costs and benefits are estimated and a standard business case is provided for management review. An Executive Sponsor may decide not to proceed with the project, save it for a later time or request that it be reworked prior to moving forward. Projects that appear feasible and that demonstrate a solid business case or are mandated, for instance by government regulations, are given a “Go” by the individual project steering committee to move forward. Large complex projects may also need to be presented to the regional Project Portfolio Board before going forward.
This stage yields many benefits:
• Prevents individuals from distracting the business from its priorities
• Avoids duplicative efforts as other functions may be conducting similar projects
• Confirms management's interest and support prior to expending valuable resources
• Reduces resources used for personal/private business agendas.
Exhibit 3. Project Approval Process
Exhibit 4. Funding Confirmation
Project Approval Process
Once approval of the project's high-level description has been granted and management feedback has been incorporated, a complete plan is developed including a charter and work plan with tasks, roles, responsibilities and timing. A cross-functional project team that includes all areas impacted by the project conducts an issue analysis of the cost, benefits, timing and resources to resolve conflicts as much as possible. This step also refines and solidifies the business case (project financials).
A full proposal has been developed, there is another gate review with senior management. Again, a decision may be made to not proceed with the project proposal, save it for a later time or revise the plan prior to moving forward. At this point, funding approval is still provisional.
One of the key benefits of this stage results from the Project Portfolio Board's ability to view the total business impact as the project is now fully dimensioned. Projects need both funding and resources to be successful. This phase reveals resource and timing conflicts. For example, Ford Financial is in the process of a major systems changeover. Projects that need system interfaces may need to be delayed until some of the major system upgrades are complete.
Funding Confirmation
This is the final stage in the planning process as projects are fully scheduled into the project portfolio and the necessary budget is committed. The project spending planned for the current year is reviewed during the project approval process to determine the source of funding. Tangible benefits that will be booked in the current year are also reviewed and committed. Any necessary adjustments are made to department forecasts during the next regular update.
Project spending and benefits for the next calendar year(s) are also included in the budget development process. Future year project funding is considered provisional until the budget is approved, as overall budget goals can drive timing adjustments to projects in the approved portfolio. It is important to note that placeholder funds may be established when the budget is developed for projects that have not been fully defined and approved.
This is a critical element of the process as it is where project management becomes integral to managing the business. It is now a component of the financial planning process. It also solves the problem of project schedules that are asynchronous to the budget and business planning cycle. All projects must use a business calendar approach when developing their financial business case.
Execute/Manage
The actual project work is now ready to begin. Enterprise Project Management is used to proactively focus on the project needs. The process methodology assesses change, assists with control of time, cost and scope and provides standard management reports. It provides numerous resources to manage the situations encountered during execution. Provided through a global intranet site are:
Exhibit 5. Execute and Manage
Exhibit 6. Conclude
• A comprehensive Project Management Handbook (English, Spanish, Thai, Japanese, German, French, Chinese and Portuguese)
• A Project Management Training Program with a variety of courses geared toward informational needs of project managers, project teams, department/business unit management, and other key stakeholders
• A globally available web-based application system for project registration, scope/issue/risk management, and status reporting
• An integrated web-enabled Management Reporting System providing summary status information and a knowledge base of selected project documents. These reports are generated automatically from the project manager's status reports and provide a variety of views to management on the major strategic and business-as-usual projects
• Standardized business cases that are used to bridge the gap between project and departmental budgets
• Numerous supporting Project Management Templates are provided to facilitate the capture, tracking and communication of key project information.
The primary benefits of this stage are it provides the means to keep the project moving toward completion and aligns it with the corporate business plan. Ford Financial expanded the traditional project management view to maximize integration into the business management process. The company methodology also includes the following:
• Project change management provides defined guidelines and thresholds for escalating projects to the regional Project Portfolio Board
• Project control standards integrate the quarterly forecast process so that project financials align with the overall organization's plans
• Reports systematically link the project status data and monthly management reports providing an early warning system for flagging issues in a timely manner. This allows project managers to leverage senior managers in the problem resolution.
After the project is launched and the deliverables are handed over to support groups an assessment is completed to identify the “lessons learned” about the project's management and development. The business case is updated to reflect the actual costs and timing of the project. The assessment and updated business case are added to the EPM Knowledge Base for future project use.
A Post-Implementation Review may also be conducted after the launch to evaluate the project qualitative and quantitative benefits. This helps to determine if benefits are meeting project estimates. This is an independent review usually conducted by EPMO, Finance staff or another objective party that is not a vested stakeholder.
This review is especially beneficial for pilot projects, as it allows the project team to examine the results and operation issues so the program can be adjusted before it is rolled-out across the organization. The Post-Implementation Review also provides additional lessons learned that could, again, be used in planning future projects.
Conclusion
Proof of success is the inclusion of the Enterprise Project Life Cycle in the first quarter of 2002 as a key component of the Ford Financial corporate governance strategy including interactions with the parent company, Ford Motor Company. The methodology at Ford Financial continues to be upgraded as the company strives to each prior year's performance. Current plans are to expand the resource planning capabilities, streamline and integrate with other business management processes such as Consumer Driven Six Sigma and to expand the current internal training curriculum.
Importantly, the major barriers to success and the key customer question, “What's in it for me?” have been addressed. As a result, project costs and benefits from the local level to the end effect on the corporate bottom line can easily be assessed. Senior management now has a process and forum that enables them to prioritize and confidently make tough choices. This has enabled the company to contain project spending during a difficult economic period and still strategically plan for the future.
Project teams operate in a healthier environment as steps are clearly outlined for authorizing, funding and obtaining resources for their projects. All stakeholders and impacted parties understand that decisions to advance, cancel or defer projects are to be based on strategic processes and not directed by personal experience or singularly focused agendas.
The corporation is realizing the total value of project management. The ultimate result is Ford Financial has the ability to react faster to market place changes with solid data on the entire project portfolio.
