Enterprise project management
the New York State experience
The purpose of this paper is to explain the theoretical and practical basis for the innovative approach New State (NYS) government developed and implemented to strengthen Enterprise Project Management (EPM).
At the turn of the century, three major events occurred in NYS government's environment that posed significant challenges to its capacity to management projects at the enterprise and state agency levels:
▪ While the Y2K effort was successful in NYS, it required significant investment in outsourced services to accomplish and many of the services were for project management.
▪ The already fragile capability of the state to manage large scale projects was seriously compromised as the large numbers of workers over 45 reached retirement age and took their hard-won PM expertise with them
▪ The Governor's Initiative on E-Government created a whole new set of projects for agencies, which already had limited project expertise.
Though NYS’ experience is unique in many respects, it does reflect a broader trend. Englund et al (2003, p. 12) conclude that “changes in the environment, changes in customer expectations, and changes in technology used in organizational processes have brought many organizations to the point where up to 80 percent of their work is project work rather than repeat process work.” This trend has resulted in the need for organizations to change to more project-based procedures and to adopt EPM. According to Dinsmore (1999, p. 19), EPM is “an organization-wide managerial philosophy based on the principle that company goals are achievable through a web of simultaneous projects, which calls for a systemic approach and includes corporate strategy projects, operational improvement, and organizational transformation, as well as traditional development projects.”
NYS’ leadership was keenly aware of this trend and chose to undertake a large-scale EPM initiative involving its 80 independent agencies to achieve state government's strategic goals. According to William Pelgrin, former Director of NYS’ Office for Technology (OFT):
“It was clear to me from the start that a strong PM capability would increase the success rate of projects. With so many large-scale business and technology projects underway, we had to adopt project management principles in order to effectively maximize the state's resources.” (Jaques 2003, p.29)
NYS’ leadership also recognized that managing the initiative as an organizational change project would be the most effective approach. The overall goal of the change project was to institute new processes and procedures to make EPM the norm for the entire organization. Englund et al (2002, 13) suggest that one of the key reasons people have difficulties with implementing EPM, and in particular the project management office, is that they focus on the functions and not on the change processes that are necessary for successful implementation.
This paper utilizes the framework based on Englund et al's (2003) adaptation of Kotter's (1996) work on the organizational change process. The framework is shown in Exhibit 1 and includes:
▪ the three change phases (creating the conditions for change, making change happen, and making change stick)
▪ the change agent processes for the any change project
▪ the application of these processes to NYS’ EPM project
Exhibit 1: Change Agent Processes and the NYS Enterprise Project Management Initiative
Phase 1. Creating the Conditions for Change
The first phase of the EPM project involved the creation of the conditions for change in a large hierarchical, functionally-oriented organization. NYS leadership recognized that it had to effectively accomplish the three major tasks cited in Englund, et al's work (2003, p. 18-25):
▪ Develop a compelling business case for the urgent need for change
▪ Develop a guiding coalition of powerful forces
▪ Communicate a vision and strategies for how the changed organization will function
The Business Case for Change
In order to create the appropriate conditions for change, people at all levels of the enterprise need to be convinced that that change is necessary and that they would be better off by adopting project management practices. Once the need is accepted, the potential return on investment must be demonstrated.
Need for Change
The Office for Technology (OFT) (http://www.oft.state.ny.us/index.htm) was created in 1997 as a statewide agency to provide a focal point for coordinating Information Technology (IT) policy and purchases and to ensure cost-effective investments.
One of OFT‘s responsibilities was the coordination of the State's Y2K remediation effort, and as such the agency's management had a birds-eye view of the PM capabilities of the 80 State agencies, Boards and Commissions that comprise NYS government. As noted in the introduction, while the Y2K effort was successful in NYS, it required a significant investment in outsourced services to accomplish, and many of the contracts were for project management, not just code remediation. It became obvious that the PM capability of the agencies was not sufficient to take on the challenge of Y2K while continuing to manage agency initiatives.
Also looming on the horizon was the aging of the State workforce, as estimates of the number of workers over the age of 45 climbed over the 50% mark, and would be eligible to retire in record numbers over the next 5-10 years. The few PM experts, with their accumulated knowledge and insight into the discipline of managing projects, had rarely spread their knowledge across project boundaries, let alone organizations. Past project successes were dependent on the individual knowledge and experience of the project manager, and these were the very folks about to exit the State workforce.
At the same time, the Governor's Initiative on E-Government, also coordinated by OFT, challenged state agencies with a whole new set of projects. Once again, state agencies found that they had limited available PM expertise to manage these new initiatives on top of their agency projects, including legislative mandates.
As these realizations were beginning to emerge, the state began receiving some unwanted publicity about a high profile project that had experienced some significant cost and schedule overruns. Clearly, there was need for change.
Potential Return on Investment
NYS leadership was also able to draw on several studies that demonstrated the potential return on investment that could be realized by implementing more effective project management practices. For example, a recent study by the Standish Group cited in PMNetwork (2002, 14) found that 31% of all IT projects are canceled before completion, and that 88% of IT projects run over schedule, over budget or both. In addition, this study found that the average project cost overrun was 189% and the average time overrun was 222%. Further, this study concluded that these problems occurred as a result of companies’ failure to utilize effective project management practices.
NYS believed that implementing project management would reduce cost overruns significantly and avoid cost increases for future projects. For every $10M project, a 10% reduction in cost overruns would yield a savings of $890,000. NYS estimated that there are dozens of projects statewide in this cost category, so the potential savings by avoiding cost overruns would be in the millions of dollars.
In addition to cost-related benefits, professional project management has been demonstrated to provide significant qualitative benefits – including improved project quality, greater customer satisfaction, improved morale of project team members, and improved relationships with customers.
The business case seemed clear.
The “Guiding Coalition”
NYS leadership recognized the importance of garnering support for the EPM initiative at both the enterprise level as well as at the state agency level. Englund et al (2003, p. 13) note that the management of an organizational change project requires the commitment and active participation of four different kinds of players:
▪ Sponsors, who legitimate the change
▪ Change agents, who are responsible for planning and executing the change project
▪ Targets, who must alter the way they work as a result of the change
▪ Advocates, who would like to see a change project idea happen but are not in a position to sponsor it
In the case of the NYS project, the sponsor of the EPM initiative was a powerful player in NYS government, William Pelgrin, director of OFT. The change agent-project manager was Nancy Mulholland, who recently received an award from the Project Leadership Conference for her excellent work on a large-scale organizational change project for a NYS government agency. The main targets were project managers in all of NYS’ state agencies. Finally, the advocates included experienced project managers representing different state agencies, who helped in creating the conditions for change in Phase 1 of the project and in planning and implementing components of the change process in Phases 2 and 3.
In early 2000, Will Pelgrin convened a Project Management Committee comprised of key contributors in Information Technology, Human Resources, and project management. In January of 2001, James Natoli, Director of State Operations for New York, announced the creation of a statewide, enterprise Project Management Office (PMO) (http://www.oft.state.ny.us/pmmp/pmo.htm) within OFT. With the committee formed, NYS leadership committed, and Nancy Mulholland at the helm of the PMO, the guiding coalition now had a structure in place to complete Phase 1 and make the necessary changes happen in Phase 2.
The Vision and Strategy
The third task for creating appropriate change conditions is the creation and effective communication of a vision and strategy for the change project. The guiding coalition's vision for the entire EPM project was the development and implementation of a coordinated approach to project management throughout all agencies in NYS government. The group decided that the strategy to achieve the vision should include:
▪ Active participation of as many state agencies as possible
▪ Formal analysis of the current state of NYS’ capability
▪ Development of integrated solutions to address any gaps
▪ Coordination of planning and implementation of the solutions by the PMO
▪ Embedding of the solutions in the culture of the entire enterprise
A significant challenge was how to effectively communicate the strategy and the vision and eventually the results and benefits of the project to a diverse group of stakeholders, which included project managers and team members and their supervisors in 80 state agencies, as well as agency commissioners and senior executives. A plan was developed to engage and maintain stakeholder buy-in and support for the change process. The framework for the plan was based on Axley's work (1996) and specified the following:
▪ Why people should support the change and how it would affect them
▪ The essential message about the change, its magnitude and expected outcomes
▪ The individual(s) who would be most appropriate to deliver the change message
▪ The individual(s) to whom the message or messages should be delivered
▪ The best means (e.g., e-mail, conference call, face-to-face) to deliver the change message
▪ The most appropriate timing and frequency for communicating with each stakeholder about the change
The communication plan for stakeholders was developed using the PM Committee and later the graduates of the PMO‘s mentoring and training program as well.
Phase 2: Making Change Happen
In order to effectively accomplish the vision and the strategy, NYS needed to have a strong grasp of the enterprise's current PM capabilities. In addition, State leaders were clear that they needed to be able to demonstrate the “payback” for the investment that would be necessary to further develop PM competency in NYS. From the outset, State leadership was concerned with measurement. The key questions were centered around how to measure competency, and also, what actions to take to build and grow competency.
NYS decided to forego any formal measurement of its PM maturity, such as Kerzner's Maturity Model (1996). A preliminary assessment concluded that NYS would be very low on the scale for process maturity. Instead, NYS decided to take a baseline of the measures of project outcomes (on time, on budget, on scope, on quality) while looking at the elements of process maturity and what would be required to be able to eventually measure the enterprise in these terms. From the research conducted, NYS concluded that process maturity is a progression, from basic to advanced, characterized by:
▪ Standardization: Common language, common processes, common methodology.
▪ Measurement and Control: Formalized approach and tools to measure performance and benchmark performance against other organizations.
▪ Continuous Improvement: Formalized process for examining improvement opportunities, incorporating into standards, and publishing throughout the enterprise
Based on this assessment, the guiding coalition identified the following actions in order to make the envisioned change happen and improve the level of PM maturity of State agencies, and ultimately of NYS as an enterprise:
▪ Development of a PMBOK based PM methodology that would be utilized by all agencies.
▪ Development of a comprehensive PM mentoring and training program
▪ Definition of PMO direction and priorities
▪ Development of a statewide PM title series to formally establish PM as a recognized job function
Since the most basic measure of process maturity is standardization, the top priority of the PMO was the development of a standard statewide PM methodology. The purpose of the New York State Project Management Guidebook(http://www.oft.state.ny.us/pmmp/guidebook2/index.htm) was to document this common methodology for managing projects in NYS government organizations and to provide guidance and advice to Project Managers throughout the life of a project.
The methodology is tightly aligned with the recognized ANSI standard. Since the publication of the first release in September 2001, the Guidebook has been distributed to over 80 NYS government agencies, Boards, and Commissions, and has been downloaded from the NYS PMO website by interested project managers in both the public and private sectors. It has been an unqualified success, and is being actively implemented within dozens of agencies.
Project Management Mentoring Program (PMMP)
The NYS leadership chose a formal mentoring and training program as a way to expand project management skills and knowledge across multiple state agencies as rapidly as possible. The program was developed and refined with substantial input from the PM Committee. The curriculum reflects the 2000 edition of AGuide to the Project Management Body of Knowledge (PMBOK®) and is built around the NYS PM Guidebook.
The 6-month program integrates four key components:
▪ Careful matching of interns with a mentor, based on level of expertise, development needs, communication and work styles, and opportunities for cross-agency collaboration
▪ Intensive classroom training in PM skills and knowledge
▪ Opportunities to practice some of the new skills and techniques in a protected setting
▪ Mentor-intern interactions, including observation and coaching
Interns who successfully complete the program receive graduation certificates and are asked to join the ranks of the mentors. The mentors in turn become change agents and assist their agencies in moving up the NYS PM capability scale.
Enterprise PMO Service Definition
Drawing on the results of the PM capability assessment and on input from the guiding coalition, the EPM project leadership decided that the enterprise PMO should be developed as a center of excellence and not as a provider of project management services. Its focus has been to provide resources to assist state agencies and individuals in improving PM practice as they move up the NYS PM capability scale.
In addition to supporting the methodology development and the PMMP, the PMO provides other services that help increase NYS‘s PM capabilities, such as:
▪ Project Health Check, which provides specific project assessment and quality assurance oversight to identify areas for improvement, document best practices and capture lessons learned
▪ Project Management Tools, which provides recommendations to agencies on tool selection based on specific customer requirements, approved PM Tool Standards, and the appropriate match with tool functionality
Civil service PM Job Title Series
In order to make change happen, the organization must signify acceptance of project management on a broad scale and institutionalize the changes as part of its personnel system. NYS is currently considering a proposal that will formally establish “project manager” as a recognized job function and not just a capability for subject matter experts in other disciplines. The proposed civil service title series is directly tied to the PMI certification process. As project managers acquire and demonstrate increasingly complex PM skills and knowledge, they will be able to advance to a higher level in the organization.
Phase 3. Making Change Stick
According to Englund, et al (2002, p. 249), once the project office begins to fully implement changes in the organization to support successful projects, a new problem arises: How to consolidate changes and prevent the enterprise from sliding backwards to business as usual. They also assert that the fundamental nature of the PMO must be transformed from center of excellence to cultural change agent.
“As a center of excellence, the PMO is primarily the facilitator of a set of tools and techniques to run projects, programs, and project portfolios and the sponsor of a set of competencies for project managers to effectively use those techniques. As a cultural change agent, the PMO becomes the sponsor of project management as a core business process. This requires increasing the breadth and depth of project management so that project practices reach all members of the organization. This helps embed project management in the culture of the organization.” (Englund 2002, p. 249)
In the same vein, Dinsmore (1998, p.26) suggests that a broad view of EPM takes into account issues of importance to the executive, such as the need for prioritizing projects, battling for resources, having the information necessary to abort projects, and ensuring that all projects are continually in harmony with ongoing business objectives.
The NYS PMO has undertaken several innovative initiatives to increase the breadth and depth of project management so that it becomes a core business process and supports this broad view of EPM.
Project Management “Community of Practice”
The “Community of Practice” provides the opportunity for all NYS government employees practicing project management to share successes, improvement opportunities, and lessons learned. Practitioners meet monthly to hear presentations and discuss topics of specific interest to project managers, allowing a broad audience to benefit from the experiences of others and learn the value of project management.
State Agency PMOs
Over time, all of the members of the PM Committee and participants in the training programs began to establish PMOs within their own agencies, thus becoming change agents as well and expanding the breadth and depth of project management. The impetus behind creating state agency PMOs was not only to improve the performance of individual projects, but also to ensure that the project selection process supports the agencies’ strategic objectives. A Special Interest Group for state government employees interested in establishing state agency PMOs has been formed as part of the Community of Practice to address this key issue.
Services for Executive Management
In recognition of the importance of maintaining top-level support for change, the enterprise PMO has developed a resource for executive managers, documented in the NYS Management's Guide to Project Success( http://www.oft.state.ny.us/pmmp/managementguide/index.htm), to assist in understanding project management and their own role in making projects successful. A half-day companion course was also created for this target audience.
Other Types of Training
The enterprise PMO worked with the Governor's Office of Employee Relations to develop a two-day training course for an expanded target audience. The course provides an introduction to the concepts of project management, but from the perspective of team members, fostering an understanding of the project team concept and how team members contribute to the development of PM deliverables and successful outcomes.
A one-day course focused on the layout and contents of the NYS Project Management Guidebook was also developed by the enterprise PMO. It includes lecture and group discussion activities and is intended to stimulate interest in the Guidebook and enable project managers and other organizational stakeholders to begin to utilize the NYS PM Methodology in their own agencies.
Links to the broader PM community
In order to increase the depth and breadth of project management throughout the organization, the enterprise PMO has also actively participated in the exchange of ideas and best practices with the broader community of project managers, by presenting regularly at the local PMI chapter meetings.
Conclusion: Results of the EPM Initiative
For the first time, NYS is recognizing project management as a distinct profession and skill set, and is advancing a formal, standard, repeatable project management techniques
With the publication of the NYS Project Management Guidebook, the PMO has provided a way for the state to approach each project with the same discipline and tools. Consistency of approach can save each project team from reinventing their management strategy from one project to the next, while allowing the organization to effectively compare and evaluate projects against a standard context and set of criteria. The methodology ensures that roles and expectations are clearly defined for all stakeholders.
The Statewide PMO has reached out to all other NYS agencies, not only through the Guidebook, but also through the PMMP and the Community of Practice group. As state government staff is trained, a cultural change is taking place that will enable all state agencies to work more effectively and efficiently with each other and the citizens of the state. There is no learning curve when several agencies collaborate together on a project, and clear lines of accountability and authority are established enabling the smooth implementation of multi-agency projects.
The NYS PMO, even in its short span of existence, has already provided tangible benefits to a wide cross-section of New York State agencies.
Improved Quality of Products and Services – A Benefit to Citizens
The greatest benefit to be gained by the incorporation of PM skills and practices into NYS government is the rise in quality of the products and services we provide to our citizens. By improving the performance of a project, the project is more likely to be completed on time, within budget and within scope. Increased customer satisfaction, clearer alignment of the project to strategic business goals, and fewer product/service defects are all hallmarks of quality improvements that result from a formal PM methodology. .
New Network of Project Management Professionals – A Benefit to State Government
The Community of Practice is building a network for both the present and future sharing of successful project techniques, problems for solution, advice, consultation, and ideas. Over one hundred individuals from twenty-five state agencies are already participating. The PMO continues to be instrumental in guiding their development.
Over 2 years have passed since NYS looked at measuring and improving its PM capability, and concluded it was not mature enough to measure. Where would NYS government be positioned on the scale now that the basics are in place and concrete results have been achieved? We believe that NYS’ PM capability will be at a level where it can be measured on a standardized scale, such as the PMI‘s Organizational Project Management Model (OPM3), which will be released in December 2003.
Please address any questions or comments on this paper to Janey Trowbridge Jtrowbridge@canalbc.com.
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Proceedings of PMI® Global Congress 2003 – North America
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