Introduction
The Liberty Group is a large financial services organization based in Johannesburg, South Africa employing approximately 6,000 people. The life-blood of our business is the marketing of life insurance and investment products. Project management within the organization needs to be effective to maintain competitive advantage in an extremely competitive industry.
This case study relates the experience of establishing a Project Office (PO) at the overall organizational level and subsequent Project Support Offices (PSOs) at the business unit level. The key lessons learned can be applied by other organizations to shorten the learning curve and avoid some of the pitfalls encountered. The case study will cover the establishment of the organizational-level PO and then briefly describe the creation of the business unit level PSOs.
Background
The situation in the organization at the beginning of the year 2000 was that there was not sufficient control of the project portfolio, as evidenced by coordination problems between dependent projects, overruns on schedule and cost, and quality problems experienced after project implementation. Senior management realized that something had to be done to gain control of the project portfolio and to have access to accurate management information. A decision was made to establish a PO to fulfill this critical function. The amount spent every year on new projects and maintenance of existing systems warranted the expense to sort out the problem and gain more efficiency.
Organizational Project Office
In order to establish organizationwide standards, it was decided that an overall PO should first be established to provide the necessary standards, procedures, and support across all business units. This would ensure that each business unit did not create different standards, resulting in problems with consolidation of information at the organizational level.
The establishment of the organizational-level PO included the following major components, each of which is discussed below: objectives, structure, staffing, project register, methodology, project manager assessment, training, coaching, tools, management information system, project reviews, capability maturity assessment and change management.
Objectives
The objectives of the PO were to:
• Raise the profile of project management
• Develop project management skills
• Provide a consistent set of frameworks, methods, and tools for project management and execution
• Assist and review project definition, planning, and progress
• Review and analyze project performance
• Establish and maintain a project repository.
Structure
It was decided that a two-tier structure should be employed to best cater for the needs of the organization. The company uses the Federal Model, whereby each business unit runs as an independent profit center with specific strategies and targets. The organizational-level PO was established under the Chief Information Officer (CIO) with authority to implement and enforce the project management standards across all business units. Each business unit was then encouraged to establish their own PSO to support the business unit and to ensure compliance with the central standards set by the PO. The PO is responsible for supporting the business unit PSOs on an ongoing basis. Although the PSO staff report to the business unit management, they are responsible to the PO regarding adherence to the standards and procedures set by the PO.
Staffing
The PO consisted initially of the following staff:
• Project Office Manager. This is a senior manager with vast experience in project management practice, methods, tools, and techniques. The role requires both a technical and marketing flair, as this role performs the major change agent role in promoting professional project management within the organization.
• Consultants. This role needs to be filled by highly experienced senior project managers, who can act as researchers as well as coaches, mentors, and trainers of project managers. They also need to be well versed in marketing aspects in order to promote the objectives of the PO effectively. The Consultants are also responsible for methods and tools training and support.
• Project Administrators. The project managers need to go through a steep learning curve, while still bringing in their projects on time, cost, and quality. The Project Administrators assist with project administration, planning, progress reporting, document distribution etc. to free the project manager from the administrative burden. The Administrators need to be well versed in the project management methods and tools in order to ensure that these are utilized effectively on the project.
• Project Managers. The organizational structure was defined with the project managers reporting into the specific business unit management and not to the PO. This structure requires the PO to assist the project managers and monitor their compliance to the standards without having direct authority over them. This creates a problem if the business unit management does not fully buy into the PO mission and objectives.
Project Register
The first task was to gain control of the project portfolio. Many projects were running in the organization without management having a common view of what the projects were, their budgets, costs, and progress. An exercise was conducted to establish what projects were currently running, on hold, and planned for the future. This list was then consolidated and captured into a simple project register system to give management an overall view of the current project portfolio.
Management then used this list to decide which projects should be discontinued, changed in priority or new projects started. These decisions were initially based on limited information, as a formal project prioritization and project review mechanism had not yet been established. The establishment of a central project register proved to be extremely useful, as management had a view of the project portfolio in one consolidated form, which facilitated their decision-making. Some projects that did not contribute to the strategic goals of the organization were canceled, resulting in an immediate benefit to the organization.
Methodology
The organization had been through historical cycles of enforcing a rigid systems development methodology to the other extreme of very loose standards of methodology compliance. A decision had to be made as to which methodology to utilize going forward. The in-house developed methodology was lacking in many respects when compared to the Project Management Body of Knowledge (PMBOK®), as it excluded many of the knowledge areas. Consideration was given to developing a methodology from scratch, using the PMBOK® as a basis. Upon investigation this option was found to be too expensive and time-consuming. It was essential that the methodology be available quickly to prevent undue delays in implementation. Many commercially available methodologies were then evaluated, resulting in the choice of Oracle Method. The reason for this decision was that Oracle Method follows the guidelines of the PMBOK® and is totally customizable by the user. This enabled the organization to customize the methodology to suit its own needs in a very short space of time and to have all the required handbooks, templates, and procedures in place at a low cost.
Project Manager Assessment
In order to establish what training would be required for project managers, an assessment was conducted to gauge the skill level of the existing project managers. This gave a benchmark of the skill levels and helped in the planning of the training effort that would be required. The assessment highlighted gaps in the theoretical knowledge of project management principles across all the PMBOK® knowledge areas. This was not surprising, as most of the project managers had come up through the technical ranks and had not had formal project management training.
Training
Research was conducted on available project management training courses to find the most suitable courses to provide the existing project managers with a thorough knowledge of all PMBOK® knowledge areas. The following criteria were set for the training course:
• Must cover all PMBOK® knowledge areas and be compatible with PMBOK®
• Must result in a certificate or diploma upon successful completion
• Must prepare the attendee for the Project Management Professional (PMP®) certification examination.
The training course that satisfied these criteria and was chosen was the Masters Certificate program in project management offered by the University of George Washington. The program consists of a minimum of seven courses, which must be completed within a three-year period. At the time of writing more than 50 of our project managers have completed the program and received their Masters certificates in project management. Many of these project managers will go on to achieve their PMP certification in the near future.
Coaching
In order to bridge the gap between theoretical project management training and the practical application of the knowledge and skills in the workplace, it is essential to set up a program of on-the-job coaching of project managers. The PO conducted workshops of the Methods and Tools to train the project managers on the specific skills required to run a project. When a new project started, then a PO staff member assisted the assigned project manager by meeting with them on a regular basis to assist with any misunderstandings or omissions regarding the methodology. This led the project manager through each step of the methodology using an actual live project as the learning mechanism. This proved to be a very valuable means of knowledge transfer and retention.
Tools
Many organizations fall into the trap of first choosing a tool or suite of tools and then basing their methodology and procedures on the tool. This is a dangerous practice, as the tool then dictates everything else. Tools are useful in providing support to the methodology and procedures and in automating some of the complex tasks. The first tool that we recognized a need for was a planning and scheduling tool for projects. The major criteria for the tool were:
• Must be able to handle multiple projects
• Must utilize a central resource pool for all projects
• Must show resource utilization across all projects
• Must be able to do resource leveling across multiple projects
• Must have a web reporting facility for project information
• Must not cost an exorbitant amount to implement across the whole organization.
The other criteria were common to all project scheduling tools, so they need not be mentioned. The cost considerations and methodology specific limitations excluded many of the top-end tools available. Scitor's Project Scheduler was chosen, since it was able to satisfy all the criteria above.
The subsequent implementation of Project Scheduler was very successful in that it met the requirement for a powerful yet relatively low-cost tool, which could be customized to support our chosen methodology and standards. We successfully integrated the project management templates into the tool, resulting in huge time savings for the project managers through the generation of project management outputs directly from the project plans, for example progress reports, risk logs, change records, etc. This proved to be our first quick-win to demonstrate benefits to management in a short space of time.
Another useful tool that was developed was a help facility on an intranet. A professional website was developed for the PO to promote awareness and provide guidelines and help facilities to aid staff in using the methods and tools. This proved to be extremely successful, as the project managers were able to go to one source to answer all their queries. This also freed up the PO staff from answering the same queries over and over for different people.
Management Information System
The first source of management information provided by the PO was the Project Register, mentioned above. This formed the backbone of the management information system. When building a management information system, I would recommend an incremental process. If you try to build up a complex system including all the possible information, then this will take too long before any benefits are derived from the information by management. If you follow the incremental approach, then many quick-wins can maintain management interest and support for the initiative.
A standard of progress reporting was instituted, whereby every project had to submit a progress report to the PO every two weeks in a defined format. Information from the progress reports and the Project Register was then used to compile a Project Governance Report, which was distributed to management for action.
The information provided was expanded gradually to provide greater benefit to management. The type of information provided is: project name, project code, project manager, sponsor, business unit, baseline target date, forecast target date, budget, actual cost to date, remaining cost, estimate at completion, schedule variance, cost variance, project health rating (assigned by PO).
Each project was provided with an online project folder with predefined directories in which to store all project documents and deliverables. This ensured that project information was available to all stakeholders in a common location, easily accessible and in a standard format. Configuration management principles were applied to project documents, although the necessity for this is still not fully appreciated by many project managers.
The next step was to encourage project managers to utilize the planning tool, Project Schedule, to plan and monitor their projects. This had the added advantage of enabling the generation of web reports based on the live projects plans. Project managers therefore did not need to manually compile project progress reports, as the tool generated them in the required format and made them available on the intranet for all project stakeholders to view online. Progress indicators such as Cost Variance, Schedule Variance, Cost Performance Index, etc. were then calculated and reported directly from the project plans.
Project Reviews
Project reviews were set up by the PO to assess project health, as well as compliance to the standards. Initially, priority was placed on reviewing the projects, which were either strategic, high-cost, or runaway projects (way over budget and/or cost). These reviews established what the major problems were with these projects and what needed to be done to bring them back on track. In some cases, management was not aware of the severity of the problems until the reviews had quantified the risks and issues objectively. These reviews were of great benefit to the organization, as it enabled management to make decisions such as to cancel runaway projects that were no longer fulfilling their original cost/benefit justification.
Review sessions were then set up for all projects that had recently completed. These reviews assessed the processes, deliverables, costs, quality, and usage of methods and tools on the project. This information was then used to improve the processes and gauge the level of compliance to the standards. Also, when new projects were started, a meeting was held with the project manager to ensure that he or she was aware of the required standards and processes to be used in managing the project. The PO also used this opportunity to offer the project manager coaching assistance during the project, if required.
Capability Maturity Assessments
The existence of a standard, comprehensive project management and systems development methodology does not ensure that a mature, effective process will be used to execute projects. What often happens is that people are trained on the methods and tools, but when they run an actual project they do not apply the agreed processes to the project. An objective measurement and assessment process can be used to assess the processes actually being used in project execution.
Many frameworks for software process assessment have been established over the years to attempt to address the process capability assessment and improvement issue. Some of these include: STD by the Scottish Development Agency, Trillium by Bell/BNR/NT, SQPA (HP), ISO 9001 and 12207, HealthCheck by British Telecom, BootStrap by Bootstrap Institute, CMM by Software Engineering Institute and ISO/IEC TR 15504.
“A capability maturity model contains the essential elements of effective processes for one or more disciplines. It also describes an evolutionary improvement path from ad hoc, immature processes to disciplined, mature processes with improved quality and effectiveness” (SEI, 2001, p. 547).
The PO chose the ISO/IEC TR 15504 framework (otherwise known as SPICE) as a means to assess the capability maturity of the processes applied during project execution. The results are then used to identify the weaknesses and initiate process improvement projects to address these weaknesses. The weaknesses could be related to the methodology, in which case the methodology is enhanced to alleviate the problem, or it could be caused by the failure of the responsible person to apply the correct process. In this case the reasons behind the non-compliance need to be addressed.
The PO encourages each business unit to set target capability maturity levels for each process and to regularly request process assessments of projects to ascertain their progress toward achieving the desired capability maturity level. The PO staff are trained SPICE assessors who conduct the assessments and manage the process improvement projects for the business units. External consultants are also used to assist with the process improvement projects.
Change Management
Most of the above deals with the mechanics of setting up a PO. One aspect that was underestimated was the effect of organizational culture on the initiative. One of the major issues that had to be dealt with in this process was the change management issue. Organizations become accustomed to working in a particular way, which they regard as optimal. When the status quo is challenged, much resistance is encountered from management and lower-level staff. Many people will say that “we tried that in the past and it did not work” and such comments. One needs to constantly market the benefits and successes of the PO to counter such negative comments; otherwise the PO initiative is doomed to failure.
To address this issue, the PO engaged in a marketing program using a number of different channels to reach as wide an audience as possible. For example, a Project Management Forum was established to promote professional project management as a discipline within the organization. A Forum Committee was established, comprising volunteers from the systems and business areas. Forum meetings were held every two months, featuring presentations from the PO and prominent external speakers on project management standards, tools, techniques, and practical experiences. This had the effect of raising the profile of project management and fanning the interest of all levels of staff.
Regular articles were also published in the company newsletter, detailing success stories of projects using the new methods. Numerous presentations were also given at the many management forums to show current and planned future initiatives of the PO. Other communication media used were posters, intranet, and workshops.
The change management initiatives were targeted using both a bottom-up and a top-down approach simultaneously, so as to reach all stakeholders in as short a period as possible.
Business Unit Project Support Offices (PSOs)
After the establishment of the organizational PO, business units were encouraged to establish their own PSOs under their direct control. The establishment of these PSOs was done in conjunction with the PO to ensure that the same standards were used throughout the organization. As such, the same components discussed above for the PO were implemented for the PSO. The essential aspects of the PSO are given below.
Structure
The Business unit PSO reports in to the relevant Business unit management. The PSO must be in conjunction with the PO to ensure compliance to the Group project management standards framework. If a BU wishes to set up a PSO, this must be done in consultation with the PO. The use of external consultants to assist with the PSO setup may be required, but this must be done in conjunction with the PO to ensure that the Group methods, standards, policies, and procedures are not compromised. The PSO may be configured according to the specific needs and requirements of the BU, as each BU may have different requirements.
Roles and Responsibilities
The roles and responsibilities of the PSO include the following.
Strategic Level
• Register the strategic intent and orientate all project managers to the bigger picture of what has to be achieved
• Register the projects in the program portfolio and their associated priorities
• Consolidate individual project progress into a program progress view and then into a strategic delivery view.
Program Level
• Scope all projects in the portfolio, ensuring accurate planning in terms of individual project objectives, deliverables, milestones, roles and responsibilities, risks, critical success factors and projects teams
• Ensuring uniform application of Project Management.
Individual Project Level
• Assignment of the most appropriate project managers to the various projects in the portfolio
• Ensuring project delivery on time, within budget and customer satisfaction
• Enforcing the Group standards for project management methods, tools, and techniques in the business unit.
• Assisting Business unit staff to use the methods, tools, and techniques, through consultancy, training, coaching, and support
• Giving feedback to the PO regarding the methods, tools, and techniques to enable the PO to update and enhance methods, tools, and techniques as appropriate. This includes feedback on the processes, tasks, deliverables (templates), project plan templates and handbooks. If new or changed processes or templates are required, the PSO will act in conjunction with the PO in compiling these, since the PO is the custodian for the methods and tools for project management within the Group
• Encouraging a professional project management discipline and attitude within the BU
• Identifying the need for project management training for anyone within the BU
• Assisting the BU staff with all aspects of the project, such as project prioritization, project administration, enterprise resource management, project planning, project management, and project facilitation
• Registration of new projects with the PO, based on an assessment of the approved Business Case supplied by the Business unit.
Macro Plan to Establish a PSO
This is a high-level plan for establishing the PSO. These major steps can be run as subprojects, as some of them run concurrently:
1. Establish physical PSO.
2. Appoint PSO resources.
3. Implement/streamline Project Management Methodology, together with Project Governance Office.
4. Implement tools.
5. Agree and implement management information system for all stakeholder groups.
6. Compile and conduct education and training.
7. Ensure usage of project management framework through coaching.
8. Instill project management culture in the Business Unit.
Summary and Lessons Learned
The establishment of the central PO and the related business unit PSOs has resulted in a measure of success, through:
• Improved project prioritization
• Improved communication of project status to stakeholders
• Proactive identification and corrective action of troubled projects
• Standardization of methods and tools for project management across business units
• Better allocation of scarce resources (based on project priorities)
• More realistic estimations of cost and schedule
• More comprehensive project documentation and management information
• Better knowledge and control of the overall project portfolio and interdependencies
• An increased awareness of the principles and potential benefits of professional project management.
The above positive outcomes show that this was extremely beneficial to the organization, although it has not yet realized its full potential. This is because, although one can establish the physical and technological infrastructure reasonably quickly, it takes time and effort to change the culture of the organization to fully commit to and apply the new processes and procedures. The culture has to be changed over a period of time by actively marketing the success stories and winning over more and more key influencers to the “new way.” The extent of adoption of the new methods has been different in the different business units, as each business unit has its own unique culture and issues.
One major lesson that can be learnt is the benefit of running the PO establishment as a project. This is imperative for success. If it is not run as a project, it will tend to receive low priority and not get off the ground at all. To run it as a project, you need to establish a business case, appoint a project sponsor and project manager, create and agree a project plan, get commitment to project resources, conduct risk analysis, agree a comprehensive communication plan, report on progress, etc. as per normal project management practice. This also has the added advantage of “test running” the project management methodology and tools selected, if these are new.
The establishment of PSOs at the business unit level helps to gain ownership and commitment from each business unit to the over-all project management initiative. If the central PO is not involved in establishing these PSOs or does not maintain close contact with them, then the danger exists of the PSOs adopting their own methods in opposition to the PO and thus diluting the overall organizational initiative.
Based on my experience in establishing the PO and business unit PSOs in our organization, I suggest that each organization should first assess their own unique needs and culture in order to strategies how best to implement a PO. The major obstacle to success is not the methods and tools, but the people who need to commit to using them and changing their familiar ways of working. By concentrating on the people issues, the PO implementation has the potential to be successful and to deliver all the potential benefits promised to the organization.