Case study: is every business request a project?

Understanding project requests and project evaluation

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Understanding Project Requests and Project Evaluation

MUSTAFA DÜLGERLER

National Bank of Abu Dhabi

In today's rapidly changing market environment, customer needs do not remain the same. This makes it difficult for companies to decide what project is more beneficial than other projects, and on how to set the priority. This paper looks at the successful implementation of the demand process at the National Bank of Abu Dhabi, which is used in evaluating business requests.

Keywords: demand management, project evaluation

INTRODUCTION

The business landscape is going through a continuous change as a result of a volatile economic environment, advances in technology, and the need for connectivity everywhere. The impact on organizations is significant as it requires changes in organizational agility, culture, infrastructure, technology, and offerings. The current pace of commerce makes it difficult for organizations to adopt this rapid change.

Many companies face the challenge of having to deal with high volumes of projects, either in progress or on hold, making it difficult to manage priorities. It is imperative to tackle each problem at the root and to sort and define priorities right from the project request stage. Many researchers and academics are working on this area to find different methods for evaluating projects. However, there is no single recipe.

Once a proposal has been received, there are numerous factors that need to be considered before an organization decides to take this project up or shelve it (TutorialsPoint, 2016). In order to choose the most viable option, there are a number of questions to be answered: How is the project is aligned with our enterprise-wide strategy and with the goals and objectives of the organization? How profitable is the project? Do we have the required capabilities, and so on.? The answers to these questions will identify whether a project is viable or not. Hence, project evaluation frameworks come into use.

The project evaluation becomes an integral part of project management where companies avoid setting unrealistic goals and spending money on unachievable projects.

BANKING IN THE UNITED ARAB EMIRATES

The United Arab Emirates (UAE) represents the second biggest economy in the Middle East after Saudi Arabia, as per the annual report in 2013 issued by the Ministry of Economy of United Arab Emirates. This highlights that the UAE banking industry is, at the moment, the largest in the Arab world and it hosts 21 of the world's leading banks. The UAE business environment is dynamic, diverse, and multicultural (UAE Ministry of Economy, 2013) with a total of 202 different nationalities living and working alongside each other. In most industries, projects are the driving forces for many companies, “Projects can be defined as society's efforts for change and today change is everywhere around us” (Dinsmore & Cabanis-Brewin, 2006).

Hence, the only way companies can survive and grow is if they manage this change efficiently and successfully. Through projects, strategies are implemented and products and services are introduced to the customer. In the current challenging and competitive environment, in order to adopt market changes and meet customer demands, many companies initiate projects in order to innovate or bring new products or services in the market.

NATIONAL BANK OF ABU DHABI

National Bank of Abu Dhabi (NBAD) was founded in 1968 and is the largest lender bank in the Emirate of Abu Dhabi in the United Arab Emirates. NBAD's line of businesses include a whole range of retail banking, corporate, wholesale and investment banking, wealth management, and private banking; as well as Islamic banking, brokerage, property management, and leasing in cross-geographic locations such as UAE, Oman, Kuwait, Egypt, Bahrain, India, The United Kingdom, Switzerland, The United States, France, Hong Kong, Malaysia, and China. Considering the size of projects, it is crucial for us to implement a framework to evaluate the project requests and measure the viability of the projects.

NBAD implemented a Demand Process in 2014 and it went through a number of revisions, where the project management office (PMO) has tailored the process according to the changing banking environment. We have been conducting process evaluation assessments every year to evaluate the efficiency of the demand process. No major change has been recommended in the past two years. Therefore, we consider this process stable.

PROJECT EVALUATION

Project evaluation is a continuous effort which takes place in the entire project management life cycle, including pre- and post-project phases. Table 1 summarizes the need for the project evaluation and the list of important criteria to look at according to Nhung and Shtembari's study (2009).

Table 1: Project evaluation stages.

Pre-project Project Post-project
strategic fit, marketing criteria, corporate social responsibilities, information quality, facilitating factors, profitability, production costs, return on investment performance, validation of plans, any change in the objectives, goals, existence of the demand for the project, need for termination outcomes, achieved goals, meeting objectives

In this case study, we will be focusing on the pre-project evaluation.

DEMAND PROCESS

Demand management plays a key role in service management. It aligns supply with demand and tries to forecast the “sale” of products as closely as possible. In a nutshell, demand management refers to the management of customer needs and delivering value added products/services in return. This concept is adopted by many different areas, such as ITIL demand management which refers to the management of IT services; while demand management in supply chain theory refers to balancing customer requirements with the capabilities of the supply chain.

Demand management in the project world is not a new term. There are various project demand management (PDM) frameworks available. These frameworks are quite helpful in streamlining a company's strategic initiatives; delivering solutions for better prioritizing; and planning, managing, and executing a portfolio of projects. Some of the main features of these systems are:

  • Project Request Management: Tracking project requests from initiation through final approval
  • Project Reporting and Analytics: Generating robust status reports, including comparative analysis against previous projects
  • Project Integrity and Compliance Monitoring: Ensuring that the concepts and designs of your projects are sound and adhere to requirements
  • Resource Planning: Analyzing demands and allocating resources across multiple projects
  • Project Management: Planning, scheduling, and controlling large-scale programs and individual projects from a single location
  • Project Portfolio Management: Cataloging project demands and gaining the visibility necessary to promote and simultaneously manage the right strategic mix of projects
  • Financial Management: Integrating with financial and human capital management applications to complete projects on time and within budget

NBAD DEMAND MANAGEMENT

A demand is defined by NBAD as a high-level request (vision) by business with a set of proposed benefits for which the bank needs to invest time, money, and resources in order to achieve and hence, requires executive management approval.

NBAD Enterprise Projects and Architecture Department has developed its on-demand management framework based on supply management and ITIL demand management frameworks in order to govern these demands and highlight the necessary inputs, outputs, and activities (Exhibit 1).

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Exhibit 1: High-level demand process.

The demand process is placed before the project management framework to evaluate the projects and ensure the demand is reviewed from strategic and tactical perspectives before it reaches the project management area.

The projects are classified in two stages in the NBAD pipeline: projects which are under the demand management, and inflight projects which are actually managed by the project management framework.

Demand management has two phases:

  • Concept: The business idea (demand/request) is evaluated conceptually and strategically

  • Study: The demand is further detailed according to the current/future (planned) capabilities of the organization

In the concept phase, there are two steps:

1. Demand Buildup

Demand buildup is about documenting and formulating the needs of the project.

1.1 Concept Statement (CS)

The line of business prepares the concept statement where they describe their needs in business terms and expectations. The need is justified in strategic, customer, competitive capability, and financial perspectives.

For example, when issuing a Real Madrid credit card, it is justified as: Strategic: Sponsoring and cooperating with Real Madrid and increasing brand awareness of the bank with the alliance of another strong international brand Customer: Customers will be offered unique offers as such: additional discounts in match tickets at the official Real Madrid stores anywhere in the world, and in Real Madrid coffee shops, Competitive Capability: Going to market with a unique offering in the UAE Financial: issuing X number of cards, return is Y

1.2 Evaluate CS

CS is submitted to the Enterprise Projects and Architecture Department (EP&A) by the business. EP&A, along with the concerned stakeholders, evaluates the submitted CS by using benefit measurement methods or Constrained Optimization Methods by using predefined criteria in addition to peer review methodology (Exhibit 2).

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Exhibit 2: Basic project evaluation process.

Ian Needs (2014a) proposes a simple classification of projects from two dimensions: how much effort is required to deliver the project and what is the impact created (Exhibit 3). According to Needs, business can change its focus according to classification and emerging needs. NBAD's predefined criteria is aligned with this classification.

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Exhibit 3: Project evaluation grid.

  • Fill activities that have low reward, but also demand little effort: These are worth doing only if you have project execution people on the bench and need something to keep them occupied.
  • Projects that require lots of effort, but produce little reward: The best thing you can do is identify these early and eliminate them from the portfolio. Unfortunately, some of these can fall into the “pet projects” category which can lead to a reluctance to remove them from the portfolio.
  • Major projects that require much effort, but produce large rewards: Examples of this type of project are a product launch or implementing a major software application. You need to manage these projects carefully to make sure the business results justify the time and financial expense.
  • The last category is our favorite-quick win projects that require relatively low effort, but still reap big rewards: An example of this would be launching an existing product into a parallel marketplace. Quick win projects make everyone look good, so identify them quickly and launch them aggressively.

Upon the evaluation, the requests are classified in one of the following three statuses (Exhibit 4):

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Exhibit 4: Three possible statuses following project evaluation.

a.   Project: Request can be managed as a project, Demand Management Committee (DMC) will assign the priority to conduct the detailed analysis of the request

b.   Business as Usual (BAU)/Managed Work: Line-of-Business (LOB) will be notified that this initiative was not evaluated as a project, as it can be managed by business as usual as per the pre-determined criteria

c.   Invalid Request: Initiator will be advised that the CS submitted didn't meet the minimum requirement to be treated as project/BAU or managed work

If the business request is decided to be managed as project, then the DMC begins plans to work on its prioritization.

2. Portfolio Selection:

The project request is sent to the PMO for prioritization.

2.1 Prioritization and Selection

The project is analyzed under the projection of the concept statement provided by business. The PMO identifies the relevant program where the project is to be added. Later, the project is assigned with a priority in consideration of the current projects within the program.

3. High-Level Design

3.1 Project Manager and Technical Lead Assignment

After the program selection, the PMO assigns the project manager with the right competency that suits the project. The project manager will lead the project throughout the project life cycle and will ensure the successful delivery of project goals. The project manager coordinates with the head of IT applications to assign a technical lead who will be the focal point from IT.

3.2 Schedule Pipeline Activities

After the assignment of the project manager and completion of resource mobilization, the project manager will lead in planning the demand process activities to continue to evaluate the project and conclude if the initiative will continue with the project execution or will be cancelled.

3.3 High-Level Design Buildup

The project manager requests the enterprise architecture office (EAO) to analyze the project request and give their recommendation to continue with the project.

The EAO assigns an architect to the project to analyze the project and produce architectural design in coordination with LOB, IT, and other relevant departments. The architect assesses the project from the following perspectives and provides the best architectural design to enable the bank achieve the goals of selected project. The main areas analyzed in the high-level design (HLD) document are:

  • Bank/LOB/EAO strategy alignment
  • Business Architecture
  • Information Architecture
  • Technical Architecture
  • Impact on other initiatives/projects
  • Regulatory Impact

Upon the completion of the HLD, it is reviewed and signed off on by the project sponsor, LOB, and IT. There are three exit gates from this process which are:

  • Approved: Project manager coordinates with the business analysis team to capture business requirements
  • Rework: HLD is updated with new/missing areas
  • Rejected: Project manager conducts the closure process to terminate the demand management process for demand

4. Requirement Build-Up

4.1 Business Requirement Document (BRD) Build-Up

The project manager provides the HLD to Business Analysis Team (BAT) to start requirements-gathering sessions to develop the BRD.

Similar to the HLD approval process, the detailed BRD is reviewed and approved by the stakeholders in order to decide to continue or stop the demand process for the initiative.

4.2 Request for Proposal (RFP) Process

If the solution is sourced from a vendor, the project manager works closely with procurement to initiate the procurement process. If there is no vendor involvement in the project, the project manager initiates business case development activities.

4.3 GAP Analysis with Recommended Vendor

Once the vendor is selected, the team conducts a gap analysis between the BRD and the vendor(s)’ proposal(s) in order to identify the gap and plan for transformation.

5. Business Case Build-Up

5.1 Develop Business Case (BC)

The BC is a master plan of the project which includes:

  • Concept statement

  • HLD
  • BRD
  • RFI/RFP
  • High-level project plans (cost/schedule)
  • Financial memo
  • Business case draft

5.2 Evaluate and Authorize

The BC package will be evaluated by LOB, EP&A, the PMO, and OTP representatives to approve the project.

There are three exits from this stage:

  • Approve: If the project is approved and it will be registered in the project management pipeline queue and continue with project management activities
  • Rework: LOB will consider the reasons of rejection and, accordingly, update the project scope; once revised, the demand can be re-submitted for re-evaluation through the demand management process
  • Reject: The demand is rejected; the rejection report is filed and archived

If a project reaches to step 5.2 and becomes authorized, the project manager initiates the project management cycle and starts working on the project charter.

OUR RESEARCH

We conducted an internal audit to measure the success of DM. In the scope of this analysis, 46 projects were analyzed, more than 200 project documents were benchmarked the ones created before DM and more than 30 project managers, program directors, and project coordinators were interviewed to understand their experience of DM (Exhibit 5).

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Exhibit 5: Our research.

As per our findings, our project success rate has been increased by 31% after the introduction of the demand process. The total project success for 2016 is estimated as 80%.

MAIN BENEFITS OF THE DEMAND MANAGEMENT

NBAD recognized the below benefits of the demand management since its introduction.

  • Better alignment between the projects and organization's strategy
  • Drastic reduction in terminated/write-off projects before actual spending
  • More structured prioritization on timeline
  • Provides method for financial prioritization and early return on investment realization
  • Better managing project dependencies
  • Early involvement of stakeholders, executive management to make no/no-go decision
  • Elevating the efficiency of procurement process
  • Reduces the project implementation duration
  • 95% greater accuracy in timelines, budget and scope
  • Estimating the milestone delivery dates more accurately
  • Increase reusability of organization's existing Business and Technological capabilities
  • Creating more focused skills and reducing planning cost

WAY TO MOVE FORWARD

The demand process is robust and efficient; however, it can still benefit from portfolio management theories by creating more strategy oriented consolidated project view. For example, defining alternative agile approaches for the Innovation and Future Vision type of projects can exploit the business value by delivering the projects in shorter timelines (Needs, 2014b).

Another main concern raised during the interviews is the time spent in the demand management. As a next step, a benefit realization analysis will be conducted to measure the extra time spent and its contribution to the project success.

We have also identified that having dedicated enterprise architect, business analyst, and project manager per program may increase the chances of being successful.

The procurement process is another lengthy process impacting the duration of the demand management. Populating a list of preferred vendors will benefit in reducing the time spent in the demand management.

NBAD truly believes that the demand process can benefit organizations in aligning their projects with the organization strategy, increasing project success rate in the expense of additional time spent in planning.

ABOUT THE AUTHOR

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Mustafa Dülgerler has managed IT projects across industries ranging from intelligent transportation and healthcare to manufacturing and banking. Mr. Dülgerler specializes in leading mid-sized teams of highly-skilled engineers to solve some of the most pressing challenges in enterprise IT. As an Enterprise Architect at National Bank of Abu Dhabi, he is responsible for defining the technology and business platform to execute strategy. He is also a widely recognized project management trainer in the Middle East.

Mr. Dülgerler has been invited to various international events as a speaker including PMI® Global Congress 2015—EMEA, the IRM UK Enterprise Architecture Congress 2015, the Middle East Forum 2015, and the Big 5 Dubai Congress.

CONNECT WITH ME!

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REFERENCES

Dinsmore, P. C. & Cabanis-Brewin, J. (Eds.) (2006). The AMA handbook of project management. (2nd ed.). (pp. 269–279). New York, NY: AMACOM American Management Association.

Needs, I. (2014a). Quick guide to selecting the right projects using project portfolio management. Retrieved from http://www.keyedin.com/keyedinprojects/article/quick-guide-to-selecting-the-right-projects-using-project-portfolio-management/.

Needs, I. (2014b). 4 step guide to simplifying your portfolio definition process. Retrieved from http://www.keyedin.com/keyedinprojects/article/4-step-guide-to-simplifing-your-portfolio-definition-process/.

Nhung, N., & Shtembari, E. (2009). Key criteria in project evaluation: Umeå, Sweden: Umeå University Press.

TutorialsPoint. (2016). Project selection methods. Retrieved from http://www.tutorialspoint.com/management_concepts/project_selection_method.htm

UAE Ministry of Economy. (2013). Annual economic report. Abu Dhabi, UAE: UAE Ministry of Economy.

APPENDIX A

ACRONYMS

BAT Business Analysis Team
BAU Business As Usual
BC Business Case
BRD Business Requirement Document
CS Concept Statement
DMC Demand Management Committee
EAO Enterprise Architecture Office
EP&A Enterprise Projects & Architecture
HLD High Level Design
NBAD National Bank of Abu Dhabi
PDM Project Demand Management
PM Project Manager
RFI Request for Information
RFP Request for Proposal
UAE United Arab Emirates
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.

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© 2016 Mustafa Dülgerler
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain

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