The project management value question
in search of value at the expense of delivering it
Vice President, Project Corps, LLC
It seems at times that the future of project management is in question as more and more organizations struggle to quantify the value of their investment in project management. The Project Management Institute (PMI®) has recently joined the quest with a $2.5 million research project focused on determining the return on investment of project management. As professionals concerned with providing value and facing the question within our own work lives, project management practitioners and consultants would be wise to differentiate between the discipline, the profession, and the units that we have helped build within organizations to support and promote project management excellence. This paper explores the definition and development of the discipline of project management beyond strategic project selection and tactical project delivery to the planning, delivery and analysis of maximum organizational strategic value. The Integral Project Management Value I™ is presented as a model for identifying and pursuing the critical path to greatest value at both the tactical and strategic levels while serving both the internally-driven and externally-driven needs of the organization.
“Virtually every company will be going out and empowering their workers with a certain set of tools, and the big difference in how much value is received from that will be how much the company steps back and really thinks through their business processes…thinking through how their business can change, how their project management, their customer feedback, their planning cycles can be quite different than they ever were before.” Bill Gates, Founder of Microsoft Company (thinkexist.com)
It seems at times that the future of project management is in question as more and more organizations struggle to quantify the value of their investment in project management. PMI has recently joined the quest with a $2.5 million research project focused on determining the return on investment of project management. As professionals concerned with providing value and facing the question within our own work lives project management practitioners and consultants would be wise to differentiate between the discipline, the profession, and the units that we have helped build within organizations to support and promote project management excellence. It is the value of the profession and these organizations, not the discipline, which is in question today. Do those of us with a vision that the discipline of project management has value beyond strategic project selection and tactical delivery have the ability to evolve it? Much like the questions faced by the bookkeepers of yesterday, can we become the accountants, financial analysts, investment managers and strategic leaders of tomorrow? If there is life beyond the institutionalization of the discipline of project management what is it and how can it be realized? These are fundamental questions that we should ask of ourselves.
To find the answers we may need to turn away from the traditional measures of project management value. Traditional models of success, such as CMMI® or Capability Maturity Model Integration, a process improvement approach developed and owned by Carnegie Mellon University, guide organizations along a process improvement path or maturity staircase that delivers increasing value over time.
Exhibit 1 – Interpretation of the CMMI® Project Management Improvement Path
The above illustration (Exhibit 1) is an interpretation of the CMMI® process improvement path as applied to project management. At Level 5, Optimization, an organization has reached a state of continuous improvement or institutionalization of project management that is providing greatest value. The challenge in defining and pursuing value based upon maturity or process improvement models is that the ultimate value of project management is in its integration with other processes and an organizations ability to embrace a project lifecycle that extends through the realization of the benefits that were the basis for initially moving forward with the project. This requires viewing project management as both an essential discipline and a business art, as both tactical and strategic, delivering both internal and external value. The flip side of this viewpoint is that project management professionals must develop expertise beyond basic project portfolio management and prepare themselves for challenges much more complex: capturing and articulating this vision of greater value from project management and helping organizations to see and embrace the path to realizing it.
The Integral Project Management Value Framework™
It begins with developing a framework, a model that supports this enhanced value viewpoint. First and foremost it is important to be able to reflect on current models whenever possible to support the communication and buy in process. The following exhibits pull our interpretation of the CMMI® project management improvement path (refer to Exhibit 1) into a view of an organization as whole system.
Exhibit 2 – A Project Management Value Framework
The two frameworks illustrated above (Exhibit 2) represent an integral system view of an organization. The primary outline of each framework encompasses four quadrants that represent tactical internally-driven, tactical externally-driven, strategic internally-driven and strategic externally-driven elements of organizational work. In 2a we see the five levels of the CMMI® relative project management maturity model (depicted in Exhibit 1) identified by the focus of work at each level. In 2b we see the quadrants reflect the nature of the values, techniques, and technology that support the corresponding elements of an organization. For example, to support an organization with tactical and internally driven work, methodology and processes are required. To move from that internal focus to a larger audience, tools for standardization, communication, and integration are required.
Take it one level deeper and we have a framework for redefining project management based upon real and perceived value.
Exhibit 3 – The Integral Project Management Value Framework™
The Integral Project Management Framework™ illustrated above further delineates each of the four larger quadrants of foundational work required to deliver value to an organization by representing the various elements of an organization that seek value from that work, i.e., tactical internally-driven, tactical externally-driven, strategic internally-driven, and strategic externally-driven. With this framework we have a basis for defining, illustrating and delivering the ultimate value of project management.
The last aspect of the framework is the five key business disciplines that contribute to achieving the ultimate value from project management:
- Strategic Management - The strategic decisions that identify key initiatives, key performance indicators and provides a basis for the definition and prioritization of work, e.g., projects.
- Financial Management - The short and long term decisions that enhance corporate value by ensuring that return on capital exceeds cost of capital, without taking excessive financial risks. Provides primary criteria for project selection and funding.
- Performance Management - The measurement of the organizations achievement of vision, mission, and goals. Establishes accountability for performance from the enterprise, to the project, to the individual level.
- Project Portfolio Management – The methodology, processes, and tools that support standardization, measurement, reporting, and process improvement of project management across an organization. Enables the enterprise wide management of the lifecycle of projects from concept to completion.
- Resource Management - The efficient and effective deployment of an organization’s resources, when and where they are needed.
Defining, illustrating, and achieving the ultimate value from project management requires serving all of the interests of an organization and aligning and/or integrating the activities of these five disciplines. Pulling it all together, the framework consists of three basic elements:
- Four arenas of organizational interest or value.
- Tactical and internally-driven.
- Tactical and externally-driven.
- Strategic and internally-driven.
- Strategic and externally-driven.
- Four categories of work that support the interests of the four organizational arenas noted above.
- Methodology and processes.
- Tools, i.e., manual and technical.
- Integrated knowledge base and metrics.
- Five key disciplines that must be engaged to support the interests of the four arenas noted under element 1, above and, define, design, deliver, and evolve the specific products of the four categories of work noted under element 2, above.
- Strategic management.
- Financial management.
- Performance management.
- Project Portfolio management.
- Resource management.
The challenge is taking this somewhat complex view of project management value and employing it to support us, as project management professionals, to answer questions of value as well as pursue and deliver ultimate value from our work. For most organizations this work begins in the Project Management Organization (PMO) or the unit or body of centralized resources established to pursue project management excellence. Highly successful sponsors and leaders of these organizations are already recognizing the ultimate value of project management. In these organizations we are seeing project management units acting as key strategic analysts and advisors. These organizations integrate their missions, goals, objectives and day to day work with other departments, those responsible for strategic, financial, performance, and human resource management. In some cases we are seeing the PMO evolve into, or being absorbed by, strategic management units.
Why the Project Management Value Question
The fact remains, however, that many organizational leaders are questioning the value of their investment in project management as they seek greater efficiencies from shared service models. Project management offices that have not had the benefit of visionary, skilled, and savvy sponsorship and/or leadership often find their operations relegated to a static state as ‘centers of excellence’ for the practice of project management with no strategic role. These organizations face certain end of life as project management is institutionalized across their organizations. These project management offices tend to be those that attacked project management from a linear singular process improvement path focusing first on, and then becoming seemingly bogged down in, tactical internally-driven and externally-driven work, In many cases, these organizations end up alienating project managers and their broader customer base by getting caught up in the ongoing refinement of process and tools rather than the evolution of project management beyond the tactical internal and external worlds.
Many organizational leaders are questioning the value of their investment in project management from yet another angle, the professional development of project managers. This is often in direct relationship to funding and/or identifying Project Management Professional (PMP®) certification as the primary indicator of project management skill. These organizations are facing the challenge of redefining project management skill beyond knowledge of the discipline of project management to knowledge of their industry and like program or project experience. The proliferation of certified project managers without any correlation to general business training and industry, program and project experience has raised even more suspicion with regard to the value of project management.
The pursuit of best practice has contributed to questions regarding the value of project management as well as individuals and project management organizations pursue best practice at the expense of defining and delivering practical solutions and best value for their organizations. This often means too much time and energy is spent making others wrong rather than exploring the definition of value unique to the particular situation or organization.
Few individuals or organizations that find themselves caught in these kinds of traps will be able to recover. For others the recovery path will require complete transformation. Whether relegated to a solely tactical role and seeking a means to shift this state or seeking the best path to ultimate tactical and strategic value The Integral Project Management Value Framework™ provides a means for launching the dialogue required and mapping the path ahead.
Answering the Project Management Value Question
How do we, as project management professionals, take our expertise to the next level? What is the case to be made, the dialogue to initiate, the picture to paint, of the road ahead? It begins with reaching out beyond our own, often insular, worlds and departments. The five key disciplines incorporated in The Integral Project Management Value Framework™ is a starting point. We must actively partner and explore synergies with other disciplines and specific departments within our organizations. Finance, human resource, performance management, and strategic planning departments are the natural partners of project management in the integral value future. Our quest to provide greater value begins with forming partnerships and exploring synergies with management and staff of these departments. Consider the following possibilities:
- Strategic Planning Organization
This unit pursues value in the measurement of performance against the strategic plan.
- Finance Organization
This unit pursues value in the measurement of performance against the financial plan
- Performance Management Organization
This unit pursues value in the measurement of performance against specific objectives at the organizational to individual level.
- Human Resource Organization
This unit pursues value in the measurement of performance against goals for the efficient deployment of staff.
Based upon these simple statements regarding the pursuit of value within each of these four organizations there are many avenues for initiating a dialogue and building partnerships. A recent client, a highly valued and strategically positioned enterprise project management organization of a national company, was pursuing an initiative to develop a closed loop benefit realization process for their enterprise project portfolio. This required establishing project value based upon measurable benefits and tracking the delivery of benefits far beyond the completion of the project. For the first time in its history the organization had to tackle full integration with strategic, finance, and performance management processes and systems. The result was an increase in both the measurable and perceived value of the department at the strategic level and the further enhancement of value provided at the tactical level as project managers, business analysts and financial analysts partnered to more clearly and accurately define, analyze, and measure the value of projects though to their operational results. In short, the enterprise project management organization guided the organization to a higher level of accountability for results.
How do you and your colleagues begin pursuing and delivering increased value at your organization? The following is a view of The Integral Project Management Value Framework™ applied as a start up model (Exhibit 4).
Exhibit 4 – The Integral Project Management Value Framework™ Start-up Model
Exhibit 4, above, describes the general categories of work products that might be considered by the various aspects of an organization in identifying highest value start-up or improvement work. To use The Integral Project Management Value Framework™ model effectively whether as a start-up, assessment, or road mapping tool requires exploring project management value as defined by the four elements of your organization, i.e., tactical internally-focused, tactical externally-focused, strategic internally-focused, and strategic externally-focused. This can be accomplished formally with a survey or questionnaire or informally with personal and group interviews. Begin by identifying a range of management and staff that represent the four elements of your organization and work with them to identify what they need and view as value added in the way of the four categories of work identified by the four quadrants noted above in Exhibit 4. By gathering a list of products and services, rating by level of value and identifying dependencies the critical developmental path to greatest value can be identified.
The following exhibit (Exhibit 5) is an example of a critical developmental path.
Exhibit 5 – The Integral Project Management Value Framework™ Governance Development Critical Path Example
A client seeking greater value from project governance applied The Project Management Value Framework™ and through a process of interviews and valuation work sessions the critical development path for project governance, illustrated in Exhibit 5, was developed. In reviewing the value based improvement priorities noted to the right of the framework you get a clear sense of the definition of value for this organization. In approaching each of the value improvement tasks identified performance metrics were established to assure the desired increase in value was achieved. One interesting note relative to this client and most companies, the quest for the ultimate value of project management may be dependent upon directly associating the work of project management with the results delivered after a project is completed, see the most upper right hand quadrant that identifies post project benefit realization tracking. In seeking to quantify the ultimate return on investment of project management I contend that a necessary element of the equation is the valuation of the contribution of on time, on budget, scope relative, and quality controlled project delivery to the operational benefits delivered after project completion. With or without this equation the path to value remains the path defined within any specific organization based upon current strategies, goals, and objectives. Whether answering questions of value, or seeking a path that assures value is delivered, project management professionals must extend their reach beyond projects and their direct sponsors and customers. The Project Management Value Framework™ is a map to guide you in doing so.
If the value of project management is in question then we must answer with a clearly articulated comprehensive value picture, statement, and equation. To do this we must partner with others in our organization that are focused on defining, pursuing, and measuring value across the enterprise. We must be able to understand and meet the demands of the tactical, strategic, internally-focused, and externally focused elements of our organizations. We must redefine project management as stretching beyond the completion of projects to the realization of operational benefits forecast by that project. Most importantly we must reach beyond the tendency to self-evaluate, self prescribe, and grab other organization’s best practice solutions that may or may not be relevant. If the value of project management is in question I contend that the root cause is our inability to integrate our work into the full spectrum of our organizational interests and pursuits. The Project Management Value Framework™ is one way that forward thinking organizations have charted, or corrected, their course in pursuing the ultimate value of project management. I encourage you to chart yours.
© 2006, Meg Charter
Originally published as a part of 2006 PMI Global Congress Proceedings – Seattle Washington