Introduction
The premise of this paper and presentation are:
- That organizational management does not have reliable clear-line-of-sight to project progress data as that project relates to strategic objective fulfillment delivery expectations.
- That project interdependencies are managed incorrectly as a result of poor transparency.
- That poor collaboration in delivery results between organizational governance and execution management (holistic governance) creates and sustains enterprise uncertainty.
- That project teams must work together to remove progress impediments that are tactically and strategically relative.
- That Project Management Information System tools are not mature enough today to support a holistic governance perspective and that supporting manual processes are necessary to realize their full value.
To wit: The more time you spend on a project, the more cost and risk is incurred. The additional risk ripples and expands resource allocation and assignment creating further costs and resource commitment expansion. These cause and effects lead to declining delivery success in project investment and resource optimization. Thus, if you can reduce the effort and risk necessary to complete project work in a tactical manner, the business will gain strategically. This is the premise of this paper that suggests that if proper organizational governance processes are integrated with proper execution management processes, the business will prosper.
IT Organization Governance Is Growing In Recognition
Organization Governance in Information Technology (ITOG) is growing in recognition. Why? The value of the transparency it brings, and the benefits of the related processes, provides management the ability to act with more certainty and predictability when making decisions involving the timely deployment of scarce resources for maximum business impact.
CCEM Is Growing In Recognition
Critical Chain Execution Management (CCEM) is also growing in recognition. Why? The need for improved delivery speed that creates successful results is a key motivation for why businesses practice project management at all. CCEM has demonstrated the ability to significantly reduce project lead times while increasing throughput, in a wide range of industries and organizational settings, including IT Organizations.
Organizational Governance and Execution Management Dimensions can be successfully integrated to cover the whole spectrum of managing the organization efficiently. Together these two approaches cover the management spectrum of project selection, project delivery, and resource management supply and demand.
Most IT organizations that are actively seeking to improve their project delivery performance will find that it is not sufficient to excel at Organizational Governance or Execution Management alone. Unfortunately, the offerings available to choose from in the market place today, forces an organization to seeking to improve, to choose between good governance or good execution. This is an unfortunate situation that needs to be corrected through a collaborative effort between practitioners of both aspects of advanced project management practice.
The resulting capabilities such an integrated approach would give to an organization who masters this, would put it miles ahead of its peers in it’s industry and turn management decision-making and execution management into truly a competitive edge in the market place for any organization.
What is IT Organization Governance – Definition
Strategic Alignment
In organizational governance, strategic alignment is the focal point for all business rules. Strategic alignment improves organizational governance and drives tactical execution management. In strategic alignment, all projects, programs, resources, assets, customers needs, etc. are mapped primarily one-for-one to specific highest-level strategic objectives of the business enterprise. In correlating these business investments to what the business has determined as strategic objectives for the fiscal year, management must seek clarity. This includes any strategic interdependencies. This clarity for what work to perform next becomes more transparent resulting in an improved clear-line-of-sight for management and affected work-force in making work choices at their role level. As interdependencies are determined in each portfolio type, clarity is further improved for organizational governance for all role levels. Improved clarity in organizational governance reduces uncertainty in role-level decision making for management accountability for expected results.
In traditional management models, management is accountable for business performance. Yet in many businesses, management does not practice essential processes for project portfolio management and/or other homogenic asset classes managed by the business. Why? We believe a potential answer lies in the maturity level of traditional business processes. Immature business processes will often lead to immature use of other enabling methods and practices such as project management. We argue that all enterprise level fiscal year budgets contain budget safety. This is often based on a degree of expected uncertainty by the budgeting organization. Planning for uncertainty is a sound management practice. However, mere budget compliance should not be automatically accepted as necessarily the only or best measure of success. In addition, an organization should consider the relative value of opportunities lost and emerging opportunities capitalized on during the period. This latter perspective is only possible with the level of near real time transparency provided by a properly implemented ITOG system. With such a system in place, the annual budgeting process becomes a baseline against which emerging opportunities can be evaluated and confidently pursued or rejected at each decision making level.
Risk Management
We have learned that risk management involves the management of opportunities and threats for positive risk events and negative risk events. Managing risk is managing uncertainty. In a heavily matrixed work environment, delivery uncertainties abound. It is common place in today’s IT organization that project selection and execution decisions and choices are made every day that are less than optimal simply because the ability to evaluate the impact of those choices in advance is limited or non-existent. Experience has shown that even very experienced management with good intentions operating in a context that lacks a systematic approach to decision making can benefit substantially when their experience is augmented by consistent rules of applied globally.
Resource Management
In many businesses practicing organizational governance, success of a project is frequently judged solely by whether or not it finished on its promised due date. But is finishing on the promised due date always the only legitimate or even preferred, measure of success for a given project? What if you learned that while the project achieved its goals successfully the resources that performed the work were over allocated due to unplanned changes in their assignments on the project and this resulted in many other projects missing their expected delivery dates? Furthermore, many of the resources were multi-tasked and were often conflicted about which work to work first on a daily basis. It can be seen that the definition of success in a project management organization needs to be expanded to reflect a broader organizational context.
In organizational governance, good resource management is essential to completing work on time, on budget and on scope. The minimum expectation that should occur for businesses practicing project management is that projects complete on-time, on-budget and on-scope. Is it possible that poor supply and demand resource management is a key root cause as to why your projects often miss their expected completion date, cost and budget?
If the worse result is on time, on budget, and on scope, then what should be the normal expectation instead? Thus normal becomes defined as exceeding or meeting expectations in project delivery and/or resource management supply and demand.
Process Improvement
In order to effectively manage the integration of project and resource relationships in organizational governance, processes for project portfolio management (PPM) and resource portfolio management (RM) must be managed holistically. This all-encompassing method provides essential transparency for management to have proper clarity for their decision making. Can you imagine an organization separating project management responsibilities and resource management responsibilities into separate competing organizational (and conflicting) models? Isn’t this essentially what is happening today in most of our larger organizations that are practicing some form of matrix management today?
Imagine the Project Management Office (PMO) as the tactical agent for senior management accountability for all project delivery. Now imagine Information Technology (IT) as a true supply chain organization that provides for resources to support the PMO projects. The PMO is responsible for the project deliveries. IT, the resource group, is responsible for resource sourcing and completing work. Now when an unplanned project change occurs at the project level that impacts resource allocations and extends resource assignments – delaying planned subsequent assignments, who is responsible? Who gets the blame? In today’s environment don’t we know this answer? Is it a surprise then that so many organizations have difficulty establishing harmonious relationships between the PMO and the IT department? It should be obvious now why it is important to manage a project change request transparently so both organizations can react proactively to avoid the potential threat(s) to project end date and/or resource assignment while seeking to achieve acceleration in project delivery.
Separating project delivery accountability from sufficient resource management supply and demand capability increases the requirement for effective management control. The negative impact from unplanned change on resource allocation and assignment arising from changing project schedules can thereby be recognized and mitigated at the strategic level of the business by improving how resource risk is managed at the execution management practice level.
What is Critical Chain Project Execution Management
Critical Chain Scheduling
Traditionally constructed project networks are modified by removing contingency time from task or activity durations. Task level contingency is replaced with project and path level located at key points within the project network. This results in schedules that are shorter in overall cycle time, yet safer overall due, to the pooling effect.
Because the network is relied on as a dynamic execution and prioritization tool, it is important that key logistical dependencies be identified and documented while at the same time, it is important to avoid the documentation of unnecessary or false logic. Important resource requirements and their respective availability levels are documented and unprotected task duration estimates are applied to each activity. Resource leveling is then applied and the resource constrained critical path or “Critical Chain” is identified. Tasks that do not belong to the Critical Chain, is assigned to one or more “Feeding Chains” (Goldratt, 1997).
The final step in the process is to insert a calculated amount of safety at strategic locations in the schedule, to ensure that overall; there is a good chance of meeting the delivery commitment. One rule is to add at least 50% additional time to the end of the project (Project Buffer) as safety. Similarly, each feeding Chain would be buffered at the point where it joins or integrates with the “Critical Chain”. Exhibit 1 below illustrates what a Critical Chain schedule looks like. Project and Feeding Buffers are Green, Feeding Chain tasks are blue and Critical Chain tasks are hash marked. It is common for critical chain schedules to be significantly shorter than traditional plans for the same project despite the addition of a generous buffer. Furthermore, it might surprise the reader to learn that in case where the conditions exist for comparison, these shorter plans finish on time or earlier typically, when compared to projects executed under the traditional critical path approach.
Exhibit 1 A Critical Chain Schedule [Buffer = ½ chain length]
Pipeline Leveling or Strategic Flow Control
To ensure that resources are not overwhelmed with a large backlog of assigned work and to reduce significantly the tendency to assign scarce resources to more projects than they can reasonably support, the number of active projects are limited by policy, to a set level, based on a careful assessment of the load carrying capacity of the organization. Allowance is always made for a certain amount of known unplanned work to drop into the schedule without significant disruption to the basic flow of work.
The basis for strategic flow control is an important decision as it establishes the rate at which the organization will complete projects over a given time period. Factors to be consider include; management ability to provide focus and their decision making capacity, scarce and difficult to replace skills, critical organizational processes that are shared across all or most projects, number of available and experienced Project Managers, etc.
In order for strategic Flow Control to work in practice, it is essential that business opportunities pursued in the form of projects be selected and prioritized in such a way as to ensure the maximum return on investment once executed and delivered. It is also important to reduce significantly the cycle time of individual projects so that pipeline leveling or smoothing has no negative impact on how soon business benefits can be realized.
Execution Management Using Buffers
In traditionally managed organizations the following paradox is frequently observed: On the one hand, the organization experiences a repeating sequence of crisis, fire fighting, followed by a short period of lull broken by the next crisis; while on the other hand, some things just seem to take forever to get done, for no clear reason – leading to the claim by some, that there just isn’t a great enough sense of urgency in the organization thus afflicted.
Despite the best efforts to plan and track project work, the organization fails to live up to its full potential while most of the time, resources feel overworked and under appreciated.
An effective process for managing execution can make a significant difference in organizations faced with this situation. Critical Chain Execution Management uses frequently reported task updates to maintain clear execution priorities for all project work across the organization. When combined with effective flow control, the number of true crisis situations is minimized and the organization is able to easily identify and respond appropriately when they occur.
When tasks are delayed in a Critical Chain schedule, the time lost is subtracted from the buffer as the task slips along the timeline. A path that is delayed for a day in most cases uses up one day of buffer protection. Priority is determined for each path or chain based on a ratio between the amount of work remaining on the path and the amount of unused protection the path still has available in the buffer. In deciding which task to work on next, a resource would choose the task with the longest remaining path and shortest remaining buffer.
A three color system is used to depict the current status of a project. If the longest chain in the project is experiencing satisfactory progress and very little of its buffer has been used, the project is most likely in the GREEN and needs no intervention. However, if the reverse is true, the project is flagged as being RED and steps must be taken to correct the trend while there is still time. YELLOW status indicates vigilance and preparation is in order. See Exhibit 2 below for an illustration of how a trend chart is used to project whether or not the project’s status is changing for the better or for the worst over time.
Exhibit 2: Project Status Trend Chart or “Fever” Chart
This basic concept is applied universally to task preparation, task management, support functions, resource allocation and Project/Portfolio Management activities for consistency and real time alignment in execution priorities. The organization settles down into an orchestrated and synchronized workflow utopia where the level of ambient stress is significantly reduced leaving resources with the sprint capacity to react quickly when necessary. At the same time, work moves much more quickly through the organization due to a significant reduction in the number of unplanned, delays, interruptions, re-directions and reassignments. This approach to execution management has been demonstrated to a) reduce the cycle time of projects by 20% on average, b) increase effective capacity correspondingly, while at the same time c) reducing the effort or cost per project substantially below typical reference conditions.
Where Does CCEM Fall Short?
CCEM today does not connect the Execution Management Dimension to the needs for holistic organizational governance very well. As a result, project teams must be more diligent in presenting status and in their overall communicating to management and other key stakeholders. This issue resonates in most current CCEM oriented project management information systems. Dr. Goldratt did not provide any guidance on the question of determining what projects are worth authorizing and in what order they should be done. Yet in order for an organization to fully leverage the speed and reliability of the CCEM approach, it is important that the improved performance not be squandered on projects that do little to advance the strategic and tactical interests of the organization as a whole, especially if there are available projects of higher value to the organization that are left to flounder. There is a need for a well defined methodology by which opportunities can be evaluated and ranked against each other with respect to their overall contribution to the organization’s strategic and tactical objectives.
A Project Governance Process for Assigning Priorities and Enforcing Pipeline Rules
In addition to a methodology, it is also important that there exists the organizational framework through which this methodology can be applied in a consistent and disciplined manner. The details and supporting tools for such a process would make the difference between paying the concept of priorities lip service and actually managing the organization in a manner that ensures maximum value from available opportunities. A few essential business rules are necessary to ensure strategic alignment of project investments. These are:
| I. | All projects are to mapped one-one to a specific strategic objective |
| II. | All strategic objectives are assigned tactically and strategically to one member of the senior governance team for accountability to fulfill |
| III. | A project investment prioritization model must be developed and standardized within the organization for all strategic projects to be listed in the Project Portfolio. |
| IV. | All strategic objectives must be strategically forced ranked to each other |
| V. | All strategic project investments must be strategically forced ranked within their assigned strategic objective |
| VI. | All project investment interdependencies must be explicitly stated in the project portfolio in an end-date cause and effect manner that is dynamic |
| VII. | Key strategic resources must be identified and managed for optimum allocation and utilization. |
| VIII. | All other resources must be made subordinate to the workload capacity of the intersecting key strategic resource. |
| IX. | All submitted change requests must be managed and controlled through a central office (Project Management Office) for the purpose of measurement of cause and effect to the project and resource portfolios |
| X. | Periodic management reporting must reflect execution progress against strategic baseline expectations denoting potential opportunity and/or threat in delivery. |
A Resource Governance Process for Assigning Priorities and Enforcing Pipeline Rules
The details and supporting tools for this governance process would increase certainty and improve predictability through actively manages resources in a manner that ensures maximum value from available supplying resource pools. A few essential business rules are necessary to ensure strategic alignment of resource investments. These are:
| I. | All resources are mapped to a specific resource pool. |
| II. | Key strategic resources are identified per resource pool and are optimized by allocation and utilization. |
| III. | All other resources in a resource pool are subordinated to the identified key strategic resource(s). |
| IV. | Pipeline Resource Managers work from the Project Management Office to manage a specific resource pool in collaboration with owning department managers. |
| V. | Pipeline Resource Managers are accountable for ensuring resource commitments are honored and that resource future opportunity and/or threat is managed accordingly. |
| VI. | Resource utilization is subordinated to project throughput speed as a matter of priority. |
| VII. | All projects are planned with buffers and executed to buffer derived priorities. |
| VIII. | Resource allocation assignments are made completely based on buffer impact. |
A Proposed Integrated PPM/RM and CCEM Model Implementation Approach
In a defined PPM/RM model that integrates the philosophy of the CCEM approach, several steps need to be complied with to prevent the loss of transparency. A high-level outline of this model would include the following work packages:
| I. | Standard Project Management Information System (PMIS) must be selected that supports real-time dynamic observation of cause and effect of change requests for any project or resource on either portfolio. |
| II. | All programs and projects are defined into a strategic portfolio and are interdependently related as it interdependencies become determined. |
| III. | A standard project prioritization schema must be defined and implemented that assigns strategic numerical value to each program/project portfolio investment. |
| IV. | All resources and projects are defined into a strategic portfolio and are segregated into specific resource pools based on their alignment with strategic objectives. |
| V. | All change requests must be approved or rejected through a centralized office for positive impact consideration on throughput efficiency of both portfolios. |
| IV. | If supply and demand resource management is the most important risk to manage, then resource allocations and committed resource assignment release dates must be managed through organizational governance. If project delivery speed is the most important risk to manage, then managing project delivery through execution management approach becomes the standard business rule. |
| VII. | Organizations if they feel the need to choose an implementation plan for short term gain in project delivery, they should implement CCEM first with supporting sufficient manual processes. If there is no clear need for speed, then organizational governance should be implemented first. |
| VIII. | Governance teams must be established at key management levels to make strategic and tactical business choices for the correct order of work for near term and long term. |
| IX. | Work-choice activation sub-processes must be implemented in the governance sub-processes to take advantage of realized acceleration value in project delivery and/or to mitigate potential delivery delays. |
Conclusion
Today there lacks one project management information system (PMIS) that will accomplish the integration of organization governance and execution management in a seamless manner. In order to implement this model, manual processes must be implemented to supplement PMIS commercial products. Therefore, the selecting organization must choose PMIS systems that manage project and resource change requests in a transparent and dynamic manner that allows determining management to make the best delivery decisions. If neither capability is desired, the capability for management to perform command and control functions over project delivery and supply and demand resource management will increase significantly in complexity and time required to be performed. If an organization can implement the recommended integrated implementation model stated above, decisions related to achieving business objectives convergence and transformation from project delivery and supply and demand resource management will become clearer to a greater number of stakeholders.
These improvements when implemented together will lead to gains in transforming new and modified business knowledge to business operations and the achievement of business objectives. If only one of these dimensions is implemented without integration, gains will still be achieved but the full potential of value to the business will be unrealized.