Tesco Hindustan Service Centre, Bangalore, India
TESCO HINDUSTAN SERVICE CENTRE, BANGALORE, INDIA
For one of the world's largest retailers, measuring and improving performance is a top-down affair.
PHOTOS BY MAHESH BHAT
Piyush Kumar Chowhan
Think of it as “trickle-down metrics.”
At Tesco, one of the world's largest retailers, a focus on measuring and improving performance starts at the very top and permeates the entire organization—all the way down to the company's individual projects.
“Everything we do in our portfolio aligns with the business goals that are set at the very highest level,” says Piyush Kumar Chowhan, the Bangalore, India-based program delivery manager who manages the supply chain portfolio at the Tesco Hindustan Service Centre (HSC), part of the U.K.-based international grocery and general merchandising group. His project portfolio includes ordering, space, range, merchandising and labor management.
To ensure project results align with organizational goals, the company leverages the balanced scorecard approach to create key performance indicators (KPIs) and other metrics for its portfolio. Tesco recognizes that monetary performance is only one part of the larger performance picture, Mr. Chowhan says. His project portfolio fits into the IT quadrant and contains a range of IT projects related to development, implementation and service management.
“Each year Tesco executives create a business plan. From that business plan, we create an IT plan. From that IT plan, we develop the metrics for projects within the portfolio,” he explains.
But the strategy doesn't stop there. It also encourages everyone—from the portfolio manager to the project team member—to realize how he or she fits into the big picture.
“Because the metrics are derived based on the balanced scorecard and are related to the individual objectives of the project managers, they easily follow them,” Mr. Chowhan adds.
“The KPIs enable us to provide IT as a service and create that as a strategic asset to the organization.”
— Piyush Kumar Chowhan
With help from other portfolio managers in the organization and the quality team responsible for monitoring and measuring performance, he created a solid set of KPIs for the projects within the portfolio.
“The KPIs enable us to provide IT as a service and create that as a strategic asset to the organization,” he says.
All KPIs fit into four areas: scope/requirements management, project delivery, resource management and risk management:
■ Traceability Matrix. The traceability matrix template, which must be completed for every project, enables teams to ensure deliverables all trace back to business requirements.
“We have business requirements that form the foundation of what we should deliver, but sometimes requirements are not defined clearly,” Mr. Chowhan says.
■ Change Management for Scope and Requirements. This measures the project team's ability to effectively to deal with changes in scope and requirements.
■ Requirements Analysis. Projects follow a detailed requirements checklist, according to Mr. Chowhan. It defines everything that must be accomplished to meet business objectives, and project managers must indicate which items on the checklist are met.
■ Percent of Schedule Variance. Each project team measures how far ahead or behind schedule the project is in terms of a percentage.
■ Percent of Cost Variance. Also measured as a percentage, this KPI has project teams tracking how much over or under budget a project is. It informs executives how much more or less money is needed to complete the work as planned.
■ Percent of Effort Variance. For this KPI, project teams are asked to compare actual to anticipated effort needed to complete tasks. Again, the result is viewed as a percentage.
■ Project Bell Curve. The bell curve theory within project management suggests that most outcomes of project activities, such as cost and schedule, cluster around an average.
“All projects must stay within that curve,” Mr. Chowhan says.
This KPI measures the ratio of activities to team members who successfully remain in the bell curve.
■ Plan for Ramping Up or Down Staff. Has a plan been created for adding or removing staff, and if so, how effective was it?
■ Training Plan. Project teams are given training targets at the start of every initiative. Based on those targets and the type of training required, project teams devise their own training plan.
“Each project team discusses its training plan once a month in a meeting,” Mr. Chowhan says. “We measure how many man-hours of training is provided compared to targets.”
■ Resource Early Warning Tracker. Resource attrition is generally very high in India, where Mr. Chowhan's project teams are based, so it's crucial to keep tabs on team member satisfaction levels.
“Program managers are responsible for putting all critical resources together and measuring if there are any grievances or complaints coming from those critical resources,” he says. “If there are grievances, we put them in the early warning tracker and work with the person to understand why he or she is not satisfied.”
■ Backup Plan for Critical Resources. Given the high employee turnover rate in India, Tesco HSC institutes contingency plans should essential team members, project managers or other staff leave. The plan includes the necessary skills and responsibilities of every critical resource, the person who will replace the resource should he or she move on, and the training plan for the replacement.
“We measure if the project has a backup plan,” Mr. Chowhan says. “And if someone leaves, we measure how effective that plan is in getting the replacement up and running.”
■ Risk Mitigation Plan. Project teams track whether a risk management plan with potential risks and responses is completed. Also measured are the number of risks identified in the plan that were realized and the effectiveness of responses to potential risks.
All KPIs and metrics are captured in a dashboard, of which project managers have ownership.
“Each project manager submits the dashboard results to the quality team,” Mr. Chowhan says. “Then the quality team consolidates those by the vertical service area the project is in.”
Tesco's annual calendar is divided into 12 periods, and during each Mr. Chowhan and the quality team present project portfolio results to senior management and executives at a leadership meeting.
Poor-performing projects are examined to find the root cause of the problem. The quality team works with project team members to implement steps to overcome issues, and projects are reviewed regularly until KPIs reach desired levels.
“For example, if one project is having huge schedule variance, we try to understand why,” Mr. Chowhan says. “Is it because of change in requirements, change in scope, lack of proper resourcing, etc.?”
The organization takes steps to recover from those issues, including reviewing the issue log and risk plan.
While the portfolio KPIs are revisited regularly to ensure they are still applicable and effective, Mr. Chowhan notes that they aren't often changed.
It's more likely that a new KPI will need to be added for a specific project.
“We have more or less standardized all of these metrics and feel that they are very robust,” he says. “They have been successful at helping us consistently deliver the quality we want from our projects and add value by eliminating waste.”
PM NETWORK MAY 2011 WWW.PMI.ORG