In today's global market companies, regardless of industry and size, are looking to improve their systems and processes to become more competitive. One way they are attempting to do this is by establishing project management as a core competency throughout the organization. By setting up standardized procedures within the company, they hope to learn from past mistakes, make processes more efficient, and develop people's skills and talent to work more effectively. The list of organizations attempting to integrate project management disciplines and best practices into the way they manage their businesses is expanding daily; however, those who have succeeded in doing so is significantly smaller.
The answer for many of these companies is positioning. By positioning, I mean that the group charged with the implementation of project management and best practices is positioned in the uppermost levels of management. It is critical that all levels of workers in the organization, including line managers, see that the executive level supports project management as a business function without hesitation, publicly, and completely. Without support from the top, the effort to inculcate project management won't get off the ground. Typically, the group charged with the responsibility to get project management system up and running is called a Project Office or Project Management Center of Excellence (PMCoE) or Corporate Project Management Office (CPMO). The name isn't nearly as important as its position. Positioning is a critical aspect of establishing project management as a enterprise-wide core competency. It must first be viewed and treated as a key business function throughout the organization. This recognition is the first critical step toward successfully institutionalizing project management best practices as a core competency. Not taking this first step will result in not achieving the goal of establishing project management enterprise-wide as a business function because the PMCoE will not have requisite authority and autonomy required to get the job done.
What are the driving forces behind establishing PMCoE's?
Project management, as a professional discipline, has been around since the mid 1950's where it got its start in the aerospace, government and large infrastructure construction sectors. It was not until the mid 1990's that project management began to achieve significant recognition by businesses in other industries as a method to manage strategic projects.
The concept of creating a specific home for project management, referred to by some as a project office, emerged as organizations began to view project management as a better way to manage all types of projects. The idea of creating project offices was propagate in the mid-1990s and the Y2K issue in 1999 provided the impetus for the proliferation of project management offices (PMOs) in many organizations.
The project management profession is being embraced by almost every industry as a valuable business function with many organizations positioning it as a necessary core competency. PMOs have been created for many different reasons, however they typically share an origin that involves some degree of pain, which brings about a need to take action to relieve or eliminate the pain. The root cause of most pain felt by businesses typically results in a recognition there is need to make significant changes.
Changes often occur as a result of pain, which is caused by some circumstance – either internal or external – that reaches a point were action is demanded. The following is a list of common issues that have driven organizations to establish PMOs to deal with and hopefully avoid repeating them in the future.
- Losing market share due to increasing competition
- Poor cost versus profit ratios resulting in falling or stagnant stock values
- Competition with faster time-to-market capabilities
- Changing economic conditions that force downsizing
- Implementing new technology to become more efficient
- Managing changes brought on by dynamic growth
- Managing changes brought on by mergers & acquisitions
The desire to set up a PMO can originate at any functional level in the organization, but frequently emerges in the department with the projects having the greatest impact on the whole organization. Information technology (IT) is typically one of those functional departments where PMOs are found regardless of the industry sector for several reasons:
- The rapid growth in technology and desktop use of business applications has generated a large number of projects because of company-wide use.
- IT is most often where the greatest number of strategic, mission-critical, projects occur.
- The Y2K issue brought the effectiveness of project management to the forefront, and many project offices where created specifically to manage these projects.
- IT consumes a significant portion of the annual operating budget in most organizations, thereby giving mission-critical projects high visibility.
- Reports from IT watchdog groups, such as Gartner and Standish, indicate a dismal record of failures for IT projects in general.
The number of companies who are creating PMOs grows daily. The numerous articles written about PMOs and the number of companies sending representatives to seminars and classes to learn about PMOs attest to the continued popularity of this concept. The one caution I would offer those who are embarking down this road is that establishing a PMO is not a trivial pursuit and it requires real dedication and commitment to see the process through to the end. I do believe establishing PMOs is the right thing to do, because the driving forces behind creating them are not going to go away, and project management is the best answer to overcoming them, but more importantly I believe project management is a core business function for most companies.
What is the importance of positioning?
Positioning is equated with authority in organizational structures; the closer something is to the top, the higher its level of authority, acceptance, adoption, and autonomy is perceived to be by the organization. Establishing project management in most organizations is very difficult to do, partly because managers are afraid of losing their authority and control over the resources that are assigned to them and workers are afraid of being held accountable for performing a new set of requirements brought about by organizational changes. This fear, expressed as resistance, comes from lack of information and understanding about how the changes will affect their jobs. Positioning the project management function at the highest management level within the organization provides the measure of autonomy necessary to extend its authority across the organization while substantiating the value and importance the function has in the eyes of executive management. Establishing project management centers of excellence should not be viewed as a quick-fix solution, but rather as a long-term, foundation-building effort.
Competing globally, increasing market share, reducing costs, and improving profits - all in the pursuit of producing better products and services faster through the use of high technology solutions - are just a few of the reasons why most organizations seek better ways to improve time-to-market, cost-to-market, and quality-to-market. The effective use of project management techniques is becoming more widely recognized as an effective approach for achieving improvements in these areas. Some firms’ even view project management as a key weapon in their arsenal to increase customer satisfaction and beat the competition. The organization as a whole must recognize and adopt new attitudes that embrace project management best practices as the normal way of working. This enables them to bring the full power of this new competitive weapon to bear in the battle of continued business growth, and in many cases ultimate survival in today's highly competitive global market.
Completing projects successfully on a consistent basis is a basic requirement to receive excellence awards from most customers. Customer satisfaction is the goal of every organization. If projects are an integral part of the business, it stands to reason that there should be a clear understanding of what is required to satisfy the customer's needs. If they also realize that completing projects successfully on a consistent basis requires the application of project management best practice knowledge, skills, tools, and techniques. Doesn't it make sense then that such an important business function be established at the executive management level of the organization? How else can a company ensure that projects are managed successfully across the organization, and that strategic, mission-critical projects are given the best opportunity to succeed from the very start?
Positioning the project management function in a hierarchical organization structure establishes its autonomy and thus “ownership” of the responsibility for setting up, distributing, supporting, and managing the application of project management best practices within the company. Enterprise-wide adoption of project management best practices calls for single ownership of the function. Establishing common practices across an organization at all levels is very difficult, if not impossible, without a sole ownership being clearly established. Ownership must be recognized as an independent business function at the highest level of the organization to enable the authority that is required to distribute, monitor, and control the distribution of the disciplines required to achieve enterprise-wide project management best practice capabilities.
“Enterprise project management is an idea whose time has come. Applying project management on a broader basis within the organization adds speed and productivity to ongoing processes,” states Paul C. Dinsmore (1999, x, xi), an international author and speaker on the subject of enterprise project management.
What is the next step?
Determining the current conditions is required on any project that involves introducing a change that will impact people across the organization especially if it affects the way they do their work. Clearly documenting the current conditions establishes a baseline, which is a prerequisite to estimating the effort that will be required to achieve the changes. Determining the effort is accomplished by measuring the gap between the AS IS (current conditions) and the TO BE (future conditions). The ability to measure progress towards achieving the change is dependent on having a clear understanding of baseline conditions.
The organization's current level of project management knowledge and skills (also referred to as maturity level) is the baseline that must to be established when implementing project management practices within any organization. There are a number of processes available in the marketplace to day, like PMI's OPM3®, that can be used to assess project management maturity. I have used the following three survey tools to determine the maturity of several organizations in recent years. (Bolles, 2002, Appendix A)
- Management Team Survey: is a (33) question survey used to gather general information from department managers on communications and business environment issues that can interfere with the implementation of project management best practices.
- Project Management Maturity Survey: is a set of (90) questions, which cover all nine areas of knowledge found in the Project Management Institute's publication A Guide to the Project Management Body of Knowledge (PMBOK® Guide 2000 Edition), used to gather information from a sampling of people at the executive, functional and operational levels to evaluate the organization's current knowledge and application of project management practices.
- Project Evaluation Survey: is used to evaluate (23) elements of project management processes, tools, templates, and forms. The survey tool is used to evaluate several projects of different sizes, complexity, durations, including past projects as well as projects in progress. The primary objective is to analyze the amount and consistency of documentation between projects of various sizes, complexity, and durations. Another outcome will be a validation or contradiction of current practices as those who participate in survey number two have reported them on.
These three surveys are designed to provide a general understanding of the organization's knowledge, practice, and capability for applying project management disciplines. People in the organization often view surveys as an unjustified distraction and a waste of time, because they typically feel the results do not provide much value to the participants. Planning and communication are critical elements in the successful use of surveys. The value of surveys is only as good as the accuracy of the data collection and the proper interpretation of the responses, which reflect the “average” conditions within the organization rather than the exceptions. Interpretation of the survey data requires an in-depth knowledge of the subject matter and an ability to express the findings in a clear and concise matter. The information that is obtained from the surveys will help the PMCoE implementation team understand how significant knowledge and skill level differences are across the organization, which in turn will help them develop a more effective action plan for establishing the PMCoE, and define the type of services required initially.
What are the four key functions of a successful PMCoE implementation?
I believe the key to successfully executing project management best practices across an organization depends on firmly establishing four functions required for institutionalizing project management as a business function. Figure 1 is a graphic that symbolizes the four functions as pillars standing on the foundation of project management that supports the PMCoE.
Authorization: Authorization is the formal process for developing a forecast plan that identifies corporate goals and objectives. This in turn is translated into a list of prioritized projects documented as the organization's portfolio of projects. Authorization includes a formal review and approval process to ensure that company resources (money and people) are distributed only to authorized projects that directly support corporate goals and objectives. Authorization also includes a process to adjust the approved portfolio of projects for new opportunities during the fiscal/calendar year of the plan.
- Improves master planning and capital budget planning processes.
- Provides enterprise-wide forecast of future projects.
- Facilitates the growth of the organization's project management maturity.
Standards: Standards is the establishment and formal acceptance of guidelines that define common processes, tools, templates, and technology. These guidelines are to be used consistently across the organization to manage all authorized projects.
- Improves efficiency and shortens the learning curve for new project managers.
- Reduces project timing and costs.
- Improves project organization, planning, and management skills.
- Enables tracking of earned value - actual versus planned project timing and cost.
- Facilitates regular management review of project status.
- Aids the growth of the organization's project management maturity.
Education: Education includes the development and delivery of programs to provide the knowledge, skills, and capabilities required at all levels of the organization to effectively apply the standards in the management of all authorized projects.
- Improves new product and/or services time-to-market, quality-to-market, and cost-to-market.
- Reduces project timing and cost.
- Improves project organization, planning and management skills.
- Aids the growth of the organization's project management maturity.
Readiness: Readiness refers to the formal processes that ensure and validate that the required standards, knowledge and skills are present prior to project start-up; work in-process is meeting project deliverables; and post project reviews, including documentation of lessons learned, are carried out to help ensure the success of all authorized projects. Readiness also means that continuous improvement of authorization, standards, education and readiness elements occur in a timely fashion.
- Ensures project standards are being properly applied to all critical projects.
- Facilitates creation of an environment for a “learning organization.”
- Aids the growth of the organization's project management maturity.
Why is Authorization so important?
Every journey begins with a destination, or it should, because without a predetermined destination you would not know that you have arrived. World-class industry leaders are made up of organizations that set high goals and objectives and develop plans to achieve them. Having limited resources (people and money) is an aspect of business common to every organization. The challenge most of them share is distributing those resources effectively to achieve the highest return on their investment. You would think that identifying organizational goals and objectives would be an obvious requirement, however that is not the case for many organizations. In many cases, if it is being done, it is not done very well. There are many reasons why this effort is ignored or done poorly.
- There is no formal process to define corporate goals and objectives.
- Firefighting diverts attention from long-range planning.
- Stated goals and objectives are not qualified or quantifiable.
- The development of corporate goals and objects stops at the top.
- There is no formal measurement process to validate status.
- Accountability to achieve goals does not exist.
- There is no personal reward for achieving them or penalty for failing to achieve them.
- It fails to produce desired results.
Defining company goals must start at the top and cascade down through the organization structure to the individual department manager's to be supported by their goals and objectives. The goals and objectives at each level of the organization should support the corporate goals and objectives as well as the goals and objectives of the level it reports to. Establishing goals and objectives is a forecasting activity that requires significant planning and training to achieve the results intended. A formalized process must be documented that identifies the steps taken, roles and responsibilities defined, and the training provided at all levels of the organization. Companies of all sizes use many methods and techniques with varying degrees of success. Putting in place a well documented process to identify, track and manage corporate goals and objectives is a critical step in achieving project management excellence.
Why is Standardization so important?
Efficiency, proficiency, continuous improvement, and best in class are goals that are in a large part dependent on a consistent application of procedures. These procedures, whose actions are guided by a regimen, are commonly referred to as standards. Standards are documented processes that when universally adhered to, generally result in the successful achievement of goals. The importance of establishing and following standards is not always clearly understood by workers at all levels of an organization. However, the ability to achieve goals on a consistent basis lies in the unvarying adherence to the use of standards by everyone. There has been a shift in recent years in the area of non-technical business processes away from standards documentation that describes the rules and procedures to be followed in infinite detail toward guidelines, which allow more flexibility in how they are applied and contain less detail. This is particularly true of project management methodologies. The trend in the past was to create multiple volumes of documentation describing project management procedures in excruciating detail with the thought that the standards would be used as training documents as well as standards to direct the management of projects. The only thing this approach to project management standards documentation did effectively was to gather dust.
The one of the goals of many project management offices is to establish modern project management knowledge and skills as a core competency requirement throughout the organization. Successful achievement of this aggressive goal requires a well-designed and implemented set of project management methodology guidelines. The American Heritage Dictionary of the English Language defines methodology as “a body of practices, procedures, and rules used by those who work in a discipline.”
Many organization who develop their own project management methodologies attempt, but fail, to make strong connections to the Project Management Institute's (PMI®) Project Management Body of Knowledge (PMBOK®) Guide. These guidelines are universally recognized and accepted as the project management methodology standard, providing guiding principles for managing projects. This failure is due in part to a mistaken perspective, held by more than a few, that the PMBOK® Guide is itself a methodology for managing projects. The PMBOK® Guide is not a methodology, but a set of guidelines that identify specific practices, principles, techniques, and tools for managing projects of all sizes and types, regardless of the industry. The difficulty companies’ encounter lies in their inability to translate the PMBOK® Guide into an effective methodology to help project managers and teams apply the PMBOK® Guide. The focus is typically on product development processes rather than project management processes to manage the work to make the deliverables required to create the products. These guidelines typically address critical milestones to develop new products with the emphasis on engineering requirements, and customer requirements, industry and governmental regulations.
Why is Education a Key Element?
Providing basic training is an important next step after introducing a project management standard methodology. Most organizations struggle and resist using a project management methodology and the associated templates if some basic training in the fundamentals of project management is not provided immediately following the initial distribution of the standards. It does not make much sense to publish a methodology that represents a totally new concept to many of the users and expect them to willingly start using it on their own.
Completion of a project management fundamentals class should be a mandatory minimum requirement for all department managers, project managers, and team leaders. A comprehensive project management education and training program is necessary to meet the needs of the organization's general population, project team members, project managers, and management staff at all levels.
Education and training to learn special skills is generally included in the annual budget in most companies, especially in the areas that require technical knowledge to do the job. Yet management in many organizations is reluctant to earmark funds specifically for project management training. There is a general expectation that untrained and inexperienced employees assigned to manage projects will be able to meet time and cost objectives on a consistent basis because they are often subject matter experts in a technical area, such as engineering or information technology. Formal education and training however, is a critical success factor in the consistent completion of projects that exceed customers’ expectations.
Executive management support and commitment in the form of continuous funding is absolutely critical to the goal of establishing project management knowledge and skills as a core competency within any organization.
What makes Readiness so important?
Determining readiness is the last thing that is done just before work on the project begins. Evaluating readiness also occurs on strategic projects between project phases, and at the end of the project. Performing readiness checks is similar to checking the car over before you start off on a long trip; it doesn't keep bad things from happening, but it does provide some comfort and reduces the risk of mechanical things going wrong. Readiness checks are needed the most in the early stages of implementing a project management methodology. Once the organization's project management capability has matured the initial readiness check could be reduced to periodic reviews as deemed necessary.
It usually takes a while for organizations to become acclimated to new business processes and comfortable to the point that some degree of proficiency is attained. Experience has shown me that implementing a project management methodology usually experiences some degree of resistance from project managers who feel concerned they might not “get it right” the first time or they just want to “get on with it,” believing readiness checks are an unnecessary waste of time. Some executives and department managers may also believe this process isn't need and just slows the project down. A good way to counteract these forms of resistance is to point out that readiness checks are not performed to evaluate performance - there are no good or bad grades assigned. They are done to help the project team ensure it is properly prepared to achieve success before work begins or continues to the next phase, which will save time and money in the end.
It is preferable that the full project team, project customer representative, and project sponsor be present and participate in the readiness check. Having the customer and sponsor attend the readiness review communicates the importance of being prepared to everyone. The review process also provides another opportunity to validate customer requirements and expectations have been communicated and are clearly understood by the project team.
Additional project reviews are held between project phases, referred to as gate reviews, on larger strategic projects. The customers’ representative, project sponsor, project manager and team members are involved in these reviews as well. The purpose of gate reviews is to have the project team present the current status of the project, report on deliverables made to date (if any) and establish that the project is on track to achieve its objectives and goals as stated at the start. This review also identifies what work and deliverables will be accomplished during the next phase of the project.
Post project reviews are critical to the continued improvement and growth of project management practices within any organization. Unfortunately, they do not occur as often as they should, with “not enough time” or “the next project is already started” the common excuse. Post project review meetings are as critical as readiness reviews before the project begins. Establishing project management best practices cannot be done without incorporating lessons learned to improve the methodology, processes, procedures, tools and templates. These improvements will not be identified if a formal process isn't followed to ensure they are documented. Continuous improvement programs are based on formal reviews. Whether the project is deemed to have been a success or not, the post project review can provide all the project participants an opportunity to learn from what worked well and what did not.
The saying goes “we never have time to do it right the first time, but always have time to do it over.” Project readiness reviews make sure the team will get it right the first time, and that it stays on track. In some cases, the project is cancelled before it consumes too many wasted resources if it is determined to be the best choice. Effective project management begins and ends with processes that ensure continued improvement and growth, without them the organization will take longer to mature.
Establishing project management centers of excellence should not be viewed as a quick-fix solution, but rather as a long-term, foundation-building effort, it is not a trivial pursuit. Positioning the project management function in a hierarchical organization structure establishes its autonomy and thus “ownership” of the responsibility for setting up, distributing, supporting, and managing the application of project management best practices within the company.
Enterprise-wide adoption of project management best practices calls for single ownership of the function. Establishing common practices across an organization at all levels is very difficult, if not impossible, without a sole ownership being clearly established. Ownership must be recognized as an independent business function at the highest management level of the organization to enable the authority that is required to distribute, monitor, and control the distribution of the disciplines required to achieve enterprise-wide project management best practice capabilities.
Determining the current conditions is required on any project that involves introducing a change that will impact people across the organization especially if it affects the way they do their work. Clearly documenting the current conditions establishes a baseline, which is a prerequisite to estimating the effort that will be required to achieve the changes.
And finally, developing a plan to establish and implement the four key functions of Authorization, Standards, Education and Readiness are an integral aspect of creating a successful PMCoE. This is a basic requirement to institutionalize project management as a core competency and achieve the highest level of project management maturity.