Project management maturity
an industry-wide assessment
James S. Pennypacker, Center for Business Practices
Kevin P. Grant, Ph.D., PMP, University of Texas at San Antonio
During the last 5–10 years we have witnessed a dramatic and steady increase in the extent to which the modern enterprise adopts and relies upon project management to secure a competitive advantage. As project management becomes the dominant way that work is accomplished, organizations strive to become good at delivering projects successfully. The predictable consequence is widespread commitment to improvement initiatives that may include the establishment of an enterprise project management process, the development of a career path for project managers, the implementation of project management education and training programs, and investment in project management tools and information systems. But the modern enterprise cannot afford to improve recklessly or randomly. The modern enterprise must approach improvement purposefully. Committing an organization to a significant improvement effort requires a thorough understanding of where the organization is and perhaps more important, where does the organization need to grow? This is the need that is addressed by the recent interest and attention devoted to the development of project management maturity models.
The purpose of a project management maturity model is to provide a model of progressive improvement in project management systems and processes that can be used to assess an organization’s capabilities and to provide an improvement path (Pennypacker 2001, 6). In recent years, many organizations have developed project management maturity models. In fact, there are currently 27 models included in a list of extant maturity models published by the Project Management Institute (PMI®) (Project Management Institute 2002).
There are several additional trends that are influencing the modern enterprise. Many organizations are devoting increased attention to suppliers and are exploiting technology, especially the Internet, to improve supplier relations and performance. Organizations are also working ever harder to orchestrate the rhythms that enable complementors to deliver products when needed. The competitive landscape is rapidly changing. New entrants from across the globe are adding to the competitive pressures. At the same time, many of the key players in several industries have changed radically due to the number of mergers and acquisitions that have occurred. All of these factors signal an important fact. The modern enterprise cannot afford to chart its course to improvement in isolation. The complex web that characterizes the environment of the modern enterprise demands that plans for the future should be informed by an awareness of where the enterprise stands in relation to others. This demand trumpets the value of a Project Management Maturity Benchmark. This research is an empirical study designed to address the need for industry benchmarks that can be used to help a modern enterprise determine where it stands both industry-wide and relative to organizations that manage projects within the same industry.
The PM Solutions Project Management Maturity Model is based on a two dimensional framework. Both of the dimensions are based on accepted industry standards. The first dimension reflects the level of maturity. It is based on the structure of the Software Engineering Institute— Capability Maturity Model. This model has received widespread acceptance as a standard for process modeling and assessment of organizational maturity in several process areas (Crawford 2002). The second dimension depicts the key areas of project management addressed. This dimension adopts the structure of PMI’s nine knowledge areas (Project Management Institute 1996). Each of the nine knowledge areas were further decomposed into key components that provide for a more rigorous and specific determination of project management maturity. There were a total of forty-two specific components included in this study. The structure of this two dimensional framework is presented in Exhibit 1.
Levels of Maturity
There are five levels of maturity included in the PM Solutions Project Management Maturity Model.
Level 1: Initial Process
“Although there is a recognition that there are project management processes, there are not established practices or standards, and individual project managers are not held to specific accountability by any process standards. Documentation is loose and ad hoc. Management understands the definition of a project, that there are accepted processes, and is aware of the need for project management. Metrics are informally collected on an ad hoc basis” (Pennypacker 2001, 25).
Level 2: Structured Process and Standards
“Many project management processes exist in the organization, but they are not considered an organizational standard. Documentation exists on these basic processes. Management supports the implementation of project management, but there is neither consistent understanding, involvement, nor organizational mandate to comply for all projects. Functional management is involved in the project management of larger, more visible projects, and these are typically executed in a systematic fashion. There are basic metrics to track project cost, schedule, and technical performance, although data may be collected/correlated manually. Information available for managing the project is often a mix between summary level data, and detailed level data” (Pennypacker 2001, 25).
Level 3: Organizational Standards and Institutionalized Process
“All project management processes are in place and established as organizational standards. These processes involve the clients as active and integral members of the project team. Nearly all projects use these processes with minimal exception—management has institutionalized the processes and standards with formal documentation existing on all processes and standards. Management is regularly involved in input and approval of key decisions and documents and in key project issues. The project management processes are typically automated. Each project is evaluated and managed in light of other projects” (Pennypacker 2001, 25).
Level 4: Managed Process
“Projects are managed with consideration to how the project performed in the past and what is expected for the future. Management uses efficiency and effectiveness metrics to make decisions regarding the project and understands the impacts on other projects. All projects, changes, and issues are evaluated based upon metrics from cost estimates, baseline estimates, and earned value. Project information is integrated with other corporate systems to optimized business decisions. Processes and standards are documented and in place to support the practice of using such metrics to make project decisions. Management clearly understands it role in the project management process and executes it well, managing at the right level, and clearly differentiating management styles and project management requirements for different sizes/complexities of projects. Project management processes and standards are integrated with other corporate processes and systems” (Pennypacker 2001, 25).
Level 5: Optimizing Process
“Processes are in place and actively used to improve project management activities. Lessons learned are regularly examined and used to improve project management processes, standards, and documentation. Management and the organization are not only focused on effectively managing projects but also on continuous improvement. The metrics collected during execution are used to understand the performance of not only a project but also for making organizational management decisions for the future” (Pennypacker 2001, 25).
The Center for Business Practices (CBP) Consortium is a benchmarking group that includes over 600 senior practitioners who possess knowledge of the project management practices and business results within their respective organizations. All of the members of the CBP Consortium were invited to participate in the Project Management Maturity Benchmark study. The survey was conducted using a web-based survey. One hundred twenty-six members responded.
This research was conducted to achieve two objectives. The first objective was to determine the level of project management maturity across a wide range of industries. The second objective was to determine if the levels of project management maturity varied between industries.
Objective 1: Industry-Wide Assessment
Each of the 126 respondents was asked to rate the overall project management maturity of their organization, using the descriptions for each of the five levels of maturity in the PM Solutions model. The hypothesis is that the current level of project management maturity, industry-wide, is relatively immature. More specifically, we posit that most organizations have adopted project management processes, but have yet to establish these processes as organizational standards.
Objective 2: Cross-Industry Comparison
In support of this second objective of this study, the 126 respondents were stratified based on the primary industry within which each of their organizations competes using the North American Industry Classification System. As a result of this effort to stratify the sample, four industries emerged with a sufficient number of respondents to support the cross industry analysis that is the focus of this research objective. Specifically, this study examines and compares maturity levels across four industries (number of respondents in parentheses): Manufacturing (19), Information (21), Finance and Insurance (15), and Professional, Scientific and Technical Services (27). The maturity levels for each of these four industries were compared for all forty-two of the project management knowledge area components included in the survey. The Kruskal-Wallis test was used to test for differences between industries. “The Kruskal-Wallis test is an excellent test to use in a contingency table where the rows represent ordered categories and the columns represent the different populations” (Conover 1980, 232). In this analysis the five maturity levels constituted the ordered categories or rows in the table, and the columns represented the four different industries. In each test case the null hypothesis assumed there was no difference between the maturity levels of the four industries. Rejection of the null hypothesis indicates that there is a statistically significant difference between at least one of the industries and the rest. The level of significance used in this analysis was .05 ( α = 0.05). The following discussion will also include those cases different at a significance level of .10 (α = 0.10).
A clear majority of respondents indicated that their organizations are relatively immature in terms of the project management maturity model. Nearly 67 percent of respondents indicated their organizations were operating at level 1–initial processes (13.7 percent) or at level 2–structured process and standards (53.2 percent). While a notable portion of respondents reported their organizations had reached level 3–organizational standards and institutionalized process (19.4 percent), a mere 7.3 percent indicated their organizations were operating at level 4–managed process, and only 6.5 percent assessed their organizations to have achieved level 5–optimizing process (Exhibit 2).
The four industries were compared in each of the forty-two key component areas. There were only three areas in which we found a statistically significant difference (α = 0.05). These component areas were schedule development (p = 0.02), cost resource planning (p = 0.03), and cost control (p = 0.05). Additionally there were two component areas significant at (α = 0.1) that we will include in the discussion. These component areas are scope change control (p = 0.08) and organizational planning (p = 0.08). Perhaps the most important conclusion supported by this study is that project management maturity is currently very consistent between industries with very few exceptions. An analysis of the remaining thirty-seven out of forty-two key component areas concludes that there is not a statistically significant difference in project management maturity levels between the four industries considered in this study.
Time Management: Schedule Development
The most significant difference between industries identified is this study occurs with respect to the schedule development component area. The average maturity reported by respondents in the professional services industry was 2.59. This value is well above the average results reported for the information and finance industries (2.1 and 1.8 respectively) and nearly a full point above the average maturity level reported by those respondents engaged in the manufacturing industry (1.61). The results are presented in Exhibit 3.
These results indicate a majority of the professional services industry organizations that participated in this study have adopted the practices that characterize level 3 maturity in schedule development. These practices include the definition of the project schedule at the appropriate level of detail, in line with the project scope and work breakdown structure. Additionally, the project schedules are established as baselines that are managed. Finally, the use of project management scheduling tools is standard across all projects. In the remaining three industries there are a greater proportion of respondent organizations that are currently operating at level 2 or below. At level 2, schedule development is based on a repeatable process that relies on expert knowledge, access to industry methods, and access to commercial databases. Project teams develop staffing plans to support the project schedule and work with management to secure the resources required. Finally, at level 2, project management software tools are standard for large, visible projects. We should also note that a majority of respondents in the manufacturing industry indicated their organizations were operating at level 1maturity. At level 1, scheduling occurs in an ad hoc fashion. The organizations lack a formal process for developing project schedules.
Cost Management: Resource Planning
The results for cost resource planning reveal that once again the respondents in the professional services industry report the highest average level of project management maturity (2.22), and the respondents from the manufacturing industry report the lowest average level of project management maturity (1.42). See Exhibit 4.
Industry-wide, the average project management maturity levels reported for cost resource planning are less than those reported for schedule development. In the case of the most mature industry, professional services, the majority of respondents report practices consistent with level 2 or above. These organizations are identifying resource requirements for all labor categories, equipment, and material. They are also employing planning processes that develop and document the resources required as well as the methods for determining resource requirements. The planning process in level 2 organizations is supported by management and is gaining acceptance through the organization. In the manufacturing industry, level 1 practices are considerably more prevalent. The respondents indicated that project managers in their organizations employ methods to identify resources that vary from one project to the next. At times, the functional support areas are overlooked. Most indicated the cost resource planning process was undocumented.
Cost Management: Cost Control
The third and final key component area in which there exists a statistically significant difference (α = 0.05) between the project management maturity of one or more industries is cost control. As in the previous two cases, the professional services industry reports the highest average level of project management maturity (2.33). The average maturity level was below 2.0 for all three of the remaining industries included in this study; namely, information, finance, and manufacturing (Exhibit 5).
It is noteworthy that 38 percent of the respondents in the professional services industry reported their organizations have attained level 3 in cost control. In level 3 organizations, cost control is achieved through the use of a formal cost change control system, a cost reporting process, and performance measurement analysis. Additionally, earned value and performance status reporting is integrated with cost and schedule systems. In the remaining three industries, a preponderance of the organizations reported a level 1 maturity level. In level 1 organizations, project teams apply independent approaches to managing and controlling costs.
Scope Management: Change Control
The principal difference that occurs in this component appears to exist between the professional services industry in which approximately 50 percent of the respondents reported level 3 maturity or higher, and the manufacturing industry where a distinct majority of the respondents reported level 2 or below (Exhibit 6).
Projects in level 3 organizations establish baselines, adhere to baselines, and manage exceptions. The level 3 organizations rely upon a formal scope change control system and documented and repeatable processes for reporting and analysis of scope changes. These practices have been adopted by the 50 percent of professional services organizations that have reached level 3. In the manufacturing industry most respondents indicated that their organization has defined and documented a change control process and this process is followed for the larger, more visible projects.
Human Resource Management: Organizational Planning
In each of the previous component areas discussed, the trend has been a higher maturity level for the professional services industry, with the manufacturing industry generally lagging behind. As we investigated the maturity levels between industries in the organizational planning component area we drew a different conclusion. In this case, the average maturity level for the professional services, information and manufacturing industries was approximately 2, with a majority of respondents for all three of these industries indicating level 2 maturity or above. It is the financial industry that lags in this component area. Respondents reported an average maturity level of 1.4. A majority of respondents reported a level 1 maturity level (Exhibit 7).
In level 2 organizations, project managers create an overview of the type of skill sets that are required by the project and the approximate time frame in which these skill sets will be needed. This is the common practice reported by the respondents engaged in the professional services, information and manufacturing industries. In the financial industry, respondents reported reliance upon ad hoc processes of determining the number of people required to work on project activities. Additionally, they indicated their organizations relied upon informal reporting relationships between project staff members and the project managers.
This section discusses several important observations based on the results of this study. Additionally, we will identify key implications as appropriate.
This research provides a snapshot of the current level of project management maturity industry-wide based on responses from senior-level practitioners representing 126 different organizations. Overall, the level of project management maturity is relatively low across the organizations surveyed. Nearly 67 percent of the respondents rated their organizations at level 1 or level 2. A substantial proportion of the respondents (53 percent) rated their organizations as level 2. For these organizations, current improvement efforts should be focused upon strategies to achieve level 3. There are several fronts upon which the next steps should be taken.
First, one of the key actions to move from level 2 to level 3 is to make the project management processes that are currently used in the organization into an organizational standard. This would be an easy step to accomplish if it could be achieved simply by decision. Unfortunately, this step frequently requires a very concerted effort. Any standard process must adequately address the needs of the variety of projects that are undertaken in an organization. This task is easier in an organization where a preponderance of projects are similar in objective and scope. It may be more difficult when an organization undertakes a wide variety of projects with different outcomes, and substantially different magnitudes of scope. This step will frequently require efforts to integrate any supporting processes. It will also require a very clear and conspicuous commitment on behalf of the leadership in the organization. This step is really only complete when the organization has formally documented the process and implemented the organizational standard across all projects performed by the organization.
A second key action to advance to level 3 is to expand involvement in project management. In the level 3 organizations, clients are involved as active and integral members of the team. Management is also routinely involved in the approval of key decisions and documents, and in key project issues. This increased involvement pays dividends in many respects. The quality of the solution is often improved, and more importantly the commitment to support the solution delivered is stronger as a direct result of the involvement of key stakeholders and decision makers. The broader involvement also improves the communication process. Enhanced communication also improves the quality of the solution delivered, not only of the instant project, but also on other related projects that may benefit from the information shared.
This study did not find widespread differences between project management maturity levels when comparing across industries. To the contrary, there was no basis to conclude a difference existed in thirty-seven out of the forty-two key component areas analyzed. Perhaps this result is due to the relatively low degree of project management maturity found industry-wide. It nonetheless signals that the opportunity for improvement abounds regardless of the industry considered. In those cases where differences were noted, it was generally the professional, scientific, and technical services organizations that were most advanced; and the manufacturing organizations that lagged behind. This study did not investigate the specific factors that may explain the differences observed. It is possible that the nature of project work in these two industries influences the result. In the professional, scientific and technical services organizations project work is frequently accomplished through contracted work. Due to the legal and financial considerations associated with contracted work, one might expect to find greater emphasis on matters related to proposing a contracted effort such as schedule development, cost resource planning, and organizational planning. Likewise, one might expect to find greater emphasis on items related to the performance of the contract to include scope change control and cost control. These are precisely the areas where the professional, scientific, and technical service organizations reported higher levels of project management maturity. The nature of project work in manufacturing organizations is frequently more limited to capital improvement projects, or process and quality improvement initiatives. Many of these projects are completed internally. Additionally, in the manufacturing arena, the need for project management infrastructure often competes with a robust and substantial manufacturing operations infrastructure. Planning for resources to accomplish project work may compete with resources required to conduct manufacturing operations. Projects may compete for budgets that must also support the routine ongoing manufacturing operations. The information systems deployed may focus more on production issues than project results. Looking forward, it is very possible that the manufacturing industry will prove to be a challenging arena for the true institutionalization of project management. Project management has frequently been defined in contrast to operations management, which has long proven essential to success in manufacturing.
The principal purpose of this research was to provide organizations with a benchmark that could be used to gauge its relative maturity with respect to project management. There is an important caution that we should stress. First and foremost, a valid and thorough assessment of project management maturity cannot be obtained by adopting a single response by a single individual to a survey question. A more thorough assessment should involve several methods to include personal or group interviews, artifact collection, widespread survey input, and benchmark comparisons to established standards (Pennypacker 2001, 157).
While this study did not rigorously measure project management maturity in the participating organizations; it has collected, analyzed, and shared the results of 126 senior-level practitioners who provided an overall rating of their organization’s project management maturity. These results can be used in a general sense to characterize the industry-wide level of project management maturity. This snapshot also provides an initial baseline that can be used in subsequent studies conducted over time to measure the evolution of project management maturity industry-wide and between specific industries.
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Proceedings of PMI Research Conference 2002