Abstract
According to A Guide to the Project Management Body of Knowledge (Project Management Institute, 2004), projects are often used to achieve an organization's strategic plan. Yet, besides the strategic planning level, the PMBOK® Guide points out two more hierarchal managerial levels that most modern organizations encompass: tactical planning and operational planning. One of the main differences between those three planning levels is their planning horizon: top management strategic plans are aimed a few years ahead, program managers' tactical-level plans are made for the next year or two, whereas in the operational level, functional managers plan for the next few weeks or months.
Due to their short lifespan, operational-level plans are updated rapidly. That characteristic, together with the dynamic nature and high uncertainty of the project management environment, raises a key question: How can top management align floor-level resource managers to continuously aim at the right tactical and strategic targets?
To deal with this question and to find a mechanism that will align operational level managers' actions according to chief executives priorities, we developed and implemented an enterprise project management (EPM) model we call PROM—Proactive and Robust Objectives Management.
We designed PROM using the theory of constraints (TOC) as well as PMBOK® Guide principles, as an enterprise infrastructure that will enable managing and controlling work plans of different scales: programs, projects, and work packages, in coordination.
PROM's main target was to get managers at all levels focused on achieving up-to-date most crucial objectives, which in this context are the program's strategic objectives, derived from the organization's strategy, that are under a substantial risk.
In the last four years we have successfully operated PROM, reducing project management waste and improving organizational effectiveness. Bottom line, our PMBOK® Guide plus TOC methodology led to four years of continuous improvement in project due date performances.
In this paper we will describe the principles of the PROM model and describe the way we implemented our model in the day-to-day project management organizational processes. Lastly, we share some of our lessons learned from this journey.
Introduction
Connecting Objectives and Operations
Most organizations are based on three hierarchal managerial levels: strategic, tactical, and operational (Anthony, 1965), as seen in Exhibit 1. One of the main differences among those three levels is their planning horizon (Norton & Kaplan, 1996). Due to their short lifespan, operational plans are updated rapidly. Because of this and because of the dynamic nature and high uncertainty of project management, a key question emerges: How can top management align floor-level managers to continuously aim at the right tactical and strategic targets?
Exhibit 1 – The Planning and Control Process
Planning and Control Challenges
Back in the beginning, in 2003 our organization encountered insufficient project due date performances, which became a major challenge for our project management office (PMO). This challenge initiated our journey.
As a first step we looked for the root causes of this phenomenon. The main and significant four root causes we found are listed in Exhibit 2, and are divided into two aspects: an operational aspect and an organizational one.
Exhibit 2 – Root Causes for Insufficient Project Due Date Performance
One main fact that was behind some of these problems was our functionally structured organization, which has changed during our PROM journey to a more balanced matrix structure. As a functional organization we had faced some of its general symptoms (PMI, 2004): project managers, who were located in one unit, had very little or no control over the project in other units. Moreover, resources were managed locally with very little organizational perspective. These two characteristics caused bad synchronization among project parties, and in turn, were a major reason for delays. This lack of synchronization reduced the ability of the PMO to monitor and locate burning issues on time, and to bring them to management's attention. The results were last-minute change requests that should have been dealt weeks or even months before.
PROM – Principles, Implementation, and Limitations
Resolution Direction: Three-Level Planning Model
In order to deal with our challenge and to find a mechanism to align operational-level manager actions to chief executive priorities, we developed and implemented a managerial model we called PROM—Proactive and Robust Objectives Management.
We designed PROM using TOC principles, based on Goldratt's inherent simplicity ideas (Goldratt, 2004) perspective. In accordance with Goldratt's approach, instead of managing hundreds of non-integrated work packages, we decided to simplify our planning and control system and to rebuild it as an integrative objectives-oriented system.
To do so we decided to use the Management by Objectives (MBO) theory (Drucker, 1978), in which the needs of each managerial level are presented as objectives to one lower managerial level. We have decided to use the concept of MBO to integrate all managerial levels' plans into one integrated organizational infrastructure.
In our quest for a suitable model to start with, we encountered the VMCC model (Peleg, 2002), which deals with system-of-systems project management. In this model, virtual managerial levels are created and integrated through a chain of contractual milestones.
With the MBO approach and the VMCC as a model, we decided to design PROM as a multilevel project management organizational infrastructure that will enable managing and controlling different kinds of work plans at different levels of the organization (see Exhibit 3):
- Programs – at the organizational level
- Projects – at the functional unit level
- Work Packages – at the resource department level
Exhibit 3 – PROM Model Levels
PROM's main target was to get managers at all levels focused on achieving up-to-date most crucial objectives, which in this context are the program's objectives, derived from the organization's strategy, that are under a substantial risk.
PROM's Virtual Infrastructure
The PROM model consists of three hierarchical levels:
- Executives' Master Schedules (MS)
- Program Managers' Master Schedules
- Project Managers' Plans
The PROM structure is an integrative one, that is, each level is integrated with the level above it; as in the VMCC model, each contractual milestone in every project plan has a corresponding milestone in the program master schedule to which it belongs. And in turn, each contractual milestone in any program's master schedule has a corresponding milestone in the executives' master schedule.
In this context, a contractual milestone is a commitment from the plan's owner to the customer or the main stakeholder of the same plan. Naturally, as we reach the higher level, there are fewer and fewer contractual milestones, to increase the focal point of the upper-level executives.
Each connection between two levels contains a time buffer (see Exhibit 4). This buffer is set in order to absorb real-life noises, and eventually increase the reliability of the system. We have decided to set the project-to-program buffer size to one month, and the program-to-executive buffer size to two weeks. The minute a buffer is penetrated a yellow and then a red sign are shown. Then the plan's owner, whether the project manager or the program manager, must take corrective action to regain its confidence level and increase its buffer size. When no recovery plan is effective, an escalation is made and the next-level buffer is penetrated, causing the yellow and red signs to appear again, only now at an upper level.
Exhibit 4 – PROM Virtual Infrastructure
Monitoring the Integrative Plan
Using the PROM, a monthly organizational Objectives Management Review is conducted. All project status information presented in this review is based on field reports. The PMO checks all field reports for completeness and correctness before every review.
Top management and program and functional managers attend this review, after similar reviews have been conducted in each program with the relevant top management executive. The review is three hours long, and it is a paperless process, using our review tool (see Exhibit 5).
Exhibit 5 – A Snapshot of Our Objectives Management Review Tool
The main target of each review is to make decisions that can only be made in this forum. Such decisions might include re-prioritizing work chunks or strengthening critical resources for troubled projects. This is achieved by reviewing all organizational objectives and focusing only on the critical project milestones that are at risk.
Every program manager reviews his program's red milestones, which are project objectives at risk. For each troubled project, the program manager shares with the forum the actions taken to recover buffer status and reduce risk. It should be noted that milestones are coloured red only after all preliminary buffers are consumed: within the project, between the project and the program levels, and between program and executives levels.
When a red milestone is being investigated, it is possible to drill down in its virtual critical chain, which begins at the working package level and goes through the project and the program levels. This is how we can instantly locate the owner of the “hot potato” we must help to resolve the situation.
Limitations of PROM's Implementation
Of the three PROM model levels, organizational objectives management, program management, and functional constraint management, only the top organizational level has been completely implemented. The other two levels were partially implemented with local successes. Still, the PROM model has showed significant results. We explored this paradox to answer the question: How could we become more effective, when not all program managers and not all functional managers have adopted PROM?
The answer relies in the top-down implementation method we used: our first challenge was to convince all management members to use PROM in order to improve their visibility and gain common organizational performance metrics. Together with the personal high responsibility of our general manager, our monthly objectives management reviews gave tremendous results, since no program manager wanted to have to explain his red milestones. Our job as the organizational PMO was to make sure the system is reliable, meaning RED is RED and GREEN is GREEN. No lack of reporting was acceptable!
In many cases, the focus on these main organizational project objectives made the program managers and functional managers give greater attention to solving the problems and bottle-necks that were preventing organizational objectives from being reached.
Conclusions
PROM Model Results
In the last four years, we have successfully operated PROM, yielding reduced operational waste and improved organizational effectiveness. Bottom line, our methodology led to four years of continuous improvement in project due date performances.
Lesson Learned
Here are few of the main lessons we have learned from our journey:
- Top management leadership is a necessary but not sufficient condition for implementing an organizational model such as PROM. In our case we had one strong sponsor in top management who, together with the general manager, supported each of our implementation steps.
- The first step is to explore the methodology and only then invest in the tools. Purchasing an EPM suite will not do the work, unless you have a clear path to follow.
- Enhanced planning makes a big different between a robust and a non-robust plan.
Enabling a Focal Point
In order to transform a complex work plans system into a simpler one, we integrated our infrastructure and thus enabled a stronger focal point for all managers. Now executives and program managers can focus on the crucial project objectives that are at risk. In the same manner, project managers can focus on their critical chain instead of exploring all risky chains. And, when using PROM, resource managers can focus on their constraining bottlenecks instead of managing all resources all the time. This focus simplifies our work plans system and makes enterprise project management more effective.
So Why PROM
Today, using PROM, we proactively cope with our projects' most crucial risks, weeks or months in advance. Our planning process is becoming more and more robust, resulting in fewer change requests. And nowadays our top management focuses on viable targets, and functional managers use a more organizationally holistic approach instead of what's best just for their project or program.
Our next challenge is to integrate PROM with the functional units' floor-level operations and the resource managers. Only then will we close the loop of the planning and control process.