Good news, bad news – we got the project!

Introduction

Have you ever had to deliver a project that was bid on because a Sales person thought it was a “good deal”? Have you struggled with figuring out how to select the “right” projects to pursue?

This paper articulates the process that one systems integration firm has established for qualifying project opportunities. The process, called the Opportunity Roadmap (OR), is a rigorous methodology that supports field project managers before and after an opportunity is won. This support infrastructure greatly enhances the project manager's success of delivering projects within the quadruple constraints (on time, within budget, to the quality specified, and to the delight of the various stakeholders).

A word of caution—this roadmap process is just that, a process. What makes it work is the adherence to the process. It is not a panacea for all the ills that afflict the delivery of projects. It was implemented because the pain of continuing in the old way was much too high. The process alone does not allow one to chose only the best projects, nor does it automatically make projects successful—the components for those objectives are the people that participate in the process.

Although this discussion is from a System Integrator's (SI) perspective, the over-arching principles are applicable to all firms that are involved in project-based work.

This paper concludes with an opinion of the attributes and distractions of having such as system.

Opportunity Roadmap Overview

The Opportunity Roadmap (OR) is a cross-division, cross-geographic process for the pursuit and delivery of client-based projects. The key elements are representation from all Business Units (BU), early managerial involvement to determine which opportunities to pursue, determination of which BU should lead, a series of approvals designed to qualify and guide good business decisions, and regular monitoring of projects that are being delivered.

The Opportunity Roadmap has a number of Stages with supporting Approvals and Review events. These are:

Stages

The stages of the OR process are sequential gates that have predefined objectives with established approvals and/or reviews required prior to moving forward in the process.

“PARB” Process

The PARB (Project Approval and Review Board) process defines the approval structure for opportunities as they progress through the stages of the OR. It also serves as the mechanism for periodic customer project reviews during the implementation (delivery) process.

PARB Approvals

The PARB is chartered to approve all customer projects that exceed predetermined revenue values and a duration of two months or greater. PARB Approval meetings are held at three points on the Roadmap: during the Opportunity Evaluation Stage, the Development and Proposal Stage, and the Negotiation Stage. An additional approval may be necessary for scope change during implementation if the change is substantial.

PARB Reviews

Periodic formal reviews are held on projects during their implementation. Focus areas during the reviews include: customer satisfaction, project plan vs. actuals, ongoing profitability, balance sheet items, and cash flow.

Exhibit 1

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Opportunity Creation (OC) Stage

The Opportunity Creation (OC) stage starts the cross-division process by identifying projects to be evaluated. The account team develops an Opportunity Profile (rough order of magnitude, key milestones) and brings the opportunity promptly to the local Management Team (MT).

Using a briefing document that identifies: the client's business, description of business need, estimated schedule with key milestones, anticipated key resources required, estimated revenue by fiscal quarters and months, a cross-functional Opportunity Review is held where the MT evaluates the opportunity profile, and decisions are made whether or not to pursue the opportunity and if so, proceed to evaluate the cost to produce a bid. Key areas examined during the Opportunity Review are: how well is the customer need defined, how well is it understood by customer/by us, is the opportunity part of customer strategic plans/direction, is it supported by their senior management, who is the competition, are alliance/teaming partners needed, what third-party subcontracting opportunities have been identified, have resources been identified to perform the opportunity evaluation, what is the estimated cost and duration of this evaluation, what are the current perceived risks/issues in pursuing and NOT pursuing the opportunity?

Further signs that the opportunity is worth pursuing are that: the key account personnel from the sponsoring BU are present at the review; there are plans to use expert resources to analyze the project needs; the opportunity is consistent with the BU strategy.

If the opportunity is accepted, the Management Team identifies the lead BU, assigns a Lead to drive the opportunity evaluation and the process moves onto the Opportunity Evaluation Stage.

Opportunity Evaluation Stage (OE)

The Opportunity Evaluation (OE) stage allows the lead Division to drive a rapid evaluation to assess the size of the effort and the expected returns or risks associated with winning or losing the bid. The Bid Investment Approval PARB is conducted at this stage, and resources are allocated.

The designated Lead Manager is responsible for involving people at the appropriate levels and across all appropriate countries, so that most issues are resolved before the PARB approval meeting. The evaluation team may include the following functions, depending on the size and complexity of the opportunity: Account Manager, BU managers, Country/Region Managers, PMO Manager, Solution Architect, and/or Opportunity Consultant (Finance).

The Evaluation Team is tasked with creating a description of the customer's needs based on documented requirements, determining the resources required to develop a solution and proposal, and formulating a strategy for a winning bid.

The Lead Manager convenes a PARB Bid Investment Approval meeting to evaluate the opportunity and decide whether or not to invest the resources required to develop a bid. The outcomes of the PARB Bid Investment Approval are: the decision is made to develop a proposal package; the Lead Business Unit is confirmed; the Project Manager is assigned; the Bid Team resources are committed by all Business Units.

The major areas addressed in the PARB Bid Investment Approval meeting are: does the customer have an approved budget for this proposal (if so, what is it); how well are the customer requirements defined, has the solution been defined; does it involve unannounced/leading edge products or technology; is a Solution Architect involved; what is our level of experience/capability with the proposed solution; what are the identified risks; are teaming agreements in place; are there any unusual contract or legal issues—with the customer/with third parties; what is the company's win probability estimate—how can it be improved?

Areas that the MT will want to ensure are covered are that a Solutions Architect is involved; the technology/application is within a known area of expertise; experts will be involved in developing customer requirements.

Development and Proposal Stage (DP)

In the Development and Proposal (DP) Stage the team creates and submits a proposed solution that meets the customer's business requirement and budget, as well as one that the company can profitably deliver.

The Lead Manager is responsible for driving the proposal process. The resources contributing to the proposal would include the: Account Manager, Project Manager, BU Accounts contacts, Solutions Architect, Opportunity Consultant (Finance), Delivery Readiness Team and Functional Team (HR, Legal, etc.). In this stage, the team develops the proposed solution, creates a preliminary Project Plan, develops the proposal letter, statement of work (SOW), and Terms and Conditions. If appropriate, a solution Design Review is held. The team also convenes a PARB Bid Proposal Approval to present the project, financials and risks; document the agreement of the management of all participating Divisions; gain support for the proposed solution, schedules, and pricing; establish the negotiating guidelines, and approve the bid for submission to the customer. If granted approval, the team submits the proposal to the customer.

The PARB Bid Proposal Approval meeting ensures that: the sponsoring BU still supports the solution; an independent review of risk, design, or plans has been held; alternate solutions have been evaluated; there is a support strategy spanning the duration of the project; all expenses have been included (administration, overhead); a process for change control and contract modifications has been designed into the offering; and the SOW has been sufficiently detailed.

The Design Review is a formal, documented, and systematic appraisal of the capability of the design to meet the requirements, and identify problems and propose solutions. Attendees to this Review are: Solution Architect, Account Manager, Project Manager, Business Unit Managers, and other qualified staff.

Areas covered during the Design Review include confirmation that the design meets or exceeds the specifications; that the acceptance criteria for each deliverable is clearly defined; that the necessary expertise is available to produce the deliverables; and that clear definitions of transition from one project phase to the next have been established.

Once Bid Proposal Approval has been granted, the opportunity enters the Negotiation Stage.

Negotiation Stage (NS)

Here the team presents the client with the proposal and negotiates a mutually agreeable set of Terms and Conditions (Ts & Cs). Once the client has provided feedback, the team assembles a Ts & Cs Approval PARB to gain company approval for final contract Ts & Cs. After negotiations are complete, the team conducts and documents a Win/Loss Review.

The purpose of the PARB Contract Ts & Cs Approval session is to approve any custom Ts & Cs and/or any changes to the proposed price outside of the negotiating guidelines before the contract is signed. If Ts & Cs are approved, the contract is submitted to the customer.

Focus areas of concerns for this Approval are: have any changes been made to the scope/requirements/delivery deadlines; if so, how have these changes affected price/revenue/cash flow/schedule/resources/risk level; if there are increased risks, are there associated rewards; what alternatives and final contract positions have been established; what are the differences between the negotiated Ts & Cs and/or price and the previously approved bid; how do those differences affect profitability; based on negotiated customer agreements, have the needed changes to subcontractor agreements been negotiated; have subcontractor prices changed?

At the conclusion of the negotiations, a Win/Loss Review is held to document what was done well and what can be done better the next time. Data is captured on why the opportunity was won (or lost), how well the opportunity was qualified, were the customer's business requirements and budget understood, what was our competitive advantage, and who was the competition?

Upon signing the agreed terms, the project enters the implementation stage.

Implementation Stage (IS)

During the Implementation Stage (IS), the project manager is responsible for delivering the solution, as defined in the Contract Statement of Work (SOW). Other major tasks include: managing changes in scope with the customer and company resources; conducting regular Implementation Progress Reviews; and conducting a Project Closeout Review.

The Implementation Progress Review is held to assess the implementation, customer satisfaction, and profitability of the company's delivery. Inputs to this review are the most recent project monthly reports, change request logs, and client sponsorship feedback (via the PM or Account Team). The typical plan-to-actual items are reviewed (e.g., schedule, financial, etc.).

Success criteria in this review includes: active participation by the sponsoring Business Unit; milestones have been met; all variances to scope/schedule/budget/performance have had customer review and acceptance; required resources are available and scheduled according to the project plan.

Quoting Yogi Berra, “it ain't over ‘til it's over”—projects are not finished when the client signs the final acceptance form. Projects are complete when all acceptances have been signed, all revenue is claimed, invoices are paid, purchase orders are closed, a customer satisfaction survey has been conducted and the results shared, the project team has been reviewed, subcontractor performance has been evaluated, lessons learned sessions been held and documented, and project files are complete and prepared to be archived.

The formality of holding a Closeout Review assists the PM, team members, and management in closing out the project prior to moving on to the next opportunity. It also is time to formally recognize and thank the project personnel for their achievements and successes. Items confirmed during the Closeout Review include that: the client has signed the final acceptance; all invoices have been paid; there are no significant issues outstanding; resources have completed their project activities.

Once the project is formally closed, the project manager can release the resources to other opportunities and take a long, well deserved break… at least until the next opportunity.

Benefits

For SI firms, having a process to sift through the many opportunities to find the “right” projects is crucial. The benefits of implementing an OR methodology dwarf the costs of not following such a process. Prior to our implementation of this rigorous methodology, we had a number of legacy projects that consumed our time, talent, and money for much longer than the contract value.

From this project manager's perspective, the road map works. It is the foundation for delivering successful projects. The process ensures that the management team understands what the project is, has committed resources to its success, and ensures the project is aligned with corporate objectives. It provides the account/selling teams the confidence that once a proposal has been approved, it has the backing of the corporation to make it happen.

The road map has improved the overall Bid/Win process by specifying key selling and delivery activities and responsibilities. It has increased profitability by identifying points at which management must understand and assess the value of a prospective project, the investment required to successfully win the business, and the risks involved.

Using the OR has helped to improve internal business processes that, in turn, has increased responsiveness to customers’ needs and overall satisfaction. Also, by using a project closeout review, key learnings are applied to continuously improve business processes.

The OR establishes a common business environment and facilitates resource sharing across the various company geographies and functions. The formality of the approval and review sessions improve communications such that all internal stakeholders have an up-to-date understanding of the project's standing.

By providing more thorough checks on potential project risk areas and actions to address them, the OR helps to minimize the impact of risk on quality and profitability. Having consistent reviews and approvals by the same teams allows lessons learned to be carried into new opportunities. This brings valuable experience to the present project manager such that they can either avert the risk or have adequate planning time to develop contingency plans.

The value of having support resources involved throughout the development of a solution is immeasurable. Controllership resources (finance folks) have confidence that revenue and expenses will be recognized according to corporate guidelines. Through their early involvement, they can advise the proposal team on alternative financial packaging that may benefit the client and the corporation. Legal advice is always less expensive in the negotiations stages than the courtrooms. The benefits of having formal reviews on terms and conditions before a contract is signed are obvious.

Similar to the challenges of getting senior management support for instituting project management discipline, it is difficult to embrace a process that involves many steps and people's input. The OR process articulated here did not happen over night; but, it did happen. Using promotion of process, consistency in expectations and reviews, managerial support, and a little coercing and positive incenting, the OR process is now a normal course of action to take when qualifying promising projects. Everyone in the field now knows that if it meets the minimum criteria then it has to go through the road map. As a result, opportunities are brought forth quickly and either progressed or refused, thus allowing folks to turn their attention to other opportunities.

A few distractions to the OR process need airing to round out this discussion.

The process takes time. Account/selling teams do not always have the luxury of time to walk opportunities through review teams. This issue is addressed by the players knowing upfront what it takes to get an opportunity reviewed and can set expectations with the client and each other on timeframes of decisions and deliverables.

The process needs motivators to keep people using it. Management support, encouragement, and directives are the way to get peoples’ attention. Incentives tied to the use of the process are required. The OR process is the gating mechanism for project managers’ financial reward programs in our company.

Excessive attention in one area (e.g., project financials) can dominate any approval or review session when you have too many reviewers that are measured in the same way (revenue goals). The over-emphasis in one area causes a loss of attention on the other equally important issues. It is critical the project manager ensures the reviewers consider all areas of the solution uniformly.

A roadmap process should evolve. The process should mature from a “did you do …” centric focus to a “how can we help you” model. The challenge is to be as diligent in updating your procedures as often as you improve your solutions.

Summary

A critical success factor for a System Integrator is winning the “right” projects—the OR methodology enables us to just that.

To borrow a line from the 1980s political scene—“are we better off (using the Opportunity Roadmap process) than we were before”? The resounding answer is—Absolutely!

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

Proceedings of the Project Management Institute Annual Seminars & Symposium
November 1–10, 2001 • Nashville, Tenn., USA

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