Sailing through the storm
PMO OF THE YEAR
BY JEREMY GANTZ
The business environment is never static: Markets grow, regulations change, technology evolves. Strong leaders know that the ability to rapidly develop and execute strategic initiatives separates the heroes from the ho-hum. And many leaders turn to their organization's project management office (PMO) to manage change and deliver exceptional value.
The three finalists for the 2014 PMI Project Management Office of the Year Award showcase the power of PMOs across very different fields: energy, economic policy and healthcare. Through close process oversight and by choosing the right practitioners for each project, one PMO helped its organization meet tightened environmental regulations on time while saving millions of U.S. dollars. Another finalist steered a country's central bank through major economic challenges by establishing a results-oriented culture and overseeing projects that ultimately tamed sky-high inflation and interest rates. Responding to sweeping changes in the U.S. healthcare industry and the most aggressive growth goals in its organization's history, a third PMO provided a scalable, repeatable project management foundation to handle rapid portfolio growth and a large-scale initiative to integrate two companies.
Thanks to steady executive-level sponsorship, these three finalists strategically aligned portfolios and raised project management practices to the next level to ensure their organizations came out on top in a world of constant change. In the coming months, PM Network will give you an in-depth look at each PMO, complemented by videos on PMI's YouTube channel.
Lighting the Way
One of the largest energy organizations in the United States, DTE Energy had US$9.6 billion in revenue in 2013. The Detroit, Michigan, USA-based company comprises electric, gas and nonutility businesses focused on power, industrial projects and energy trading.
When DTE decided it needed to become the best-operated energy company in North America to meet its growth objectives, it opted to centralize project management to drive strategic goals through its varied business units. The company chartered its PMO in 2006, giving it ownership over strategic capital electric and gas projects across five portfolios spanning the company.
The PMO isn't just about execution, however. Led by Executive Vice President Ron May, its leadership team is at the table during DTE's annual strategic planning process, helping to identify industry challenges and develop business plans that translate goals into actions. From there, the PMO's 240-person staff calibrates project portfolios to DTE's performance targets, and collaborates with business units across the organization to ensure strategic alignment and execute projects using standardized best practices.
The payoff? By evaluating desired scopes, DTE's PMO “yielded an average savings of about 10 percent for projects and associated change orders,” says Mr. May. “By leveraging construction best practices, we were able to reduce costs, yielding significant savings.”
One area where DTE's PMO delivered clear strategic value was compliance with a changing regulatory environment impacting one of the organization's power plants and its retail energy supply mix. Responding to a new regulation mandating significant reductions in exhaust emissions, the PMO handled all aspects of a project to upgrade the coal-fired Monroe Power Plant in Monroe, Michigan, USA. It also delivered a project to build DTE's 15,000-acre (6,070-hectare) Michigan Thumb Wind Park, developed in response to a new state law requiring 10 percent of the organization's energy supply to come from renewable sources.
The PMO staffed these projects with appropriate talent, playing an integral role in designing new systems at the Monroe plant and leveraging its scheduling engineering expertise to manage thousands of wind farm construction activities conducted by six contractors. Indicative of this mature PMO's track record, projects were completed ahead of schedule while achieving a combined savings of US$168 million.
Organization: DTE Energy
PMO started: 2006
Location: Detroit, Michigan, USA
PHOTO BY SUSAN MONTGOMERY / SHUTTERSTOCK
PMO OF THE YEAR
Organization: Central Bank of the Dominican Republic
PMO started: 2007
Location: Santo Domingo, Dominican Republic
Stabilizing an Economy
Annual inflation at 49 percent. A 35-percent bond interest rate. Even before the onset of the 2008-2009 global recession, the Central Bank of the Dominican Republic (CBDR) had plenty to worry about.
To tackle the economy's deep structural problems, CBDR realized it needed to restructure itself. So in 2007, the bank's governing board approved the creation of a PMO with a clear mandate: help fulfill the institution's constitutional mission by strategically aligning the bank's project portfolio and establishing project management best practices.
In other words, the PMO was tasked with nothing less than restoring and maintaining the country's macroeconomic and financial stability. And it had to do so while proving to skeptical bank employees that the PMO is more than just a “form factory” requiring excessive documentation and reporting, says Luis José Bourget, planning and budget department director, CBDR, Santo Domingo, Dominican Republic. His department sponsors the PMO.
When it came to securing buy-in, “the biggest challenge was gaining trust, proving measurable value to the institution's performance and results improvement through portfolio, program and project management,” Mr. Bourget says.
The PMO rose decisively to the challenge, integrating strategic and operational planning while leading the organization's drive for focused strategic thinking across the portfolio. It also achieved standardized processes throughout the bank and supported its clients—project managers and stakeholders—with tools and mentoring as necessary.
Project plans are now consistently completed in the areas of quality, risk, communications and stakeholder management, going beyond the triple constraint, procurement and human resources. The PMO pushed for consistent program management practices from its start and began an official standardization process in 2013. The portfolio, program and project management domains are monitored through quarterly performance reports and semiannual evaluations.
Of course, Dominicans were likely unaware of the PMO's behind-the-scenes dedication to bringing economic stability to their lives. Yet by overseeing the efficient execution of the bank's strategic research and policy formulation projects, the PMO proved invaluable. The payoff was clear during the years following its creation: During 2006-2009, the country's inflation rate declined to an average of 7.25 percent, the bank's bonds interest rate fell to about 13 percent, and the exchange rate dropped from RD65/US$1 to RD35/US$1.
Beyond those highly visible economic barometers, bank projects included successfully pushing for new legislation to strengthen the financial system and implementing a national payment system that guarantees the security of payments and securities.
Given the PMO's impact on the bank and country, its leaders are now sharing best practices—and rightfully so. “We strive to foster project management's best practices in the country's governmental and private sectors,” Mr. Bourget says.
Managing Rapid Growth
The U.S. healthcare industry has experienced convulsive changes during the last five years. Two trends have offered immense growth opportunities to health insurance companies: the 2010 Affordable Care Act (ACA)'s mandate for near-universal healthcare insurance and the severe recession peaking in 2009, which increased the number of people qualifying for state-sponsored Medicaid health coverage.
The growth-focused PMO in WellPoint Inc.'s Government Business Division (GBD) has taken full advantage of these two opportunities. Originally part of Amerigroup, which WellPoint acquired in 2012, the PMO helped power the Indianapolis, Indiana, USA-based company's transformation into the country's largest Medicaid managed care company. The GBD now accounts for 45 percent of annual revenue at WellPoint, and the PMO manages a US$4 billion project portfolio.
Yet meeting ambitious growth goals in a competitive market wasn't the only high-pressure test the PMO has easily passed in recent years. After Amerigroup's 2011 acquisition of Health Plus, one of the largest Medicaid managed care companies in New York, USA, the PMO was tasked with seamlessly combining the two organizations. It had to ensure continuity of care for nearly 500,000 people with zero erosion of membership and 100 percent service integration. Leading a project team of 500 people across both companies, the PMO did that and more as local, state and federal regulators watched for infractions stemming from the integration.
“There is no room for error in launching new products, services or entering new geographies,” says Pete Haytaian, executive vice president of WellPoint and the PMO's executive sponsor. The PMO's “partnership with the business is crucial to our success, and the strategic significance of their work cannot be emphasized strongly enough.”
The PMO's growth between 2010 and 2014—from 13 to 57 practitioners—reflects the broader organizational growth it spearheaded. It also reflects steady executive-level sponsorship before and after the PMO became part of Well-Point's GBD in 2012. Thanks to steady investments in the disciplines of project, program and portfolio execution going back to 2009, the PMO's staff of experienced PMI-credentialed practitioners was able to master repeatable frame-works for projects. Next, the PMO could scale up those frameworks to allow Amerigroup, and then WellPoint, to dominate the country's Medicaid managed care sector as ACA-related initiatives were unrolled—and often delayed—at the state and federal levels.
In the end, the PMO proved to be the compass that sailed the organization through what WellPoint calls the “perfect portfolio storm” of simultaneous organic growth, ACA project delays and large-scale integration initiatives. PM
Organization: WellPoint Inc.
PMO started: 1996
Location: Chesapeake, Virginia, USA
AND THE WINNER IS...
The 2014 PMI Project Management Office (PMO) of the Year Award will be presented at PMI PMO Symposium 2014, scheduled for 16-19 November in Miami Beach, Florida, USA. To apply for the 2015 PMO of the Year or other professional awards, head to PMI.org, and click on “About” and “Professional Awards.”
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OCTOBER 2014 PM NETWORK