4 strategies for a scalable enterprise project management framework

Abstract

In this paper, we introduce four (4) successful strategies used to implement a scalable enterprise project management framework at a diverse, $10B, Fortune 500 Company:

1. Implement a scale appropriate project delivery system
2. Integrate an enterprise stage/gate model with financial governance
3. Balance enterprise & department project management governance
4. Continuously train & engage the “community”

We discuss how these four strategies drove improvements in enterprise project management maturity, standardization and understanding, while preserving the benefits provided by existing and disparate departmentlevel processes, tools and templates.

In sharing these strategies, related key lessons, and some implementation tips, we hope others may benefit in their endeavors to drive organizational project management maturity at the enterprise level.

Introduction

In 2007, Progress Energy, an electric utility serving three (3) million customers in North and South Carolina and Florida was, like many of its industry peers, facing a significant challenge to upgrade and rebuild the infrastructure underpinning the nation's energy grid. Drivers included demand growth, environmental regulations, aging assets, and mandates on efficiency and renewable sources of energy.

As a result, the company was planning an increasing number of very large and complex projects. Senior management recognized improving enterprise project management capabilities in advance of these large projects was critical. In response, a Project Management Center (PMCoE) was chartered to bring focus to project management as a core competency.

The biggest challenge to the PMCoE mission was the lack of an enterprise project management framework. At the time, at least six (6) department frameworks were in place. Projects were governed under the framework for the department with execution responsibility. Each framework was individually optimized for project scope, mix, and organizational capabilities and had its own flavor of terminology, processes, and role definitions.

Exhibit 1 summarizes the predominant project management organizational attributes of these six (6) departments. Four departments; Distribution, Transmission, Generation [Non-Nuclear] and Generation [Nuclear]; operated and maintained assets directly involved in the generation and delivery of electricity. The departments were operations and maintenance focused; projects were a necessary but smaller part of the overall department mission.

The Construction department performed new asset and major upgrade projects including new plant build. It was focused solely on projects and was viewed as the most mature project organization in the company. The PMCoE was organizationally located within the Construction department.

The Corporate department executed the balance of projects including IT and real estate.

Exhibit 1 – Project Management Organizational Attributes by Department

The degree of formality of the department frameworks varied widely. Some had very structured procedures while others had general guidelines. All were based on long term departmental practices and utilized elements from one or more standards organizations including the Project Management Institute^®, Construction Industry Institute^®, and the Institute of Nuclear Power Operations^®.

Team structure, organizational approach and contracting style had evolved based on scope and volume and size of projects managed which varied widely. Exhibit 2 illustrates department project volume and spend by project size. Project size in this case is defined by Total Project Cost (TPC).

Exhibit 2 – Department Project Volume and Spend by Project Size Based on 2007 – 2011 Cost Data (≥ $250K Projects Only)

Corporate and Distribution managed portfolios almost totally comprised of high numbers of small projects. Such groups tended towards self perform and T&M (time and material) contracts with project schedules adjusted as necessary based on department resource constraints. At the other extreme, Construction managed very few, extremely large projects. These projects were executed almost exclusively by large contractors, often in an EPC (Engineer, Procure, and Construct) arrangement, overseen by a dedicated Progress Energy project team.

The remaining departments managed small and larger sized projects with Generation [Nuclear] managing the most extreme range. Managing such a mix within one department presented additional challenges. In general, the greater the size range of projects managed, the more difficult it was to achieve consistent performance.

As a result of these differences, the department frameworks were not easily translatable in terms of processes, standards or even role definitions. For example, each defined “project manager” through the lens of their individual organizational design and project management framework. There was no consistent definition of project manager even though 10% of the workforce (~1,000 employees) had “project” somewhere in their job title.

Although there were advantages to having local frameworks optimized to meet specific department needs, lack of an overall enterprise framework resulted in a number of challenges, including:

• Pockets of high and low maturity
• Increased complexity with cross departmental projects
• Increased difficulty in evaluating and comparing project performance
• Decreased agility; project managers not easily transplantable from department to another

Over the last three years, the PMCoE worked to roll out an enterprise framework that largely addressed the above issues without impacting the flexibility that individual departments needed to be successful. There were many lessons learned along the way; some painful. In looking back over this time, it became apparent that consistent application of the 4 strategies has proven critical in achieving this success.

We now turn to these 4 strategies and provide lessons learned and some implementation tips so others can benefit in their endeavors to drive enterprise project management maturity.

1. Implement a Scale Appropriate Project Delivery System

The purpose of a scale appropriate project delivery system, Exhibit 3, is to characterize projects using a common project evaluation method and use the results to assign the right organization, project manager, and level of project management rigor. Some of these concepts, particularly the definition of a Project Profile Matrix (PPM), were presented at the PMI Global Congress 2009, North America (Josey and England, 2009). As the name suggests, the problem that is addressed is one of scale.

Exhibit 3 – Progress Energy Project Delivery System

There are three major components to the Project Delivery System: 1) A Project Profile Matrix which defines the methodology for evaluating any project and determining it's rank on an enterprise standard, 2) a Project Manager career path, which defines the knowledge, skills and abilities required to manage a project of commensurate rank, and 3) a set of standards that define project management processes and requirements, also commensurate with the project rank.

As an example, following the four steps of the process, if a project is ranked Green II, the minimum required project manager is a PM II and the basic set of enterprise standards apply.

A scalable project delivery system provides the following benefits:

• Allows all projects across the enterprise to be evaluated in terms of cost and complexity on the same basis
• Provides a consistent method for determining the appropriate level of project manager. This enables, for instance, a project manager in one department to be evaluated for a project opportunity in another.
• Provides a common language and requirements, eliminating the “translation” problem
• Provides guidance on the appropriate level of project management rigor. This ensures, across the enterprise, small projects are not overly burdened with requirements and large projects get the rigor necessary for success

The sequence of work to establish this system is threefold:

1. Determine a ranking process appropriate for the enterprise portfolio of projects. This requires careful consideration of the size, scope, and complexity characteristics.
2. Determine Project Manager career path levels that align well with cost/complexity tiers of the PPM. Utilize enterprise practices, industry standards, and compensation data to develop a project management career path that aligns well with the portfolio of projects.
3. Establish requirements that align well with the cost/complexity tiers of the PPM. Use internal practices and industry sources (including PMI^® and other knowledge sources) to develop governance that provides enterprise level expectations for all projects. Exhibit 4 illustrates the basic structure of the 20 standards comprising enterprise governance.

Exhibit 4 – Typical Enterprise Standard Structure

2. Integrate an Enterprise Stage/Gate Model with Financial Governance

The stage/gate model, Exhibit 5, provides a common enterprise roadmap for the project lifecycle. Alignment of the stage/gate process with financial governance takes the guesswork out of when projects should seek funding authorization and what should be reviewed at those points. The problem that is primarily addressed by this strategy is timing.

Exhibit 5 – Progress Energy Stage/Gate Model

The stage/gate model makes it very straightforward to determine where the project is in time and what the expectations are for project maturity at that point. Further, providing expectations at the stage/gates in terms of project maturity and tying it to the “money” creates a natural incentive for departments to increase project management maturity.

In this model, the stages; Scan, Assess, Develop, Plan\Execute, Operate & Maintain; are periodically punctuated by gates; Identify, Select, Initiate, Commit, Build, Commission, and Close. The gates are decision points on whether or not to approve the activity to proceed.

The early stages, Scan and Assess, are business processes informed by project organizations. Purpose is to Identify (prioritize) the right set of challenges and Select the best projects to solve those challenges.

The intermediate processes of Develop, Plan and Execute ensure the project, as it progresses, achieves the expected level of maturity at Initiate and Commit (full funds authorization). The Build gate is a readiness only gate to ensure the project is prepared to initiate large scale implementation activities.

The final stage of Operate & Maintain is when the project will Commission the asset and Close the project. The inclusion of this stage is also a reminder that all projects must start with the end in mind.

The stage/gate model was not introduced at the outset of the PMCoE initiative. Rather, it evolved out of observations and insights of inconsistent practices related to project development and timing of the full funds authorization request.

Some departments funded a fair amount of project development prior to formally requesting project funding. These departments developed relatively mature cost estimates and generally delivered projects within expectations. Other departments formally requested project funding as a means to start development. These departments often surprised management with later cost increases due to progressive elaboration of project scope.

The cause of inconsistency was a lack of an enterprise pacing mechanism that allowed all departments to know what level of maturity was expected at key points in the project lifecycle. The stage/gate model solved the timing problem.

An enterprise stage/gate model integrated with financial governance has the following benefits:

• Reinforces the project delivery system by providing additional common terminology
• Provides a common model for interpreting where a project is in its lifecycle including timing of major authorizations
• Promotes project management maturity by reinforcing positive gate reviews with successful financial authorization
• Provides a flexible model for extending many concepts related to projects

The sequence of work to establish a stage/gate model is:

1. Use observations and insights to develop a stage/gate model that fits your organization.
2. Work with finance to revise financial governance to tie stage/gates and funding authorization together
3. Revise Project Management standards to align expectations with the stage/gate mode (note the incorporation of the stage/gate in the standard structure in Exhibit 4).

3. Balance Enterprise & Department Project Management Governance

The purpose of this strategy is to ensure benefits of an enterprise project management framework are achieved while allowing departments flexibility to perform projects consistent with their unique requirements. It recognizes there must be a defined hierarchy of project management standards. The problem to be solved is one of balance.

Like the stage/gate model, the governance hierarchy, Exhibit 6, was introduced later to address observations and insights of confusion about the role of enterprise governance.

Exhibit 6 – Progress Energy Governance Hierarchy

PMCoE assumed departments would interpret enterprise governance and make adjustments as necessary to department governance. Almost universally this did not happen. Some departments still viewed department standards as their primary governance. Others looked to enterprise governance to be inclusive of all requirements. However, the enterprise governance was specifically designed to not include department specific requirements; doing so would have made the governance so unwieldy as to not be practical for useful application.

The governance hierarchy was created to be an educational device to clarify these issues and prompt discussions with departments about the how to develop department specific standards consistent with enterprise governance. From these discussions, the concept of Implementation Standards was developed as means to define the primary department project management governance document.

PMCoE collaboration with departments on development of Implementation standards lead to several governance innovations:

• Department Project Profile Matrix - Most departments managed a high number of White (small) projects. The enterprise framework allowed those projects to be managed using department practices with elective compliance to PMCoE governance. Several departments elected to “expand” the white space to define levels of rigor analogous to the enterprise model and, in some cases, required compliance with enterprise requirements for more complex white projects. Exhibit 7 is an example of one of these extensions.
• Department Stage/Gates - several departments implemented additional stage/gates beyond what the enterprise stage/gate process required. These gates were used to include key project milestones meaningful to the department.
• Department Project Manager qualification requirements - The enterprise framework provided Project Manager qualification requirements. Some departments augmented these with additional requirements. An example was additional specific qualification requirements that project managers over nuclear projects were required to obtain.

Exhibit 7 – Department Extension of the Enterprise Project Profile Matrix (PPM)

Balancing enterprise & department project management governance has the following benefits:

• Provides a check and balance against applying enterprise requirements that are too heavy or too light
• Enables a process to allow departments to develop department specific project management governance that is consistent with enterprise governance
• Provides opportunity to work with departments to develop solutions specific to their needs

The sequence of work to establish a governance hierarchy:

1. Determine if your company has a governance hierarchy. If so, use it as a model. If not, develop a project management specific governance hierarchy model
2. Work with departments to assess the right balance of definition at the enterprise and department level. Make adjustments to enterprise governance as necessary.
3. Partner with departments to help ensure department governance is aligned with the enterprise. Be a solution provider as opportunities arise through these interactions.

4. Continuously Train & Engage the “Community”

The purpose of this strategy is to ensure all stakeholders with a role to play in the success of implementing an enterprise project management framework have been identified. The problem to be solved is one of defining the community.

PMCoE defined the initial target community as senior and department management; project managers, and working group representatives from all departments. Senior and department level training was accomplished via briefings facilitated with a “gold card,” Exhibit 8.

Exhibit 8 – PMCoE Gold Card

Project managers received the equivalent of 3 days of training as part of the qualification process. PMCoE reinforced this training through active engagements at the request of a project managers or management. These engagements took the form of workshops with risk often being the topic.

Based on observations and insights from training and workshops, it soon became obvious, however, that the community was incompletely defined. In some departments, project managers indicated their supervision did not always provide the level of support needed to implement the new requirements. Some groups took the gold card as the enterprise governance and were extrapolating requirements incorrectly.

The conclusion by the PMCoE was the definition of “community” needed to be enlarged. Other key groups were included in the community including project controls, first line supervision, finance, business services, and audit. Training and engagement with these groups has had a significant positive impact on the effectiveness of the enterprise project management framework.

Continuously Train & Engage the “Community” has the following benefits:

• The task of identifying the “community” itself strengthens the rollout plan
• Lessens dependence on indirect communication, which is much less effective
• Prompts identification of key governance partners who can help reinforce compliance
• Provides a feedback loop on issues and lessons learned.

The sequence of work to establish a train and engage the “community”:

1. Define who should be included in the “community.” The community at a minimum should include:
   • Project managers
   • First line of supervision
   • Department and Senior Management
   • Finance, Audit and Business Services
2. Develop and tailor training to these separate groups. Consider a tiered approach.
3. Offer and provide ongoing training and engagement opportunities.

Summary

Discussed in this paper is how a Project Management Center of Excellence implemented an enterprise project management utilizing four (4) primary strategies:

1. Implement a scale appropriate project delivery system
2. Integrate an enterprise stage/gate model with financial governance
3. Balance enterprise & department project management governance
4. Continuously train & engage the “community”

Through these strategies, the PMCoE has been successful in replacing six differing department project management frameworks with a single, scalable framework that provides enterprise governance augmented by department implementation standards.

As a result, projects are now well categorized with appropriate level of project management and process rigor. The role of project manager is now clearly defined with a well-structured career path consisting of a 150 full time career path managers (Exhibit 9). A common stage/gate process is utilized with enterprise expectations of project maturity at key authorization points.

OPM3^® and internal assessments indicated an enterprise wide increase in project maturity. Feedback from Senior Management confirmed improvement in transparency, understanding and predictability, major goals for the PMCoE.

Benchmarks with peers through the industry have proven a high degree of interest in replicating similar results. We hope sharing these strategies and related key lessons will benefit others in their attempts to drive organizational project management maturity at the enterprise level.

Exhibit 9 – Projects and Project Manager by PPM Rank (as of January 2012) Project Managers of White Projects not Shown

Epilogue

In August 2012, the merger between Progress Energy and Duke Energy was completed forming the largest utility in the United States. One of the goals of the merger was to leverage project management best practices of both companies to create a project management framework for the combined entity. During integration efforts prior to close, a joint team of Progress Energy and Duke Energy employees developed a draft project management framework for the new company that incorporates many of the concepts and strategies presented herein. A new PMCoE organization was approved and is now moving forward with the significant challenge of implementing an enterprise project management framework across a much larger and diverse company.