Abstract
The level of interest surrounding practices related to program management, project portfolio management, the strategic alignment of projects, and the business results of projects have been steadily growing over the past few years. Much has been presented, published, and discussed about them individually. What's needed now needed is an approach that combines the wide variety of concepts, processes, and tools that have emerged from these practices. This paper unveils a ground-breaking method for doing just that—The Revolutionary Strategic Project Management Maturity Model (SPM3)!
Introduction
Countless hours have been spent agonizing over how effectively we (and the organizations we work for) practice project management from a tactical perspective. This model now takes project management methodology to the “next level”, as it represents a practical application of the very popular adage: “It doesn't matter how well you manage your projects if you're working on the wrong projects!”
In an easy-to-understand and practical way, this model organizes, structures, and measures specific organizational practices in a way that will help organizations understand how well they are implementing project management from a strategic perspective. It can also be used to develop a roadmap for organizational improvement.
Following an approach that is somewhat similar to SEI's Capability Maturity Model (which was later adapted to form the various project management maturity models we're all familiar with), the Strategic Project Management Maturity Model (SPM3) displays growing levels of maturity using a five-level gradient scale. Within each level are processes, procedures, tools, and behaviors that serve to characterize an organization's practice of strategic project management--and help measure a company's level of sophistication and maturity. This model represents a meaningful breakthrough with respect to its simple, yet comprehensive construction. In this way it marks a significant, useful leap forward in how companies view the implementation of project management from a strategic perspective.
What Is Strategic Project Management?
It has been said by many that projects are a key agent for advancing corporate strategy. Perhaps. In reality, this is only true to the extent to which an organization creates useful and relevant linkages between the world of projects and the world of business. For many companies, these linkages do not exist in any meaningful way today. For example, it would not be uncommon for a business unit to pursue a particular project simply because it addresses an apparent need related to a key product within their product portfolio. However, as the business unit moves forward with that proposed project, no one takes the time to verify that the initiative will generate positive cash flow. So while the project appears to be advancing the strategy of that business unit because of its focus on a key product, in fact is not advancing the most important strategy of that business unit—to generate profit.
Generally, strategic project management is a series of practices, procedures, processes, tools, and behaviors which, when considered collectively, characterize the extent to which an organization creates effective linkages between excellent project management practices and excellent business practices—all in the name of advancing the overall strategic objectives of that organization.
From a practical standpoint, strategic project management can be thought of as being comprised of four critical elements of so-called higher-level project management practices that have become popular elements in today's project environment. These four elements are:
Strategic alignment of projects. As the title suggests, this practice refers to the extent to which an organization ensures that the projects it pursues are directly tied to organizational strategy—long-term as well as short-term.
Project portfolio management. This practice refers to the identification and use of an all-inclusive, logical, project investment categorization scheme. Identifying different types of project portfolios helps to ensure that the organization takes a balanced approach to project selection. It also facilitates the process of prioritizing projects against other projects of a similar nature.
Program management. Several kinds of program management practices are inherent within the pursuit of strategic project management. Among these practices are the management of groups of projects (such as in the case a large business unit initiative), and the management of interactions between projects (portfolio coordination).
The business results of projects. This subject has gotten considerable attention over the past few years. What is becoming more and more apparent is that projects are really financial investments. If we are to treat projects as such, then it is imperative for organizations to estimate and ultimately measure the kind of impacts that projects have on organizations from a business results perspective.
Why Develop the SPM3?
There are a number of the reasons for using a tool such as the Strategic Project Management Maturity Model. As mentioned above, many companies to a very poor job of connecting project management with strategic management. This is particularly troublesome, as those who study the overall life cycle of project investments quickly come to realize that the front end (the “strategic” end) of the project lifecycle is typically where the big money is to be made, so to speak. In other words, decisions made in the early stages of project ideation (for example, what specific customer needs should be met first) have a significantly higher business impact on those that come later (selecting Vendor A or Vendor B during project execution).
While there are several project management maturity models in existence today, nearly all of them focus on how well a given organization executes the tactical aspects of project management (planning, scheduling, control, etc.). And the models in existence today that do focus on strategic issues are often viewed as confusing, excessively complex, and generally onerous.
But one of the most important reasons for developing this particular model centers on the author's contention that project management personnel can (and should) play a role in organizations that is much broader in scope than the role that has been defined for most who work in organizations today. Specifically, the suggestion is that project managers and project management personnel should, in some way, be a participant in the “business end” of the overall project lifecycle. To that end, this model explicitly identifies a measurement pinpoint which evaluates the breadth of the role given to project management personnel.
The Process Behind the SPM3
An evaluation of how well an organization practices strategic project management makes the most sense when it is tied to the process of practicing strategic project management. As such, you are likely to observe a high level of correlation between the author's design of the strategic project management maturity model in the strategic project management process he has designed. The figure below provides a high-level view of the author's process for the execution of strategic project management.
The first step consists of defining an organization's strategic intent using an approach (such as Balanced Scorecard) by which a top down, gap analysis methodology can be used in a way that allows for the eventual identification of long-range goals (typically having a 3-5 year time horizon), and targeted business meets. Targeted business needs are defined as short term objectives, representing step-wise progress toward the achievement of long-range goals. Targeted business meets would typically be identified by organizational managers as part of their strategic planning sessions. As you can see from the illustration (Exhibit 1), long-range goals and targeted business initiatives are the second and third step in the strategic management process, respectively.
Exhibit 1
According to this author's process design, this is the point at which the project management community would “take over”, so to speak. Their first step—and the next step in the strategic management process—is to identify the optimum solution to each targeted business need. Once the needs and the solutions are known, the organization is now in a position to begin a thorough evaluation of each project proposed. The attractiveness of any given project proposal is evaluated using a combination of financial metrics (NPV, IRR, etc.) and nonfinancial metrics (a set of subjective arguments in support of the project).
Projects are then loaded into their respective portfolio categories and compared against one another. This process is called prioritization. Once this is accomplished, one of the last steps consists of identifying the overall set of projects that the company will pursue in the forthcoming year, taking into consideration constraints such as money and human resources. The only thing left to do now is to manage across all projects. Once again, the key challenge here (at least in today's environment!) revolves around the effective deployment of limited resources.
Foundational Principles of Strategic Project Management
The practice of strategic project management, and therefore the SPM3 model is founded upon a number of key principles, including the following:
SPM3 is a scalable methodology. In other words, this approach could be used at the departmental level, the organizational level, the business unit level, as well as the overall company level.
Project identification is based on a top down approach. As mentioned in the previous paragraph, the SPM process assumes a top-down direction with respect to the way that projects are identified. In many ways, this is really no different than WBS construction. Specific projects are identified only after the most critical business needs have been identified.
Strategic planners do NOT identify project solutions. The practice of solution-jumping is quite common in today's project environment. Solution-jumping occurs when those who identify key business needs take it upon themselves to jump ahead and identify specific solutions—which then get handed off to the project management community. Because no meaningful analysis was done, the solutions handed down do not always represent the optimum approach for addressing a given business need.
Every business need has at least two alternative solutions. At the very least, organizations have the option to either pursue or not pursue a proposed project. Besides that obvious point, there are often two or three ways—or variations of ways—that companies can choose to address business needs. Approaches are generally optimized only after a number of alternative approaches that come to the surface and been fully analyzed.
Projects that do not generate a positive financial return should not be pursued. The ultimate strategic objective for most companies is to make a profit. In support of that fundamental reality, it is incumbent upon organizations to confirm that any project they select has a reasonable chance of generating positive cash flow. Companies that fail to recognize this point are at risk of losing ground (from a business standpoint) with every project they pursue.
All project types must be properly represented (overall portfolio must be balanced). Every organization is likely to pursue different “types” of projects, such as: product development, process improvement, infrastructure, and legal or regulatory compliance. Actually, this is just one approach to subdividing projects into “types”. The key point here is that identifying several portfolio categories offers a level of assurance that each different type of project will be given attention. In addition, it sets up a scheme by which projects of the same type can be compared.
The effects of projects on strategy and goals are measured. As with any system, feedback is an important element of process design. Yet few companies today attempt to evaluate or measure the effect that their projects have on the advancement of organizational strategy. While one could argue that this is a difficult thing to do, it should also be pointed out that it represents a critical element in strategic project management.
The total volume of project work must be controlled. One of the most pervasive and crippling phenomenon in today's project environment is resource overload. The effective practice of strategic project management includes the recognition that organizations cannot do everything that they would like to do. In other words, not all projects that are identified can necessarily be selected. When resource limitations are violated, the result is project delays and a reduction in total project output (higher volumes often translates into lower efficiencies).
Project management practitioners are permitted to play a much more expanded role. As mentioned previously, it is this author's contention that the practice of strategic project management is enhanced when project management personnel are invited to participate in critical “front end” steps of the overall project investment lifecycle. Organizations that have done this can vouch for its effectiveness. In addition, this practice opens up a world of new possibilities within many organizations for talented and ambitious project management practitioners.
Orientation to the Structure of the SPM3 Model
The Strategic Project Management Maturity Model is comprised of three main elements, arranged as major columns in a table, as shown on the illustration below:
Strategic Dimensions. These items represent the major areas of focus which, collectively, comprise the practice of strategic project management.
Dimension Pinpoints. These items may be thought of as “competency groupings”. They represent subdivided elements within each strategic dimension. The pinpoints will be different for each strategic dimension. In organization's level of maturity is evaluated within each pinpoint.
Exhibit 2
Maturity characteristics. These items represent observable practices. Within any given pinpoint, the lowest level of maturity will tend to be characterized by the statements on the left (the sub column entitled “1”), and the highest level of maturity is characterized by the statements to the right (the sub column entitled “5”).
Incorporating a gradient scale, such as Level 1 through Level 5, allows the user to generate evaluative “scores”. It's worth noting that the generation of a score for your organization should not be viewed is a main objective in using this model, as it is in other models. However, for organizations who wish to generate scores as a way of tracking their progress over time, the use of the five-point rating scale will enable them to do so.
Introducing…The 10 Strategic Dimensions and Their Pinpoints
Space limitations do not permit the inclusion of the entire model itself within this paper. However, at the conclusion of the paper, you will be provided with the opportunity to order a copy of the strategic project management maturity model. A significant amount of insight with regard to how the model works can be obtained by examining the strategic dimensions and the various dimension pinpoints, both of which represent the foundation of the SPM3 model. Exhibit 3 below provides that insight.
Exhibit 3
Once again, note the correlation between the strategic dimensions and the steps the pier in the process flow diagram on page three. In the context of this model, the strategic dimensions really comprise strategic project management. And as mentioned previously, the dimension pinpoints are subdivisions of the strategic dimensions, and may be viewed as organizational competency groups.
A Sampling of Maturity Characteristics
The SPM3 model becomes considerably more understandable after reviewing the maturity characteristics. Once again, the entire model cannot be shown here, but two examples of maturity characteristic entries are shown below.
For example, if you were to locate the strategic dimension called “Structuring and Communication of Strategic Intent”, then follow across to be dimension pinpoint called “Relationship to Projects: Project Identification”, you would see the following “Maturity Characteristics” identified, and organized in terms of the five levels of growing maturity:
Exhibit 4
Similarly, if you were to look at the strategic dimension called “Coordination Across Overall Project Portfolio”, follow it over to the dimension pinpoint called “Resource Capacity Management”, you would see the following maturity characteristics identified on the table:
Exhibit 5
This is obviously not an exact science. It is, in reality, somewhat subjective. That's OK. The maturity characteristics identified in the model should be more than adequate to help the user generally understand where the organization exists on the continuum of maturity within a given pinpoint. And whether that organization scores a 2.4, a 2.7, or a 3.2 is really not that critical in the grand scheme of things. As mentioned previously, one of the key objectives of this model is to get the descriptive competency characteristics out in the open, so that organizations may understand the kinds of things they should be doing in order to be effective in practicing strategic project management.
Practical Applications of the SPM3 Model
So how can the SPM3 model be used in practice? In addition to the scoring approach mentioned above, the model could be used to conduct high-level diagnostics. A graphical representation of that appears below. Let's assume that each individual pinpoint has been “colored in” to represent the level of maturity achieved for that pinpoint. If so, the figure on the left would be representative of a generally mature organization. The exhibit below in the center would illustrate the characteristic profile of a relatively immature organization. The figure to the right represents the profile of an organizations that pursues what is affably referred to as a shotgun approach to process improvement.
Exhibit 6
This profile is included because the shotgun approach is somewhat common today. In the absence of a systematic and comprehensive roadmap for improvement, some organizations have a tendency to take aim at specific, individual, largely independent initiatives, and strive to improve them. The SPM3 model, as much as anything, is intended to serve as that comprehensive roadmap for organizational improvement.
Another way that the SPM3 model can be used consists of considering the specific, practices identified in the table, and evaluate exactly what would be required to improve each one. However, it's important to note that subtle interdependencies between some of the strategic dimensions do exist. Given that reality, the optimum approach would consist of ensuring that the various strategic dimensions would remaining roughly equal as the organization strives for an overall increase in maturity.
Closing Thoughts…
This model represents a starting point—the introduction of a straightforward, easy-to-use, process-driven instrument that can ultimately prove to be of great value to all organizations—large and small. I would encourage all who read this paper to take two actions. The first would be to enhance your understanding of strategic project management by requesting a copy of the detailed model ([email protected]). The second, and perhaps even more important action, would be to feel free to offer comments and suggestions to me on how the model could be improved. I welcome your input and feedback. Good luck in your organization's pursuit of strategic project management!
