Proving the value
VIEWPOINTS STRATEGY AND PROJECTS
BY DEBORAH BIGELOW, PMP, CONTRIBUTING EDITOR
Many organizations are incorporating project management as a core competency, but it is not cheap and does not happen overnight. Only 51 percent of organizations measure the value of implementing project management improvement initiatives, and these metrics are focused primarily on meeting delivery dates and budgets, according to the Center for Business Practices. This is not good enough. Senior executives who have initiated project management improvement projects now are being asked to “show us the value!”
To see exactly where the perceived or actual value of specific project management initiatives lies, I investigated organizations that currently are executing project management initiatives to see what they feel is critical and what sort of return on investment they're receiving. My research led me to a panel discussion held at PMI Global Congress 2003—North America, in which speakers summarized their initiatives and where they were finding value.
State Farm Insurance started small and gained successes along its six-year journey to project management maturity. They are now at the point where the value of project management is visible. Other departments ask to “borrow” IT project managers for assignments, and some departments have established their own internal project offices and are developing their own project managers.
Jeanne Childers, systems project office director for State Farm Insurance recommends six critical elements for a successful project office:
- Implement a project management methodology
- Formalize the role of the project manager
- Train project managers, sponsors and team members in their roles
- Implement a tool to support the project environment
- Implement a project office
- Mature the project management discipline through advanced project management training and professional certification.
The metrics used for evaluating project management performance really depend on the intiative's goals, the project management maturity level and the company culture, according to Janet Burns, director of project management at The New York Times Co. (NYTC), which had an ad hoc approach to projects. Its first initiative was to implement an enterprisewide project management methodology, the PM Roadmap. A key metric, therefore, was the rate of adoption and usage of the methodology.
NYTC's project management office (PMO) has been responsible for tracking performance results because it owns the project management process, Burns says. One significant change since the initiative began is that project management goals and objectives are now other employees' goals as well. As a result, tracking and accountability is spreading beyond the PMO.
Perhaps the most important benefit of improved and consistent communications is improved scope management. NYTC's previous informal processes did not include such documents as a project charter. Because no project charter existed, there were often multiple impressions of project goals, scope, etc. Developing a project charter now enables early and frequent conversations about the content of projects, leading to improved scope, schedule and budget adherence.
Although project data for NYTC “is anecdotal at this point,” Burns says, “the examples cited have shown positive value to the project sponsors. We will begin to track projects more diligently in the near future and compare the results of projects using our project management methodology and techniques. We expect to capture data that reflects actual savings in time resulting from improved management, project selection and leveraging information across our business units. While we currently enjoy a great amount of support from senior management, showing the value to our bottom line is expected to sustain and bolster that support in the future.”
Mark Philhower, vice president, CIGNA Healthcare Program Management Office, discussed his organization's initiatives to align corporate strategy and the project portfolio. At CIGNA, a project called Alignment and Prioritization defines an individual project's impact on the corporate and divisional objectives and strategies. CIGNA has established quantitative impact metrics for each project, with those metrics then being used as indicators for alignment and prioritization.
Although still in the beginning phases, those metrics will follow the project through the development of its business case, funding and approval process, and ultimately, production and operations. Once in production, the plan is to track operational returns and compare those returns to the original estimates and, assumptions used to justify the project in the first place. This use of pre-established metrics ensures a greater degree of financial accountability in realizing the projected business benefits of the project.
“The program management office has been given responsibility and ownership of the Alignment and Prioritization process together with project portfolio management,” Philhower says. “Projects and initiatives are derived both strategically (top down) and operationally (bottom up). Strategic initiatives are evaluated against the longer-term strategic objectives of CIGNA Healthcare, and operational initiatives are evaluated against the shorter-term operational needs of the organization. Both strategic and operational initiatives then are evaluated against capital and resource constraints. Each of the two portfolios will be evaluated and reviewed periodically (at least monthly) for any changes in project status, organization or market dynamics. Resource allocations also will be reviewed and evaluated periodically for adjustments and modifications due to availability, changing project status or changes in project demand.”
While CIGNA is just starting to get its arms around managing this effort, Philhower foresees significant opportunities for improving organizational focus and performance. PM
Deborah Bigelow, PMP, is executive vice president of PM Solutions Inc., a Havertown, Pa., USA-based project management consulting company. She was executive director of the Project Management Institute from 1992 through 1996.
PM NETWORK | FEBRUARY 2004 | WWW.PMI.ORG