Utilizing a project profile matrix to determine project management requirements

Kenric England, Progress Energy

Abstract

A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fourth Edition (PMI, 2009), does not contain a clear method for scaling fundamentals across the range of projects encountered by capital intensive industries such as electric utilities. The requirements for managing the most complex projects generally are not directly applicable to the least complex, and vice versa. For instance, the reporting and governance for a $3 billion new plant investment merits a higher level of effort and analysis compared to a $500,000 repair project. To address this issue, Progress Energy employed an innovative Project Profile Matrix (PPM) approach that establishes project classification and associated project management requirements on a consistent basis across the enterprise. The PPM allows, among other benefits, a universal Project Management career path definition including qualifications and compensation, scalable procedures with related tools and templates, and enhanced transparency of project performance to senior management. The approach has been so successful within Progress Energy, that other disciplines such as supply chain have begun to utilize the PPM construct to develop scale appropriate departmental processes, tools and organization structures.

Introduction

Progress Energy (NYSE: PGN), a regulated utility supplying electricity using nuclear, gas/oil, hydroelectric and coal fuel sources to 3.1M customers in the Carolinas and Florida, currently faces the challenge of adding substantial generation and transmission infrastructure to serve its growing service territories (Progress Energy, 2009). Managing this investment effectively in an environment with regulatory and market uncertainty is a critical requirement. To that end, the Project Management Center of Excellence (PMCoE) was formed in May 2008 with a mission to establish a standardized corporate project management approach encompassing processes and tools; training and qualification programs; and adoption of best practices (Bolles, 2002, p.3-18). An early objective of the PMCoE was to develop a mechanism to consistently evaluate projects for purpose of establishing the appropriate qualifications and processes required for successful execution. The result was the Project Profile Matrix (PPM).

Project Profile Matrix (PPM)

Traditionally, projects within Progress Energy were classified solely on total project cost. However, cost is only one dimension of a project with factors such as duration, complexity, risk, etc. not being properly captured. A better methodology was required. The PMCoE chose to classify projects based on two dimensions: (1) project size and (2) project complexity.

Elements of Project Complexity

Based on discussions with Project Managers and stakeholders, the PMCoE determined two elements in addition to cost should be considered in establishing project size: duration and impacted electrical generation capacity (megawatts). For each element; cost, duration, and megawatts; current and planned projects were used to develop approximate ranges for small, medium, large and “mega” projects.

Exhibit 1 illustrates use of these elements to determine project size. The example project is projected to have 24-month duration, involve 250 megawatts of generation, and cost $50 million. Plotting these characteristics indicates a ‘medium’ project size.

Elements of Project Size

Exhibit 1 – Elements of Project Size

Project Duration:

This element determines project size by examining the estimated duration, in months, from project initiation to project close. The longer the duration, the larger the project size is in regards to length of time involved with the project. The reader should note that a short duration project can possibly be just as risky or difficult to manage than a longer duration project. However, in the context of the PPM, the PMCoE compares duration to length of engagement by the project team and resources. Thus, the longer the duration, the larger the project size is.

Megawatts at Risk (MW @ Risk):

This element applies to Progress Energy as a result of its business, the business of generating and delivering electricity. As the number of megawatts at risk for a project increases, the potential for disrupting electric service is present, thereby increasing the risk and liability exposure if the project either disrupts power or does not deliver the amount of power expected.

Total Project Cost ($ millions):

This element is the typical area used in classifying projects by size. The high-end dollar range is a reflection of the forecasted capital cost of the larger planned projects within the Company, while providing sufficient balance to not overly bias a selection for a multi-billion dollar project. In the company's recent past, the most expensive capital project would have been a couple hundred million dollars. However, with planned new plant construction (i.e., new nuclear plant development), forecasted project costs will range in the billions of dollars.

Elements of Project Complexity

Complexity is the second dimension used to classify projects. The PMCoE determined degree of difficulty, contracting strategy, and stakeholder engagement were key elements. Similar to what was done for size, current and planned projects were used to generate appropriate ranges for these three elements which together determine if a project should be considered to have low, moderate, high or extreme complexity.

Exhibit 2 illustrates a ‘moderate’ complex project involving a first of kind technology application, lump sum contract, and department level stakeholders.

Elements of Project Complexity

Exhibit 2 – Elements of Project Complexity

Degree of Difficulty:

This element determines the degree of difficulty for the project in terms of technology use, equipment installation connections, and the sensitivity to introducing new technology.

Contracting Strategy:

This element considers the contracting strategy. All contract types have their own, unique complexities. However, for purposes of measuring overall project complexity, T&M contracts involve a more hands-on approach from the project team and are considered more complex.

Stakeholder Engagement:

This element measures project complexity from the level of stakeholder engagement expected within the project. As number and/or level of different stakeholder groups grows, the level and degree of communication increases.

Putting Dimensions of Size & Complexity Together

Project size & complexity are plotted on the Project Profile Matrix (PPM) to determine the minimum level of project management and procedure compliance required. This is typically first done during Project Initiation. Using a color scheme based on the six sigma concept, a project is classified as being white, green, brown, or black (George, 2002 p. 102). Exhibit 4 illustrates the PPM for our example, a green Project Manager II-level project.

Project Profile Matrix (PPM)

Exhibit 3 – Project Profile Matrix (PPM)

Idenitifying Minimum Project Requirements

Exhibit 4 outlines project management job titles and procedure requirements based on the project PPM classification. All projects follow requirements outlined in the body of each procedure. Additional requirements for ‘brown’ or ‘black’ projects are defined by procedure attachments.

Project Manager Job Title & Scalability

Exhibit 4 – Project Manager Job Title & Scalability

The PPM not only determines the level of procedure compliance but also minimum requirements of the project manager. In our example, only project managers qualified at a level II or above are eligible to manage the project. Within the career path, the PMCoE advises the progression of a project manager be based on demonstrated ability to manage progressively larger and more complex projects. Tenure is not a consideration. In addition, a project manager may move between departments to manage more increasingly large and complex projects; a significant paradigm shift from prior practice.

To support the project manager career path, the PMCoE delivers training internally via classroom lecture, enterprise-wide webinars, and on-demand computer-based presentations. The PMCoE maintains the training records, a sample of which is shown in Exhibit 5, and communicates training requirements via the PMCoE intranet site.

Sample Project Manager Training Development Card

Exhibit 5 – Sample Project Manager Training Development Card

Conclusion

The use of a Project Profile Matrix enables Progress Energy to deploy a scale appropriate set of project management qualification requirements and standard processes, tools, templates to support its growing portfolio of projects. As larger, more complex projects are undertaken; the Company can readily identify the appropriate project manager staffing numbers, knowledge base, and skill sets needed.

The PPM also defines the scale of standard processes, tools, and templates to be applied on a project. The PMCoE has developed project management procedures with associated training and a reference library that cover the PMBOK® Guide knowledge areas. Each procedure is scaled to allow flexibility to the project team based upon the project's PPM classification.

The creation of an internal project management information portal, which enables the on-demand delivery of information, requirements, and training to the project management community, is critical to the successful deployment of a Company-wide, scale appropriate set of project management standards. Lastly, through the use of high-impact training, active participation with major project teams and senior management, the PMCoE is able to encourage the rapid adoption and use of good project management fundamentals – ultimately leading to improved transparency of the performance of the Company's project portfolio.

References

Bolles, Dennis. (2002) Building Project Management Centers of Excellence. New York, NY USA: AMACOM, a division of the American Management Association.

George, Michael L. (2002) Lean Six Sigma: Combining Six Sigma Quality with Lean Speed. New York, NY USA: McGraw Hill., pg. 102.

Progress Energy. (2009) Balanced Solution. Retrieved on May 27, 2009 from http://www.progress-energy.com/aboutenergy/powerthefuture_florida/balanced%20solution/index.asp.

Progress Energy. (2009) Growth in the Carolinas. Retrieved on May 27, 2009 from http://www.progress-energy.com/aboutenergy/poweringthefuture_carolinas/growth.asp.

Project Management Institute. (2009) A Guide to the Project Management Body of Knowledge (PMBOK® Guide)Forth Edition. Newton Square, PA USA: Project Management Institute (PMI®).

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.

©2009, W. Chad Josey, PMP, P.E. & Kenric England
Originally published as a part of the 2009 PMI Global Congress Proceedings – Orlando, Florida USA

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