The PMO should strive very hard to keep executive team project review meetings to a strict, short, regular timetable. The governance meeting is about decision-making and direction, not management (detailed analysis and control). If the discussion goes into areas that are of great interest to one or two executives but not to the others, the PMO can quickly lose control.
Individual executives may want to get into great detail on a given project for many valid reasons. The project may significantly impact a key cus- tomer. The project may be the critical component of a major corporate ini- tiative. The project may be in trouble. However, such detailed reviews should be done outside of the executive team group project review.
Figure 12.1 Project Trend Analysis (Cost and Schedule)
Therefore, the example project progress status of “Green, Orange or Red”, as shown in Table 12.1, is enough to indicate if the project is worth some executive time. Green implies no current problem and no need for further investigation. Orange implies a warning flag is raised, and further investigation and contingency plans are required. Red indicates a current serious problem that must be addressed or the project, and therefore the executive goal, will be impacted. We are not implying that this is the only way to categorize projects. Rather, we are simply illustrating one way to make the process quick and useful for executives.
For Red projects, the PMO should indicate if executive decisions are required, and what their recommendations are. For example, a recommen- dation on a Red project could be to allocate more resources, to kill the project, to subcontract some of the work, etc. By having the full analysis of options performed before the meeting, and by including proper supporting docu- mentation, the PMO is providing a valuable support function to the Gover- nance Board.
IMPACT OF EXECUTIVE REVIEWS ON TEAMS
Executives should also be aware that these regular reviews are incentives to project teams. For one thing, when team members know that project progress is being reviewed regularly at a high level, they go out of their way to report accurately. This is especially true if a project is not on target. Further, team members are motivated simply by knowing that the executives are inter- ested in how the project is progressing and in which tasks are causing prob- lems. No one wants to be in a Red project, so team members go out of their way to find solutions before the executive review.
SHOULD PRIORITIES CHANGE
As outlined in Collins’ book, Good to Great, the research points out that great companies rarely need to change basic strategies in consideration of events. If a company is constantly changing project priorities, this is a red flag that the entire strategic planning process is out of control. In Collins’
terms, it would imply that the company has not correctly answered the three basic questions:
1. What are we very passionate about?
2. What drives our economic engine?
3. What can we be the best at in the world?*
*James C. Collins, Good to Great: Why Some Companies Make the Leap… and others don’t, HarperCollins, New York, 2001. See Chapter 5, The Hedgehog Concept.
Linking Project Progress to Strategic Objectives 181 If the PMO has done its homework on projects, ensuring that the needed information is in the project charter before a project is approved, and the strategic planning process follows the approach outlined in Part II of this book, then priority setting and changing is relatively easy.
A great deal of the priority shifting goes away by stopping the fighting over resources between functions. The strategic planning process eliminates part of this by letting the executives holistically see the company and the strategy. The holistic approach replaces the silo approach. However, this, by itself, is not enough to eliminate priority fights.
The second part of the solution is to stagger projects according to the organization’s most critical resource. This approach is described later in Chapter 17. After this, there will still be discussions over priorities, but they should be much less frequent and much easier to conclude.
SUMMARY
If the PMO concept is sold correctly to the executive team, the executives will be excited about doing weekly or bi-weekly project reviews. This re- view gives them vital information tied directly to the goals of the company and to their responsibilities relative to those goals.
When the information is provided in a graphical, trend format, the ex- ecutives clearly see if they need to get involved in a problem. Their interest is in both the projects they are sponsoring and the other projects that tie together with their own to determine overall corporate outcomes.
A correctly planned and executed review meeting will answer four key questions about the entire collection of projects, within 1 to 2 hours. These questions are:
1. Is the project on target (schedule, budget, scope)?
2. If the project is in trouble, what is the project manager doing about it?
3. Are decisions required now to bring the project back on track?
4. Should priorities change?
This linking of organization objectives to projects is vital to keep the teams motivated and the data up to date. When people know that the project they are working on is being reviewed by the top executives, there is an extra effort to report accurately and to show meaningful progress.
Finally, such regular meetings are key to considering priority changes.
If the executive team and PMO have followed the strategic planning ap- proach outlined in Part II, and the Critical Chain approach outlined later in Part III, priority changes should be infrequent.
CASE STUDY — TESSCO TECHNOLOGIES, INC.
TESSCO Technologies, Inc. is a leading supplier of integrated product plus supply chain solutions for the wireless industry.
Headquartered in Hunt Valley, Maryland, TESSCO provides solutions to the profes-
sionals who design, build, run, maintain, and use wireless voice, data, mes- saging, location tracking, and Internet systems.
TESSCO began operations in 1982, and completed its public offering (NASDAQ: TESS) in 1994. Today, TESSCO operates 24 hours a day, 7 days a week, under ISO 9001:2000 registration. TESSCO’s Global Logis- tics Centers in Hunt Valley, Maryland and Reno, Nevada configure orders for complete, on-time and error-free delivery throughout the world. Its prod- uct offerings consist of over 34,000 items from over 400 manufacturers.
TESSCO currently serves approximately 15,000 business customers and 48,000 consumers per quarter.
The key to TESSCO’s success and value add to its customers is its op- erational platform. This computer-driven capability streamlines the supply chain process and lowers customers’ total inventories and costs by provid- ing complete, on-time delivery to the point of use. This fact implies that a large number of the customer initiatives that TESSCO must deliver during a year create demands on the internal Technology Development and Ser- vices group that supports and enhances this platform. This Technology De- velopment and Services group is also involved in many of the internal im- provement projects at TESSCO.
BEFORE THE 4 × 4
In the fall of 2000, after several years of significant growth, TESSCO’s CEO, Robert B. Barnhill, Jr., sought a way to ensure future consistent growth and productivity improvements. At that time, the company engaged in a process that identified key issues for the senior management team to ad- dress. On a weekly basis, the issues were reviewed. Each unit/team was asked to undertake projects to address the issues.
While this process spelled out many of the issues and the projects needed to address them, it was departmental in nature. Therefore, the issues were compartmentalized and the focus tended to be local rather than global (i.e., what can I do in my functional area, rather than what must we do across all functions to permanently eliminate the issue). As a result, the issues rolled over, week after week, without permanent resolution. As Wendy Sauvlet, Executive Assistant to Robert Barnhill, stated, “What worked when TESSCO was a smaller company was not working any longer.”
Linking Project Progress to Strategic Objectives 183 Another problem also blocked the ability to make progress. Jeff Kaufman, of the Quality and Project Management Team, describes it as follows. “The number of projects running on and below the radar was extensive, with no one person or group tracking all the initiatives.” Carolyn Kehl of the Mar- keting Operations and Support Team, adds, “There was no formal priority system, and when priorities were set, they were often changed.”
Nick Salatino, Vice President of Retail and Consumer Markets, sums up the impact on project management this way: “One of TESSCO’s oppor- tunity areas was project management. As a result of not having anyone fo- cused on this important activity, many projects were informally initiated in many ways. As a result, many were never completed, probably never should have been started and, as a result, the important projects were delayed or impacted. This resulted in less than stellar overall financial results.”
At the time, Barnhill had read The Goal by Eli Goldratt,* and wondered if the principles went further to address the problems of strategy and project management for an entire company. Barnhill met with Gerald Kendall and decided to try the new 4 × 4 approach to strategic planning.
The process was presented to all senior managers and team leaders (a group of approximately 40) in January and February 2001. Barnhill trans- lated some of the generic concepts of operations, distribution, finance, and measurements to TESSCO’s world.
THE 4 × 4 PROCESS AND RESULTS
Barnhill comments, “The total system must be fully defined and under- stood before ‘projects’ can be defined. Few people totally understood the
‘system’ that is to be optimized. This definition and understanding is the most important benefit to-date of the 4 × 4 process!” Note that in this con- text, “system” refers to the entire organization and all its functional areas and interdependencies. Doug Rein, Senior Vice President, Fulfillment and Operations, concurs. Says Rein, “I think the 4 × 4 helped to break down the functional barriers and provide more constructive understanding of the glo- bal issues. The process helped to separate the issues from the people, mak- ing it easier to focus on the issue and not force blame on the people.”
Barnhill adds, “It is easier to do than to think.” Before the 4 × 4 process, taking immediate and unilateral action was considered to be a sign of strong leadership. In fact, “Make it Happen” leaders still resist attempts at more formal project management and the thinking behind it. They see it as bu- reaucracy or additional layers of management.
*Eliyahu M. Goldratt, The Goal, North River Press, Great Barrington, MA, 1984. This was Goldratt’s first book, focused largely on manufacturing and sales.
At the time, TESSCO was ready for a change in the project manage- ment approach. As Bob Singer, CFO and Senior Vice President, Finance and Treasury, states, “We needed organizational focus. We had no formal tracking for many of our 200+ projects. After the 4 × 4, we created a project initiation and approval process and a formal resource allocation and track- ing system.”
The 4 × 4 and new project management processes at TESSCO are creat- ing a major change in this “act now, think later” paradigm. For example, there is now a critical thinking process in place. Leaders using the project initiation forms described above must invest in rigorous analysis of the en- tire system in order to view the project holistically. The Theory of Con- straints focusing steps are required to ensure that no proposal for capital spending is made before exploiting and subordinating to existing capacity.
One challenge, in completing the rigorous analysis, is for the initiator to do his or her own thinking, with input from others, rather than having the Tech- nology Group experts do all of the analysis.
Once the initiator has moved through the critical thinking process and exercises, he or she then prepares an in-depth analysis and summary for management review. This summary invokes continued critical thought by requiring the initiator to outline objectives, specifications, projections, risk, company fit, general strategy, and deliverables. As a result, Scott Jasion, Vice President, Marketing Operations, observes, “We [now] put more real- istic dates/expectations in projects.” Only after these steps are complete does the project move forward for senior management consideration.
At the highest level review, senior management may challenge the think- ing behind the project request, reshape the project scope, approve it to move forward, or reject it. Only after this approval may it move forward for allo- cation of resources. Lynn Schwartz, Senior Vice President, Administration, notes that after the 4 × 4, “We prioritize projects based on their expected results in terms of throughput, investment and operating expense at the glo- bal level. Now there is more cross-functional involvement. This has been a very big improvement and has built more collaboration and consideration for the holistic impact of big decisions.” While Barnhill is still finding that he must reinforce the need for the process repeatedly, the culture is begin- ning to change.
The 4 × 4 was intended to help leaders understand that a “project” is a plan to exploit an identified leverage point and eliminate a constraint to maximize the output of the total system. Steven Lehukey, Vice President of Customer Support, describes the benefits of the 4 × 4 as “Project manage- ment with established timelines; reduction of projects to ‘what matters most’.” This understanding is key and requires better acceptance by the organization. To some people the word “project” means an assignment —