This book was helped by some excellent people who care deeply about project management. Over two dozen executives at Tessco provided extensive input into their journey over the past two years using the 4×4 strategic planning and project management processes.
ACKNOWLEDGMENTS
Eli Goldratt for developing their concepts so that others, like me, can use these principles in our PMO contributions to the business. PMI® represents the largest body of project management professionals worldwide who have come together in association to seek continuous improvement in project management.
THE AUTHORS
Kendall, PMP, is a noted management con- sultant, strategic planner, public speaker, and project
Additionally, Steve is the Executive Chair for the Mid America PMO Regional Group which operates as a chapter of the PMI PMO SIG (www.PMI-PMOSIG.org). Steve is also co-author of the recent white paper "How to Get Value from PMOs," and the author of white papers "How to Market your PMO" and "Growing the Business, the Value Proposition of Project Managers." Steve can be reached by email at [email protected].
INTERNATIONAL INSTITUTE FOR
SETTING THE STAGE FOR A SUCCESSFUL
PMO IMPLEMENTATIONPART I
INTRODUCTION — BUILDING A PMO
INTRODUCTION
Before we explore the details of a PMO and portfolio management solution, we would like to come to an agreement on what the current problems are with common project management practices. Then the formal definition of the PMO charter, its mission and results will make much more sense.
CURRENT PRACTICES IN PROJECT MANAGEMENT
The surgeons constantly complain that they argue with each other about the allocation of the operating room. They jump in and refocus the SMO to help prioritize surgical schedules so that the most lucrative operations have access to the precious resource—the operating table—for a full two hours at a time.
THE CURRENT PARADIGM
The refocusing of the SMO helped alleviate the symptoms of the problem, but did not solve the disease, the core problem. Whichever of these two is true, the benefit will not be realized until a major milestone in the project or the entire project is completed.
THE PROJECT MANAGEMENT OFFICE INITIATIVE
In many cases, if the project takes too long to implement, there are no benefits (e.g. introduction of new product). This applies especially where the income or investment benefits that the project brings to the organization are greater than the project budget.
CHARACTERISTICS OF A PMO THAT EXECUTIVES WILL EMBRACE
Leadership and managers throughout the organization need to feel that they are benefiting from the PMO (ie, they need to see what they are getting out of it). For example, this series of chapters describes how the PMO and project managers across the organization.
MARKETING PROJECTS — AN IMBALANCED PORTFOLIO SIGNALS EXECUTIVE TROUBLE
As a result, business decisions about which projects to sanction and in what order are often based and managed from the supply side (often Information Technology [IT]) instead of the market side. Also, the market-side projects are often not strategic, but rather focused on short-term, tactical sales support.
EXECUTIVES MUST SEE THE PMO EFFECT ON THE BOTTOM LINE
Marketing functions in many organizations are often driven to focus on the short term at the expense of the long term. The organization's top and bottom line will not achieve goals, even though the bid projects are successful.
TOO MANY PROJECTS —
Therefore, in ensuring that executive strategies are implemented quickly and that the organization has a healthy project portfolio, any improvement effort must be led by individuals from a broad functional base. In organizations with such an imbalance, the PMO can do a wonderful job, but still be perceived as a failure because the organization did not address market constraints.
ANOTHER ELEMENT OF INCORRECT PROJECT MIX
A PMO THAT EXECUTIVES EMBRACED — A TRUE STORY
When it came time for Mike to revisit the department at the end of the fiscal year, the team did their job together. The value of the PMO for the year was the excess over the $21 million that the team delivered to the company, minus the PMO's investment.
SUMMARY —
The department's PMO had collected project evidence for the savings, which showed a hard dollar value of more than $75 million benefiting the company. The team simply changed its perspective, attitude, way of life, the way they communicated with each other and became more organized through a departmental PMO.
FOUR ESSENTIAL ELEMENTS TO BUILD A PMO TO LAST
Measuring the PMO to noticeably improve project performance against managers' strategic goals. Additionally, we provide a detailed description of the processes required to resolve these issues permanently.
A COMMENT ON THE CASE STUDIES
As the PMO became more consultative and operational in nature, it began reporting to the COO instead of the CEO. After two years, PMO and project management are starting to become the AICPA norm.
QUESTIONS
THE RIGHT PEOPLE, THE RIGHT TOOLS,
THE RIGHT DATA, THE WRONG RESULT —
IMPLEMENTATIONS FAIL
RECOGNIZING THE NEED FOR A PMO
Each organizational unit has its own language, its own standards, its own project management techniques, or lack thereof. It is no wonder that so many central project management coordination units have sprung up in the last few years to try to solve these problems.
CONFLICTS BETWEEN PROJECTS
Most of the time, we see this coordination fall under the information technology (IT) function. Feel lucky that your project team had some of the best resources available in the business.
THE WRONG RESULT
CHARTERING THE PMO CORRECTLY
PMO VALUE MODEL
The Management Board, upon receipt of the aggregated delivery data, reviews the results for compliance with the corporate strategy. The Management Board must answer questions about the current prioritization of the projects listed in the project portfolio.
THE “RIGHT” PEOPLE
For example, witness the skepticism and poor morale on a $5 million project with dozens of highly paid people where key senior team members are not allowed to spend $500 on a project management tool to help them manage project data. We accept that managers who don't pay attention to waste eventually overcome it.
THE “RIGHT” TOOLS
The maturity of the organization with respect to project management skills has a major impact on the acceptance by the user community of the EPM tools and processes. A PMO that has thorough knowledge of the various politics at play and the drivers for each functional unit will be able to quickly establish itself as the "best friend" of the enterprise.
THE “RIGHT” DATA
Thus, in a PMO startup, the PMO must understand the functional unit's behavioral characteristics and needs. The role of the PMO is to diagnose system problems in project management and help solve them.
THE “WRONG” RESULT — WHY PMO IMPLEMENTATIONS FAIL
The project team must now choose priorities between the PMO initiative and the project managers'. Project teams themselves need to see something in the PMO if the PMO is to thrive.
SUMMARY
WHAT IS A PMO
AND WHAT SHOULD A HIGH VALUE
PMO DO?
WHAT’S IN A NAME? EPMO, EPO, PMO, PO…
To set project management standards and help the provider community do their best, the PMO concepts described in this book are recommended. In this model, standards and practices are established and voluntarily followed to help improve project delivery.
ORIGINS OF THE PMO WITHIN AN ORGANIZATION
The PMO serves as a source of information about projects, methodology and standards in this model. In this model, the PMO often helps with project setup and post-project evaluations.
WHAT EVERY PMO SHOULD DO
Mentorship — The PMO staff are the project management experts who have the scars to prove it. Tools — The PMO houses the technical experts of the project management tools, who often also staff the help desk.
WHO ARE THE CUSTOMERS?
As the PMO resolves major resource conflicts, resource managers can use the reports provided by the PMO to allocate resources with confidence. In turn, the resource managers can help the PMO understand the weaknesses, provide suggestions for training programs, etc.
THE ADVANCED PMO TWO-YEAR PLAN*
If the PMO was successful, the challenge in the second year is to be better. Focus on the behaviors of the culture you want to support and what is expected of the PMO.
SUMMARY — DETERMINING WHAT YOUR PMO SHOULD REALLY DO
Functional units: Go back to the business units and ask them how the PMO can do better for them. Refer to the PMO Maturity Table in Appendix A to determine how your organization's PMO fits into a PMO that delivers value.
MOVING PROJECT MANAGEMENT
FROM THE COST MODEL TO THE
LOCKED IN A PARADIGM
If one person is doing the work alone, they drag the log on the ground and burn all their energy to fight the friction with the ground while moving the tree. In a presentation to 200 project managers at a national conference, participants were asked this question and over 95% chose option 2 — the cheapest option.
WHAT IS WRONG WITH FOCUS ON COST AS THE NUMBER ONE ISSUE?
Imagine that you are the owner of such an aircraft, and that you lease (rent) the aircraft to customers who pay you tens of thousands of dollars a day in rental fees. Assuming you have found two companies that can do the job with equal quality to your satisfaction, one very important factor will be how long it takes each company to do the job.
THE COST MODEL OF PROJECT MANAGEMENT
No one in the organization is held responsible for obtaining the benefits. The project manager typically comes from one discipline (often an IT, engineering or production discipline).
THE THROUGHPUT MODEL
We also suggest that the cost model often does not provide the right answer when it comes to what is best for the organization as a whole. We saw another clear sign at a real company that the cost model is not working.
THREE PRIMARY MEASUREMENTS FOR ANY PROJECT
In a for-profit organization, cash flow is money collected from customers minus money paid to outside vendors to produce products or services. Throughput (T) — the value of the products and services you supply to customers less the direct costs of goods or services sold or paid to outside vendors.
PROJECT PORTFOLIOS — COST VS. THROUGHPUT MODELS
A book published in 2000 details the results documented in hundreds of articles, books, websites and videos.* The model works as long as the top executive buys in. with enough projects to meet the organization's goals.
STRATEGIC PLANNING —
RIGHT PROJECT MIX
THE NUMBER ONE REASON FOR
PROJECT MANAGER STRESS
When they reviewed their performance the following year, they found that very few of the 75 points had been completed. In this aluminum company, the director had to deactivate 50% of the active projects to achieve his strategic plan.
THE MULTI-PROJECT RESOURCE CONFLICT
For example, in the same month, an IT software engineer divides his or her time between several projects. If it were feasible to apply all six people to one project, what would happen to the cycle time (duration) of that project.
SYMPTOMS OF DEFECTIVE STRATEGIC PLANNING
Strategic Planning 73 took a pool of, say, six people and divided them among several projects.
PROJECT MANAGER STRESS FROM LIMITED HUMAN CAPITAL
THE MISSING LINK BETWEEN STRATEGIC PLANNING AND PROJECT MANAGEMENT
If the organization increases capacity, it will simultaneously work to increase demand for its products and services. If internal, detailed strategies must be put in place to increase the flow of products and services.
THE ROOT PROBLEMS OF STRATEGIC PLANNING PROCESSES
If customer tastes change, the organization is ahead of the curve by detecting these changes early. Instead, we often identify many projects within organizations that fail to recognize where the organization's constraint lies.
APPLYING DEMING, GOLDRATT, AND SIX
HOLISTIC THINKING
To the individual or group proposing a solution, the solution is so obvious that, in their mind, you'd have to be a fool not to understand it. In fact, the only thing visible to the other individual is how dangerous or stupid the proposed solution is (for any number of reasons).
SIX SIGMA
Some of Goldratt's genius in the last few years has been in his work on buy-in and overcoming the layers of resistance to change. An important part of solving any problem is communicating its characteristics in a way that gets buy-in - buy-in to the problem and buy-in to the solution.
BLENDING METHODOLOGIES
To another individual or group looking at the exact same situation, there is nothing obvious about it. In this chapter, we take a brief look at how the works of Deming and Goldratt converge in the project management arena.
PROJECT MANAGEMENT — A SYSTEM OUT OF CONTROL
For example, in project work, common cause variation includes individual tasks that take longer to complete than the estimates. Another essential management skill is to be able to distinguish between common and special cause variations in any system.
DEMING AND GOLDRATT ON PROJECT MANAGEMENT — STEP 1
Therefore, for most individual projects, the goal is the fastest successful execution of the project. The purpose of the multi-project environment is to meet the objectives of the overall organization.
DEMING AND GOLDRATT ON PROJECT MANAGEMENT — STEP 2
Release new projects as soon as they are approved, regardless of the capacity of the organization's strategic resources to execute the projects. Do managers link their strategic plan to all the projects that are active in the organization.
DEMING AND GOLDRATT ON PROJECT MANAGEMENT — STEP 3
To understand the project management system and the underlying problems, we need to examine how projects are started. The Project Management Institute (PMI®) offers these processes and knowledge areas in a professional guide called the Project Management Body of Knowledge (PMBOK®).
DEMING AND GOLDRATT ON PROJECT MANAGEMENT — STEP 4
DEMING AND GOLDRATT ON STRATEGIC PLANNING
He called one of the authors when the process was new and asked him, “Have you heard of the 4x4 strategic planning process?” The author (Kendall) responded, “Is that where you hit someone over the head with a big stick?”. Goldratt replied, "No, that's the 2×4!" Goldratt described the process and Kendall tried it for the first time in 1999.
SIX SIGMA — WHERE DOES IT FIT IN PROJECT MANAGEMENT?
Management must have a deep understanding of the system, the dependencies within the system regarding purpose and cause. Why should the first step be to define the system objective(s) and measurements?
THE EIGHT MAJOR SUBSYSTEMS THAT
STRATEGIC PLANNING AND PROJECT
MANAGEMENT MUST ADDRESS
THE MAJOR COMPONENTS OF ANY ORGANIZATION
OPERATIONS — THE UNIVERSAL CORE PROBLEM
For example, in a manufacturing company, operations include the scheduling and production activities in the plant—all the logistics needed to manufacture and ship products. At the same time, the rest of the organization must understand that constant disruption of operations can impair flow.
FINANCE AND MEASUREMENTS
Goldratt suggests that “the purpose of measurements is to motivate its parts to do what is good for the system as a whole.”* When we analyze the measurements within each functional area of an organization, we typically find dozens of measurements, many of which are in conflict with each other. HOLISTIC MEASUREMENTS AND THE FIVE FOCUS STEPS There is one characteristic of metrics that we believe is missing from most organizations: the team characteristic.
PROJECT MANAGEMENT/ENGINEERING
- DISTRIBUTION
- MARKETING
- SALES
- MANAGING PEOPLE
- INFORMATION TECHNOLOGY
For example, we often see divisions of the same company selling products to each other on transfer. The problem is with most of the work IT has to do.
SUMMARY: STRATEGIC PLANNING — TYING THE PIECES TOGETHER
4 APPROACH TO STRATEGIC
PLANNING
Operations do not deliver what the customer wants on time more than 95% of the time. Sales does not generate the desired sales volume at the desired margins better than 95% of the time.
- STRATEGIC PLANNING
- STRATEGIC PLANNING
- STRATEGIC PLANNING
- STRATEGIC PLANNING
Each manager must present his biggest problem that hinders him from achieving the organization's goals. Ideas for Overcoming an Organization's Core Problem (From Day 1) is a great start to overcoming every executive's biggest problem.
Because of this, the senior staff agreed to pursue the theory of limitations even before they became aware of the 4×4 process. In 1999, the facilitator of the Process Improvement Team and the Manager of Training and Development were introduced to the Theory of Constraints at a.
THE RIGHT MARKETING
THE PROJECT BIAS OF MOST ORGANIZATIONS
DEFINITIONS
IMPLICATIONS
THE RIGHT MARKETING PROJECTS
There is a great strategic advantage to segmentation when an organization can operate in 15 to 20 segments for the same products or services that are independent of each other's economic cycles. The benefit is multiplied when the organization can use the same personnel resources to service the different segments.
SECURING THE FUTURE — THE
10-YEAR ADVANTAGE VIA THEORY OF
CONSTRAINTS
Internet Service Providers - The difference between dial-up and high-speed Internet users in the mid-to-late 1990s who would consider paying $50 a month for such service. Satellite services entered the market and upped the ante by a factor several times.
IDENTIFYING THE FACTOR FOR EXPONENTIAL IMPROVEMENT
ONE EXAMPLE OF A FACTOR AND THE PROJECTS IT DRIVES
Various marketing projects to track results, stay ahead of the competition, ensure positive consumer response, etc. Without a PMO, the projects would still be launched, but the lack of coordination and focus would result in a lead time of many years instead of 1 to 2 years.
WHY THE 10-YEAR ADVANTAGE MUST FOLLOW OTHER STRATEGIES
These personalities also seem to act unilaterally, without considering the implications for other functions. As Collins pointed out in his book, Good to Great, CEOs need to evaluate their teams and get people who aren't able to "take off the bus" a holistic approach.
ROLE OF THE PMO IN THE LONG-TERM STRATEGY
Additionally, the OPM must also be consistent and capable of achieving project management goals (on time, on budget, and within scope) more than 95% of the time. Provided they are educated in strategic planning, the PMO team will have the 30,000-foot view of the organization's projects—a prerequisite to making such an effort successful.
THE PMO IN DETAIL
THE GOVERNANCE BOARD AND
PRIORITIZATION MANAGEMENT
DOING PROJECTS WITHOUT A PROJECT MANAGEMENT OFFICE
Membership of the Governance Board comes from the senior management team of the business unit or company. The purpose of the Governance Board is to assess and direct the prioritization of the project portfolio.
LINKING PROJECT PROGRESS TO
STRATEGIC
OBJECTIVES — THE EXECUTIVE RADAR
A RECIPE FOR DISASTER
GRABBING EXECUTIVE ATTENTION
The first is to clearly understand which projects will help each functional executive achieve his or her part of the corporate goals. Third, it tells all managers whether the current set of ideas and related projects are sufficient to meet the overall objectives.
PMO EXECUTIVE PROJECT PROGRESS REPORTING
Linking project progress to strategic goals 177 ensures that the company is working on the right projects at all levels and that the totality of all projects is sufficient to meet overall goals. For most organizations, once a week or once every two weeks at management level is sufficient.
WHAT ELSE DOES AN EXECUTIVE NEED TO KNOW ABOUT PROJECT PROGRESS?
4 PROCESS AND RESULTS
Leaders using the project initiation forms described above must invest in rigorous whole-system analysis to view the project holistically. As a result, notes Scott Jasion, Vice President, Marketing Operations, "We are [now] putting more realistic dates/expectations into projects." Only after these steps are completed does the project move forward for senior management consideration.
