Project Partners Blog

By Jason Ames, PMP

Concluding our discussion from the prior blog articles, we now address success factors number 4 and 5.

Finding the Bottlenecks

One of the big advantages to having an Enterprise Project Portfolio Management system is the ability to see how each project affects the rest of the projects. Project managers have been trained to look at the critical path of their own projects but do they know if other projects are impacting their performance?

Ask yourself these questions:

• Do team members work on multiple projects?
• Does your project share a facility with other projects?
• Is your project dependent on another project’s output? Read the rest of this entry »

By Jason Ames, PMP

Continuing our discussion from the prior blog article, we are now ready to address success factor number 4:

Determining which Projects to Start and When to Shut Them Down

Selecting the right projects is as important, if not more important, to your success as executing projects efficiently. The projects you select should support your firm’s strategic direction and contribute to the bottom line. Once projects have been selected they need to be ranked against each other to determine which projects are the most critical and who will win when resource conflicts exist. Just selecting and ranking projects is not enough, projects need to be continually reevaluated to ensure that they still meet your organization’s strategic direction. Over time priorities change, new opportunities arise, project ROI decreases, so you need to know how changes effect your project portfolio and where to put your resources. Read the rest of this entry »

By Jason Ames, PMP and Kimberly McDonald Baker

Too often organizations make an investment in an Enterprise Project Portfolio Management (EPPM) system but they fail to recognize the full benefits. One of the reasons is that people fail to see an enterprise PPM solution as more than just a scheduling tool.

When used properly, however, an EPPM system can be a critical factor in driving business value, not only by making sure a project stays on schedule but also via ensuring that the right projects are selected, resources are used efficiently and decision makers have the information they need to drive corporate strategy.

Key Drivers of EPPM Success

1. Top down commitment, bottom up participation
2. All business systems talk to each other
3. Measuring what’s important
4. Determining which projects to start and when to shut them down
5. Finding the bottlenecks
6. Constant learning

This series of blog articles will address each of the above success factors. Read the rest of this entry »

By Robert D. Anderson, CPA

An article by Adam Bookman provides an interesting perspective on why about 68% of IT projects fail to deliver the original desired benefits. He quotes from a study done by the Standish Group that identifies three primary reasons:
1. The initiative was outsourced to IT and not owned by the business
2. The right tool drives success
3. Best Practices represent the best starting place

Looking back over 20 years in the Accounting and Finance role at major US firms and another 14 years consulting with large international companies, these findings agree with my observations. The most successful initiatives have always been the ones where people in the direct operational area take full ownership and IT plays a supporting rule. The worst initiatives have been the ones solely driven by IT with no business buy in. Read the rest of this entry »

Gartner’s February 2008 report “PMOs: One Size Does Not Fit All” found that there are very high rates of failure when setting up a PMO. Success or failure depends largely upon two aspects:

1. How closely the PMO’s mission and objectives are linked to the real needs of the organization, and
2. How well the role of the PMO is matched to the maturity of the organization.

As Project Partners has written in prior whitepapers and presentations (See Return on Investment – Building the Business Case for Project Portfolio Management and Return on Investment – Building the Business Case for Professional Services Automation), you should not attempt to become a Level 5 organization immediately – you need to evolve.

Benchmarking your organization’s maturity

As we have stated in the whitepapers referenced above, and as Gartner states in their 2008 report, the key to setting up a successful PMO is to first understand where your organization fits in the “Maturity Model” and then to organize a PMO structure that fits in your organization’s maturity model. The main goal should be to continuously maturing your organization’s PMO, moving up the scale from Level 0 to Level 5. The optimum level of maturity is recognized as being the level that delivers your organization’s strategic objectives most effectively and efficiently, and for many organizations that does not necessarily imply you must reach Level 5.

PMOs: One Size Does Not Fit All Feb 2008, Gartner Inc. http://mediaproducts.gartner.com/reprints/computerassociates/143645.html#1_0<!–%20entry%20label%203–>

How can you improve Organization/PMO maturity?

1. Establish a vision. In order to know whether or not your efforts are successful, you must be able to articulate what will be different about your organization after you’ve launched the PMO
   
2. Process. Adopt project management methodology, institutionalize its use within your organization, assign owners for every process, and use it and improve upon it continuously.
   
3. PPM software. Introduce PPM software which enables more efficient and effective project, program and portfolio management delivery and support processes
   
4. People Power. Expand project managers’ communications and interpersonal skills.
   
5. End Result Driven. Encourage project manager certification, but manage, appraise, and promote based upon the end results achieved by project managers.
   
6. Management Buy-In and Support. Strengthen involvement and support by executives and the leadership team by giving them what they need in order to be engaged, make effective decisions, and appreciate and support the project management maturity needs of the organization. Often this can be achieved via executive-level PPM software reports and/or dashboards.
   
7. Project Planning/Execution. Developing effective and detailed plans at the beginning of the project; execute the project according to plan established.
   
8. Reporting. What is not reported is not measured. Use scorecards and dashboards to keep everyone informed and involved.
   

    

Where does your organization fit in the maturity model?

In order to know what the focus of your PMO should be, you need to first conduct an honest assessment to determine where your organization presently fits in the maturity model.

OPM3® (Organization Project Management Maturity Model) is a Project Management Institute® (PMI) standard much like the PMBOK® Guide that was started in 1998 by PMI.

The OPM3 standard consist of three major elements: Knowledge, Assessment & Improvement and they are described below.

Knowledge: The user becomes proficient in OPM3, the body of Best Practices, the ideas of organizational project management maturity, and methodology of OPM3.

Assessment: The organization compares itself to OPM3 Best Practices to determine its current location on a continuum of organizational project management maturity.

Improvement: Change Initiatives leading to increased maturity can use the results of the assessment as a basis for planning, and move forward to implement the plan while conserving precious organizational resources.

OPM3 Benefits

Advance strategic goals

OPM3 provides a way to advance an organization’s strategic goals through the application of project management principles and practices, bridging the gap between strategy and individual projects

Understand and implement Best Practices

OPM3 provides a comprehensive body of knowledge regarding what constitutes Best Practices within organizational project management Identify maturity

OPM3 assists an organization with the identification of what their current organizational project management maturity is and, thus, forms a basis for deciding whether or not to pursue improvements by Stage and Domain

Plan improvement activities

OPM3 assists organizations with prioritizing and planning activities should improvement decisions be made

In summary

OPM3 is a powerful tool that organizations can use to improve their organization project management maturity, and hence the execution of their projects and achieve strategic objectives of the organization.

A Project Management Office (PMO) is a group within an organization that defines and maintains standards for project management.  A PMO generally bases its project management principles, practices and processes on some kind of industry standard methodology such as PMBOK (Project Management Body of Knowledge) or PRINCE2 (Project in Controlled Environments).

Over time, a PMO generally will become the source for guidance, documentation, and metrics related to the practices involved in managing and implementing projects within the organization.

There was a study conducted that provided the flowing statistics:

• Organizations with PMOs complete twice as many projects than those without PMOs.

• High-performing organizations outsource 135 percent more than low performing organizations.

• 76 percent of recently surveyed companies reported that they had created a PMO, and the longer the PMO had been in operation, the more project success rates improved.

• Those with a PMO operating for more than four years reported a 65 percent success rate increase.

• The top two reasons for establishing a PMO are improving project success rates and implementation of standard practices.

• 65.8 percent of high performing organizations have enterprise PMOs.

• PMOs can deliver a return in three to six months by providing the visibility needed to cancel, postpone, or scale back unnecessary or less strategic projects.

• As PMOs mature, they are significantly better at meeting critical success factors, including having effective sponsorship, accountability, competent staff, quality leadership and demonstrated value.

• The top two issues for PMOs are forecasting the need for resources and resolving resource conflicts.

To have a successful PMO Office the following dimensions need to be evaluated and followed.

1.        Benefits:  collective visibility for estimating and tracking financial and strategic project benefits

2.       Selection:  the scalability, clarity and quality of project funding practices

3.       Issues, Risks and Dependencies:  issue escalation and resolution, aggregate risk management, and “air traffic control” over project inter-dependencies

4.       Change Control:  a practical level of business value protection and visibility

5.       Project Planning:  a repeatable, scalable framework for organizing project effort that uses common metrics and deliverables

6.       Financial Visibility:  a financial information framework that incorporates control and accountability without excessive data manipulation

7.       Communication and Reporting:  a procedural and  technical platform to collaborate on deliverables, coordinate schedules and resources, and effectively collect and use standardized project health metrics

8.       Training:  a set of training materials and standards to promote fundamental project management skills, enabled by automated workflows to simplify procedural gate-keeping

9.       Quality:  the criteria for deliverables quality, and the process for monitoring this quality

To accomplish a successful business transformation project, experience, drawn from numerous projects over the years, has shown a pattern that is worth incorporating into every project. Successful projects establish a program framework and implementation approach that addresses the following critical success factors:

• Executive Sponsorship:  The project should strive to develop a productive relationship with the Executive Sponsors that encourages active participation in the project rather than a group that receives monthly status updates. The Executive Sponsors can be the greatest asset to a team and the most effective change agents if given the opportunity. Utilizing an effective decision making framework that facilitates timely decisions is a key component to leveraging the Executive Sponsor participation.

• Project Team Structure: The project needs resources that are perceived by their organizations as thought leaders. Many times staffing decisions are made based on availability and not necessarily on the candidates’ qualifications. Because of the importance of the project to the future of the business, there needs to be a priority given to staffing the project with the right resources.

If this is done:

• The ability of the end solution to meet the business needs is enhanced
• The organization has ready acceptance and confidence in the solution
• The time to develop the solution will decrease, which reduces the risks and cost of the project
• Business process changes will be sustained after the implementation is completed

• Rollout Strategy – A rapid and aggressive roll out strategy allows the project to develop wins and demonstrate benefits early. This will help facilitate a smooth rollout and cultivate a group of supportive users early.

• Change Management Program – As program complexity and reach increases so does the risk of not realizing the expected business benefits. Most organizations are resistant to change.

• Training Program – Firms often underestimate the amount of training required for successful transformation. How your firm certifies core system competencies and readiness will help reassure the users and their management that they are ready for go-live.

• Quality Solution - Many times clients have hired us after a failed implementation. The major contributor is often incomplete design or severe technical issues that had been overlooked during the testing process. The most successful approach to any business transformation project is to take a process focus to solving the business need and to view the technology as the enabler of the process. Focus on implementing end-to-end processes that are complete and meet the stated business objectives.Employ a rigorous iterative testing process to ensure that the solution will work effectively in a production environment prior to the implementation. Leverages these testing events to accomplish several key objectives: process validation, project team education, quality assurance and solution acceptance.

• Technical Support – Many projects with fewer complexities have failed or missed deadlines because of technical issues either at the infrastructure or application layer. Use a methodology that is process oriented. Technical competency as part of the team is a core strength you must have. Partner with the different technology vendors to ensure that their solution works and when it doesn’t, work closely with them to resolve the issue.

As your organization prepares to spend significant money on new tools to help you better manage projects, how prepared are you to achieve a return on this investment?   Bradford K. Clark confirms a 15% to 21% improvement in project execution and delivery costs in a 1997 study done at the University of Southern California by moving the project management maturity level up one level. William Ibbs, UC Berkley, confirms similar results in consulting and engineering firms.

Professional Services Automation empowers the Professional Services organization by providing a set of enhanced, automated and integrated capabilities to set-up, manage, control and report on client engagements.  The span of PSA includes the initial opportunity identification, through the proposal and planning processes, staffing and executing the work, collection of costs, recognition of revenue, invoicing the client, knowledge management and collaboration with both the internal team and the client representatives.  PSA provides a single end-to-end, scalable system to manage the professional services business. This allows for growth of the business, reduces response time during the sales cycle, allows the PMO to foster innovation and increases quality of projects, better management of consulting employees and subcontractor resources, and integrates intellectual capital management with the delivery of professional services.

There are four success measures for your PSA implementation: Revenue Production, Productivity Enhancement, Risk Reduction and Improved Cycle Times.  In all cases these should be valid measurement criteria to determine success and measure the ROI of your investment.  As you prepare to implement new tools for your organization, consider establishment of a baseline across your firm.  Assess where the organization is before you begin.  Leverage this knowledge to help focus change management and training efforts where the return will be greatest. Build a business case with specific targets and ROI measures.  Develop a plan to move your organization up the project management maturity level, implementing only functions and features needed for success. Plan training programs to increase the understanding and skills of your Project Management team, not just in the tools, but in application of the tools to better manage your projects.  Enable additional features and functions as your project management team matures.

Key Performance Indicators (KPI) can assist in assessing the present state of the business and to prescribe a course of action.  Real-time monitoring of KPI’s allows maximization of performance over the shortest time period.  Oracle Project Management provides hundreds of KPI measurements for utilization by your team.  Remember to be SMART in your use of these important tools:

Specific  Measurable  Achievable  Realistic  Timely

Plan on updating the maturity measurement of your organization on a regular basis to determine where you have been successful in your improvement and identify areas of opportunity for future improvement.

The Engineering, Procure, Construct (EPC) industry, in general, has struggled for years to find solutions that would enable integrated operation across the enterprise.  Manufacturing firms found several software vendors developing innovative solutions that allow the planning of material purchases, scheduling of shop floor activities and management of the distribution and logistic process all in a single integrated system that allowed enterprise level reporting and drill down to the underlying transactions that support detail analysis.  Part of this was due to pure numbers, with thousands of companies to purchase MRP and ERP systems, but only hundreds of larger firms to purchase EPC systems.  Niche players developed to fill certain gaps and larger firms developed in house custom applications to support their business.

With the evolution of ERP systems, the major EPC players have started to see solutions that are being developed for the professional services industry, which can be directly used for much of the engineering and design activities found within an EPC firm.  One area that the ERP packages have not addressed well involve the move from historic “standard cost” models used in manufacturing to the “actual cost” model used in some engineering and design work and most construction work.  Systems, such as JD Edwards, have offered an integrated solution between the ledger and payroll systems that allowed penetration into the smaller EPC firms but still relied on other niche and point solutions to provide the complete needs across the enterprise.  By building so much functionality into the GL database, firms with a large number of projects or the need to provide detail job costing ran into conflicts with the financial reporting needs of the firm since there was no sub ledger to off load the detail.  Other niche firms, like Deltek, developed a comprehensive solution for smaller firms doing business with the Federal government but were not practical for most commercial applications.  Firms like Niku and MPower targeted specific project driven needs and built solutions that did a fine job of meeting that specific problem, but did not integrate well into the enterprise view. Other firms, like SAP, sought to build “integrated solutions” by designing in certain aspects of the project management function but ran afoul of the large firm need for very powerful project management tools, such as Primavera, that were beyond the capacity they could reasonable afford to design in.

As engineering systems moved from the drafting board to the computer, systems were evolving greater ability to speed up design by defining various recurring equipment and design elements and relating these elements to specific purchased items.  This allowed the development of automated take-off capability and creation of purchasing systems that were integrated to the design elements and take-off lists.  While this made the procurement process more efficient for some types of projects, such as heavy industrial, it did nothing for civil and less “item” intensive projects.  Other point solutions were developed to aid these industries.  Intergraph and other design tool companies developed solutions to fill specific gaps, such as Marian.  Project management companies either built out additional offerings, such as Expedition from Primavera, or were acquired like Niku did with ABT or Primavera did with TeamPlay. Various niche players developed project-estimating tools, such as MC2 (MC squared) and others developed collaboration and document management solutions like Documentum and ERoom.  Companies, like Meridian, have built up solutions such as Proliance, Prolog and Project Talk for the industry.

As all these various solutions started to appear on the market, EPC, APC, E&C firms were besieged with solutions that did not integrate, did not fill all their needs, were feature poor, plagued with problems and expensive to implement and maintain.  Many of these problems were driven by the segmented nature of the industry and lack of critical mass to fund development and improve the solutions.  As a result, the same large firms are shown as satisfied users of multiple competing systems designed to meet the same need.

In the last 2-3 years, Oracle Corporation has started to expand the Oracle ERP applications into solutions that can better be utilized in the E&C space.  As is true with all the various companies that have offered products in the past, the Oracle Applications have significant gaps that need to still be met by other solutions or custom development.  One of the primary drivers behind the acceptance Oracle is finding in the E&C market is less how well it meets the specific needs of the industry and more the feature rich functionality it offers firms that have been struggling with limited user base and integration as business expands, companies merge and government regulation reaches deeper into the company.

Historically, consulting firms did not find much traction in the E&C industry. Solutions were fragmented and it was difficult to develop critical mass to support a consulting group.  As a result many solution companies either helped customers implement their software or clients were forced to self-implement using internal teams that were sent off to training.  With the sudden up turn in Oracle activity within the E&C industry, a new model has started to appear. Because Oracle has been widely used across manufacturing firms and has thousands of clients across international firms, a significant consultant base exists across the world.  Most of these consultants have strong Oracle application knowledge, understand the complexity of multinational business transactions and the utilization of Oracle applications within a business process re-engineering implementation.  Very few consultants have truly worked across both the ERP and E&C environments.  Since several parts of the solution still require niche or point solutions, this creates a significant challenge for firms doing a true global integrated solution.  This is further compounded by pent up demand that is being met by a software solution that is marketed heavily by the solution company to justify continued development work for the industry.  In contrast to the historic model of implementation, the Oracle solution requires consulting assistance to leverage the true benefits and cost savings envisioned in the ROI model that are used to justify the expenditure.  With limited experienced resources across the ERP and E&C worlds and multiple companies seeking to do their implementation immediately, there is very high demand for a limited number of specialized individuals.  This is driving a need to team across consulting companies to meet the implementation challenges found in the E&C industry.

In the EPC and E&C world, very few firms can offer the complete set of services required to accomplish everything from initial design through final punch list sign off.  What matters most is the ability to bring together the right resources, at the right time, in the right place, to keep a project on track, on schedule and on cost.  With the entry of Oracle Applications significantly into the E&C space, this same model applies.