WHITE PAPER PROJECT MANAGEMENT OFFICES KEYS TO PROJECT SUCCESS ConQuaestor Projects & Change
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TABLE OF CONTENTS ConQuaestor Projects & Change
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INTRODUCTION
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OUR VISION ON PROJECT MANAGEMENT OFFICES
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WHAT DOES A PMO DO?
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FROM PMO TO PPMO
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THE PROJECT PORTFOLIO
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CONTRIBUTIONS OF A PPMO
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IMPLEMENTING A PMO OR PPMO
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CASES: SOME OF OUR EXPERTISE
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OUR PMO TEAM
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“It is best to do things systematically, since we are only humans and disorder is our worst enemy” ― Hesiod, 8th century B.C.
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INTRODUCTION ConQuaestor Projects & Change
Changes are managed most effectively and efficiently in the form of programmes or projects. People say: ‘Change is the only constant’. The environment is constantly in motion: clients demand better service, competitors introduce new products, and governments design new compliancy rules. Organisations will need to improve in order to stay ahead or at least retain their current position. In addition, a company’s ambitions will refrain it from not changing at all. A good sound organisational strategy therefore contains both operational objectives and change objectives. In other words: an organisation sets targets for business-as-usual and separate targets for the changes to be made. Constant changes to regular operations are crucial to stay in business (continuity) and to stay on top (improvement and innovation). A second key element of organisations nowadays to be in control. Not only of their daily business, their risks and their finances, but also of the vast amount of projects, programmes and other changes. Programmes managers and project managers will ensure changes are delivered in time, at the right cost, at calculated risks and those they are of the right quality. For short: they make sure that programmes and projects are done right. Project Portfolio Managers will ensure the correct initiatives are selected in the project portfolio to maximise the chance of realising the company’s ambitions. For short: they make sure that the right programmes and projects are done. ConQuaestor Projects & Change advises and supports organisations in the set-up, professionalization and management of their projects, programmes and entire project portfolio’s. A team of project professionals act as project managers, advisors or project support to help organisations realise their ambitions through change. Our knowledge and experience with methodologies such as IPMA, PMBOK, Prince2, MoP and P3O provide merely as a basis for a customised, pragmatic approach, tailored to our client’s needs. We have experience in various industries, such as healthcare, utilities, telecommunications and financial services. Our services focus on: Project Portfolio Management (PPM): a process of subsequent activities which ensures that the right projects and programmes are executed the right way and that the intended benefits are realised. Project Control and Project Management Offices (PMOs): an organisational entity which supports individual projects, programmes and/or entire project portfolios by providing services, professionalising people and processes and providing management with their required information. Change Management (CM): a dynamic process, enabling organisations to successfully move from the current state to a new status quo. This white paper focusses on Project Management Offices and describes our vision, approach and experience on this topic.
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OUR VISION ON PROJECT MANAGEMENT OFFICES ConQuaestor Projects & Change
Many of the best practices for preventing project failures, and increasing successes are directly related to PMOs. The most common trigger for establishing a PMO is a failed project or programme. The objective of a PMO is to make sure the project manager will be able to focus on those tasks where his added value is the highest: engaging leadership, managing stakeholders, stimulating progress, avoiding risks and solving incidents and issues. All other activities can either be prepared by or may be fully transferred to a PMO. The PMO is focused on a well-managed project to make sure project management is always in control.
CAUSES OF PROJECT FAILURE Organisations struggle to achieve success with the majority of their projects. A statement and attitude as ‘We do our best!’ is never good enough to accomplish project success. A Standish Group Survey (2013) indicates a 39% project success rate for projects, meaning that 61% of projects are not delivering on their intended value. Although project failures are inevitable, because projects by their nature involve risk and not all risk can be eliminated. Typical complaints about projects are: They take too long to complete Priorities change frequently without control Seem to be working on wrong projects, programmes and portfolios Constant fight over resources Too much rework Information is misleading or non-existent Cancelled, terminated or failing to close Value is poor Scope creep Many of the root causes for project failures are repeatedly found in: The organisation’s mission and objectives are not communicated to the people responsible for project performance and execution. As a consequence they are unaware of the audacious objectives the organisation wants to accomplish. PMI reports (February 2014) that three of five projects are not aligned to strategy. The lack of uniformity and rigor in how initiatives and projects are proposed, selected, prioritized, budgets requested and assigned, and impacts supported and justified. As a consequence waste of time, money and resources are inevitable. The lack of tuning between projects and the regular organisation. As a consequence allocation of the right competences and/or sufficient capacity will be difficult. The lack of tuning between projects. As a consequence interdependencies are invisible. The lack of a holistic overview across projects. As a consequence projects are seen as separate entities (‘micromanaging’). The project performance as monitored by the project manager is not communicated to the leadership and (functional) management. As a consequence they are unaware of the risks and issues leading to project failure.
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The leadership and (functional) management has no reliable and accurate insight and/or overview information of the projects and initiatives. As a consequence they are unaware of the return of the investments made to meet the organisation’s objectives and deliver the established strategy. The main criteria remaining for monitoring project performance are specific to individual project objectives rather than the organisation’s objectives. As a consequence redirection of money and resources to high-priority projects will be difficult. The lack of adequate project management competences of the people responsible for or involved in projects. As a consequence risk of project failure will be higher.
WHAT IS A PMO? A PMO is an office used to address common project or programme management topics in an organisation to support and facilitate project success. A PMO typically does not exist beyond the lifespan of the project or program it supports. The meaning of the acronym PMO varies mainly as a result of structural or functional needs. The acronym PMO can stand for Project Management Office or Programme Management Office, which is confusingly also abbreviated as PMO. There is even talk of a Project Office (PO), a Project Control Office (PCO), a Central Project Office (CPO), and a Project Support Office (PSO). What matters is what something does, not what it is called. After all ‘a rose by any other name would smell as sweet’. Depending on specific conditions such as importance of the desired change, organisation maturity, impact on the existing organisation, complexity, size, budget, expert availability, interdependencies with other projects and programmes a PMO can exist in different ways. We differentiate the following two main types of PMO: Project Management Office: This type of PMO provides a specific project to deliver the desired result by helping the project manager and project team to manage the project. The scope of a Project Management Office is project activities from start to hand-over to the operations department. The main purpose is to increase project success: delivering the pro-defined result within specified conditions. Programme Management Office: This type of PMO provides a specific programme to deliver the desired results and profits by helping the programme manager and programme team to manage the programme. A Programme Management Office has its focus on a programme: a collection of related projects and activities of the regular organization. The scope of a Programme Management Office is programme activities from start to earned profit. The main purpose is to achieve agreed organisation’s objective and desired profit: ensuring the investment succeed.
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WHAT DOES A PMO DO? ConQuaestor Projects & Change
A PMO strives to standardize and introduce economies of repetition in the execution of projects or programmes, is the source of documentation, guidance and metrics on the practice of project or programme management and project or programme execution. Depending on the project maturity of an organisation the PMO could provide services like: Industry Standards - the PMO will ensure that the project management methodology used for the project follows best practice for example an industry standard such as PMBoK or PRINCE2 or the organisation´s own standard. The PMO also provides a mechanism to ensure that the project is run in accordance with any compliance obligations which must be met such as Sarbanes-Oxley or Basel III and Solvency II. Process - The PMO can ensure that uniform ways of processes are in place. Essentially we want the entire business to be on the same page and to speak the same language when it comes to the project. Tools - The PMO ensures and promotes the use of the same tools throughout the project or programme, rolling out new tools in a controlled manner to meet the needs of the organisation. Templates - The PMO will provide standardized documents to the project such as Risk Logs and Issue Logs etc, freeing the project manager from creating these and allowing them to get on with the business of running the project. Metrics - Over time a PMO can establish objective metrics that provide an independent view as to how a project is progressing, in addition to the project manager’s status report. For example as an executive you might want to know that, despite the project manager being confident the project can be delivered on time, a project with this many defects and at this stage typically takes 2 months longer to be delivered than the current projection. Knowledge Base - The PMO can build maintain and share a knowledge base of lessons learned and best practices from other projects. These services can be made-to-measure for an individual project or may be of-the-shelf. Generally speaking, they all agree on one thing: it is the area in which certain activities - also called functions relating to project or programme management are centred and its objective is to help organisations achieve better results through projects and programmes. At ConQuaestor, we distinguish thirteen functions (see figure on next page).
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Figure 1: Thirteen functions of PMO
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FROM PMO TO PPMO ConQuaestor Projects & Change
The ‘common’ way of thinking in many organisations about the subject PMO is to view a PMO as a temporary organisational unit that provides services like implementation and enforcement of a project or programme management standard, administrative support, standardized project or programme templates and tools, and development and harvesting of reporting data. The focus of a PMO is on supporting a single project or programme manager in the execution, from initiation to completion. A PMO ensures that the right project or programme information reaches the boardroom in time, complete and accurate. So the leadership and management will be able to make the right decisions to achieve project success. Projects and programmes are an integral part of business and are key vehicles to realizing business strategy. The next step in the evolution of thinking about PMO is in our view the PPMO (Project Portfolio Management Office). A PPMO is a permanent organisational unit, responsible for support within the context of project portfolio management. The objective of project portfolio management is to ensure that the right projects are done and to make sure the projects are done the right way. The interests of an organisation’s project portfolio are best served by a PPMO. The PPMO is responsible for the proper conduct and performance of the project portfolio management process. A PPMO differs from the 'traditional' PMO in a number of aspects: The focus of a PPMO is on the optimization of investments to achieve strategic organisational objectives, whereas the focus of a ‘traditional’ PMO is only on delivery of agreed project results. A PMO is a temporary organisational unit that is created for the support during the execution of a project, while a PPMO is permanent organisational unit, whichis created for the support to accomplish the strategic organisational objectives. The work of a PPMO takes place in the area of organisational 'strategic alignment', whereas a PMO solely works on the procedures and processes of a project. The contacts of a PPMO are predominantly with executives and those of a PMO with project managers. The added value of a PPMO is creating cross-functional synergies, i.e. identifying dependencies and consistency of business functions such as IT, Marketing, HR, Procurement and Finance, and solving common conflicts between them. Often a difference in the footprint of a PMO and PPMO can be seen: the footprint of a PPMO can be global whilst that of a PMO can be limited to one region, country, location, department or project. Resource Pool – many PPMOs maintain a resource pool of project managers. This is useful for obtaining project managers who are professionals, 100% dedicated to managing projects. An additional responsibility of a PPMO in comparison to a PMO is to ensure continuous improvement of the support and services. It is preferable to position a PPMO as an independent and autonomous organisational entity under the control of an independent ‘C-suite’ member, like the CEO (Chief Executive Officer) or the CPO (Chief Portfolio Officer, a special ‘chief’ accountable for the change or transition agenda). Positioning the PPMO under a CIO (Chief Information Officer) or CFO (Chief Financial Officer) entails the risk that their functional approach will play a decisive role in managing the portfolio. It is therefore not advisable to position a PPMO within an IT or a Finance department.
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THE PROJECT PORTFOLIO ConQuaestor Projects & Change
A project portfolio is not a static thing. Every addition, accomplishment, failure and change shifts the balance of the project portfolio. To maintain control and balance the leadership must regularly assess the project portfolio, identifying struggling projects early enough to fix them and killing those that no longer align with organisational strategy. The crucial facilitator between realizing the strategic objectives and successful projects is a PPMO. A PPMO brings just what the leadership and management needs: the ability to document and repeat processes, to cut costs, and reduce risks waste and increase the chances of success. According to Gartner, a world’s leading information technology research and advisory firm, organisations that establish a standard for project portfolio management and a PPMO with suitable governance will experience half the major project cost overruns delays and cancellations of those that fail to do so. In other words a standard project portfolio management approach supported by a PPMO offers the key to project success. At large organisations a PPMO is a rapidly emerging phenomenon. Based on a recent study (May 2013) Gartner expects that by 2015 about 30% of the ‘Fortune 1000’ firms will have established and organized a PPMO to control and to support their project portfolios. These large organisations recognize as no other the need for proper project portfolio management processes executed by a PPMO to reduce risks of waste and increase the chances of success, because they invest heavily in organisational change and improvement through projects. However even organisations with less extensive project portfolios can benefit from adequate project portfolio management and control. It is in line with expectations that they too will quickly establish and organize PPMOs.
Figure 1: Realisation of strategic objectives
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CONTRIBUTIONS OF A PPMO ConQuaestor Projects & Change
Understanding project portfolio management at the leadership level is a major success driver. A PPMO can contribute to an organisation in several ways. Which contribution it delivers depends on what the organisation according the leadership is helped with the most: more stability an increased ability to transform more support additional control on behalf of the management of the project portfolio On the basis of these needs certain ‘main’ varieties of PPMO may be designed and established.
Figure 2: Main varieties of PPMO
Reporting PPMO for the purpose of stability and support: This type of PPMO meets the demand for (as much as possible) information about the ins and outs of the projects by collecting data and information from different managerial perspectives. A characteristic of this type of PPMO is that it has a lot of attention to the reliability, completeness and integrity of the data on which project portfolio management reports are based. Operational PPMO for the purpose of stability and control: An Operational PPMO has its focus on the projects and contributes to achieving their results through procedures, templates, advice and by providing 'hands-on' support, for example in the context of control and the preparation of project documentation. This type of PPMO may consist of a large number of various functions and employees (sometimes more than 100 FTE). Strategic PPMO for the purpose of transformation and support: For a Strategic PPMO the emphasis lies on top-down control of projects. It focuses on the strategic alignment of the project portfolio. A characteristic of this type of PPMO is that it consists of a small number of highly trained specialists who busy themselves not just with the question of which projects are to be executed, but they also delve deep into the contents of projects.
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Business Transformation PPMO for the purpose of transformation and control: This kind of PPMO helps organisations with controlled change. It also looks beyond the boundaries of the project portfolio and at how the ‘business as usual’ actually can and does transform as a result of the projects. The Business Transformation PPMO contributes, for example, to the change capacity of the organisation and helps create support for certain changes.
THE ADVANTAGES OF A PPMO The advantages of the PPMO lay in the governance processes and the support of the leadership to use project portfolio management to change the organisation. Organisations may realize the full advantages of a PPMO by making it a fixed part of their day-to-day operation and culture. In qualitative terms the advantages of a PPMO are evident. A PPMO supports the leadership to think strategically instead of getting stuck in project details, improves decision-making processes by better alignment of project objectives with strategic objectives and allows the leadership to focus on the future. The leadership may better evaluate the benefits and risks of individual projects in the context of the entire portfolio. In quantitative terms the advantages of a PPMO are less easy to specify what the contribution of a PPMO is to project success. A strong PPMO can reinforce the value that project portfolio management brings. A PPMO drives increased ROI of investments and reduces risks, helps the organisation consistently deliver business value. An IDC Survey (2011) indicates a decrease of 37% of the project budget caused by more effective use of the resources, a decrease of 78% of redundant projects, an increase of 14% of the productivity of the project teams and last but not least an increase of 59% of project failures. All of these advantages can give organisations a distinct advantage over competitors. Such forwardthinking strategic project planning transforms organisations from defensive and reactive to proactive and dynamic. As economic, social and political conditions stimulate organisations to do more with less, there is increasing pressure on projects to deliver on its promised business value. In this environment project failures are not an option. The future of many organisations depends on project successes. As a key booster of the projects needed to build new capabilities and day-to-day competitive necessities a PPMO plays a crucial role. A successful PPMO should operate within the context of a strategy derived from the mission and vision of the organisation. Its role is to manage the project portfolio as part of the strategy for delivering business value. Yet all too often PPMO are not structured and empowered to realize the maximum business value. We have defined and described different types of PPMO, the contribution and the degree of influence they can have on project portfolio management. We would like to emphasize the fact that establishing a PPMO is not a simple solution to a complex problem. Having a PPMO does not, by itself, increase project success. It is what a PPMO does that makes the difference.
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IMPLEMENTING A PMO OR PPMO ConQuaestor Projects & Change
Demonstrating that the investment in a PMO or PPMO delivers value to the organisation must be more than a leap of faith. ConQuaestor helps your organisation to understand the value of a standard for project portfolio management and a PPMO with suitable governance, to focus on the right objectives and to endorse action priorities. Our approach of implementing aPMO or PPMO consists of four phases: 1 During the Design phase an experienced consultant will determine the current status of the project portfolio processes, priorities and objectives in order to draw the design of the PPMO 2 During the Organizing phase the consultant in cooperation with the project portfolio manager will determine how the project portfolio will be designed after which the consultant will implement processes, tools and templates in line with the design 3 During the Operation: the consultant will hand over the daily operations of the PPMO to an employee of the client 4 During the Finishing phase: the last stage is to secure the achieved PPMO results and documentation Our approach is successful, because the expertise of our consultants is based on long years of education and experience of our consultants. We believe in synergy by doing things together. In collaboration with clients and colleagues with other expertise, we develop and create customised solutions. We are willing to share and spread our knowledge and skills. We have the knowledge and competences to bridge the gap between theory and practice. ConQuaestor has a group of professionals who are specialized in the design and staffing of PMOs and PPMOs, which support the organisation in a controlled execution of projects, programmes or project portfolios, including the development, implementation, monitoring and managing of processes, tools and other resources. DESIGN
ORGANISING
OPERATION
Define: PMO Purpose Assumptions Obtain: Preliminary Budget Commitment from stakeholders Deliver: Plan of Approach Commitment from stakeholders
Define: (sub-) planning Project Processes Required resources Business case/ budget Standards Meeting schedules Document management Reporting Structures
Managing: (sub-) planning Project Processes Required resources Business case/ budget Document management Project files Project library Monitoring: Risks and issues Changes in scope
Deliver: Risk analysis Project Manual Processes, templates Communication plan Document of Transfer
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Deliver: Reports Project Manual Communication
FINISHING Closing: Planning Budget Transferring: Documentation Project file Deliver: Communication Project evaluation
GROWTH PATH Organisations may improve the effectiveness of their project (portfolio) management process through the following actions: Develop a group of project executives who lead organisation strategy and organisational change. Make sure that the right talents, competences and availability are present. Projects are as successful as the people working on them. Working in the PPMO should be an opportunity for both individuals to develop their skills and knowledge and for the organisation to increase its project portfolio management capabilities. Start with a Reporting PPMO. Experience with this type of PPMO and the data involved, information and knowledge that becomes available through a Reporting PPMO. This can then serve as a foundation to build other types of PPMO in sync with augmentation of project maturity curve, such as an Operational or a Strategic PPMO. In order for a PPMO to subsequently focus on Business Transformation, it will first have to earn some credibility and credits. Create a PPMO that leads and enables, not one that simply manages. This includes well-defined PPMO processes, and roles and responsibilities, a clear reporting structure, strong leadership support, an open view of the portfolio across the organisation, organisational agility and defined benefits realization. Organisations must elevate the project portfolio management discussion to a strategic level in order to be most effective. Define the metrics by which the performance of the PPMO will be assessed and evaluated, both directly -the usefulness of its services- and indirectly
-the improvements it enables in
project portfolio decision making.
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CASES: SOME OF OUR EXPERTISE ConQuaestor Projects & Change
Energy industry Goal: creation of a business transformation plan to increase profitability of investments of the project portfolio What: design and setup of a governance model for the project portfolio, creation of a transformation plan Result: a governance model for the project portfolio and a transformation plan Public industry Goal: implementation of a Project Portfolio Management Office What: design and implementation of a Project Portfolio Management Office Result: increase project portfolio quality and results, professionalisation of the project portfolio organisation Financial industry Goal: reconstruction of the PMO of the Mortgages department What: redesign and revitalising of the PMO of the Mortgages department Result: an effective and efficient operating PMO of the Mortgages department FMCG industry Goal: implementation of a Project Management Office at corporate level What: design and implementation of a Project Management Office to support the project implementation of a new corporate financial system Result: a successful implementation of a new corporate financial system Health care industry Goal: implementation of a Project Management Office at corporate level What: design and implementation of a Project Management Office to support the replacement of a legacy IT landscape by an ERP system Result: a successful replacement of the old system and implementation of the new system
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OUR PMO TEAM ConQuaestor Projects & Change
Jan Willem Donselaar Consultant to the firm T. +31 (0) 6 208 03 764
Raagni Raktoe Consultant T. +31 (0) 6 515 78 223
jan.willem.donselaar@conquaestor.nl
raagni.raktoe @conquaestor.nl
Maarten van Weeghel Associate Partner T. +31 (0) 6 129 99 575
Jan Willem has extensive consultancy and management experience with large companies in different sectors: Industry, Financial Services and Professional Services. Always in the three areas of business, organisation and information technology. He has written articles and books related to Business alignment, Governance, Portfolio management and Project control & support.
Raagni is an experienced process and project management consultant. Her expertise lies in implementing processes and PMO’s in different sectors like government and utilities. The combination of process and project management makes her a valuable all-round project consultant that knows both fields of play.
Maarten is thought leader Projects & Change in the Dutch office and brings over 15 years of experience in project and portfolio management. He has assisted clients in many different industries, varying from healthcare to banking. His role in this engagement will be to serve as your primary relationship contact and he will responsible for the process implementation.
maarten.van.weeghel@conquaestor.nl
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