Project Management Office Center of Excellence The Improvement

Project Management Office – Center of Excellence The Improvement Paradox* Despite the demonstrated benefits of improvement programs most end in failure. Companies have found it extremely difficult to sustain even initially successful process improvement programs. Even more puzzling, successful improvement programs sometimes worsen business performance, triggering layoffs, low morale, and the collapse of commitment to continuous improvement. This phenomenon is known as the “Improvement Paradox”. Process improvement is an imperative for businesses seeking competitive advantage, yet it is disturbing how few organizations make lasting and successful use of process improvement tools such as Six Sigma, CMMI and reengineering. These tools should help to raise productivity, boost quality and enhance competitiveness. * MIT Sloan School of Management study conducted under a grant from the National Science Foundation. Why Process Improvement Initiatives fail and what can be done to influence this problem is the subject of today’s presentation. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 1

Project Management Office – Center of Excellence Presentation: 12: 00 – 12: 50 Topics: • The Results Model (review of the March presentation) • Introducing the PMO: Master of the Project Management Craft • The Current State of the PMO? • What is a PMO and what does it do? • How is a PMO organized? • How does a PMO work? • How can I start a PMO? • PMO in action – Can a PMO Reverse the Improvement Paradox Audience Questions: 12: 50 – 1: 00 Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 2

Project Management Office – Center of Excellence Results First: Practice • Results first – Change Second. When results come first the organization and its people will find ways to meet expectations - or – Big Hairy Aggressive Goals (BHAG’s) encourage improvement. • When we put results first the process improvement group’s role becomes one of support. They respond as needed to the demand for help. • Improvement ‘Pull’ rather than ‘Push’ Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 3

Project Management Office – Center of Excellence Results first – Change Second examples: • The Manhattan project: The Manhattan Project was the project to develop the first nuclear weapons during World War II. It refers specifically to the period of the project from 1942 -1946 with its scientific research directed by the American physicist J. Robert Oppenheimer. The project succeeded in developing and detonating three nuclear weapons in 1945. The project's roots lay in scientists' fears that Nazi Germany was also investigating such weapons of its own. The Manhattan Project would eventually employ more than 130, 000 people and cost a total of nearly $2 billion. • Apollo Project: President Kennedy in a speech in September 1962 said, "No nation which expects to be the leader of other nations can expect to stay behind in this race for space". Kennedy asked Congress to approve more than $22 billion for the Apollo Project, which had the goal of landing an American man on the moon before the end of the decade. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 4

Project Management Office – Center of Excellence Results First: Gone Bad Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 5

Project Management Office – Center of Excellence The Results Model: The Frame Work • The Results Model complements the Results First approach by addressing the “Change Second” part. It provides a framework to understand manage the change that is necessary to achieve results. • The Results Model begins with the Results-First premise, but adds people, processes and management. These components work together, collaboratively to produce products and services. To achieve results requires that Individuals, Processes and Management are competent and aligned. • In order to be effective and efficient Individuals, Processes and Management must possess and practice Business, Technical and Project Management competency. • Individual, Process and Management competence is not complete if it only addresses the Technical (how) aspects of producing a product/service and does not also consider the Business and Project Management requirements as well. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 6

Project Management Office – Center of Excellence Results Model: Illustrated To produce results and achieve strategic goals and objectives requires that Individuals are: • Business Competent – they produce the right product/service • Technically Competent – they produce the product/service right • Project Management Competent – they produce the product/service within the right time and cost. RESULTS = Bc Ic Tc * Pc * Mc Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 7

Project Management Office – Center of Excellence Results Model: Illustrated RESULTS = Bc RESULTS = Ic * Tc Mc PMc ( I c =. 9 ) * RESULTS Pc * (Pc =. 7 ) * = (Mc = 1 ) . 63 Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 8

Project Management Office – Center of Excellence Results Model: A Systems Approach Policies – Procedures – Techniques Management Up-line Reports Inpu Pro t. A s ) Process (fro mp revi ous Co Process) Ti Input B st me ces ut X Outp r) stome (to Cu Customer Individual (from previous Product C ut) p Inocess m (fro us vio pre Pr Tools Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 9

Project Management Office – Center of Excellence Overcoming the Improvement Paradox: The PMO - Solution: Using a RESULTS FIRST approach the PMO becomes an effective instrument to overcome the Improvement Paradox. A PMO provides expertise tailored to your business performance requirements and supports the strategic goals and objectives within the organization. A PMO provides the agility and resources necessary to support project management performance improvement. An effective PMO achieves results by supporting and delivering the right products/services, right, and on time and budget. A PMO is NOT an Improvement Initiative. It uses any improvement method available to change (improve) performance to achieve results. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 10

Project Management Office – Center of Excellence Overcoming the Improvement Paradox: The PMO – Master of the Craft: The PMO as the master project management practitioner has the talent, expertise and experience to: • Align projects to strategic business goals and objectives – Results First • Assess the state of a project – Evaluate performance using the Results Model • Prescribe corrective actions – Improve project effectiveness and efficiency As Master of the Craft the PMO can: • Objectively assess and diagnose what needs to be done • Correctly select and implement the solution • Effectively and efficiently improve performance Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 11

Project Management Office – Center of Excellence State of the PMO “The Project Management Office [PMO] may be the fastest growing organization structure in project management. ” (Status Report. Project Works May/June 2003. A recent article in CIO magazine quoted business advisory firm, Hackett Group, for saying the "Use of a Project Management Office [PMO] is another key to achieving worldclass status. " The article indicated that half of world-class companies manage IT projects through a PMO compared to just 25% of median companies. Hackett defines a "worldclass" IT organization as one that scores in the top 25 percent in its client database for measures of efficiency and effectiveness. Given such recent focus on PMOs, it is expected that senior IT Executives would wonder about the relevance of a PMO for their organization. A PMO must be a necessary component of all project focused IT organizations. Furthermore, its overall function ties directly to achieving the objectives set by the CIO. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 12

Project Management Office – Center of Excellence Why are PMOs Increasing? The PMO is a response to a serious and seemly intractable problem. The Chaos Report produced annually by the Standish Group reveals that; • Only 44% of projects typically finish on time • Projects usually complete at 222% of the duration originally planned • Project cost typically reaches 189% of the original budgeted cost • 70% of projects fall short of their planned scope (technical content delivered) • 30% are cancelled before completion. According to a Gartner, Inc. study in 2001 40% of IT projects failed to meet business requirements. According to The Wall Street Journal 42% of all technology projects launched in the U. S. are abandoned before completion. Good news/Bad news: These figures represent a slight improvement over earlier Chaos Reports, but …they still portray a bleak picture of inefficiency and poor planning and execution. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 13

Project Management Office – Center of Excellence PMO: What is it? What’s in a Name? The PMO may be called a: • Project Office • Project Support Office • Program Management Office • Project Management Group • Project Management Center of Excellence • Directorate of Project Management • Project Management Community of Practice Project Management Offices (PMOs) aren't one-size-fits-all. The PMO you establish for one client may be markedly different from the next. Always start by defining how the PMO will operate within the organization; what are it’s strategic goals and objectives then establish a charter to anchor it to its mission and vision. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 14

Project Management Office – Center of Excellence PMO: What is it? What can it do? It is a clearing-house of best practices, methodologies, tools, techniques and lessons learned: The PMO is the creator and guardian of corporate methodology, standards, and metrics. It provides a thorough review and audit of the project management practices, a baseline, of the enterprise to insure that good, standardized project management practices are being applied. The PMO is able to streamline methodologies, map out different models, and determine best practices that can be applied across the corporation. It has the ability to adapt and tailor its processes and approaches to respond to the unique needs of projects. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 15

Project Management Office – Center of Excellence PMO: What is it? What can it do? It is the craft guild of master practitioners who lead, mentor and inspire the apprentices and journeyman. PMO can provide assistance (i. e. , training, coaching, and mentoring) in using standard project management practices to achieve results. To ensure that projects are healthy, the PMO uses assessment tools sufficient to determine project management competence, and can intervene either directly in ‘troubled projects’ or indirectly with competency-based business training. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 16

Project Management Office – Center of Excellence PMO: What is it? What can it do? It is the gatekeeper and the steward of project governance: The PMO provides project governance structures that involve both the project and the functional organizations. ‘Governance’ is a layer of control over the project that is exercised by, or on behalf, of the people who are paying for the project. It is usually at a higher level in the organization than the level of detailed operational control. It can involve the project sponsor, the project director and/or an advisory board or steering group, in addition to the project manager and core members of the project team. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 17

Project Management Office – Center of Excellence PMO: What is it? What can it do? It is the nucleus of a project management culture and the community of practice. The Project Management culture or Community of Practice (Co. P) embodies a group of people informally bound together by shared expertise and passion for a common goal or discipline. Members are mutually engaged in activities that focus on the practice, the purpose of the community. This influences members to establish relationships that facilitate full participation. Eventually the Co. P develops a shared vocabulary and repertoire of resources, tools, documents, artifacts, routines, and accumulated knowledge. Members take ownership of the practice. They share a common goal or mission and become mutually accountable for the group. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 18

Project Management Office – Center of Excellence PMO: What is it? What can it do? According to PMI’s PMO Special Interest Group: The PMO is the organizational structure, methodologies, processes, procedures, controls, tools, people, training, and other components serve to integrate existing projects, manage the portfolio, control functions, and successfully deliver the organization’s business objectives. In other words, a PMO's main function is to focus on fostering project management excellence throughout the organization. Project management excellence is only achieved when standardized processes, procedures, tools, training and support functions are established, implemented, and continuously improved upon by a PMO. This sets a strong foundation for the successful management of strategic project initiatives. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 19

Project Management Office – Center of Excellence How is the PMO organized? THE PMO EFFORT IS A FULL TIME, VALUE-ADDED FUNCTION – perhaps one of the most important tools that the executive team must have to meet their goals. It is not about saving cost; it is about staying in business. To any executive who is thinking about “part-timing” it or aligning it to one functional area, our advice would be to forget the whole idea. Kendall and Rollins, Advanced Project Portfolio Management and the PMO. The Gartner Group identified four different PMO organizational models: 1. 2. 3. 4. Project Repository Model Project Coach Model Enterprise PMO Model Deliver Value Now Model Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 20

Project Management Office – Center of Excellence How is the PMO organized? Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 21

Project Management Office – Center of Excellence How is the PMO organized? Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 22

Project Management Office – Center of Excellence How is the PMO organized? Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 23

Project Management Office – Center of Excellence How does a PMO work? Project Management Working Group Practitioner Level Role: Expert project practitioners responsible for infusing project management practices into organizational projects. They represent best and brightest project management talent. The PMWG may include other technical and subject matter experts as required. Reports to PMO Director Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 24

Project Management Office – Center of Excellence How does a PMO work? PMO Director (Champion) Mid-Management Level Role: responsible for oversight, budget and planning of all plant projects. Reports to the Project Management Steering Group Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 25

Project Management Office – Center of Excellence How does a PMO work? Project Management Steering group (PMSG) Strategic level Role: Upper level management responsible for corporate vision, mission and goals regarding project management. Reports directly to Senior management and executives. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 26

Project Management Office – Center of Excellence PMO Working Group (PMWG) Responsibilities Operational Level – Practitioners • Creates and maintains project policies andbetween procedures • Act as liaison PMWG and MSG Createsand maintains repository • • Maintain monitor project performance data • • Ensure that the PMWGassessments has necessary resources Performs project • Oversee and manage the Project portfolio • • Develop Mentors and tutors and maintain theproject PM/Co. Eteams budget Participates with project team • • Ensure the Project Management skillsto and processes align with a standard (PMBOK) provide necessary skills • Optimize Project performance • • Integrate Helps project team to infuse project Project Management discipline with other management techniques, lessons disciplines required in plant projects • Maintain promote learnedand tools continuous process improvement • • Create Tailora. PMBOK processes PMO business function to andproject cost center specific and needs • Supports promotes PMBOK • • Determine specific best practices Has necessary project experience and • Manage employee training plan PMP certification credentials i. e. , PMP certification Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 27

Project Management Office – Center of Excellence PMO Working Group (PMWG) Authority • Recommend remedial actions • Report non-compliance to the PMO • Waive PMBOK compliance through PMWG approved project tailoring • Create policies and procedure Duties • Mentor and guide Project Manager and Team perform project functions as required • Perform project quality assurance audits • Report non-compliance to Project Manager for action • Perform configuration management of PMO Policies, procedures, training and tools (all data) • Creates and maintains the PMO repository • Perform project closeout audits • Participate in or oversee development of project lessons learned • Conduct PMBOK training and assessment • Assess project readiness • Review and approve project work products, including but not limited to: 1. Charter, 2. WBS, 3. Risk management plan, 4. Communication plan, 5. Cost and schedule control plan, 6. Performance reporting – EVM and 7. All others as required. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 28

Project Management Office – Center of Excellence PMO Director (Champion) Responsibilities Tactical Level – Mid-Management • Act as liaison between PMWG and MSG • Maintain and monitor project performance dataas liaison between PMWG and MSG • Act Ensure and thatmonitor the PMWG has necessary • • Maintain project performance data • Ensure that the PMWG has necessary resources • • Oversee manage the Project portfolio Overseeand manage the Project portfolio • • Develop and maintain the PM/Co. E budget Develop and maintain the PMO budget • Ensure the Project Management skills and • processes Ensure the Project Management skills and align with a standard (PMBOK) processes align with a standard (PMBOK) • Optimize Project performance • • Integrate Optimize. Project performance Management discipline with other required in plant projectsdiscipline • disciplines Integrate Project Management • Maintain anddisciplines promote continuous process with other required in projects improvement • Maintain and promote continuous process • Create a PMO business function and cost center improvement • Supports and promotes PMBOK • • Determine Create a PMO business andpractices cost center specific project best • • Manage Supports and promotes PMBOK employee training plan PMP certification • Determine specific project best practices • Manage employee training plan and PMP certification Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 29

Project Management Office – Center of Excellence PMO Director (Champion) Authority • Appoint and remove PMWG members • Direct/authorize PMWG activities • Intervene in at-risk projects • Assess project compliance to standard (PMBOK) • Ensure that projects are PMBOK compliant • Reward excellent performance • Authorize project team performance incentives • Creates PMO budget • Reviews and approve PMWG • recommendations for resources, tools and training Duties • Facilitate and expedite interaction between the PMWG and MSG • Translate strategic goals and objectives into actions for the PMWG • Authorize PMWG work • May act as the Head of the PMWG • Report project performance to the MSG • Present project management policies and process to the MSG for their review and approval • May participate on the MSG but not as a voting member • Maintain quantitative project data • Review and approve PM/Co. E policies and procedures Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 30

Project Management Office – Center of Excellence Project Management Steering group (PMSG) Responsibilities Strategic Level – Corporate Officers • Reviews and approves all project policies and procedures • Align projects with corporate level goals and objectives • Mandate and ensure Standards compliance • Require and enforce standard project tools, methodologies, metrics. • Review and approve projects against a standard project acceptance criteria(Business Case) • Manage Project Portfolio • Establish Project performance metrics • Establish Project Manager qualifications Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 31

Project Management Office – Center of Excellence Project Management Steering group (PMSG) Authority • Terminate projects • Direct PMO intervention into at-risk projects • Create, maintain and modify project portfolio • Issue site wide directives involving project policies and procedures • Control project approval and budget • Review, approve and authorize projects for the project portfolio Duties • Review project performance metrics • Review and approve PMWG policies and procedure • Review PMWG non-compliance reports • Review PMWG recommendations • Initiate corrective action through the PMO • Direct and mandate policy, procedure and process Compliance • Acknowledge and reward outstanding project performance • Review, approve, sign and support project charter Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 32

Project Management Office – Center of Excellence How does a PMO work? PMO Scenario #1: The PMO as mentor. An engineer/project manager supporting a program is being asked to develop a schedule (plan), to identify risk and track cost. He suddenly realizes that he needs to know more about project management. He is the lead engineer on the project and he doesn’t feel that project management is his area of expertise. He wants his project to succeed. So he asks the PMO for HELP! 4 3 1 2 Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 33

Project Management Office – Center of Excellence How does a PMO work? PMO Scenario #2: The PMO & Portfolio Management. The MSG is preparing to review the organization portfolio and budget for the coming fiscal year. They want the PMO to provide status for the current portfolio and to prepare business cases for future projects. They plan to review the current status at the executive off-site and provide a revised capability requirements list (strategic goals & objectives) along with a budget. 2 1 3 5 4 Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 34

Project Management Office – Center of Excellence How does a PMO work? PMO Scenario #3: The PMO VS BHAG. The MSG has decided to add a very risky and difficult project to the portfolio. This project will require extra help from the PMO. Because the MSG really want this to be successful and they DO NOT want to be embarrassed they want the PMO to become engaged on the project from the outset, don’t wait for the project manager to pull for help. 2 1 3 5 4 Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 35

Project Management Office – Center of Excellence How can I start a PMO? To start a PMO requires that you make a conscious effort and deliberately plan to focus on immediate return on investment and business necessities (RESULTS). The key is to keep the implementation simple, focused on immediate value, and structured with a plan. To jumpstart the PMO begin with a tactical focus and consider immediate concerns and business needs. Although the focus is short-term in the beginning, longer-term solutions should be considered and preliminary steps taken to lay the groundwork on broader, more complex issues. The long-term vision is to address permanent value that will result in the organization attaining and holding a very competitive and healthy business position. To accomplish a successful PMO implementation, follow this four-phase approach: Phase #1: Establish the foundation Phase #2: Startup with Short-Term Initiatives Phase #3: Rollout with Long-Term Solutions Phase #4: Support and Improve Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 36

Project Management Office – Center of Excellence How can I start a PMO? Phase #1: Establish the foundation • Identify the MSG and get their commitment to sponsor the PMO • Find a Champion • Understand your Value Proposition • Write the PMO Charter • Determine the PMO funding source • Identify available resources • Embrace the Results Model • Baseline current projects • Identify short-term objectives Phase #2: Start up with Short-term Initiatives • Launch and staff the PMO • Initiate project mentoring • Implement short-term initiatives: • Project reviews • Support New projects • Support projects In need • Deploy a pilot project support program Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 37

Project Management Office – Center of Excellence How can I start a PMO? Phase #3: Rollout with Long-Term Solutions • Develop project management expertise • Implement process improvement and streamlining • Apply lessons learned • Tailor project processes and methodology • Identify tools and techniques • Support the MSG with portfolio management Phase #4: Support and Improve: • Utilize project data and metrics to continuously improve • Refine project management processes • Expand the role of the PMO • PMP training • Business case methodologies • Enterprise architecture • Governance Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 38

Project Management Office – Center of Excellence PMO in action – Can a PMO Reverse the Improvement Paradox – Maybe! The PMO can overcome the fundamental flaws of typical Process Improvements, IF: 1. It’s driven by results first. 2. It seeks to understand what’s broken first, then fix it. 3. It’s dynamic and adaptive. 4. It provides support “pull” to projects in need. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 39

Project Management Office – Center of Excellence Questions? 40

Project Management Office – Center of Excellence Back up Slides 41

Project Management Office – Center of Excellence Results First: Concept behind the Results Model • Results first – Change Second. challenges the position that an organization must first be reformed and retrained before it can be expected to produce improved results. • The results-first proposition contends that it is not possible to change an organization to achieve higher-order results unless strategic business goals and objectives are driving the initiative. • The results first approach contends that the demand for results drives change. • Increasing the pressure to produce results sets the stage for conflict and confrontation, and exposes the painful nature of change. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 42

Project Management Office – Center of Excellence Overcoming the Improvement Paradox: The Results Model - The Framework: • Provides a systems approach to the assessment of performance competency. It answers the question ‘What’s broken and needs to be fixed’. • Forecasts the efficacy of process improvement interventions and supports ‘what if’ scenarios that let management postulate what might happen if processes are changed or people trained. It answers the question ‘How should the problem be fixed’ • Provides feedback loop for recalibration and continuous improvement of people, process and management. It answers the question ‘Are we getting better. ’ Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 43

Project Management Office – Center of Excellence Results Model: Performance Competency Scale 20 Effective Incompetent Competent 10 Incompetent 0 10 20 Efficient Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 44

Project Management Office – Center of Excellence State of Project Management - the need for the PMO A survey conducted by the Center for Business Practices (CBP), the research arm of project management consultancy PM Solutions, entitled "Project Management: The State of the Industry" reveals the latest project management challenges and trends facing executives of Global 2000 companies. Executives and project professionals report that their organization's biggest project management challenges are: • Developing a consistent approach to managing projects (23. 9%), • Allocating resources (19. 7%), • Managing too many projects or the wrong projects (16. 9%), • Developing and maintaining project manager competency, • Managing economic pressures, and • Dealing with limited visibility of project activities. According to the survey, the three most commonly implemented project management improvement initiatives are: • Software tools (77. 9%), • Methodology development (69. 1%), and • Staff training (69. 1%). The companies that implemented project management improvement initiatives spent an average of $712, 000 on them annually. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 45

Project Management Office – Center of Excellence Why are PMOs Increasing? Second, Do we really have a choice? Something must be done; it’s the Law. Information Technology Management Reform Act of 1996 – Clinger Cohen Act Public Law 104 -106 -Feb. 10, 1996: Subtitle C. SEC 5122. para (b) The Process of an executive agency shall- The Process of an executive agency shall 6) Provide the means for senior management personnel of the executive agency to obtain timely information regarding the progress; of an investment in an information system, including a system of milestones for measuring progress, on an independently verifiable basis, in terms of cost, capability of the system to meet specified requirements, timeliness and quality. Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 46

Project Management Office – Center of Excellence How is the PMO organized? Performance Improvement Inc. proprietary information. May not be released or reproduced without written permission. 47