PMO LEADERSHIP STRATEGIES FOR ORGANIZATIONAL DEVELOPMENT AND SUCCESS
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1 PMO LEADERSHIP STRATEGIES FOR ORGANIZATIONAL DEVELOPMENT AND SUCCESS Presented by Ruffin Veal III MSPM, PMP Project Management Institute Minnesota Chapter August 17, 2016
2 PRESENTATION OVERVIEW Our Challenges Our Strategy How do we as PMPs address these challenges and resulting effects? Our PMO Evolutionary Goal Project Portfolio Management or Enterprise Project Management The PMO Evolutionary Journey Our role as PMPs
3 Projects are increasing in size (financially and enterprise-wide). OUR CHALLENGES Resources (financial and human) are becoming more geographically diverse. Continued push for faster and cheaper. More difficult to stay on time and within budget while producing required solutions/deliverables. Ad hoc and disjointed project selection, initiation and implementation. Continued 50-60%+ project failure rate.
4 OUR STRATEGY HOW DO WE AS PMPS ADDRESS THESE CHALLENGES AND RESULTING EFFECTS? The Natural Evolution of Project Management Organizations Project Management Program Management Portfolio Management This evolution is driven by the challenges we face and the resulting effects upon our client organizations. PMO Organizations must adapt to our ever changing client demands
5 OUR PMO EVOLUTIONARY GOAL PROJECT PORTFOLIO MANAGEMENT OR ENTERPRISE PROJECT MANAGEMENT A Project Portfolio Management Office is an organizational unit that manages the organization s project portfolio. An organization that establishes a PPM office demonstrates commitment to achieving PPM maturity. The practical indications of such maturity include the establishment of clearly defined PPM duties, the consistent application of PPM processes, and success in each and every aspect of project and portfolio management.
6 OUR PMO EVOLUTIONARY GOAL PROJECT PORTFOLIO MANAGEMENT OR ENTERPRISE PROJECT MANAGEMENT PPM/EPM enforces the proper use of resources, employees, and timeframes to help management get a healthy queue of work established and deadlines met. PPM/EPM is infinite for the life of the enterprise. Provides the strategic methods for analyzing and managing groups of concurrent projects. Attention is focused on the strategic viewpoint of the organization s business and/or technological goals. Organizational Goals are primary consideration when addressing project prioritization/sequencing, risk/resource management, standardization and communication.
7 Remember foundational PMO functionality - Monitoring and controlling Project performance (Project governance): Reporting project status to upper management Implement and operate a Project Management Information System (PMIS) Develop and maintain a project score card - Development of PM Competencies and Methodologies: Develop implement and maintain a standard methodology Promote project management within the organization Develop competency of PM personnel through training and mentoring
8 Remember foundational PMO functionality - Multi-project management: Coordinate between projects, Identify/select and prioritize new projects Manage one or more portfolios/programs Allocate resources between projects - Strategic management: Provide advise to upper management Participate in strategic planning
9 Remember foundational PMO functionality. Organizational learning: Monitor and control PMO performance Manage archives of project documentation Conduct post project reviews/audits Implement and manage risk and lessons learned database - Execute specialized tasks on behalf of project managers: Scheduling/Risk/Contract management Customer liaison/interface management
10 Establishing Project Portfolio Management Functionality The Project Portfolio Management Maturity Model is an effective tool for organizations to decide quickly what PPM improvements they should make to enhance their organization's ability to optimize investments, execute big changes and deliver value.
11 Project Portfolio Management Maturity Model
12 Five interdependent core dimensions are of critical importance in PPM: People: The interdependencies among people in terms of their availability, their skills, their contribution to the work that needs to be done and their career aspirations are of critical importance. At higher levels of maturity, the leadership ability of the individuals involved in supporting PPM activities becomes essential. PPM practices and processes: Disciplines such as portfolio management, as well as program management and classic project management processes, such as risk and resource management. One of the most common activities also included in this dimension is the establishment of a PMO, be it a project management office, program office or portfolio management office.
13 Five interdependent core dimensions are of critical importance in PPM: Value and financial management: Systems that might be adequate at Level 1 (when projects are paid for as part of a lump sum) can be totally inadequate when forced to support a more-detailed look at multiple projects and programs. This dimension focuses on understanding how to ensure that projects and programs offer value for the money spent. Technology: The requirements for technology support tend to evolve in sync with the overall maturity of the approach to PPM. This dimension is designed to help organizations know which technology will yield the greatest return at a particular maturity level.
14 Five interdependent core dimensions are of critical importance in PPM: Relationships: PPM fundamentally is focused on teams of people working to create a specific outcome. This dimension offers appropriate guidance on the necessary touchpoints, including identifying who needs to be informed, who needs to be consulted and whose help is mandatory to achieve the desired outcome.
15 Level 1: Reactive: The organization is more reactive than proactive when dealing with projects often with too few resources and very little time. Internal processes are centered on managing critical projects, so priority projects get staffing support. Larger projects are contracted out to vendors. Projects may have budgetary estimates, but quite often, the project work is simply funded out of the IT or other departmental budget.
16 Level 2: Emerging Discipline PMO EVOLUTIONARY JOURNEY Level 2 can be a massive swing from a "just get it done" environment to a process-driven organization. Most organizations at this level have invested or will soon invest in a basic PPM tool. The concept of disciplined teams working on a project is developed, and project collaboration and team workspaces are supported. Tools with reliable data for value/financial management are generally still rudimentary.
17 Level 3: Initial Integration: PMO EVOLUTIONARY JOURNEY At this level, organizations begin to find a balance among the competing demands of the five dimensions of our model people, practices, value, technology and relationships. Level 3 organizations practice reasonable resource management. Organizations understand the difference between a project and a program. Therefore, they staff and manage a program when the scale, risk and complexity of the work justify it. Here, a good portfolio process ensures that the right projects and programs are approved.
18 Level 3: Initial Integration: PMO EVOLUTIONARY JOURNEY The most useful competency for a PPM function at Level 3 is holistic thinking focusing on the whole, not the parts. This entails being able to understand how a change in one area will affect others, how changes should be made and in what order to achieve maximum results. In a related development, joint decision making about projects and programs by the organization as a whole happens at Level 3.
19 Level 3: Initial Integration: PMO EVOLUTIONARY JOURNEY This need for transparent decision making fuels a need for tools to provide visibility and support analysis. There is also a need for a reliable delivery mechanism and for some level of financial accountability. Level 3 tends to lack sophistication, but there is a conscious focus on investing in the individual to improve performance so additional compliance activities aren't required, laying the groundwork for Level 4.
20 Level 4: Effective Integration PMO EVOLUTIONARY JOURNEY The organization begins to focus on being project-capable. An expectation that projects/programs contribute business value. Fastest, least expensive way to accomplish anything new and different is through the mechanism of setting up a project or program. Work that was started on the portfolio at Level 3 comes up a notch, and it's now possible to begin to talk about real strategy execution.
21 Level 4: Effective Integration A network of PPM leaders exists companywide. PMO EVOLUTIONARY JOURNEY Centers of competency (most of them virtual) help improve workload management, and capacity planning is in place and operating. The portfolio is modeled and appropriately optimized, factoring in risk. Value and benefit realization are being tracked. Program management skills are being developed internally, most program managers are now being chosen from internal candidates.
22 Level 4: Effective Integration PMO EVOLUTIONARY JOURNEY Very few companies have successfully reached Level 4, but we anticipate this number to begin to grow, because digital is changing everything. The new digital economy, where competition can emerge from the dark corners of possibility, forces organizations to begin to work together as a matter of course, which supports PPM in attaining the level of initial integration.
23 Level 5: Effective Integration PMO EVOLUTIONARY JOURNEY Program management exists at Level 5 in the same sense that it does at Level 4. An enterprise PMO (EPMO) oversees strategy execution and value delivery. Other PMOs exist as necessary throughout the organization. Technology supports a robust knowledge management system, and resource management is enabled for all project resources. Team compositions change and adapt to each initiative, and work is structured and executed in a way that maximizes the odds of getting things done right.
24 Recommendations: At any level of PPM maturity, focus first on helping the organization make well-informed investment choices. This will improve the odds of project success more than any other factor. If your organization requires enterprise wide change and capabilities, it is worth the effort to pursue Level 4, where enterprise PPM practices are built. Identify objectives for your enterprise, and use them to identify the most cost effective improvement opportunities for your enterprise. Meticulously manage the change involved in maturing/improving your PPM capabilities.
25 Our Goal: A Project Portfolio Management Office A project portfolio management (PPM) office is an organizational unit whose function is to manage the organization's project portfolio. Includes prioritizing projects, allocating resources to projects, and, on a regular basis, identifying which projects to initiate, reprioritize, or terminate. A key focus is ensuring that the overall collection of projects creates the greatest possible value by maximally supporting the objectives of the enterprise. The PPM office collects and distributes data for reviewing, assessing, and managing individual projects to ensure that they are meeting their expected contributions to the portfolio.
26 Portfolio Management links Project Management and Enterprise Management.
27 Our Goal: A Project Portfolio Management Office Participants, Authorities, and Responsibilities The first step for establishing a PPM function is to decide who will participate as active managers of the project portfolio. A project portfolio manager, typically a senior manager, should be appointed with accountability for the success of the entire project portfolio. The successful PPM leader has a rare combination of talents.
28 Important skills/capabilities for the Portfolio Manager Good understanding of the organization's vision, mission, and strategy. Understanding of project and program management, including ability to assess project health based on high-level reporting documents. Leadership skills, including communication, presentation, and team building. Broad understanding of the business, including markets, customer base, partners, and applicable regulations. Able to interact effectively with senior executives. Good analytic skills, with understanding of the basic concepts and techniques for project valuation and risk assessment.
29 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process The successful PPM process includes four major components. First, a structured process is used to acquire key information about all projects and to organize project data into one or more project portfolios. Second, consistent and objective methods are employed to analyze projects and compare their risks and benefits. Third, resource demands are compared with capacity so that the subset of projects that make best use of available resources can be selected. The final component consists of tracking portfolio performance for ongoing assessment and adjustment.
30 Our Goal: A Project Portfolio Management Office Components of Project Portfolio Management
31 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process On a regular basis tied to the planning and budgeting cycle (i.e. annually, biannually, or quarterly), the portfolio team reviews all projects that are seeking funding, including ongoing projects and new project concepts. Projects are screened to determine which proposals require formal evaluation and prioritization. Projects exempted from formal evaluation include obvious "non-starters," very small projects, and projects that are more appropriately funded from other budgets. Ongoing projects and "mandated" projects may or may not be exempted.
32 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Typical portfolio management cycle
33 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Project managers with projects that pass the initial screening are authorized to use resources to complete additional analysis necessary to provide the data required for entry into project proposal templates. In some instances, the necessary resources can be non-trivial. For example, a proposed construction project may require some minimal level of engineering analysis to determine feasibility, set project scope, provide cost estimates and estimate project effectiveness at addressing needs.
34 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Mandated and ongoing projects Evaluating ongoing projects for continued funding is useful to ensure that struggling or obsolete projects do not prevent funds from being available to meet morepressing needs. Where possible, large, long-duration initiatives should be reframed as a series of smaller projects. Not as much effort is required to re-evaluate an ongoing project because template inputs need only to be updated rather than generated "from scratch. Estimates tend to get less uncertain as a project proceeds in its life cycle, and providing up-todate inputs allows portfolio information to be kept current.
35 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Mandated and ongoing projects Gate Reviews Note that the evaluation of on-going projects for the purposes of project prioritization is not meant to replace other project progress evaluations. A large, multi-stage project may need to be evaluated at specified phases or "gates" to ensure that it is on track to meeting its milestones and deliverables. Project gate reviews involve in-depth evaluations based on real-time information, but they are typically made in relative isolation to the decisions made on other projects.
36 Our Goal: A Project Portfolio Management Office Project gate reviews Coordinated with Project Portfolio Management
37 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Mandated and ongoing projects Gate Reviews With PPM, gate reviews can be used to trigger project re-prioritizations (prior to the next portfolio review) or even an immediate project cancellation. Gate reviews result in modifications to project tasks. At least at the early stage of PPM adoption, it is usually best to allow portfolio management activities and gate reviews to proceed more or less independently.
38 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Mandated and ongoing projects Priortizing Projects between Major Reviews Projects may sometimes have to be evaluated between the major budgeting cycles. Urgent new projects may need to be evaluated between planning periods. Evaluations between major reviews involve comparing such projects against the most-recently established project priorities.
39 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Mandated and ongoing projects Multiple Project Versions A very useful practice is to require multiple versions of proposals for large projects. By providing project alternatives, organizations can avoid "all-or-nothing" choices for important, but resource-demanding projects. Providing alternative project versions for projects can result in a significant increase in the value generated from the optimized project portfolio.
40 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Mandated and ongoing projects Proposed Evaluation and Process Management PMO EVOLUTIONARY JOURNEY Projects are prioritized and "go," "no-go," "kill," and "hold" recommendations are made with the goal of creating a value-maximizing project portfolio. Project recommendations are reviewed by the executive committee and project funding for approved and authorized projects. Projects are phased based on critical paths to fit people and other resource constraints, with the most urgent projects starting first. Projects designated as "hold" may be resubmitted later.
41 Our Goal: A Project Portfolio Management Office Adopt a Successful Portfolio Management Process Mandated and ongoing projects Proposed Evaluation and Process Management The PPM office monitors the status of on-going projects to ensure that projects stay on track to achieve the anticipated benefits that motivate their being included in the selected project portfolio. Once the project is completed, the products (assets, services, etc.) delivered or enhanced by the project should be similarly monitored and evaluated to ensure that the forecasted benefits are realized. PPM managers provide the project portfolio manager with feedback on the extent to which actual benefits are in fact achieved. Without such feedback on actual performance, there is no real accountability.
42 Our Goal: A Project Portfolio Management Office Summary of Accountabilities Ensure consistent and accurate progress reporting on the costs and other critical resources consumed by projects. Define and develop the detailed, continuous process by which projects are evaluated, prioritized, selected, and managed. Enforce a collaborative effort that enables senior executives (the steering committee) to reach agreement on portfolio goals and objectives. Provide coaching and training to project managers to help then to understand project evaluation criteria and to enable them to efficiently generate inputs for the project template.
43 Our Goal: A Project Portfolio Management Office Summary of Accountabilities Communicate to project proponents and other stakeholders which projects are approved and project priorities. Provide stakeholders with timely assessments of portfolio progress, with early identification and correction of portfolio-level issues that may impact performance. Adjudicate resource conflicts between projects. Maintain visibility of key project information across the enterprise. Ensure that the project portfolio remains in tune with changing business objectives and strategy. Identify lessons-learned and continually refine the PPM process.
44 Conclusion Project management organizations are ever changing and naturally evolving entities. In order for our PMOs to remain relevant they must adapt to the ever changing organizational environments which they serve. We as PMPs, must approach our PMO management responsibilities with a vision of enterprise portfolio management as our organization s goal. We as PMPs are obligated and must articulate this evolutionary vision to our client organizations. We must be the proactive facilitators of PMO evolution and not just maintainers of the status quo.
45 References Miley W. (Lee) Merkhofer, President Merkhofer Consulting Establish a Project Portfolio Management published on Gartner Research, analyst(s) Lars Mieritz IT Score Overview for Program and Portfolio Management, 09 Nov 2015.
46 Additional Resources PMO EVOLUTIONARY JOURNEY PMI Global Congress 2016 North America Pre-congress courses: September (3-4 day seminars) The Evolving PMO: Governance, Portfolio Management, Resource Optimization and Performance Measurement by Ken Crawford Next Generation PMO and Portfolio Management by Jack Duggal PMO Building Blocks for Successful Strategic Initiative Management by Claudia Baca & Ruth Anne Guerrero
47 Questions & Comments PMO EVOLUTIONARY JOURNEY Web site:
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