Business Process Management (BPM) applied to improvement of the project portfolio selection process

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Business Process Management (BPM) applied to improvement of the project portfolio selection process Ézio Rosso Junior (UFSC) ezio.rosso@gmail.com Cintia Medeiros Bastiani (UFSC) cintia.bastiani@gmail.com Mauricio Uriona Maldonado (UFSC) mauricio.uriona@gmail.com Fernando Antonio Forcellini (UFSC) forcellini@gmail.com Abstract: In the last decade, many organizations are working to adapt quickly for new demand of flexible process. In the same time, organizations have increasingly sought to apply project management techniques for development of new products and services. This article shows one case, that the objective was apply Business Process Management (BPM) for improvement of the process of project portfolio selection. Was verified the opportunity of using the BPM tool, with a significant contribution, due to presents the BPM as a technique to be used in process modeling of project management. Key-words: Business Process Management, Projects, PMBOK, BPM Gerenciamento de Processos de Negócio aplicado à melhoria do processo de seleção de portfólio de projetos Resumo: Na última década, muitas organizações estão trabalhando para se adaptar rapidamente para a nova demanda de processos flexíveis. Ao mesmo tempo, as organizações buscaram cada vez mais aplicar técnicas de gerenciamento de projetos para o desenvolvimento de novos produtos e serviços. Este artigo mostra um caso, onde o objetivo foi aplicar o Gerenciamento de Processos de Negócio (Business Process Management - BPM) para melhorar o processo de seleção de portfólio de projetos. Verificou-se a oportunidade de usar a ferramenta BPM, com uma contribuição significativa, devido a apresentar o BPM como técnica a ser utilizada na modelagem de processos de gerenciamento de projetos. Palavras chave: Gerenciamento de Processos de Negócio, Projetos, PMBOK, BPM

1 Introduction In the last decades, one of the disciplines that has developed in organizations is arguably the Project Management. Despite of the Project Management Institute (PMI) and their community orient the best practices, the maturity level of organizations still low, regarding the use of methodologies, processes and procedures. With fierce competition, the rivalry makes the companies offer better and faster services and products to the market, in other words, the Time to Market at the lowest possible cost. With this scenario, it is even more important to choose the right projects to execute them properly. Choose projects which will add value and provide competitive gains is daily task of the project management executives. Select What and When to do, it is what makes the difference in groundbreaking organizations. One major problem when defining a project portfolio is on the fact that the decision makers have limited information for choosing and building a portfolio. The perceived value of the project towards the company's strategy and market requirements are the major sources of obscurity of the project success (KERZNER, 2002). Nowadays, with the dynamism of society, it is common to for companies to have in its portfolio, a higher number of projects than they can perform. However, the problem is not about having a much larger amount of projects than you can execute, but rather, in not having a robust procedure for evaluation and selection of projects which will be part of the executable portfolio. The company where this research was applied is an engineering multinational company at the area of cooling solutions, at the unity located in south of Brazil. The process that demands improvement is the project portfolio selection, of the Electronics Research and Development (R&D) area. The reason that lead to the necessity of this review of this process, was the difficult to select the right project to be developed, when the scenario while the last years was an increasing of projects quantity, and at the same time the number of people available to work in this process was decreasing as consequence of cost reduction, then is mandatory to correctly select the projects to be executed by the team. Currently some of the projects started are not finished, as while the project execution is evidenced that the requested change of the product was not really necessary, or not possible to be done because of elementary inconsistencies of the requested modification faced with the product concept. This article has the objective of develop a solution to improve the project selection process, however, the delimitation of this study is evaluate the Medium complexity/size projects portfolio process, using the Business Process Management (BPM) as a methodology to structure the revision of the process. The study will not evaluate the others projects sizes (Small and Large projects), and will be focused only on project portfolio selection process, then the product development process will not be detailed or studied. 2 Theoretical background For anyone who works with projects, is no stranger when a manager of R & D comments that projects are cancelled because they are no longer aligned with the strategy or need to be prioritized. In organizations, we observe that in most of project manager use PMBOK (2013) as a reference, as this guide defines best practices for managing projects widely held. Though,

in practice is not the use of all the PMBOK processes in all areas of the company's knowledge, because it is too bureaucratic and do not apply to all types of project or does not encompass all the necessary knowledge. The Business Process Management (BPM) focuses on the management of the process at the company's business, such as, identifying, modeling, and run mainly accompanies its implementation, making the management of it in real time and identify possible areas for improvement in the process for it to be improved (DUMAS et al, 2013). Business Process Management (BPM) is a concept that has been growing rapidly since the late 1990s (LU & SADIQ, 2007; MELÃO & PIDD, 2000). One of the biggest problems organizations in Project Managements the lack of definition and the non-compliance with this management processes. BPM helps organizations, acting directly in the management and improvement of processes. Jeston and Nelis (2008), can be defined Business Process Management (BPM) as a holistic practice where factors such as organizational management understanding and involvement of the top of the organization, clearly defined roles, adequate technical, welltrained people and a culture receptive to processes business are essential to obtain the desired result. According to them, the modeling process is associated to the methods used to identify and conceptualize business processes (as-is) and future processes (to-be). Modeling the current state or Modeling As Is" experts argue that is to understand the existing process and identify its faults. Modeling the future-state or To Be Modeling, refers to development of a new version of the process, considering the solution of processes already listed above and meet the goals set for the process. The increase in Business Process Management (BPM) in the past decade has seen an increase in demand for Business Process Management (BPM) techniques. A rapidly growing aspect of BPM is the use of workflow management systems to automate routine and sequential processes Based on BPM theory, it will be possible to identify gaps for process and eliminating them into the flow. According to Rasmussen (2003), although a variety of analytical tools and methods can be used in selecting projects, processes need to be present for the people involved in making the decision to share a common vision in a structured method for well-defined steps. Cooper et al, (2000) comments that doing the right projects is more than simply than project selection. Select projects is not easy, when you decide make some projects, is important to have clear that you put your resource to have increase the sales or revenues. Due to, select the best project is very important. While this study was conducted a search activity at the scientific web bases Scopus, Wiley and Science Direct, with the objective of verify the articles available regarding to the application of the Business Process Management (BPM) methodology to evaluate and improve the Project Portfolio Selection process. To validate the keywords used to conduct this search, was evaluated if each keyword when inserted at the searching tool of the web bases. The delimitation of this searching were: consider as result only the Article document type; available on Journals; limited to seek only at the fields Article title,

Keywords and Abstract. This searching process was conducted on second semester of the year 2014. Picture 1 - Quantity of Articles founded on searching at web bases As shown at the Figure 1, all the 6 keywords used to represent the Axis 1 (Project portfolio selection) and the Axis 2 (BPM) returns a good quantity of articles, when searching with only 1 keyword alone, but when were done the combination of the keywords of the Axis 1 and Axis 2 using the condition AND, only 1 article was found, but the subject of the article was related to the development process and not to project portfolio selection. As result of this searching at the web bases, is possible to know that is a lack of scientific study related to use of BPM to evaluate and improve the process of Project Portfolio Selection, and in this article will be shown this application, with the proposed changes to the process defined using the BPM methodology. 3 Methodology The stages of the work development were defined following sequence shown at the Figure 2, using the acquired knowledge of BPM, and interviews with executives involved at the Portfolio Selection Process. As the first activity of the working methodology applied, the Indicators Analysis was done, focused on current process, since the process is established, and have the indicators considered being important to evaluate the process performance and the projects requesting demand. Based on the current performance of the process under analysis, and at the necessary improvement of the results, the expected Goal is defined. According to Dumas (2013), the As-Is process modeling phase is used to document the current state of the process under analysis, as it is in practice (not the envisioned process), this time is also called Process Discovery. The next step of the methodology, consists on discuss how the process under evaluation could be improved, initially by the definition of the Critical Points. With the Critical Points mapped, the team could identify the necessary changes at the process that will lead to achieve the Goal previously agreed, and this process redesign is formally presented at the called To Be Process.

4 Results Picture 2 - Stages of the work development as BPM methodology 4.1 Indicators Analysis and Goal Definition The process under evaluation is the Project Portfolio Selection, of the Medium Projects. The projects with intermediate complexity are characterized by medium impact of modification at the products, this type of project is named as Medium Projects at the company were this study was conducted. At the current process, all projects requested were kept on system until be started/developed, but some of them are cancelled while the development process, before than be finished, as the project is not really feasible. On this company all projects requisition and projects under development were stored on a web based system, where the administrative staff could consult if the projects was started and the current status. By this system is possible to analyze the history of projects requisition and execution. When this study was done (first semester of the year 2014), the company had 104 projects in its portfolio, waiting to be started. The team capacity was only 30 projects annually, and then was necessary to change the process of project portfolio selection, to enable an better selection process, and execute the most important and necessary projects. The projects can be requested by any area of the company and usually has the following objectives: - Adjust an existing product to a specific need from the market; - Adjust an existing product to a request from regulatory institutes; - To improve the quality of the product, suppliers or the process; - Inclusion of new suppliers for items/components already in use; - Increase in production capacity. As Figure 3, the number of requests for projects were growing up 30% annually, and projected number of projects to the year of 2014, in the second quarter, was even bigger than in previous years.

Picture 3 - Quantity of requested projects Besides the amount of projects are increasing significantly, from one year to the next, there was a need to decrease the amount of people, the team was reduced on 30%. Faced with the challenge of doing the right projects, with limited staff, the company was seeking for alternatives to be robust, on process of selecting projects that will bring the expected financial results. After executives have acquired greater knowledge about BPM and Project Management, the Project Management Office (PMO) started jointly with same executives a work of mapping and automation, with the goal of reducing by 30% the volume of requests for projects of medium complexity. 4.2 As Is Process The Project Management process to be evaluated and improved, is composed by the processes of Prioritization/Choose projects, this one begins in the Research and Development (R&D) area, when it receives a request and ends when it gives the same project closure. The process is started by anyone with the opening of a document, which has the date established for ending, the PMO manager receives the request, examines the technical feasibility, verifies the resource availability and approves. The company has its own processes and monitoring reports. The focus of this work was to the point of approval of the project to be executed by the engineering team, but was not defined as part of the scope the process after project approval. At the Figure 4 is shown the graphical representation of the current process As Is using the methodology of BPM.

4.3 Critical Points Picture 4 - Actual Process - As Is With the process modeling As Is, becomes visible dependence of the process in the management leader of PMO. It was verified that other areas of interest, as manufacturing, quality and sales were not involved in the process of decision to approve and prioritize

new projects to be executed. Point that can be seen as weak, as the great challenge of project management is not just about doing a project with excellence, but also the choice of which shall be done and in what order. Assessing the projects executed at the complete year of 2013, it was observed that 30% of the 39 projects delivered, did not need to be really developed until the end. As shown below, these are the main reasons to the projects were not harnessed in the company: - Started late and when was finished, the market had not interested in it; - Because it is middle level of complexity, the projects were not directly linked to the organization's strategic planning, and when the project was finished the product under modification was obsolete; - The requestor had strong power of reasoning in the analysis of viability, although after implanted, the sale was not performed; - Some investigations into the causes of quality problems were poor, directing for product improvement when options with a lower impact as alternatives still existed, as small changes to improve the manufacturing process, to prevent the failures, instead of changing the product design. The PMO took the decision to use the BPM tool, to aid in the search for improvements to the current process. Was defined a working group represented by managers who were requesters of projects, meaning that they were internal customers of the projects we are referring. Some of the difficulties identified in the current model of projects requesting and portfolio management are listed below: - Anyone could open a project request; - Approval process as the responsibility of a single area; - From the moment that opened the request, the requesting area considered his project into execution; - Projects approved upon examination of the team were considered unfeasible, the allocation of the team was used to analyze not winning projects; - Waiting time to approve the project was long, on average 60 days. Improvement opportunities were found in the current model and for this reason a new process model of prioritization/selection is being proposed, as will be shown at the To Be proposal. 4.4 To Be Process As previously defined, the analysis is related for the approval process and prioritization of projects, not being considered the next steps of the flow. In the process definition To Be, the cultural practices of the company have been respected, in order to facilitate the acceptability of the people. The first topic discussed by the committee, was how to design a process that reduces by 30% the volume of projects in the "queue". Since it is an open form to anyone, the inhibition in requests was the point of care. The first suggestion was to restrict access only to people with a certain level of maturity, but the company did not feel comfortable to focus solicit projects in some people.

The second alternative, that was considered to be implemented, was the creation of a committee, to examine the feasibility of each project requesting. This committee is composed by the leadership team of the company unit, and the project asker is responsible to present and advocate in favor of the development proposal, regarding to it go ahead as new project on Portfolio. If approved, the project is prioritized, in this moment a list of projects is composed, and so that resources are released, they take on the first in line. At the Figure 5, the To Be process proposal is shown. Picture 5 - To Be process proposed

5 Conclusion It was observed that the company previously had the process for analysis of the feasibility of the project informally, depending on the knowledge of the person who performed. Apart from the dependence of the knowledge, is noted that the priority was also given by only one person. It is noticed that the dependence of this process be conducted by a single person can be dangerous, because it is tied directly to your knowledge and good judgment, and in some cases were not possible to understand the needs from other areas of the company. As this study had the objective of develop a solution to improve the project selection process, whereas the proposed goal was a way out to enable a 30% reduction of projects to be developed. This objective was exceeded, as the BPM methodology enabled the solution proposal and also its implementation, generating a decreasing in order of 42% in projects portfolio quantity. Another perceived benefit on the committee, is that the number of new projects requested by week reduced. The reason was investigated and concluded that the requests for projects was an alternative for some processes, to get evidences that was addressed a problem. After the first time of the requester on the committee, where he should explain why that project should be done, in the next time he would not need to submit for the committee evaluation, he examines automatically when filling the project request form. 6 References COOPER, Robert G.; EDGETT, Scott J.; KLEINSCHMIDT, Elko J. New problems, new solutions: making portfolio management more effective. Research-Technology Management, v. 43, n. 2, p. 18-33, 2000. CULL, Richard; ELDABI, Tillal. A hybrid approach to workflow modelling. Journal of Enterprise Information Management, v. 23, n. 3, p. 268-281, 2010. DUMAS, Marlon et al. Fundamentals of business process management. Heidelberg: Springer, 2013. JESTON, John; NELIS, Johan. Business Process Management: Practical Guidelines to Successful Implementations. Routledge, 2008. KERZNER, Harold. Strategic planning for project management using a project management maturity model. John Wiley & Sons, 2002. LU, Ruopeng; SADIQ, Shazia. A survey of comparative business process modeling approaches. In: International Conference on Business Information Systems. Springer Berlin Heidelberg, 2007. p. 82-94. MELÃO, Nuno, & PIDD, Michael. (2000). A conceptual framework for understanding business processes and business process modelling. Information systems journal, 10(2), 105-129. PROJECT MANAGEMENT INSTITUTE PMI. A guide to the project management body of knowledge. PMBOK. 5ed., 2013 RASMUSSEN, Nils H. et al. Process improvement for effective budgeting and financial reporting. John Wiley & Sons, 2003.