top

Agile PMO vs Traditional PMO

Agile PMOLately, more and more organisations in Australia have transformed or are currently transforming their traditional project delivery approach into an agile delivery approach.

According to the CEO Magazine (June 18th, 2015), agile companies’ revenue grow 37% faster than their competitors, generate 30% higher profits and outperform their peers on every efficiency, customer, and employer measure. Multiple new players such as Uber, Airbnb, and Amazon have changed the landscape here in Australia and new companies emerging weekly potentially disrupting the market.

An agile PMO can greatly drive the organisation, guiding and supporting them to achieve their goals faster, more cost effective and of better quality.

So how can a traditional PMO move to an agile PMO?

Change won’t happen overnight. It takes time, money and effort to get there. When moving an organisation to an agile approach, People, Projects and Processes need to be reviewed and transformed. This won’t happen in weeks, rather than months.

Project teams and Management require training, coaching and support. Existing behaviours will be challenged and need to be changed. An agile approach for project delivery needs to be established. New practices will be learned and adapted (Stand Ups, Retrospective, Showcases, Pair Programming, Automated testing, Refactoring…) and metrics will be established and collected. Core teams need to be formed and established and Community of Practises will need to be setup to support teams and groups.

There is also the focus on reducing reporting, meetings, emails, sign-offs and governance in order to speed up the delivery.

Some of the key differentiators between a traditional and an agile PMO are outlined below:

Traditional PMO / Organisation
Agile PMO / Organisation
Annual funding will be released for project work once a year. These funds needs to be spend by the end of the financial year, otherwise the funds will be ‘lost’. This might drive the wrong behaviour. Funds might be spend on activities, which might not bring the desired return, impacting the organisational goals and targets.Incremental funding is based on the number of resources. These funds will be released throughout the year per planning cycle (e.g. quarterly). Since teams are stable, hardly any additional project resources are required. Therefore the funding amount will be in most cases consistent.
Centralised Annual Planning is performed yearly and only adjusted when major incidence happen.In an agile organisation the strategy, goals and targets are set.  However, the roadmap on how to get there will be adjusted during the year. Planning will be done on a regular basis (e.g. monthly) and the current situation and market will be analysed. Corrective actions will be taken accordingly (rolling wave planning). Decision making is distributed and not centralised anymore, which requires a high level of communication, trust and accountability.
Governance is performed through project status reporting (e.g, milestones). Information is aggregated and might be delayed, depending on the reporting cycle (e.g. fortnightly).Governance performed through daily stand-ups, Scrum of Scrums, ‘Project walls’ and Leadership Boards. Information is available ‘real-time’.
Traditional Project Management focuses on artefacts and plans. The Project Manager uses the Work Breakdown Structure as a tool to adhere to it. Change Management is used for corrective actions. Focus is adherence to plan and to produce the desired end-product.Agile Project Management focuses on collaboration, customer interactions and customer satisfaction. Through agile sprints and planning features will be completed. Focus is value-driven.
Examples: PMBOK, Prince2, V-Model, ISO 21500Examples: Agile Project Management, DSDM, Scrum, Kanban, Lean, SAFe
Organisations struggle with having too many projects underway and not having enough resources to do the actual work. An individual resource can be assigned to multiple projects at the same time. This often results in productive loss of individuals, delay of project outcomes and therefore delay in business benefit realisation (http://www.apa.org/research/action/multitask.aspx).The work is based on the number of resources available not on the number of projects. The emphasis here is that the team is pulling the work and not overloading its team members (Kanban method).  There is no individual work assignment. This has the effect that more work will be done as the teams are working more efficient and effective.
Measurements are an afterthought. Many organisations are claiming to perform business benefits realisation but when drilling down, hardly any metrics, measurements or baselines are included. Reporting and tracking of outcomes once the project has been deployed is hardly done.Focus on Measurements and Benefits. Organisations, which follow an agile approach tent to focus on benefits and measurements from the beginning. They typically use a lean or business model canvas, form hypothesis to benefit to results (http://blogs.atlassian.com/2013/10/fight-the-dark-side-of-lean-ux-with-the-experience-canvas/).
Detailed Plans / Business Cases: Traditionally, plans will be developed and created in form of documentation as a means of governance and justification e.g. the person who wrote the document thought of all the requirements. Documentation is required as Sponsor and Business Owner will be less engaged in the project - compared with an agile approach (e.g. possibly only at a monthly steering committee meeting).Lightweight Business Case: The Business Case will be developed with the extended team (including development team and management), therefore only light weight documentation is required. Since the Sponsors and Product Owners belong to the team and meet on a regular basis (in some cases daily), corrective actions can be performed when required (via Executive daily scrums). Documentation is reflected in light weight notations like  mock up screens, stories and done criteria’s not necessary a word document.
Project Teams exists: Organisations tent to scale their project resources (e.g contractors / partners) based on existing or upcoming project work. Individual resources will be assigned to project work. Time and effort is spent on onboarding new resources. New teams have to go through the team formation process. After the project has been deployed, teams will dissolve and knowledge will be lost.Stable teams exist: Organisations will use existing resources to form stable teams to undertake the project work. The team will stay together and will pick up the next available work request. The teams forming process will only occur once and knowledge stays within the teams. No individual resource assignment.
Single projects are performing their deployments throughout the year. In the classical sense projects are releasing milestones. Coordination’s between project deployments are complex due to the numbers of projects, interdependencies and release windows.Release Trains performing regular deployments throughout the year. Release trains will deliver features. Any features can be easily and in a timely manner released. This can drastically shorten the time to market.

Depending on the size of the organisation and the size of the software development teams this transformation might not come cheap.

However, the questions might be better: Can an organisation afford not to change?

17

How can PPM tools help in the daily life of a PMO Manager

PPM ToolsI confess: I like PPM tools and I’m not a sales person. Scary, isn’t it?

Though I admit, I used to work for a tool vendor, selling tools and process consulting, but that was a long time ago now.

During my time, I have seen some very successful PPM (Project Portfolio Management) tool implementations but I’ve also seen some failures along the way.

In this post, I would like to give an overview on how PPM tools can be helpful in the daily life of a PMO Manager.

How to make the PMO successful

To start off with: There are many activities that you can do to make a PMO very successful, like providing training to Project Managers, performing resource supply and demand management or assisting with the project prioritisation process.

But one of the key and critical get rights is to provide the management team with information on the performance of the project portfolio investment. Management questions need to be answered quickly, for example: What is the forecast? Will we make our financial year target? We need to save $2mil from our portfolio budget, what would you recommend?

In order to answer the above questions, it is essential to have the supporting information compiled:

  • In a clear and consistent format
  • In a timely manner
  • In an accurate and concise manner

Doing this will provide visibility around the project portfolio and will facilitate decision-making. Without this in place, it just becomes a guesstimate and the Business / PMO ends up flying blind.

There will be no way of knowing to what extent the project portfolio investment will support the companies 12 month objectives and where the portfolio will be financially at the end of the financial year.

There could even be possible costs to carry over, but you wouldn’t be able to see this until it happens. You end up with a PMO of fire fighters, who are reacting to events that unravel – rather than a PMO that is well planned, in order and controlled.

Typical EnvironmentTypical Business Environment

Collecting and analysing the required information and data is hard. Often the information is stored not only in different places and in different systems but it often comes in different formats too.

For example: Project Managers might use MS Excel for their financials, MS Project for their project scheduling and then they might present status updates in the form of a PowerPoint presentation.

To continue, business cases are typically written in MS Word and meeting notes are often captured within various emails.

Some of the team expenses are directly entered into the expense system (for example Oracle) and team resource information can be found in an HR System.

No wonder it can be very difficult to get together all of the required information and it can turn into an absolute nightmare. Data collection and analysis is very time consuming and by the time the report is finished – the data is already out-dated and ad hoc reporting is nearly impossible.

Imagine that this process needs to be repeated every month again and again. There is hardly any time left for the PMO to provide any ‘real’ value.

Can PPM tools help?

So where can PPM tools help? What can they do for you?

In general all PPM tools can perform the following:

  • They can create, manage and view project data that is entered and stored in a database. This includes project proposals, plans and ongoing projects.

Some PPM tools can help you with:

  • Project prioritisation – assist with ranking of your projects by using scorecards.
  • Project portfolio optimisation via scenario modeling: If we postpone one of our projects, what impact does this have on our portfolio investment?
  • Plan projects and manage the execution of approved projects (work flow management).
  • Manage the supply and demand of project resources. Viewing and managing the utilisation of your project team and assisting with hiring decisions.

Data Flow PPM ToolsHow do tools work?

In order to get the tool to work for you, you need project data. The more data you have, the more information you get.
Data can come from key participants like:

  • Project Team Members: who are entering their time against a project, which will translate into project cost (hrs * resource rate = cost)
  • Project Managers: who plan and manage their projects (status, financials, risks, issues, action items…)
  • PMO Managers: who set up new proposals and projects and who manage the governance process (gate ways, mandatory documents, financials)
  • Team and / or Resource Managers: who enter resource requests and perform resource allocation

If your entire team is using the tool for planning and managing the project then you will get a holistic view of your project portfolio. If only some team members are using the tool – for example the IT department – then your information is incomplete and your predictions are not as accurate as they could be.

One important thing to remember: There is a saying: “Crap data in, will equal to crap data out”. I guess this is right. So, the quality of your data is key to your success.

How can you use tools to your advantage

Tools can make your life as a PMO Manager so much easier. They can save you time, money and effort at the following activities:

  • Manage your project portfolio investment – provide visibility on project performance to facilitate decision-making. This includes: reports on programs, projects, and portfolios. Information on: plan, cost, budget, resource, schedule etc.
  • Manage financials – regulate your financial health. Manage costs with time keeping, expense and capital expenditure tracking.
  • Manage Resources – optimise your resource utilisation. Perform capacity planning and manage resource assignments.
  • Prioritise portfolios – deliver the business value. Align projects with business priorities.
  • Manage scope – react to changing needs. Capture, quantify, assign, and track actions, issues, risk, constraints, opportunities, and changes.
  • Project Health Checks – PPM Tools assist in this purpose by giving management a comparison and summary of projects in a simple portfolio report that highlight variances from planned outcomes.
  • Single snapshot of portfolio performance for PMO management to review and evaluate.

As I mentioned earlier, you can only get all of this information and assistance if the required data has been entered consistently into the system beforehand. Only then can you query the data and report on the data using the PPM tool.

What are the benefits of tools

PPM tools can help you with the following:

  • Assist with labor-intensive tasks – e.g. collecting reporting data from many sources.
  • Automate processes – e.g. workflow can be started to inform project members about an event and what to do next.
  • Visualize data e.g. resourcing over or under allocation of team members, Gantt Chart views.
  • Financial Modeling: monitor, estimate and forecast financials: Will we underspend or overspend?
  • Enable you to support process standards – Projects need to go through phase gate approvals in order to access funding.

The main benefit for the PMO Manager is the time saving factor. In one of my previous assignments, I used to spend 5 days of each month compiling and analysing information for a monthly portfolio performance report. The data was stored in different systems and different formats which I had to collect manually. If I had a tool available to me I could have used my time more effectively.

Why tools fail to deliver full value

Based on all the benefits I mentioned above, everyone would agree to start using a PPM tool, right? So why do PPM tool implementations fail?

Here is a list of common issues and challenges:

Not all PPM tools will integrate with your current systems or in-house tools. For example, they might not be able to import or export your data from MS Excel or they cannot connect to your financial systems. In this case, the time-saving aspect will be reduced.

Another issue that some companies face is that the tool has too many features and it is too complex for the organisation. It’s like buying a Ferrari, when you only need a Fiat. For example – don’t use a tool like Primavera, when your projects are smaller than $5m, it’s just too complex.

In some instances the tool might be very hard to customise, it doesn’t fit your company’s process and you require a special tool consultant to make the tool work for you. It can become very costly and time consuming.

Another thing to consider is the post-implementation of the tool itself. Just because the tool has been installed, doesn’t mean it will be used. Training and ongoing support is crucial for the successful usage. A proper Change Management process needs to be in place in order to make the tool roll-out successful. Without this, the tool starts being used by so many different people in many different ways and the data is no longer meaningful or useable in the future.

Last but not least, it’s important to realise that the main people benefiting from a PPM tool and having the immediate advantage are the managers. The managers will now get reliable information based on the data produced by the new system.

However from the beginning, the project managers and team members have a lot of work to do and often most difficult of all is that they have to learn a new tool on top of getting on with their day job and getting things done.

The tool may not even be sufficient enough to resolve all of their challenges and provide all necessary solutions. It is always hard at the beginning and productivity will go down while everybody gets used to it.

More often than not, it’s the “what’s in it for me” question that is not well communicated i.e. the wider benefit for the company to meet their annual objectives. Communication is key to ensure that the tool is still used 12-18 months down the track.

What makes tools successful?

There are three conditions / common requirements you need to have in place in order to make your tool implementation and roll out successful:

1) Endorsement and support from your Business Executives

This is the key requirement for your success. Your tool implementation project needs a sponsor who is accountable for the success of the implementation and who will continue to drive and support the tool even after the tool has been implemented and is in operational mode.

If you don’t have the right sponsorship in place than there is little chance that your PPM tool will be used after 12 months.

If your sponsor sits within the IT Department, no business user will use the tool. You need to have a sponsor from within the business otherwise the result is that you will only get limited project information provided.

2) Change management strategy in place

Setting up and implementing a tool is easy! Piece of Cake! You can generally perform this activity in a few days. But when it comes to the adoption and the usage of the tool you need to have a proper change management strategy in place, which includes a communication plan, training, ongoing support, help desk support and maintenance.

3) Training and mentoring and on-going support

This is crucial for both existing and new team members who are required to use the tool. It’s important that enough training and support is provided to ensure the use of tool is embedded into the business. I’m not just talking a couple of days, I’m taking about weeks.

PPM Tool List

Partial PPM Tool List. For complete list, please visit Lee Merkhofer Consulting

What tools are out there?

There are currently more than 100 software providers on the market, offering tools in the PPM space. They are targeted at different industries and different types of projects. Each of them has their different strengths and weaknesses.

If your company is using an agile methodology, you don’t want to use a tool like Primavera you are best using a tool like Rally or Jira.

For projects following PMBOK, I had good experience with Sciforma. I have had many difficulties with Clarity, which is a dinosaur in comparison to some of the more recent tools. In my personal experience it is very slow and clunky, but this is something you might want to check out yourself and see what you think.

I came across a great website from Lee Merkhofer Consulting, who have done a tremendous job in putting a PPM tools list together. They have listed the most common PPM tool vendors so you might be able to find the right tool for you here.

Summary

Despite all the negative reputation PPM tools have, I strongly believe that organisations can benefit a considerable amount from using PPM tools to improve processes and to manage their projects portfolio investment.
Nearly all tool software options out there have a good data management and reporting capability. However, most current tools lack sufficient algorithms for identifying optimal project portfolios.

I hope you enjoyed this post. I would be interested to hear your experience of using PPM Tools. Did you get the benefits you were hoping to get? Looking forward to hear from you!

11

How to validate that a Strategic Initiative is still aligned?

Project health checkLast week, I met the Strategy Team at one of the Financial Services organisation here in Australia. We discussed their approach on project portfolio management and how we possibly could improve it.

During our conversation the team mentioned that one particular strategic initiative would give them some headache and concerns. This is what they said:

“We have one major strategic initiative, which will deliver a core function of our business. This initiative is a multimillion-dollar program, which started 1.5 years ago and will continue for another 1.5 years. Every time we question the strategic alignment, we get the answer: ‘We are aligned, because we are initiative X and we have full support of the Board Members”.
We really don’t know what to do.”

To be honest, when I heard this comment, I was a little bit taken back. Could this really be the case? Do they not know if this initiative will provide them the benefits they were after?

If I really think about this, I’ve experienced similar situations in the past, where large strategic projects have been commenced and have been underway for sometime without validating their strategic alignment to goals and targets over the course of their delivery. Some of them were successful, but some of them weren’t.

Unfortunately, the meeting got interrupted and we couldn’t discuss this topic further. But somehow, the question got stuck in my head. What would I do, if I need to solve this problem this week? Next week? What would you do?

After some brainstorming and a couple (!) of coffee’s later,  I came up with the following approach:

I would perform a “Health Check” with the following activities:

Business Case Review

  • The first thing I would do, is to familiarise myself with the business case.
  • Once I know the business case, I would form a small team which would include the Senior Business Analyst and, if possible, the Commercial Manager or Financial Analyst to analyse the following sections:
    • Business Case Assumptions Section:
      Are all assumptions still valid and true? Has the technology changed in the last 1.5 years? Has a competitor gained market share?
      If one of the original assumptions is not valid anymore, than the initiative might need to change its course.
    • Business Case: Business Benefits Section:
      Next, I would ask the BA and Financial Analyst to review and validate the stated business benefits in the business case. Are these still valid in the current environment? If not, corrective action needs to be taken.
    • Benefit & Assumption Validation with Strategy Team:
      Once, I get the validated business benefits, I would ask the Strategy Team to confirm that these benefits are still aligned to the company’s goals.
    • Business Case: Features link to Benefits:
      Next step, I would check if the high level features are linked to benefits. Depending how the business case is structured, this might be already included. If not I would perform this exercise with the BA.
      For example: I would start from the initiative outcome and link the features back to benefits – if a feature cannot be linked to a benefit – then it shouldn’t be there. (I’ve adapted this approach from Phil Abernathy, who assisted me with the implementation of a governance process at an Insurance Company).
BUSINESS OUTCOMES
SMART* GOALS
Benefits
Accountable (Name)
Features
To reduce the load on call centres in providing information on existing insurance claims To reduce the number of calls to the call centre by 500 from current number by July 2014Thus saving….John SmithFeature 1
To deliver working solutions faster and improved time to marketTo reduce the cycle time for requests by x% over the next 2 yearsThe assumption is that this will deliver a business benefit of….Helen HuntFeature 2
To increase employee satisfaction in order to reduce attrition and attract the best staffTo increase employee satisfaction from the current 5/10 to 7/10 by end 2017This will result in reduced attrition and if we assume $30k per new hire we hope to save…Linda HeFeature 1,3,2

Mapping the relationship of features to benefits will allow better prioritisation and the understanding if a feature is really a “must-have”.

Benefits Mapping

Review Current Documentation

  • Next, I would review current project documentation, steering committee packs to get an understanding where the program is.
  • I would work with the Project Manager and BA to discuss current scope and how this scope is linked to benefits. If the scope can’t be directly linked then it shouldn’t be there and corrective action needs to be taken.

Provide Findings and Recommendation

  • I would discuss my findings with the Strategy Team. If the findings would have a major impact on the initiative (e.g. benefits don’t stack up anymore or assumptions are not valid), I might suggest hiring a third party (e.g. consulting company) to validate my findings and to communicate the news.
    Changing the direction of the program could cost a lot of money and will cause a political stir within the organisation. Manager’s KPI’s are possibly linked to the delivery of the program (but not necessarily to its benefits) and changing it will have influence on their performance bonus. So there will be a lot of resistance to change.

Basically, this would be my approach to validate if this strategic initiative is still aligned to companies goals and targets.

What would be your approach? Have I missed something? I am really interested in your thoughts. Thank you!

6

PMO KPI examples for measuring success

PMO KPIIn 2010, Gartner presented a PMO study at the ‘Symposium ITXPO’. It showed that over the last 7 years 50% of all PMO’s failed. That means that every second PMO was not successful. That sounds scary, doesn’t it?

One major factor for their failure was, that the Business perceived their PMO would not provide sufficient value to its organisation.

Interesting enough, at the same time Gartner’s research showed that ‘world class organisations‘ have a ‘three times’ higher project success rate than the Industry Standard. Those project success rates can be directly linked back to good project management practices and to highly successful PMO’s.

So, where is the discrepancy? Often PMO’s do provide value to the Business, but they are not measuring and advertising it. This often lead to the above perception, where the PMO is not adding value.

An important step to overcome this perception is to define a set of metrics, so called: PMO KPI’s to show how the PMO can increase project performance, actively drive change and support organisational goals and targets.

Definition: PMO KPI

A key performance indicator (KPI) is a type of performance measure (e.g. metrics), which an organisation uses to evaluate the success of a particular activity. The PMO needs to define and agree on a certain set of metrics (with its stakeholders) to demonstrate that it provides value to the Business. Only than, the PMO can be successful. Otherwise the PMO will struggle with its existence.

Possible PMO Metrics

Below you will find some possible metrics. You still need to tweak them to make them fit to your project portfolio and to your organisation. But it is a good starting point and it will give you an idea on what to measure:

Topic
Area
Possible Metric
Strategic ContributionStrategic Project DeliveryIncrease the success rate of % of strategic projects delivered / the total number of strategic projects
Strategic ContributionImprove Time to MarketImprove Time to Market Delivery = Elapsed Time from Idea Conception to Project Start
(How long do we need to start a project)
Strategic ContributionImprove Time to Market

Improve Time to Market Delivery = Elapsed Time from Idea Conception to Project Delivery
(How long do we need to deliver a project)
Strategic ContributionImproved Time to Market

The improvement of estimated time versus actual time of project delivery = (comparison between the estimated and the actual time of projects delivered)
(How good are we in estimating our project delivery)
Governance ProcessImproved Governance ProcessMethodology compliance (required deliverables vs. actual deliverables)
Portfolio ManagementOverall Project Portfolio successful delivered% of projects in portfolio delivered / the total number of projects in portfolio
Portfolio ManagementDealing with Change% of projects remain at same status for x reporting periods
Project ManagementImproved Project Management ProcessIncrease the success rates of the projects = (within a certain time period, the number of success projects/the total of projects)
Project ManagementImproved Project Management ProcessImprove training rate of project staff members
Project ManagementImproved Project Forecasting & CostingThe improvement of estimated cost versus actual cost for the projects = (comparison between the estimated and the actual cost of the projects)
Resource ManagementIncreased Resource Utilization on ProjectsIncreased productive resource utilization on project time (ie: Business Analyst >31.5 hrs p/week = Exceeds)
Resource ManagementIncreased Resource Utilization on ProjectsIncreased resource utilization on projects = Billable Hours/Total Hours
Stakeholder ManagementImproved Customer or User SatisfactionCustomer or user satisfaction survey averages (aim for a % above previous quarter or year average)
Stakeholder ManagementImproved Customer SatisfactionOver-delivered items within budget
ROIBusiness Benefits achievedPost-project ROI review to determine if project ROI is being realised
ROIBusiness Benefits achievedBenefits realised against Benefit forecast for year
ROIROI for the yearSimple Return on Investment (ROI) for all of the projects the PMO has oversight for
Staff MembersImprove Staff RetentionImprove project member satisfaction survey averages (aim for a % above previous quarter or year average)
Staff MembersImprove Staff RetentionImprove career path for project members

Setting up your PMO for success: Your PMO KPI’s

Review the above metrics and work out which metric(s) might be meaningful for your PMO. The next steps would be to discuss and to agree with your stakeholders (typically this would be your manager and the Business) on the selected metrics. This should also include how often you would report on them. This step is important as it will help clarify the purpose of your PMO.

Once you’ve agreed on these metrics, document the ‘as it is’ state, which will act as your baseline. You would need to have a baseline, in order to demonstrate your improvements later on. Historical data might be able to help you to get a baseline.

The next step will be to design a report or a dashboard, where you can track and report your success on a regular basis.

Collect, validate and assess the data you need in order to compile your report. Monitor your performance. If the performance drops in comparison to your previous reporting time-frame, take corrective action early onwards to get back on track.

Finally, make sure you promote your success. You can use your Intranet, your companies newsletter, or you can compile a case study to promote Project, Program and PMO success. All these activities will help you to promote the value and the success of your PMO.

I hope the above PMO KPI’s are useful for your PMO. If you have any additional metrics or questions, please let me know.

51

Project Prioritisation: How to prioritise projects

Project prioritisation is vital for any organisation in order to achieve its goals and targets. Selecting the wrong projects, which don’t provide the required return to its investment can have a significant impact to the bottom line. Therefore, it is crucial to spend time on the prioritisation and selection of projects and proposals in order to find the ‘right’ projects for the organisation.

Project prioritisation can be performed in many different ways. Below, I’ve outlined a method I’ve used, while working in the Financial Services Industry.

The project prioritisation process itself can be done in a couple of days – or, if the organisation is of a larger size, can take up weeks – trying to slice and dice the project portfolio within a given budget. I had cases, where the project budget was $40m but the proposed project proposals in the pipeline were worth $90m. So, how to decide, which projects are more important than others?

There are a number of project portfolio management tools out there, that can help you with this process, but I like to share my manual process, which I perform in MS Excel. Once you know how to do this process manually, it should be easy to perform similar steps within a tool. Let’s start:

1. Why should project proposals being prioritised?

There are different reasons on why an organisation would need to prioritise projects or project proposals. Typically these are:

  • Limited number of money, resources or time to do all of the projects
  • More project proposals have been submitted than the organisation can physically do or absorb (-> imagine the change the organisation need to go through)
  • The company would like to achieve the organisational targets and goals with an optimised cost / benefit ratio

2. What to prioritise?

I would suggest prioritising any project proposal or activities that require budget and resources. You could narrow it down and suggest any activity that required more than x days of work or cost more than $ x. Again, it depends on the size of the organisation.

3. When or how often should a project prioritisation exercise be performed?

Many organisations perform a major prioritisation exercise once a year, which is aligned to their budgeting cycle. Once the Leadership / Exec team has decided on how much they are willing to spend on projects, the project proposal prioritisation can go ahead.

Minor project prioritisation sessions can be performed quarterly or twice a year in order to slot in new, upcoming projects which were unknown at the time.

4. Who does the prioritisation?

  • From my experience, it works best when the PMO / Portfolio Manager collects, analyses and prioritises project proposals and provides a recommendation to the Leadership / Exec team of the organisation
  • The Leadership / Exec team makes a decision on the proposed recommendation.
  • Once the project portfolio has been finalised, the PMO will execute the approved project portfolio and provide regular updates on its performance

Please note, that once the project portfolio has been approved, each project still needs to provide a business case in order to access funding’s.

5. How to prioritise project proposals?

Below, I’ve outlined the process I use in order to prioritise project proposals. Please note, that this might not work in every organisation. But it can be used as a guideline in order to understand how the process works.

5.a. Establish evaluation criteria

Before the process can start, the Leadership / Exec team needs to agree on certain prioritisation criteria in order to assist with the process. These criteria’s should depend on the Strategy the company is following. Example criteria’s are:

  • Project contribution to strategy
  • Cost savings within x numbers of years
  • Resources required to deliver the project (people)
  • Complexity – new or current technology
  • Improve customer satisfaction by w%
  • Increase sales by x%
  • Increase revenue by y%
  • Increase market share by z%
  • Any other criteria that is important for the organisation

Generally, there is a mixture of criteria or drivers an organisation would choose in order to perform the prioritisation exercise.

To provide a real life example: Below is a prioritisation table that was used to prioritise projects in a financial organisation:

Project Prioritisation

You will notice that the values in the categories are very broad and still high level. This is because most of the project proposal data is at this stage unknown.

5.b. Develop template with established criteria’s for project proposal submission

Once the driver or criteria have been established and agreed on, a project proposal template needs to be setup to capture the project proposal data for the selected criteria.

The form itself should be no longer than 2 pages, outlining the project proposal including the agreed criteria.

Typically, anyone in a company can submit a proposal for a project, but the proposal needs to be approved by a Manager first, before it can be submitted to the PMO / Portfolio Manager.

5.c. Proposal collection and inventory

Once the proposals have been submitted, the proposals will be collected in a central place, which later becomes the project proposal inventory. This step can be performed with MS Excel or SharePoint.

5.d. Using Excel spread sheet for project prioritisation

Once all project proposals have been submitted and registered, the project proposal data with the evaluation criteria will be entered in the prioritisation table (see below).

Based on the entered values a project portfolio rank will be calculated.

For this Financial Service company the ranking criteria is based on: contribution to strategy, cost savings, payback period, resource requirements (people and skills) and complexity (e.g. new or known technology and number of systems to interface or change to organisation).

In our example, our selected project proposal 1, could have the following criteria:

  1. Low contribution to the strategy
  2. Cost savings less than <5m
  3. Payback of the investment is low
  4. It requires many resources
  5. And has a high execution risk e.g. uses a new technology, which the people have not trained in

So overall, project proposal 1 seems not very good. The overall rank for this proposal is 25, based on the values of the criteria’s (1-4 points) and their weighting (10% to 25%).

Project Prioritisation 2

 

In order to provide a better graphical and visual representation, I’ve grouped the following columns together:

  • strategy contribution + payback + cost savings = benefit
  • resource requirements + execution risk = complexity

Project Prioritisation 3

 

I plotted these values into a bubble chart which provides a graphical view of the ranking of the project proposals:

Project Prioritisation 4a

 

in this case, the projects we would like to select would be in the top right hand corner, which have the highest benefits and the lowest complexity. In our example, these would be the project proposals: 4, 5, 3 and 8.

These proposals would be the first selection of our project proposals pool.

6. Next steps

The next step would be to analyse these project proposals further based on: dependencies, compliance, impact on existing projects and other possible environmental factors. Several discussions with Business Sponsors need to take place in order to get down to the final proposal selection within the allocated budget.

Further tweaking is required before a list with final recommendations can be developed and presented to the Leadership / Exec team. Once the list has been approved, the PMO will be responsible for it’s execution.

I hope this process makes sense. As mentioned earlier, this process could take up a couple of days up to weeks in order to get to the final candidates; it really depends on the organisation.

If you have further comments or questions in regards to project prioritisation, please leave a comment below and I will get back to you.

P.S: I found a way to upload the prioritisation tool as excel file in this post – so here it is (click to download):

project prioritisation tool

37

Does your PMO add Value?

Some people love the PMO, others hate it. I have heard names like “Project Police” or even worse “Piss Me Off”, which to be honest, makes me quite sad. Something must have gone terribly wrong when people think of their PMO like that.

But there is some truthfulness in it. The PMO is often “the meat in the sandwich” as a good friend once said. It always stands in-between Executives, Sponsors, Program and Project Managers, Business and IT – you name it. If those departments or people don’t get what they want – for example their business case has been rejected or a project has been delayed or even cancelled, than the PMO is the first one to blame.

The key element for a PMO is to communicate decisions and provide reasons on why these decisions were made. This will help understanding the value a PMO can provide.

In the end, the PMO will help to determine which investments should be selected in order to help the organisation reaches their goals and targets, which than pay for the salary of the employees  – so really, everybody should have an interest that the PMO is performing well and help making the right decisions….otherwise we won’t have a job very soon.

PMO Value Chain

A PMO can provide value, regardless of it’s size. Below I mention some activities, explained using the PDCA method which stands for Plan – DO – Check – Act, an iterative process made popular by Dr. W. Edwards Deming:

PMO Value

1. Strategy – The Planning Stage

The major investment portfolio planning exercise is generally performed ones a year. A pre-requisite for this planning stage is that the company’s strategy and targets are known to the PMO.

Based on this information the PMO will assist in collecting and evaluating ideas and proposals and prioritise them based on their strategic contribution and their business benefits.

Suggestions and recommendations on the prioritised proposals (within the proposed budget) will be put forward to the executive team in order to help the organisation to reach their goals and targets.
These investment proposals can be categorised (for examples in: compliance / running the business  / growing the business / transforming the business) in order to provide visibility on how ‘innovative’ (or not) the organisation will be.

2. Governance – The Do Stage

Once the proposed investments have been agreed on, the PMO or Portfolio Manager will take oversight and will start executing on it.

Activities like: resourcing projects and performing supply and demand analysis, helping projects to start-up, reviewing business cases (to see if the ROI stacks up), assisting troubled projects and setting-up business benefits realisation are tasks which will help to execute the above plan.

Providing regular updates to the executive team on the performance of the portfolio investment should be done on a routine basis.

3. Program- and Project Management – The Check Stage

The next stage is really about studying the projects outcome and compare it against the expected results. This is commonly done by performing health checks and ‘lessons leaned’.

Some people might wonder why I didn’t mention tools and templates here. In my view they are only tools which will help to achieve the goals and objectives.

It is important to have and to use a standard set of tools in order to automate tasks and to track improvements. My personal view is that the PMO should only spend a limited amount of time on tools and templates as they are only adding little value compared to the other activities.

4. Improvements – The Act Stage

Often, there is a difference between the planned and the actual results from a portfolio and from a project view:

The portfolio could have been impacted by legislative changes or delayed projects that have an impact on the performance and cost.

From a project perspective there could be a lack of training and resources or a lack of skills on how to do project estimation. In order to overcome these issues: training, support and tools should be provided.

This cycle will now start again from the top, and will iterate through this several times a year. The planning stage might not be that extensive – new initiatives might come up and re-planning of the investment is required, and the plan needs to be adjusted. Projects might be in trouble and need further attention. If some projects are over budgets – others need to be cut down or delayed until the next financial year in order to stay in the budget. From my experience, the planning stage shouldn’t be performed more than 4 times a year, otherwise the management of the investment portfolio becomes very reactive. The other stages are running more or less in parallel – but it always depends on the size of the organisation and how the PMO is managed.

Do you agree? Have I missed anything? And how does your PMO provide value? Looking forward hearing from you!

 

0

Project Portfolio Management – What is it exactly?

There are a number of different definitions out there, which describe the term Project Portfolio Management or short PPM. The one, which I like to use, is the following:

Project Portfolio Management Definition:

Project Portfolio Management or PPM is: Having the right resources, at the right time, on the right projects, in order to achieve organisational goals and targets.

This might sound easy – but when you deal with several projects and programs with possibly hundreds of people working on projects at the same time, than this can get tricky and complicated.

Project Portfolio Management

Lets have a closer look at the different parts of the definitions:

Having the right resources at the right time:

A resource can be a human person, a physical object or a piece of technology (e.g. software).

Good Portfolio Management practice should guarantee that you have the right person, with the right skills, with the right equipment for the right job at the right time in order to deliver your project successfully.

For example: If a new software development project starts, you would like to have a Project Manager on your project, which has done a number of software projects before (right resource). You also want to make sure this person has a desk, a laptop and access to certain software products, for example Microsoft project or required in house systems (physical and technology resources) and this person is currently not working on any other project (at the right time).

In addition, you would need to find the right project team, which has experience in developing this kind of software (and there are plenty of different software skills out there), and the people would need to be available at this particular point in time.

The right projects:

The right projects are those who help the organisation to achieve their goals and targets in the shortest possible time, with a good cost / benefit ratio.

This might be particular difficult when it comes to business and budget planning. Typically once a year projects and budgets will be set. The business will put forward a number of projects, which they would like to do. Normally you have more projects than there is a budget. The key is now to prioritise and select the projects based on business benefits and contribution. This process can take some time, but it’s worthwhile doing. An example would be: You have $1m available to spend, which equals 10 projects. The business put forward 40 projects, which seem all equally important to them. Your tasks it to provide recommendations on which ones to choose. How would you go about this? This questions lead to the last part of the definition.

In order to achieve organisational goals and targets:

To help reaching the organisational goals and targets the Portfolio Manager or PMO would need to know what exactly the target is. This should be defined in the companies’ strategy, which should be communicated and known within the organisation.

Targets and goals can be: Increase market share by X%, increase sales by X%, increase online presence – direct channel by X%, or improve customer satisfaction by X.

Before a project commence, a project business case needs to state how much the contribution to a particular goal is, when the project will be finished and what are the cost / benefits.

With this information a PMO or Portfolio Manager can provide suggestions and recommendations to the Executives on how to manage the project portfolio best.

This is a quick and short version about my definition on Project Portfolio Management. I hope you find it useful and can relate to this.  Do you have a similar definition of the term Project Portfolio Management? Let me know.

2

Failing projects are still a major challenge for PMOs

Failing projectsPMOs play a vital role in driving business outcomes. They assist in the planning and execution of the ‘project investment portfolio’, making sure strategic goals and targets will be met.

During the execution, the PMOs major challenge is to deal with failing projects. On average, larger projects (>$15m) run 45% over budget and 7% over time, while delivering 56% less value than predicted, found by McKinsey, who surveyed and evaluated more than 5,400 projects.

Failing projects create a challenging moment that is demoralising to all stakeholders. Therefore it is crucial, that PMOs recognise the signs of failing project and take any necessary corrective action before the project fails.

Indicators that show failing projects

Successive scope creep: Although some scope changes are necessary, if the project is experiencing constant project scope updates, it shows that the project sponsors and stakeholders are not strict with the project or the primary assumptions are ineffective.

Higher Costs: It is necessary to closely monitor the cost performance index (CPI). The CPI is calculated by earned value/actual cost. If the CPI value is less than 1, it is an indication that the budget is not being used effectively and instead your project is burning through cash.

High rate of unplanned project staff: It is normal for long projects to have planned staff rotation but the PMO should watch closely unplanned project team attrition. This is because every person who leaves in an unplanned attrition goes with vital knowledge of the project. Changing staff too often would put some areas of the project at risk causing the team to revisit the project because they do not understand why the decision was made and hence the need to maintain same staff in the same area. Putting new staff on a running project would result in extra cost and time but with no additional value to the project.

Reversing failing projects

The PMO should periodically revisit the scope statement and verify if they are working on the same project goals. If the change is likely to alter the expected results, the PMO should consult with the sponsors on the best way forward.

The PMO should review staffs on monthly basis to determine the number of unplanned vs. planned shifts that occurred. If a critical member of the project has left, the PMO should summon a meeting to assess the situation and plan for replacement.

The PMO should also review the trend of the CPI to determine the financial situation of the project. If the trend is unhealthy, you should looks for ways that you can stabilise the situation such as negotiating for lower supplies.

Pulling out of failing projects

It is not easy to stop a project that is already running, due to many political and personal forces that would come into play. In most occasions, people tend to waste money and time while justifying costs that have already been spent. Instead, the PMO should maintain objectivity and explain to the sponsors why the project should be cancelled based on cost-benefits analyses.

0

6 Characteristics that Make a Good Project Manager

Good Project Manager

Good Project Managers are hard to find. There are a lot of average and inexperienced Project Manager out there, who might not know how to bring a troubled project back on track, which potentially could cost your company a lot of money.

On the Other hand, a good Project Manager, who possibly could bring a project in by just a couple of days, can potentially save the company $1000s of dollars.

So, what characteristics make a good Project Manager and what do you need to look out for when you hire one?

Here you will find some suggestions:

  1. A good Project Manager knows how to finish a job. A lot of employees are enthusiastic enough to take on a new project on but are unable to finish it due to lack of determination. You can look through an applicant’s background projects and past experiences. You can also ask people who had worked with him/her in the past.
  2. A good Project Manager knows his team and who to select. Without his team, a Project Manager doesn’t serve his/her purpose in the company work force. A good Project Manager establishes a great relationship with his/her team and knows that each individual is important for the task. When hiring a Project Manager ask behaviour interview questions in regards to a conflict situation amongst project team members in the past.
  3. A good Project Manager is resourceful. Projects are investments and investments come in many ways such as time and most importantly, money. A Project Manager knows how to deal with troubled projects and thinks outside the box. When interviewing a Project Managers, ask for examples on how he or she brought in projects under budget.
  4. A good Project Manager needs to be organised. Careful planning and organising is important for a critical task flow within the project. In order to be organised, a Project Manager needs to plan ahead and needs to identify potential risks. His/her organisational skills need to be exceptional and able to see through plans and put them into action.
  5. A good Project Manager is experienced in the industry you are in. When looking for a Project Manager, you need to look for an individual who knows the industry and speaks its language or at least have had training. Carefully look at an applicant’s resume that you find valuable in this industry such as seminars, background, etc.
  6. A good Project Manager knows how to communicate properly with all stakeholders. This is perhaps one of the tasks that most applicants fail at. A good Project Manager needs to be an effective communication avenue for employees and clients. He/She needs to be transparent about giving tasks; reviewing productivity and motivating his/her team. Communication is important not only on projects but also raising team morale.

Looking for a good Project Manager is a hard task, especially if you are working with big clients for your business. Choosing a Project Manager is like placing your entire company image in the hands of a single person who has the power to improve or destroy it.

0

Powered by WordPress. Designed by Woo Themes