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Why is a PMO valuable to your organization?
By Dr. Harold Kerzner IIL-Webinar
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Governance Issues Poor alignment between project objectives and broader business goals Poor business case development resulting in the go-ahead of projects that provide limited or no value Badly specified project outcomes measured in real business terms
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Benchmarking “Benchmarking and ongoing monitoring are part of the success metrics required for optimization of project processes. Customer-defined measures, such as project order responsiveness, etc., are benchmarked against industry standards (best and average). …. Implementation of the standard project process will enable the implementation this business unit’s ‘best practice’ into the standard project process for enterprise-wide improvements.” (Bill Marshall, Formerly Director, Nortel Networks) IIL-Webinar
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Benchmarking “In 1996, we began looking at our business from the viewpoint of its core processes…… As you might expect, project management made the short list as one of the vital, core processes to which quality principles needed to be applied.” (Martin O’Sullivan, Vice President, Motorola) IIL-Webinar
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Process Champion
“Benchmarking resulted in our Group assigning a process champion and process action team to project management.”
(Martin O’Sullivan, Vice President, Motorola) IIL-Webinar
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Growth at American Greetings
According to Jeff Weiss, President and Chief Operating Officer: The program management office provides the structure and discipline to complete the work that needs to get done. From launch to completion, each project has a roadmap for meeting the objectives that were set.
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Growth at American Greetings
According to Zev Weiss, Chief Executive Officer: Through project management, we’ve learned how to make fact-based decisions. Too often in the past we based our decisions on what we thought could happen or what we hoped would happen. Now we can look at the facts, interpret the facts honestly and make sound decisions and set realistic goals based on this information.
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Activities for a PMO Strategic planning for project management
Education and training
Benchmarking
Disaster recovery plans
Cost reduction and continuous improvements Mentorship Lessons learned files Problem-solving hotline Templates Career path
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Assessing risks Customer relations management Portfolio management Capacity planning PMIS Guardian of project management intellectual property
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Project Office versus COE
Project Office
Center of Excellence
Permanent line function for project managers
May be a formal or informal committee (may be part-time)
Focuses on internal lessons learned activities
Focuses on external benchmarking activities
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Project Office versus COE
Project Office
Center of Excellence
Champion for the implementation of the methodology (driving it from the top down)
Champion for continuous improvement activities and mainly external benchmarking
Expertise in the use of the project management tools
Expertise in the identification of project management tools
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PMO Implementation Risks
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The Project Office (COE)
Companies are now struggling with the organizational reporting location for the Project Office/COE.
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The PMO’s Charter
Is the charter for the PMO to manage the present or to focus on the future?
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Mission
Drive continuous improvement through successfully managed projects delivering bottom-line results
Goals 1. Opportunity Identification
2. Project Management
3. Change Champion
Facilitate identification of Text opportunities to grow revenue, reduce costs and optimize assets
Develop and institutionalize Textprogram management processes and tools
Champion and enable change
Guiding Principles Out-of-the-box thinking
Teamwork
Big, hairy, audacious goals
Open and direct communication
Fact-based decision making
Results orientation
PMO’s mission, goals and guiding principles © 2009 International Institute for Learning, Inc.
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Value-Added Activities for the PMO The project manager focuses heavily upon customer value-added activities, whether it be an internal or external customer. The PMO focuses on corporate valueadded activities.
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Ways for a PMO to Fail Focusing on profitability or cost reduction of a single project Not understanding the cost of paperwork
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PMO Questions Is the PMO overhead or a direct labor charge? Can we measure the return on investment of a PMO?
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Measuring the ROI on a PMO Tangible measurements include:
CSF: Customer satisfaction KPI: Projects at risk KPI: Projects in trouble KPI: The number of red lights that need recovery, and by how much added effort Throughput of work year over year
Intangible elements may also exist and these may not be able to be measured
Early-on identification of problems Quality and timing of information
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More Critical PMO Evaluation Questions Is the PMO becoming more productive year-over-year? If so, is it causing the rest of the organization to become more productive as well? Are we convinced that we are working on the right projects?
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Types of Project Offices Functional Project Office: resource management Customer Group Project Office: customer management Corporate Project Office: strategic and operational issues
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Benefits of a Project Office [for the executive levels of management] (1 of 2) Standardization of operations Company rather than silo decisions Better guidance on resource allocations (i.e. effective capacity planning) Access to and quality of information reporting systems Effective project prioritization process Company efficiency and effectiveness
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Benefits of a Project Office
(2 of 2)
Elimination of silos Less need for restructuring Fewer meetings (i.e. better time management) Development of future general managers Retention of quality resources Horizontal career path and horizontal decisions
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Project Office Risks Excessive headcount Potential burnout of talented people Using the wrong people as leads Reliance on excessive paperwork Going “to the well” too often Focusing on job descriptions rather than competencies Unnecessary restructuring for control of the project managers/project office IIL-Webinar
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When to Involve the PMO Threshold:
Dollar value of the project Duration of the project Risks to the company Criticality of the project (i.e. cost reductions) Amount of cross-functionality
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Project Office Growth According to Jim Triompo, Group Senior Vice President at ABB: “The project office does not deliver projects. The projects managed by the project management office are limited to process/ tools development, implementation and training. The project management office is sometimes requested to perform reviews, participate in division level risk reviews and operational reviews in various countries.” IIL-Webinar
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Exel’s Networking PMOs CEO CEO Americas Americas
Senior Senior Director Director Solution Solution Design Design
EPM
PMO Mexico PMO Mexico
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PMO Brazil PMO Brazil
PMO UK/Europe PMO UK/Europe
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PMO Asia PMO Asia
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Master vs. Regional PMOs (EXEL) Activities for the regional PMOs include:
Promoting use of the methodology Promoting use of the tools Project execution and delivery Subject matter expertise (which may support the Master PMO)
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Star Alliance
How does an organization coordinate the efforts of fifteen or more regional PMOs that, when combined, carry annually 405.7 million passengers to 975 airports in 162 countries?
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Star Alliance Membership Air Canada
Tap Portugal
Air China
Singapore Airlines
Air New Zealand
United Airlines
All Nippon Airways
Asiana Airlines
Austrian Airlines
South African Airways
bmi british midland
Spanair
Egypt Air
LOT Polish Airlines
Lufthansa
Thai Airways Int.
Turkish Air
Other airlines?
Scandinavian Airlines (SAS)
Swiss Air
Shanghai Airlines
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Air India Brussels Airlines Continental TAM
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Star Alliance
The projects carried out for the business units include such topics as information technology, marketing, sales, products, services and frequent flier programs.
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More Critical Questions
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PMO Skills
Are all people (PMP®s) qualified to work in a PMO? What skills are important? Will the required skills change if the PMO is involved in multinational activities, or with networking PMOs?
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Questions Involving P&L Responsibility Are there risks in assigning a PMO P&L responsibility? What if the PMO is now identified with P&L rather than the line organization? Will the line organization “surrender” P&L responsibility easily? Will the line organization allow their best project managers to be transferred to the PMO, either permanently or temporarily? IIL-Webinar
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Questions on PMO Governance How should a PMO handle compliance audits? If poor compliance is discovered, is the PMO authorized to enforce corrective action?
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Questions on PMO Toolkits
What is a PMO toolkit? Are there different tools based upon the type of PMO?
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Project Selection What projects should we work on now?
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PMO Involvement in Projects HIGH TECHNOLOGY / RISKS
BREAKTHROUGH
PLATFORMS
ENHANCEMENTS
MAINTENANCE
PROJECTS
LOW HIGH IIL-Webinar
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Strategic PMO Issues Determining the staffing tolerance for projects Analyses of the number of change requests Validate funding, schedules and deliverables on existing projects Bringing some projects to closure at a quicker rate
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View from the Top (EDS) Most organizations have a PMO established and this was generated from the view that their individual projects required oversight. This is a significant jump for many organizations that ten years ago did not see value in project managers and are now funding a PMO. But most of them are paying the price to staff the PMO, but still do not see the value; they see it as a necessary evil. In other words, things would probably be worse if we did not staff the PMO.
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Project Office Growth According to Ron Kempf, Director PM Competency & Certification, HP Services Engagement PMO at Hewlett-Packard: “For large, global companies the need for project management standardization and support is essential. To solve this problem, companies have developed a network of global project management offices all coordinated from a single source. At HewlettPackard, this network is referred to as the HP Services Project Management Office.” IIL-Webinar
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Project Office Growth According to Ron Kempf, Director PM Competency & Certification, HP Services Engagement PMO at Hewlett-Packard: “HP Services PMO structure supports more than 8000 project managers in 160 countries with regional offices located in Americas, Asia Pacific, Europe, Middle East, Africa, and Japan. Three focus areas are – health of the portfolio, project management development, and processes.” IIL-Webinar
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PMO Mission The PMO provides an enterprise-wide approach to identify, prioritize and successfully execute a portfolio of IT initiatives, aligned with the business units’ strategic objectives. Consideration Are we (Company, Question IT) doing the right things?
Are we doing enough of the right things?
Are we doing the right things right?
Are projects aligned with strategic goals? (e.g., shareholder value, customer satisfaction, etc.)
Are resources deployed against projects with the highest strategic value?
PMO Tool/Process
Objective strategic fit analysis
Effective project prioritization
Consolidated resource planning
Given our strategic objective, will we meet our strategic goals? (e.g., SVA = $100M improvement)
Rigorous benefits tracking
Will we hit current fiscal year targets or should we manage expectations of stakeholders?
Accurate portfolio reporting
Common tools and processes for projects (e.g., standard status reporting, issue & risk management, etc.)
What are the necessary capabilities to effectively manage the technology portfolio (e.g., benefit realization)?
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What is the PMO - its mission • The PMO assists in defining a standard Project Management methodology to use with IT projects. It supports the consistent application of this methodology to all IT projects. • The PMO evaluates IT projects against strategic plan regardless of the owner (responsible business unit). • The PMO assures that only the projects with the most value are allocated resources. • PMO processes and tools complement and support standard FE IT Project Management processes. Why does it exist - the business need for the PMO • Ensures that only highest value projects are completed. • Optimizes resource allocation. PMO “Guiding Principles” • Complements traditional project management. • Complements the merger benefits tracking process. • Authorized to manage, allocate, and ensure availability of resources. • Manages project interdependencies. • Measures project performance.
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PMO and Project Life Cycle Project scoping & planning
Project initiation
PMO evaluates projects
Standard opportunity P M O
form to capture projects
Standard business case rigor
Link to strategic
PMO monitors delivery
PMO prioritizes projects
Prioritize based established criteria tied to strategic goals & KPIs
Formalized detailed project planning
objectives
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Project delivery
Resources (dollars & FTEs) go to projects with strategic value
Standard status reporting
Monitor/Document benefits realization
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Participant’s Notes: In the Initiation phase of a project, the PMO evaluates projects. • Should further analysis be done (develop a Business Case)? • Should IT resources be allocated for planning? In the Planning phase of a project, the PMO prioritizes projects • Should IT resources be allocated for development & delivery? • Integrate the project into the Master Schedule (the IT project portfolio). In the Delivery phase of a project, the PMO monitors across projects. • Identify impacts on Master Schedule and take action. • Track benefits realizations after project completion.
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Evaluate projects
…then evaluated using a standard business case…
Ideas are generated throughout the entire organization…
•Opportunity options •Resource requirements •Refined project costs
Business Case
Filter
•Refined savings •Benefits (financial, strategic, payback) •Project metrics •Benefits realization •Risks •Exit strategies •Refined people, process, technology impacts •Schedule/milestones •Complexity •Standard technology?
NON-VALUE ADDED BUSINESS CASES
…non-value added opportunities & projects
are eliminated…
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The Participant’s PMO evaluates Notes: projects • Ideas are generated. • Captured using an Opportunity Form. • Determine if resources should be allocated to evaluate further. • Develop a Business Case. • Determine if resources should be allocated for project planning.
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Prioritize
Business Business Business Case Case Business Case
All Business Cases . . .
Case
. . . are be evaluated relative to
Understand resource availability
their strategic impact. . .
. . . to prioritize initiatives
Strategic Programs Value 147 PowerOn Remote 100 Website for Vendors 86 B2B Pantellos 70 SAP for IT 90 Energy 2000 Reorg 71 Dereg Bill Ready 55 SAP 4.6 Upgrade 44 Disaster Recovery 26 CCS Test data MVS - Retire unused applications55 20 Multi-Function Devices 10 Ethernet Back bone 10 Upgrade to Windows 2000 Server 10 Lotus R5 Rollout
Understand Strategic Goals
Financial (SVA,EPS) Customer (Index) Operational(Index) Employee Development (Index)
Expense Cost $
10
Cumulative Cumulative Expense Capital CumulativeResource Resource Cost Cost Capital Cost Reqmt Reqmt $
10
$
8
$
18
$
13
$
31
$ $ $ $ $ $ $ $ $
IIllllu usst trraat tiivve e
and allocate resources. . .
4
$
35
6
$
41
4
$
45
$
10
$
23
$
4
$
$
$
10
2
33
0.5
2.5
2
4.5
2
6.5
37
$
2
$
39
$
45
$
84
0.5
$
32
$
116
Resource Driven -Off Cut 3
$
48
$
23
$
139
87
$
135
$
3
$
142
2
$
137
$
23
$
165
Capital Driven -OffCut 12
$
149
$
2
2
7 9
28 7
16
2
18
1
19
7.5 231
$
396
0.5
19.5
3
$
152
$
3
$
399
1
20.5
1
$
153
$
4
$
403
0.5
21
Expense Driven -OffCut
Understand Project Complexity Relationship w/other projects
Program Plan.
Technical complexity Risk
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. . . resulting in a Master
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The Participant’s PMO prioritizes Notes: projects • Project plans are developed for Business Cases. • Project plans are are prioritized relative to their strategic impact. • Resources are allocated for execution. • Projects become part of the Master Program Plan.
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Monitor delivery
Master Program Plan
Each project will be delivered using defined standards outlined in the PMO Guide and project management best practices. Scoping and Planning
Project Delivery
Project Plan
Status Reporting
Issues/ Risks
Change Control
Resource Allocation
Benefits Tracking
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The Participant’s PMO monitors Notes: projects • Status reporting. • Managing issues and risks. • Change control. • Resources use is monitored. • Tracking the benefits.
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Project Manager Identification • Leadership • Judgment • Flexibility • Sound business knowledge • Credibility • Communications • Team building
Soft Skills
Hard Skills • Define project • Solve problems • Project management • Business knowledge • Technical understanding IIL-Webinar
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• Independent • Accountable • Willing to work within process
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PMO Process: Projects Portfolio Reductions ($ millions) $240M $80M
Reductions $80M or 35%
$160M PMO Process Reductions
Reductions based on Business Case criterion:
Starting Portfolio
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Financial Corporate Safety Customer Service Excellence Operational Performance Employee Development
Final Portfolio
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Evaluations
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