The Project Management Institute's Organizational Project ...

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The Project Management Institute’sOrganizational Project Management

Maturity Model or OPM3

A Presentation by John Schlichter

Presenter• John was the volunteer program manager of

PMI's OPM3 Program for over four and a half years, from May 1998 when the program was chartered to November 2002, when he resigned his volunteer position and launched OPM Experts, a firm that will offer supporting products and services to help organizations get the most out of the OPM3 standard once it is released later this year.

• John Schlichter is a principal of OPM Experts, LLC, "the organizational project management experts," located in Atlanta, Georgia, USA.

• John has spoken about the OPM3 hundreds of times, all over the world.

Disclaimer: The contents of this presentation represent the presenter’s own views and do not necessarily represent the views of PMI. This presentation does not imply an endorsement by PMI of the presenter’s own products or services.

Agenda

• Background• Benefits of OPM3• Terms and Concepts• Structure of the

Standard• Implementing the

standard• Summary• Question and Answer

“The corporation as we know it, which is now 120 years old, is not likely to survive the next 25 years. Legally and financially, yes, but not structurally and economically.”Peter Drucker, Business 2.0(08.00)

Globalization and technology are sweeping away the market and industry structures that have historically defined the nature of competition.

• The fundamental transformations under way in the global economy have only just started!

• Only 20 percent of the world’s GDP comes from industries that can be called global.

• It will take 30 years or more before anything reasonably approaching a truly integrated global economy will be realized.

• What can you expect over the intervening period?

The 21st Century

The world’s market and industry structures will be in continuous flux.

The 21st Century

Are you managing change oris change managing you?

Consider your own projects.

1 out of 2 projects will cost nearly twicetheir original estimates.

3 out of 4 professionals believe their organizations are not balancing the portfolio of projects to achieve the strategic goals of their organizations.

The 21st Century

• Successful organizations must adapt to today’s environment.

– achieve the strategic intent of your business through multiple, inter-related projects

– manage change

– cultivate organizational and individual project management capabilities

– deliver projects successfully, consistently, and predictably

The 21st Century

PMI’s OPM3 Standard is designed to help your organization adapt to

today’s business environment.

PMI Standards• PMI was accredited in October 1998 as a Standards

Development Organization by the American National Standards Institute (ANSI).

• A PMI standard is: – A document consistent with the PMI Ends Policies & PMI

Standards Program Vision, Mission, Purpose and Standards Setting Process

– A document created by an appropriate diverse group through an open consensus-building process

– A document covering commonly accepted knowledge and/or practices and dealing with core concepts for the practice of theprofession

Read about the PMI Standards Program athttp://www.pmi.org/info/PP_Standards_Overview.asp

PMI Standards in Print

OPM3 Program

• In 1998 a program was chartered to develop an international standard for industry and government strictly through the grassroots efforts of unpaid volunteers

– to help organizations to assess and improve their project management capabilities as well as the capabilities necessary toachieve organizational strategies through projects

– to set the standard for excellence in project, program, and portfolio management best practices

– to explain the capabilities necessary to achieve those best practices

Read the history at http://www.pmforum.org/library/papers/TheHistoryofOPM3.htm

The OPM3 was developed with the widespread participation of the larger PM community.

Over 800 professionals from over 34 countries contributed to its development.

Benefits of OPM3

• Help organizations understand current project management, program management, and portfolio management capabilities.

• Enable executives to assess their own organization’s or partner’s ability to a achieve strategic priorities through projects.

• Identify areas for improvement and ways to make coordinated improvements incrementally.

• Help all levels of management understand how to create an environment for successful projects.

Benefits of OPM3

• Help those responsible for project management (e.g. PMO’s) identify drivers of project results and set standards for excellence.

• Enable organizations to achieve consistent implementation of project management work methods through standardization.

• Demonstrate relationships between executive functions and project management functions.

• Explain how to make project management measurable within an organization.

Benefits of OPM3

• Rally an organization or its partners to focus on project management improvements.

• Facilitate organizational change associated with developing project, program, or portfolio management functions.

• Develop consistency and predictability in project delivery.

• Distinguish one’s own organization from competitors.

Terms & Concepts

• Organizational Project Management• Maturity Model• Best Practice• Capability• Outcome• Key Performance Indicator

Organizational Project Management

• Project Management (PM) is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. (PMBOK Guide)

• Organizational Project Management (OPM) is the application of knowledge, skills, tools, and techniques to organizational activitiesand project activities to achieve the aims of an organization through projects. The OPM process combines project

management, program management, and portfolio management to enact organizational strategies through projects.

The PMBOK Guide’s Process Groups

A Guide to the Project Management Body of Knowledge-2000 Edition, ANSI/PMI 99-001-2000. Newtown Square, PA: Project Management Institute, Inc.

The OPM3’s Organizational

Project Management Process

Maturity Model

• Capabilities are developed over time.

• “Maturity implies a state of being fully developed. Maturity also connotes understanding or visibility as to why success occurs, and as to ways to prevent common problems.” - John Schlichter, “Surveying Project Management Capabilities,” PM Network, 13(4), 39, April 1999.

• A model outlines the steps for achieving maturity.

Process Maturity

Portfolio Management

Program Management

Project Management

Best Practice

• A Best Practice is a technique or methodology that, through experience and research, has proven to reliably lead to a desired result.

• In the OPM3, maturity is represented in terms of Best Practices. One applies OPM3 to achieve maturity, that is, to enact Best Practices.

• In the OPM3, Best Practices are comprised of constituent Capabilities.

Achieving Maturity in OPM

Program Management

Project Management

101112

1 – Best Practices associated with Standardizing Project Management

2 - Best Practices associated with Standardizing Program Management

3 - Best Practices associated with Standardizing Portfolio Management

4 – Best Practices associated with Measuring Project Management

5 – Best Practices associated with Measuring Program Management

6 – Best Practices associated with Measuring Portfolio Management

7 – Best Practices associated with Controlling Project Management

8 – Best Practices associated with Controlling Program Management

9 – Best Practices associated with Controlling Portfolio Management

10 – Best Practices associated with Continuously Improving Project Management

11 – Best Practices associated with Continuously Improving Program Management

12 – Best Practices associated with Continuously Improving Portfolio Management

Capability

• A Capability is a specific ability to perform, resulting in measurable outcomes.

• A Capability may depend on pre-requisite Capabilities.

• A Best Practice is comprised of constituent Capabilities.

• To achieve a Best Practice, one must develop the constituent Capabilities of the Best Practice.

Dependencies

Best Practice A

Best Practice C

Best Practice B

CapabilityA3

CapabilityA2

CapabilityA1

CapabilityB3

CapabilityB2

CapabilityB1

CapabilityC3

CapabilityC2

CapabilityC1

Dependencies

Best Practice A

Best Practice C

Best Practice B

CapabilityA3

CapabilityA2

CapabilityA1

CapabilityB3

CapabilityB2

CapabilityB1

CapabilityC3

CapabilityC2

CapabilityC1

Dependencies

Best Practice A

Best Practice C

Best Practice B

CapabilityA3

CapabilityA2

CapabilityA1

CapabilityB3

CapabilityB2

CapabilityB1

CapabilityC3

CapabilityC2

CapabilityC1

Outcome and KPI

• An Outcome is an observable result produced by using or having a Capability.

• Outcomes have Key Performance Indicators that demonstrate either quantitatively or qualitatively that an Outcome exists.

OPM3 Architecture

Best Practice

Capability

urity Outcome

Outcome

OPM3 Architecture

Standardizing

Measuring

Controlling

ContinuouslyImproving

Project Management

Program Management

Ability to determine present value of assets of each project proposed for investment.

Ability to determine expenditure required to acquire assets of each project.

Ability to determine length of time the decision to invest in each project may be deferred.

Ability to determine the time value of money, i.e. the risk free rate of return.

Ability to determine the riskiness of each project, i.e. the variance per period in project returns for each project.

Ability to compare the present value of assets of proposed projects to the discounted present value of the capital expenditure.

Ability to select projects and make project continuation/termination decisions to manage the value of the portfolio.

Best Practice: The value of the

portfolio is managed.

Best Practice: Portfolio managers and

program managers assess confidence in

project plans.Ability to confirm the availability of resources throughout critical paths necessary to achieve Work within allotted Duration for each project.

Ability to identify dependencies among all projects.

Ability to analyze the critical paths of all projects and to measure variance in the critical paths of all projects.

Ability to measure variation in activity duration values for all projects.

Ability to develop best, worst, and most likely estimates for durations all tasks of each project.

Ability to estimate duration and work for each project.

Ability to develop a WBS dictionary for each project.

Ability to confirm the scope of work for each project with the project sponsors and project customers.

Ability of portfolio managers and program managers to assess confidence in project plans.

Ability to understand the business drivers, constraints, and assumptions for each project.

Implementing OPM3

1. Study the Standard

4. Identify Capabilities Leading to

Best Practices

5. Evaluate Capabilities

6. Plan Improvements

7. Implement Improvements

8. Repeat the process

To implement the OPM3 standard, you perform a series of steps that comprise a repeatable process.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

Implementing OPM3: Step 1

Best Practices

In step 1, you read the introductory sections of the standard, which explain- the purpose and scope of OPM3- the meaning of maturity- how process improvement works- how information in the standard is organized- how to use it

2. Self-assess

Organization

3. Determine Focus

on Best Practices

Best Practices

In step 2, you answer a concise list of questions that allow you to draw an inference about your organization’s maturity across a spectrum of areas addressed by the standard.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

This is not a comprehensive maturity assessment. It is an interim step designed to help you focus on Best Practices you may need to work on the most.

Caveat: the only way to determine truly whether or not your organization has a Best Practice is to evaluate the Capabilities associated with that Best Practice, i.e. step 5.

Best Practices

In step 3, using the results of the previous step, you decide which Best Practices to evaluate.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

If the previous step indicated that your organization is immature in a certain area, you may wish to find out exactly what your capabilities are in that area.

Alternatively, if the previous step indicated high maturity in an area, you may wish to validate that indication to ensure it is accurate. Determine your area of focus.

Best Practices

In step 4, you refer to a directory that shows you the Capabilities associated with each Best Practice. You refer to the Best Practices that you decided to focus on in the previous step.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

Each Best Practice is comprised of a series of Capabilities. In this step, you see the sequence of Capabilities that result in development of a Best Practice.

In this step you are simply locating the lists of Capabilities leading to each of the Best Practices you have chosen to evaluate.

Best Practices

In step 5, you evaluate the Capabilities leading to each Best Practice. Start with the lowest Capability in the sequence, and move up. If your organization has some of the Capabilities but not all of them, then the Best Practice has been achieved only partially.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

You evaluate Capabilities by learning the Outcomes associated with each Capability, and verifying Key Performance Indicators.

Once you know which Capabilities the organization doesn’t have, you can see clearly which Capabilities remain to be developed.

Best Practices

In step 6, you reflect on the results of the previous step and decide how to proceed. By now, you know the sequence of Capabilities leading to the Best Practices you have chosen to focus on, and you know which of those Capabilities have not been achieved. Plan the required improvements!

2. Self-assess

Organization

3. Determine Focus

on Best Practices

Because you know exactly where you stand on the path toward a Best Practice, you can see the next Capability ahead. You also know the Outcomes that should result from having that Capability. Decide whether to develop it.

Best Practices

After deciding which improvements to make in step 6, you actually make those improvements in step 7.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

You have selected the Capabilities that you wish to develop, and now you must initiate, plan, execute, control, and close projects to achieve those Capabilities.

Projects to develop organizational capabilities are often organizational change projects. In the steps leading up to this one, did you involve the stakeholders you need now?

Best Practices

In step 8, after you have finished your Capability Development Projects to advance toward the Best Practices you have focused on, you can revisit the self-assessment questions in step 2, or you can go directly to step 3 to select Best Practices to focus on.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

You may wish to re-select the same Best Practices chosen last time, in order to validate progress toward those Best Practices.

Alternatively, you may wish to focus on entirely new Best Practices.

OPM3: ask the experts• Business drivers, critical success factors• Assumptions, constraints• Roles and responsibilities • Stakeholders• Scope of implementation• Accountability • Timing, personnel, internal costs• Measuring progress• Communicating throughout the process• Managing risks• Getting the expertise you need

Schedule

• The team will hand the standard off to PMI in September 2003.

• PMI will release the standard to the public in December 2003.

Summary

• OPM3 helps organizations to assess and improve their project management capabilities as well as the capabilities necessary to achieve organizational strategies through projects

• OPM3 sets the standard for excellence in project, program, and portfolio management best practices

• OPM3 explains the capabilities necessary to achieve those best practices.

Summary

Best Practices

To implement the OPM3 standard, you perform a series of steps that comprise a repeatable process.

2. Self-assess

Organization

3. Determine Focus

on Best Practices

Develop the capabilities to do the right projects right.

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