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Presented By: DENNIS L. BOLLES, PMP OSPMI Chapter Meeting
March 8, 2012
Creating a Sustainable PMO for Achieving Effective
Business Results
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AGENDA
• Why is a PMO needed – especially now? • Why is Project Business Management (PBM)
the right sustainability solution? • How is a sustainable PBMO created? • What are the values and benefits of a PBMO? • Conclusions
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Why is a PMO needed – especially now ?
A study by the American Productivity and Quality Center finds: 44% of new product projects fail to meet their profit objectives 49% are launched late to market.
Fewer resources available Surviving in today's economic downturns Gartner Analysis and The Standish Group
research reports indicate large numbers of projects failed in most organizations when market conditions were good
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PMI - PMO Research Results
• No clear consensus of what constitutes a PMO.
• Lack of executive support, and focused purpose
• Lack of consensus as to the value (50% are valued – rest are being challenged)
• PMO is isolated entity, not an integral part of organization’s PM practice, and majority are stand-alone
• Lack of training of executive sponsors and functional managers
Dr. Brian Hobbs -- 2007 White Paper: “The Multi-Project PMO: A Global Analysis of the Current State of Practice.”
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Poor Distribution of Limited Resources
New Opportunities Require Reprioritization
of the Portfolios, Programs, and Projects
Limited Resources
Capacity And
Capability To Do Work
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Customer Value Management
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Life Cycle Costing
CVM links quality, value, loyalty and project management. CVM support comes from:
The project manager must be more business-oriented. The project manager must link project management
activities to the client’s business decisions which includes the client’s customers. The use of metrics is
essential.
Risk Management
Quality Management Project Management CVM
Slide from Dr. Harold Kerzner’s book PM Metrics, KPI’s, and Dashboards
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APQC Study entitled “Customer Value Management: Gaining Strategic Advantage” - The American Productivity and Quality Center [APQC], ©1998, p.8):
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Operations and Project Management Integration
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Project Business Management
•PBM integrates and harmonizes PMI Project, Program, and Portfolio Standards PBM integrates strategic & tactical planning
of operational and non-operational objectives
•PBM directly aligns resources with strategic initiatives & business objectives
•PBM is adjustable to various types and sizes of enterprises
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Project Business Management (PBM) Concept (1)
• PBM uses General Business Management and Project Management knowledge, skills, tools, and techniques in applying portfolio, program, and
project management processes to meet or exceed stakeholder needs.
• PMB derives benefits from and captures value through any project-related actions and activities
used to accomplish the enterprise’s business objectives and related strategies
(1) © 2007-2008 DLBALLC & DGHELLC
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Project Business Management Office Concept
•PBMO is a mindset, which needs to be held organizationally at an enterprise level.
•PBMO is a way to manage, communicate, and perform work that is supported by technology
•PBMO organizes, applies, and manages an enterprise’s resources in direct alignment with the enterprise’s vision, mission, strategic initiatives, and business objectives (VMSO)
•PBMO enables the enterprise to translate the VMSO into executable portfolios, programs, and projects
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PBMO House of Excellence
A Seamless Integration and Harmonization of General Business Management, Operations Management, and Project, Program, and Portfolio Management Principles, Policies, Processes, and Procedures (1)
Four PBMO components are required for sustainability
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Project Management Enterprise-wide
Plan to Achieve Your Desired State of Enterprise-wide Project Management
Assess the Current State Define the Future State Plan to Fill the Gap
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Establishing PBMO for EWPM
Critical Success Factors for Enterprise-Wide Project Management
Establish Governance • Sets Policies • Charters the organization
Define Standardization • Identifies, documents, and integrates five standard models
Develop Capability • Improves human skills and knowledge • Enhances business operational abilities
Enable Execution • Facilitates strategic and tactical planning • Improves business objectives development • Drives the execution of portfolios, programs, and projects
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P M C O E P M C O E P B M O
Project Business Management Maturity
Establish Corporate Support
Charter PBMO
Asses Current Situation
Standardize PBMO
Processes
Implement PBMO
Roll-Out PBMO
Establish Capabilities
PBMO Development Process
Execute With PMB3
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PBMO Development Steps
1. Establish Corporate Support • Create executive & senior management support for
PBMO initiative • Get middle management commitment & support • Obtain top executive formal commitment &
support 2. Charter PBMO
• Develop PBMO strategic initiative business case with business objectives
• Prepare and authorize PBMO charter and get it formally adopted by the senior management team
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3. Assess the current situation; PBMO requires cultural, organizational, process, and technical capabilities
• Mission (Governance)– Degree to which enterprise knows why it exists and what its direction is.
• Consistency (Standardization) – Enterprise’s systems and processes which support efficiency and effectiveness in reaching business objectives.
• Commitment (Capability) – Degree to which individuals at all levels of the enterprise are engaged in and hold the PBMO directions as their own.
• Agility (Execution) – Ability of enterprise to know what Customers want, and degree to which enterprise can respond to external forces and demands.
PBMO Development Steps
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4. Standardize PBMO Processes • Create and establish PBMO policies, practices, and
procedures • Implement PBMO standards • Establish how Key Performance Indicators (KPI) will be defined, used, and evaluated
5. Establish Capability • Identify and select personnel, • Provide PBM education & training, • Set-up management systems
6. Implement PBM • Have PBMO apply the enterprise’s version of a PBM3 Methodology
PBMO Development Steps
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7. Roll-Out PBMO • Make a big splash to get everyone’s attention • Announce the PBMO and its management and staff • Distribute the PBM3 Standard Practices 8. Execute with PBM Model • Begin execution of work with PBM methodology
Establishing Project Business Management Enterprise-wide Is Not A Trivial Pursuit!
PBMO Development Steps
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First Component that establishes a sustainable PBMO
Develop PBMO Governance
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PBMO Vision and Mission
PBMO Vision Create an organizational environment that enables
world-class proficiency in applying PBM enterprise-wide.
PBMO Mission Provide leadership that guides the enterprise in
implementing PBM enterprise-wide utilizing ‘Good Practice’ PBM processes, tools, templates,
and technology to accomplish the enterprise’s Business Objectives.
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Creating The PBMO Charter
Prepare and Issue PBMO Charter Purpose Vision Mission Strategy Goals & Objectives Methodology Critical Success Factors Roles & Responsibilities Accountability &Authority Organizational Structure
PBMO Charter
Management Sign-off
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PBMO Positioning
Position is equated with Authority
Position establishes level of Acceptance
Position enables enterprise-wide Adoption
Position defines level of Autonomy
PBMO Organizational positioning is Critical to Sustainability
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PBMO Organizational Structure
Business Unit Level
Enterprise Project Business Management Office - Strategic Planning - Forecasting - Business Objective Development
PBMO Corporate Level
Business Unit PMO - Planning, Scheduling, Reporting
PMO PMO BUPMO
Divisional PMO - Overview - Master Project Planning
PMO PMO DPMO Division Level
Project Management Office - Planning, Scheduling, Reporting - Mission-Critical Strategic Projects
PMO PMO PMO Project Level
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PBMO Reporting Structure Large Enterprise
PBMO
DPMO DPMO DPMO
BUPMO BUPMO BUPMO
PMO PMO PMO
PBMO = Executive Level
DPMO = Division Level
BUPMO = Business Unit level
PMO = Mission Critical Project Level
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PBMO
PBMO = Executive Level • Strategic Planning • Business Objective Development • Portfolio Management • Master Schedule Review • Forecasting
PMO PMO PMO PMO = Department Level • Program & Project Planning, Scheduling, Reporting • Mission-Critical Strategic Projects
PBMO Reporting Structure Small Enterprise
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PBMO – Value and Benefits
• PBMO is an independent executive-level business unit for project / program / portfolio management
• Is organizationally an equal player in company politics and executive power, thereby assuring the enterprise is doing the right things at the right time
• Maintains enterprise level focus on achieving all approved non-operational business objectives and related strategies
• Assures deliverables for authorized portfolios, programs, and projects stay aligned with their approved business objectives
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Develop PBM Standards
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Second Component that establishes a sustainable PBMO
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Establish Five PBM Integrated Standards
PBM Methodology Models (1)
(1) © 2007-2008 DLBALLC & DGHELLC
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Document PBM Standards
Standards Documentation Content
Introduction Authorization Initiation Planning Execution Monitor & Control Closing Education & Training PM Templates
Manuals Handbooks Work Instructions Templates
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The five PBM Methodology standard models are closely aligned with product or service development processes.
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PNM Standard Development Processes
Strategy Initiating Processes
( A )
Strategy Planning Processes
( B )
Strategy Executing Processes
( C )
Strategy Monitoring & Controlling Processes
( D )
Strategy Closing Processes
( E )
1A-1 Update Enterprise Vision and Mission 1A-2 Develop Business Strategies for Next Business Cycle 1A-3 Identify Applicable Enterprise Environmental Factors 1A-4 Define Strategy Prioritization Criteria 1A-5 Develop Strategy Accomplishment Metrics
1B-1 Prepare Strategic Business Plan 1B-2 Prepare Business Cases 1B-3 Prioritize Business Strategies
1C-1 Implement Strategy 1C-2 Perform Strategy Status Reviews
1D-1 Manage Strategy Change 1D-2 Monitor Strategy Metrics Performance
1E-1 Close Strategy
◄ IPECC Process Groups
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Develop PBM Execution
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Third Component that establishes a sustainable PBMO
Develop Capabilities Through Education & Training Programs
Entry
Intermediate
Advanced
Project Management Career Path • Qualification • Certification
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General Population
Project Teams
Program/ Project
Managers
Executives & Functional Managers
Knowledge Objectives
Learning Objectives
Assessment Methods
PBM Education and Training Program
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Templates, Tools & Techniques Manuals, Procedures, Instructions Databases Information & Management Systems Project Cost Accounting Safety & Quality Management Financial Resources Enterprise Environmental Factors Organizational Process Assets
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Develop PBM Execution
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Fourth Component that establishes a sustainable PBMO
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PBM Execution Roadmap (1)
(1) © DLBALLC & DGHELLC
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PBM Execution Stages
• Strategic Planning – Create business-plan based strategic initiatives with KPIs
• Tactical Planning – Develop Business Objectives with KPIs
• PBM Based Planning – Identify portfolios, programs, and projects and associated KPIs PBM Initiation – Select, prioritize, and
authorize portfolio, programs, and projects and set final KPIs PBM Execution – Manage the portfolios,
programs, and projects to meet KPIs
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Apply PBM Business Strategy Development Model (1)
The first move often determines the outcome of the business game
First business action in PBM is to perform the transformational processes that focus on being effective in identifying & documenting the right strategic business initiatives.
(1) © 2007-2008 DLBALLC & DGHELLC
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Strategic Metrics Processes
PBMM Business Strategy Metric Development & Measurement Process
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Prepare PBM Enterprise’s Strategies (1)
From Purpose, Mission, & Vision to Ranked Business Cases
(1) © 2007-2008 DLBALLC & DGHELLC
First Step
Last Step
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Create the PBM Business Plan
• Annual packaging of executive management approved strategic initiative business cases
• Prepared in a simple format: Table of Contents; Executive Summary; each Approved Business Case; and Appendix of Supporting Materials for each case
• Executive Summary provides the context for understanding the relationship among business cases
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Document the Business Cases
• Articulates the intent and desired benefit and value of a business strategy in a feasibility study format
• Documents any associated business threat or opportunity related to the strategic initiative
• Is the common basis and format for use by business management, operations management, and PBM
• Typically divided into specific sections that reflect the type and style of business case being created
• Provides basis for authorizing further planning and analysis activities
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Apply Tactical Planning Model (1)
Second business action in PBM is to perform the transformational processes that focus on being effective in identifying the right supporting business objectives, portfolios, programs and projects.
(1) © 2007-2008 DLBALLC & DGHELLC
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Business Objectives Metrics Process
PBMM Business Objective Metrics Development & Measurement Process
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(1) © 2007-2008 DLBALLC & DGHELLC
Perform PBM Business Objectives Development (1)
First Step
Last Step
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Prioritize and Select Work (1)
(1) © 2007-2008 DLBALLC & DGHELLC
First Step
Last Step
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Management authorizes and initiates work to ensure the resources used are in alignment with enterprise strategic initiatives and supporting business objectives.
Authorize the Selected Work (1)
(1) © 2007-2008 DLBALLC & DGHELLC
First Step
Last Step
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Execute PBM Methodology Models (1)
Third business action in establishing PBM is performing the transactional processes focused on being efficient in performing the work and completing each selected portfolio, program and project
(1) © 2007-2008 DLBALLC & DGHELLC
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Performance Metrics Processes
PBMM Portfolio / Program / Project Performance Metrics Development & Measurement Processes
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Initiating Phase
Planning Phase
Executing Phase
Closing Phase
Review Gate
Review Gate
Portfolio, Program, or Project Readiness Check
Review Gate
Lessons Learned Review
Capture Lessons learned
Capture Lessons learned
Capture Lessons learned
PBMO Readiness Checks
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PBMO Sustainability
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Foundation Component that supports a sustainable PBMO
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Baseline A baseline - an PBMO is established
1. Repeatable PBM standards applied to all portfolios, programs, and projects
2. Managed PBM fully integrated
3. Distributed
PBM is a core competency enterprise-wide
4. Sustained Continuous improvement and innovation is common
PBM Maturing Model
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• Strategic and Tactical Planning are well established tools in the business management discipline and are becoming recognized and used as tools by successful organizations.
• PBM provides a standardized methodology, that incorporates strategic and tactical planning
• PBM allows management to ensure projects are selected and completed in alignment with their business objectives and strategic initiatives
• PBM processes allow executive and portfolio management to assure correct business objectives, programs, and related projects are authorized or terminated
PBMO Sustainability Conclusions
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Questions?
© 2012 DLB Associates, LLC – All Rights Reserved
Name: Dennis L. Bolles, PMP Email: [email protected] Website: www.dlballc.com Phone: (616) 392-2292