Strategic Role of Project Management

Strategic

Programme and Project Management

[BOLT REPORT]

ANUPAMA SINGH

[October 12, 2009]

Mentored by

Mr. B K Basu

Chief Executive, L&T Sargent & Lundy Limited

L&T - Sargent & Lundy Limited

[The report intends to bring out the importance of projects in organizations and why effective program and project management has become imperative for any organization for doing business in todays dynamic global market place]

Strategic Programme and Project ManagementContents

AcknowledgementExecutive Summary

A. Project, Programme and Portfolio Management

B. Strategic Role of Project and Program Management

C. Role of Project Management Office

D. Project Management Processes

E. Conclusion

F. References

ACKNOWLEDGEMENTS

I could not have completed the BOLT (Blending Ownership & Leadership for Transformation) journey without the support of many individuals who were a constant source of inspiration and encouragement for me. I take this opportunity to extend my sincere gratitude for their continuous support for me.

Enlightening sessions and team exercises on Leader in you by Nirmal Parekh gave very good insight on various leadership attributes which should be inculcated by anyone who is aspiring to be a leader. Session on Situational Leadership by Sameer Parekh was very informative. The outbound sessions at Mount Abu , the unique way of learning invented by Naman, stand out above all.Hiral, our BOLT coordinator, Urvi our PDP coordinator and the entire Naman team was very warm and cooperative and it was a pleasure interacting with them.Interactions with Urvi gave very good inputs on how to improve my interaction with people, which would finally help me in building strong and healthy relationships at personal and professional levels.

Mr. B K Basu CE, L&T-S&L Limited and my mentor who reposed trust in my abilities to pursue this programme and nominated me for the same. He spent quality time with me on analysing 360o report and gave me inputs which would definitely help in my development. His guidance while writing this report has been very useful.I would like to thank Mr. B.N.Saha my immediate superior for his interaction with Urvi, his useful feedbacks and for his continuous support during BOLT.My father, though he is no more with us, his presence will always be felt and his faith in me will continue to be a source of inspiration.My mother, for being there when-ever I need her.My husband for the continuous and much needed support I get from him.My sisters for their continuous motivation and moral support.I sincerely express my gratitude towards my esteemed organization, L&T-Sargent and Lundy Limited, for providing me with such a great learning opportunity and supporting me in all possible ways to complete this programme.

Anupama SinghOctober 12th 2009Executive Summary

A. Project, Programme and Portfolio Management

Projects are essential to the growth and survival of organizations today. They create value in the form of improved business processes, are indispensable in the development of new products and services and make it easier for companies to respond to changes in the environment, competition and the marketplace.

A project is a temporary endeavour, having a defined beginning and end (usually constrained by date, but can be by funding or deliverables, undertaken to meet particular goals and objectives, usually to bring about beneficial change or added value.

Project management is the discipline of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives.

Programme management is the process of managing several related projects with common objective and with the intention of improving an organization's performance

Portfolio Management is analyzing and collectively managing a group of projects or programme. The fundamental objective of the portfolio management is to determine the optimal mix and sequencing of projects and programmes to best achieve the organization's overall goals - typically expressed in terms of economic measures, business strategy goals, or technical strategy goals - while considering the internal and external constraints.

B. Strategic Role of Programme and Project Management

Project management has emerged as a strong discipline as organizations have started realizing that they cannot stay in business if they cannot manage their projects efficiently. However, many companies are still limiting the application of project management to the tactical level.

Project failures happen mainly due to following reasons:-

Sharing of resources is not in line with the requirement of the projects

Priorities of projects change frequently

Projects are launched regardless of the availability of resources

Expected result is not achieved at the end of the project

No synergy between projects and strategy

The root cause of these failures is due to lack of understanding of business requirement from strategic point of view.

Strategic project management is the management of those projects that are of critical importance to organization as a whole to have competitive advantage. It is the process of managing complex projects by combining enterprise strategy and project management techniques in order to implement the business strategy and to achieve organizational goals. The focus is to move from individual project management to project management at organizational level or effective program management. All projects in an organization compete for resources and support, strategic program management views all of the organizations projects together and makes strategic choices in their support.

C. Role of Project Management Office (PMO)

Organizations that deliver products and services through projects have increasingly introduced a new organizational entity called the project management office. The impetus for introducing project management offices (PMOs) is to improve project management performance and to reduce the number of runaway projectsthose that fail to meet customer expectations, run over budget, or become compromisingly delayed. The trend toward implementing PMOs in organizations will only continue as projects become a way of life for more and more organizations

The main roles of the PMO are:

Support to strategic planning in the high level management of organizations, portfolio management and program management, including planning, control, reporting, resource and financial management;

Development of methodology, reporting, tools, techniques, templates and forms; and

Orientation, guidelines, standardization and support to application of best practices, tools, techniques and software related to project management (PM).D. Project Management Processes

A project is accomplished through integration of project management processes. Project Management Processes are overlapping activities that occur at varying levels of intensity throughout each phase of the project. A process is defined as a set of activities that must be performed to achieve project goals.

Processes can be divided into two types :

Enabling processes

Facilitating Processes

Scope Management

Schedule Management

Budget Management

Quality Management

Team Management

Stakeholder Management

Information Management

Risk management

Contract Management

The project management processes are interrelated with the Project Management phases during the entire project cycle (as shown in the diagram below).

(Source:- The Project Management Processes :- pm4dev, 2007 management for development series )

A. Project, Programme and Portfolio Management

Organizations activity can be divided into two categories: operations and projects. Operations involve repetitive, ongoing activities, such as manufacturing, service, and production, whereas projects involve unique, one-time initiatives, such as launching new products, construction & infrastructure projects, new organizations, or new ventures, improving existing products etc. Projects drive business innovation and change; in fact, the only way organizations can change, implement a strategy, innovate, or gain competitive advantage is through projects.

With high demand for growth and innovation, the share of projects in most organizations is on the rise (see figure 1-1). Not only product life cycles are becoming shorter, but also customers today demanding greater variety and more choices, forcing companies to offer more products in almost every market. Likewise, time line of Infrastructure projects is also shrinking and customers are becoming very demanding.

Figure 1-1: The increasing share of projects (Source:- Reinventing Project Management: The Diamond Approach to Successful Growth and Innovation-By Aaron J. Shenhar and Dov Dvir: Publisher: Harvard Business School Publishing)

Market globalization has also forced businesses to respond to fierce competition around the world. Information technology (IT) and Internet revolution have added speed to way of doing things.

During most of the twentieth century, organizations focused more on improving their operations rather than their projects.] Efforts to improve operational efficiency still continue with more recent concepts such as just in time, lean manufacturing, reengineering, supply-chain management, six sigma etc are stealing the limelight.

Now that the world, in particular the developing countries are witnessing tremendous growth in infra-structure projects it is high time that projects and superior project management are given due importance. Projects are also the engines that drive innovations from idea to commercialization.

The time has come to recognize that project management is everyones business.

Projects are a part of overall business strategies of an organization. However the common objectives in all projects undertaken across an enterprise are its alignment with the strategic objectives of an enterprise.

Project is an endeavour in which human, financial and material resources are organized in a novel way to undertake a unique scope of work of a given specification, within constraints of cost and time, so as to achieve beneficial change defined by quantitative and qualitative objectives.

Project management is the discipline of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives. The primary challenge of project management is to achieve all of the project goals and objectives while honouring the preconceived project constraints. Typical constraints are scope, time, and budget.

Figure 1.2: Management of projects

The five functions which form the basis of any project management activity are:-

a) Scope

b) Organization

c) Scope

d) Time

e) Quality

Figure 1.3: Functions of project managementThe scope and the organization are the essential functions of project management. The remaining three - time, quality and cost are the constraints under which the project is to be executed and managed.

Project management provides the 'single point of integrative responsibility' needed to ensure that everything on the project is managed effectively to ensure successful project completion and delivery.

Program Management

A programme is a set of related projects and organisational changes put in place to achieve a strategic goal. A programme is a series of specific, interrelated projects and additional tasks which together achieve a number of objectives within overall strategy or strategic goal. It articulates the organizations business strategy, which is required to be implemented through projects.

Benefits of Program Management

- The elimination of risk arising from interfaces between the projects

- The successful completion of individual projects through coherent prioritization and optimization of resources.

A reduction in management effort

Portfolio Management:

A Portfolio is a set of projects and/or programmes which are not necessarily related to each other, but are brought together for the sake of control, co ordination and optimisation. Portfolio Management of projects and/or programmes cover the prioritisation of projects and/or programmes within an organization.

B. Strategic Role of Programme and Project Management

For years, companies have been using the principles of project management to get work accomplished. Yet, very few attempts were made to recognize project management as a core competency for the company. There were three reasons for this resistance to project management. First, project management was viewed as simply a scheduling tool for the workers. Second, since this scheduling tool was thought to belong at the worker level, executives saw no reason to look more closely at project management, and thus failed to recognize the true benefits it could bring. Third, executives were fearful that project management, if viewed as a core competency, would require them to decentralize authority, to delegate decision-making to the project managers, and thus to diminish the executives power and authority base.

Business-Focused, Success-Oriented Projects

It is important to consider the strategic as well as the tactical aspects of project performance in the short and the long term. It is important to focus on more than just meeting time, budget and quality goals.

Specifically, the strategically success criteria for any project involve at least five dimensions:

Project efficiency: meeting time, budget and quality goals

Impact on the customer: meeting requirements and achieving customer satisfaction, benefits, and loyalty

Impact on the team: satisfaction, retention, and personal growth

Business results: return on investment, market share, and growth

Preparation for the future: new technologies, new markets, and new capabilities

Organizations now need to use project management as a tactical tool to execute projects. Projects are essential to the growth and survival of organizations today. Project management creates value in the form of improved business processes and makes it easier for companies to respond to changes in the environment, competition and the marketplace.

Project management is emerging as a strong discipline practiced by highly trained, certified professionals as organizations have come to realize they cannot stay in business if they cannot manage their projects. It is vital to the very survival of the enterprise to ensure products are designed, created and delivered to internal and external customers efficiently and effectively. Organizations are now recognizing that project management is a critical strategic tool. They practice program and portfolio management to select, manage and support a program/ portfolio of projects that have the best chance of moving the enterprise forward, keeping it vibrant in the marketplace and returning maximum shareholder value.

This panoply of competitive advantage, strategic capabilities, and tacit knowledge management constitute the new lens through which organization should envisage Strategic Project Management.

Basics of Project Program Management

Program management is the centralized management of one or more projects, an approach to achieving strategic goals by selecting, prioritizing, assessing, and managing projects, programs, and other related work based upon their alignment and contribution to the organizations strategies and objectives. Program management combines

(a) Organizations focus of ensuring that projects selected for investment meet the program strategy with

(b) Project management focus of delivering projects effectively and within their planned contribution to the program.

The steps of program project management would include assessing merits of the organizations various proposed projects, weighing them against each other, selecting and supporting those projects whose execution will deliver the greatest value to the bottom line.

The drivers of a program of projects are:

1. Where the company wants to go and what it needs to do to achieve the goal (e.g., improve its return on investment, increase shareholder value or gain market share).

2. Tactical concerns, such as improvement projects individual departments need to undertake in order to become more efficient or effective; e.g., cost reduction, staff reduction, getting to market faster.

3. Problems whose correction requires a project or program; e.g., lost data to support decisions, poor customer service, slow time to market.

4. The need for organizational change management initiatives that prepare people to move in the desired direction along with the organization.

The application of program management permits the sharing of goals and the allocation of resources among these drivers so that projects can achieve their strategic intent.

Figure 1.4: Organizational Context of Portfolio/ Program Management{Source: Featured Paper- The Strategic Role of Project Management By Don J. Wessels : Published in PM World Today - February 2007 (Vol. IX, Issue II)}

Challenges and Solutions in Project Management

Those new to the process of strategic project management may encounter challenges in the following areas.

1) Executive championship. Without buy-in from high-level decision-makers and their ability to give guidance and support to the program manager, strategic project management will fail. Even organizations that have established a formal Project Management Office need an executive champion, particularly when the office is understaffed.

2) Business acumen. A program manager needs much more business acumen than a traditional project manager because he or she has to decide which projects are necessary in order to meet the organizations strategic objectives.

3) A solid project management process. Leadership may do an excellent job of creating a strategic program of projects and setting goals and ground rules. But if the actual practitioners the project managers and their teams are in a just-do-it mode or are inefficient or ineffective in managing their projects, all the strategic work is for naught.

4) Timeframes and budgets. Executing projects efficiently and effectively across the board depends on honest and realistic timeframes and budgets, so that projects are not set up for failure from the start.

5) Requirements analysis. Program managers need skill in gathering accurate requirements, analyzing them and managing them properly throughout a projects implementation.

6) Stay on the course. One of the most common mistakes leading to project failure is not staying on course. A Better Way to Manage: Toward an Adaptive Project Management Approach

As projects are becoming more complex, it is imperative for the organizations to adopt a focused, flexible, and adaptive framework. It differs from the traditional approach in several ways, as given in table 1-1 below.

Table 1-1: From traditional to adaptive project management

Approach Traditional project management Adaptive project management

Project goalGetting the job done on time, on budget, and within requirementsGetting business results, meeting multiple criteria

Project planA collection of activities that are executed as planned to meet the triple constraintsAn organization and a process to achieve the expected goals and business results

Planning Plan once at project initiation Plan at outset and re-plan when needed

Managerial approach Rigid, focused on initial plan Flexible, changing, adaptive

Project workPredictable, certain, linear, simple Unpredictable, uncertain, nonlinear, complex

Environment effectMinimal, detached after the project is launchedAffects the project throughout its execution

Project controlIdentify deviations from plan, and put things back on trackIdentify changes in the environment, and adjust the plans accordingly

Distinction All projects are the same Projects differ

Management styleOne size fits all Adaptive approach; one size does not fit all

(Source:- Reinventing Project Management: The Diamond Approach to Successful Growth and Innovation-By Aaron J. Shenhar and Dov Dvir: Publisher: Harvard Business School Publishing)

Projects are not just a collection of activities that need to be completed on time. Instead, projects are business-related processes that must deliver business results. Many projects involve a great deal of uncertainty and complexity. They must be managed in a flexible and adaptive way. Thus, planning can not be considered as rigid or fixed, instead, it must have the flexibility to adjust itself as per the requirement of the project at any given point of time.

As per the Standish Group Chaos Report, 1995, 90% of projects do not meet time/cost/quality targets. Only 9% of large, 16% of medium and 28% of small company projects were completed on time, within budget and delivered measurable business and stakeholder benefits. There are many reasons for such failures. As per a KPMG survey of 252 organizations, technology is not the most critical factor. Inadequate project management implementation constitutes 32% of project failures, lack of communication constitutes 20% and unfamiliarity with scope and complexity constitutes 17%. Thus, about 69% of project failures are due to lack of and/or improper implementation of project management methodologies.

C. Project Management Office (PMO)

Project management office, (PMO) is an emerging relatively new concept which has become a global phenomenon reaching the structure of organizations all over the world. The main focus of PMO is towards successful implementation of project management methodologies and it is the link between the management and the project managers.

What is PMO?

According to Kendall and Rollins (2003), PMO is a centre of intelligence and co-ordination that allows a link between the strategic business objectives and the related practical results through organizational portfolio, program and project management.

The PMOs can be classified as:

Strategic: SPO Strategic Project Office - identification, selection and prioritization of projects, in conjunction with the organizational strategic planning.

Directive: PMO Program Management Office - definition of guidelines, standards and templates to application of PM best practices, tools, techniques and software in PM processes.

Support: PSO Project Support Office - providing support for the application of PM best practices, tools, techniques and software in PM processes.

Hybrid combination of two or three of the above mentioned classes of PMO.

Strategic PMO carries the mission to provide higher management support in strategic planning.

According to the PMBOK Guide, The project management office is an organizational unit which centralizes and coordinates the project management under its domain. The PMO can be called also by Program Management Office, Program Office or Project Office.

The renowned Project Management Institute (PMI) Program Management Office Significant Interest Working Group (PMOSIG), views the PMO as a strategic driver for organizational excellence and seeks to enhance the practices of execution management, organizational governance, and strategic change leadership.

Role of PMO

A good PMO will base project management principles on accepted, industry standard methodologies. Organizations need to define, borrow and collect best practices project management and need to increase assigning the PMO to exert overall influence and evolution of thoughts to continual organizational improvement. Organization structure should support the PMO's existence and operation with direct line authority and communication with stakeholders.

The main functions of the PMO are:

1. Practice management: provides a common approach and frame of reference for conducting project management activities within an organization. This PMO function area establishes project management processes and practices, introduces associated project management tools, specifies project performance standards and metrics, and creates a collaborative project management environment that guides project information management and includes access to project archives and a reference library.

2. Infrastructure management: facilitates establishment of a professional project management environment. It helps to define the project structure and stakeholder involvement necessary to support successful project performance and it provides for administration of facilities and equipment needed to accomplish project objectives.

3. Resource integration: manages the competency, availability, and performance of project resources. This PMO function area enables the PMO to collaborate with resource managers to acquire, assign, and manage project managers and project team members.

4. Technical support: provides project management advice, counsel, and support to project managers and project teams. This PMO function area leverages the skill, knowledge, and experience of available project management experts to provide mentoring in the project management environment; provides a range of project planning, facilitation, and support activities.

5. Business alignment: introduces the organization's business perspective into the project management environment. This PMO function area oversees project portfolio/ program management, facilitates executive involvement in project management to include overseeing project management.PMO and Project Managers

Project managers and the PMO pursue different objectives and, as such, are driven by different requirements. All of these efforts, however, are aligned with the strategic needs of the organization.

A project manager is responsible for delivering specific project objectives within the constraints of the project, while the PMO is an organizational structure with specific mandates that can include an enterprise-wide perspective.

The project manager focuses on the specific project objectives, while the PMO manages major project scope changes and can view them as potential opportunities to better achieve business objectives.

The project manager controls the assigned project resources for meeting project objectives, while the PMO optimizes the use of shared organizational resources across all projects.

The project manager manages the scope, schedule, cost and quality of the products of the work packages, while the PMO manages overall risk, overall opportunity and the interdependencies among projects.

The project manager reports on project progress and other project specific information, while the PMO provides consolidated reporting and an enterprise view of projects under its purview

Benefits of PMO

While project managers have a view of each project they are responsible for, the PMO encompasses a wider view of the projects since they have a whole view of all the company projects. Therefore, the PMO provides support to higher management so that they can more effectively implement corporate governance procedures.

As we can see, project management is essential. It is a bridge between strategy and success. Company higher management counts on the PMO for supporting planning & control, data collection and analysis, documentation and reporting, for each project and to all projects, as well as identification, selection, prioritization of projects, data collection, analyses and communication of results by project and/or by department, consolidated to all company with the comparison between the planned values and the real values.

Fig 1.5 given below depicts the relationship of Business Strategy, Projects, resources, Application and the management..

Figure 1.5: Business Strategy and PMO Stages of development of PMO

Five general stages of PMO competency are indicated in Figure 1.6. These five PMO stages represent a progressive competency and advancement of functionality that can be attained to meet the needs of the project management environment and the associated business objectives of the relevant organization.

Figure 1.6: Stages of PMO development (Source: The Complete Project Management Office Handbook by Gerald M. Hill: Auerbach Publications 2008)D. Project Management Processes

The project management processes can be divided into two types :1. Enabling processes

2. Facilitating Processes

Enabling processes

1. Scope Management

2. Schedule Management

3. Budget Management

4. Quality Management

Depending on the scope, large, complex projects will require a more rigorous application of project management processes than small, noncomplex projects. The Project Manager assesses the project characteristics to determine how to customize the processes for a specific project and determine which project management processes will be required.

Project Management Processes are overlapping activities that occur at varying levels of intensity throughout each phase of the project. A process is defined as a set of activities that must be performed to achieve a goal, in this case the project goal.

Brief description of Project Management Processes is as below:

1. Scope Management

Includes the processes involved in defining and controlling what is or is not included in the project. Scope is the way to describe the boundaries of the project.

2. Schedule Management

This process includes the actions required to ensure the timely completion of the project. Schedule management is the development of a project schedule that contains all project activities, the project schedule is a communication tool that informs project stakeholders the status of the project and gives project team members information, in the form of graphs and charts, as to when each activity must begin and end.

3. Budget Management

Budget management processes are required to ensure the project is completed within the approved budget. This is the area that receives a lot of scrutiny before, during and after the project is completed. Risks have the highest impact to the project, the organization and to the beneficiaries. Thus, it calls for a very disciplined budget management.

4. Quality management

Quality management is the process to ensure that the project will satisfy the needs of the beneficiaries. Quality is defined as a commitment to deliver the project outputs and meet the expectations of the beneficiaries.

5. Team Management

During the definition of the project activities a list is created that identifies the skills needed by the project. These range from highly technical to administrative and support functions. The project team is after all the team responsible for the project. Project Organization is defined at the beginning of the project, which identifies the structure and key functional areas of the project.

Team management includes the processes required to make the most effective use of the people involved in the project. The first step is identifying the roles, responsibilities and reporting relationships. The second step is getting the people that will be assigned to the project

6. Stakeholder Management

Stakeholder management is one of the areas that receive the least amount of thought and planning in development projects, this is due to the limited understanding and agreement on who are the stakeholders and their role in the project.

Stakeholders are all the people who have an interest in the project and they are the most critical element for the success of the project. Managing stakeholders is not an easy task; the projects objective is to improve the way the relationships between the project and the stakeholders are managed, this is achieved by taking a proactive approach that builds trust.

7. Information Management

Includes the processes required to ensure timely and appropriate generation, collection, dissemination, storage, and ultimate disposition of project information. 80% of a project managers time is spent communicating via reports, email, telephone, meetings and presentations. The first step of the plan is to define the informations needs of the stakeholders, determine when they need it, how the information will be distributed and how to evaluate the relevance and effectiveness of the information.

8. Risk Management

Risk Management includes the processes concerned with identifying, analyzing, and responding to project risk. Risk in projects is defined as something that may happen and if it does, will have an adverse impact on the project. There are four stages to risk management planning, they are: risk identification, risk analysis and quantification, risk response, risk monitoring and control.

Risk identification deals with finding all possible risks that may impact the project, it involves identifying potential risks and documenting their characteristics. The project team members identify the potential risks using their own knowledge of the project, its environment, similar projects done in the past. Risk identification results in a deliverable, the project risk list

9. Contract ManagementContract management or contract administration is the management of contracts made with customers, vendors, partners, or employees. Contract management includes negotiating and managing the terms and conditions in contracts and ensuring compliance. This includes documenting and agreeing on any changes that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.

E. Conclusion

Project Management has experienced an extraordinary growth in the last decade. The growth of the profession can be attributed to globalization, implementation of mega or highly complex projects with high risks. Modern project management is emerging as a separate discipline and is crucial today for enterprises to maintain a competitive edge in businesses. Project Management is fast becoming a way of life in executing projects successfully and to the satisfaction of all its stakeholders.

F. References

1. Reinventing Project Management: The Diamond Approach to Successful Growth and Innovation-By Aaron J. Shenhar and Dov Dvir: Publisher: Harvard Business School Publishing2. The Complete Project Management Office Handbook by Gerald M. Hill: Auerbach Publications 2008

3. The Strategic Role of Project Management By Don J. Wessels : Featured Paper Published in PM World Today - February 2007 (Vol. IX, Issue II)

4. The Project Management Processes :- pm4dev, 2007 management for development series

5. A Guide to Project Management Body of Knowledge (PMBOK Guide 2000)

Constraints:

Time, Cost, Quality, Technical, Legal, environment etc

Inputs- Business need andrequirement

Output: Project Deliverables, Products and /or services

Management of Projects

Mechanism People, techniques, tools, equipment, organisation

Scope

Time

Cost

Quality

Organisation

Management

Project Management Office

Business Strategy

Facilitating processes

1. Team Management

2. Stakeholder Management

3. Information Management

4. Risk management

5. Contract Management

Management

Plan and Execute

Validate and Re-plan

Projects

Resources

Application