Tanner James Best Management Practice White PaperA Portfolio, Programme, Project Office (P3O) can...

Implementing Your Programme Management Office March 2009

© 2009 Tanner James Management Consultants Pty Ltd of 21

implementing your programme management office

WHITEPAPER

July 2009

1800 774 623www.tannerjames.com.au

Enhancing your programme and project management capability

P3O® is a Registered Trade Mark of the Office of Government Commerce The Swirl logo™ is a Trade Mark of the Office of Government Commerce


TABLE OF CONTENTS

Does your strategic change delivery need a sharper focus? ........................ 3

Problems for Programme and Project Management (P2M) without a P3O..... 4

A Summary of P3O.................................................................................. 6

Benefit: Greater Value from change.......................................................... 9

Benefit: Improve Benefit Realisation ........................................................10

Benefit: Reduce waste from failure ..........................................................11

Benefit: Efficiency ..................................................................................12

Benefit: Reduced Resource cost ..............................................................13

A current driver for government organisations:.........................................14

Other related practices/guidance.............................................................15

How to make it happen?.........................................................................16

Portfolio, Programme, Project Office Checklist ..........................................18

About the Author – Craig Bates ...............................................................19

About Tanner James ..............................................................................20

Contact Us ............................................................................................20



DOES YOUR STRATEGIC CHANGE DELIVERY NEED A SHARPER FOCUS? If your organisation is pursuing best practice programme management and project management then you’re on the right path! However, many organisations struggle to establish these practices or fail to sustain them. In an ever more competitive business environment, where there is a need for quicker decision-making and change cycles, what more can you do? A Portfolio, Programme, Project Office (P3O) can benefit your Programme and Project delivery in the following ways:

Extract greater value from change initiatives, Drive greater Benefit Realisation, Reduce the waste caused by failed projects and programmes, Enable more efficient programme and project processes, and Reduce resource costs.

In short, the services of an appropriate P3O model enable your organisation to:

Ensure the right changes (programmes and projects) are undertaken, and Ensure the changes are completed effectively and efficiently.

In the following pages we’ll look in more detail at what is a P3O and how it can deliver these benefits. Also discussed briefly are:

Related events for government organisations, Relationship to other best practice guidance, and How to implement a P3O.



PROBLEMS FOR PROGRAMME AND PROJECT MANAGEMENT (P2M) WITHOUT A P3O The first thing to recognise is that good management of programmes and projects involves work by skilled staff and a P3O contributes by supporting (i.e. helping) and assuring (i.e. checking , challenging and reporting). Below are some scenarios of what can happen when there are no, or inappropriate, P3O services available to programmes and projects.

1. TOO MUCH: Typical of P2M staff on the change initiative attempting to do all of the work themselves which can ultimately lead to burn-out and mistakes. The more routine aspects of the work, e.g. reporting, can distract them from the more critical aspects such as good planning, regular tracking and decision making. The cost of having Programme and Project managers complete such work is also more expensive (and possibly less efficient as well) compared with specialist staff that would typically work out of the P3O.

2. PICK & CHOOSE: This scenario is evident when some of this work gets dropped, particularly the more mundane or difficult tasks. For instance, a lot of projects have weak Project Assurance – the Project Board members don’t have the time or don’t understand the need and nobody else is assigned to do it. Projects without assurance are at increased risk of failure.

3. RE-INVENTION: Can be seen when programmes and projects re-invent the wheel out of their own budget. They set up their own resources and mechanisms, independent of others, often using out-sourced resources which subsequently leave the organisation and take the valuable skills and knowledge with them. There is little compatibility or synergy in such an arrangement.

4. MISSING ELEMENTS: Lastly, some business areas/units have the “smarts” to create cross programme and project standards and services however they may be incomplete (i.e. lack other important P3O elements needed to gain full value) or again re-invent or differ from P3M improvement efforts in other business areas/units.



An appropriate P3O seeks to provide all of the necessary services at an optimal cost – which may be centralised or distributed, P3O provided or Programme/Project embedded. A P3O will need at least one centralised1 “enterprise level” element in order to determine the best implementation of these services.

CLIENT FOCUS A Government transport infrastructure business had invested in at least 3 Project Management Processes, 1 in the infrastructure area and 2 in IT (one not in use)! Multiple investments were required to create these, they’re incompatible and P3M staff couldn’t easily move from one to the other.

1 The structure of a P3O is discussed further in a later section.



A SUMMARY OF P3O Firstly, some jargon. The OGC2 P3O guide refers to a P3O model rather than a P3O. This emphasises the fact that the implementation of P3O does not necessarily result in a single “Office” that delivers all P3O services. The P3O model is “the total structure put in place to deliver decision-enabling/delivery-support services for Portfolio, Programmes and Projects”. In short, a P3O model delivers a set of functions and services which enable change in an organisation. These services are delivered to projects, programmes and senior management. P3O does not manage the programmes and projects – this is completed by management teams specific to each Programme or Project. However, The Programme and Project Managers in those teams may, in some organisations, be supplied by the P3O model. The P3O model functional areas are divided into 3 major categories: Functional Area Primary Client(s)

Strategic Planning or Portfolio Support Senior management

Delivery Support Programmes and Projects

Centre of Excellence Business units, Staff, Programmes and Projects

Figure 1 summarises the Functions and Services of a best-in-class P3O model. Not all of these need be implemented at the same time (see Implementation discussion in a later section). The P3O guidance describes a generic high level organisation for a P3O model (see Figure 2) allowing for a combination of permanent and temporary offices as well as staff embedded in programmes and projects. The guide discusses many different P3O implementations based on this generic structure, to help the reader understand what might be appropriate for their organisation.

2 Office of Government Commerce (UK)



Figure 1: P30 Outline functions and services Source: Adapted from P3O Manual, page 174

P3O

Planning (Portfolio)

Delivery

COE

Portfolio build, prioritisation, analysis & reporting Programme & project set-up & closure Stakeholder engagement & communications Planning & estimating Capacity planning & resource management Benefits realisation management Performance monitoring

Monitor, review & reporting Risk issue & change management Finance Commercial (inc. supplier management) Quality assurance Information management (inc. configuration & asset management Transition management Secretariat

Standards & methods (processes & tools) Internal consultancy Organisational learning & knowledge management People & skills (P3RM competencies)



Figure 2: High-level Outline P30 Model Source: Adapted from P3O Manual, page 7.

Project Office for a specific initiative

(temporary)

Hub Portfolio/

Programme Office (permanent)

Programme Office for a specific

initiative (temporary)

Organisation

Portfolio Office

(permanent)

Hub Portfolio/

Programme Office (permanent)

Centre of

Excellence (may be a

separate unit r a function or

team within the portfolio and

hub programme office)

o

- Standards - Skills/training - Assurance - Knowledge management



BENEFIT: GREATER VALUE FROM CHANGE The Portfolio services are key to delivering this benefit. Firstly, a register of current and potential programmes and projects is established and maintained so that senior management always have an accurate view of the “big picture” of change. Standard mechanisms are put in place to value and prioritise the programmes and projects, allowing only the best value, strategically aligned changes to go forward and consume scarce organisational resources. An extension of this is used to “hunt down” unjustifiable programmes and projects, challenge them and terminate them if necessary. As part of the assurance activities, active programmes and projects are subject to gated review and challenge to ensure that they continue to earn their right to remain in the change portfolio. Also ongoing is a process of collecting KPI measurements from programmes and projects. Of particular importance are metrics on benefit realisation which enable senior management to evaluate the success of strategic initiatives as early as possible.

CLIENT FOCUS A unit of a major Australian Government organisation implemented a Programme and Project Management Environment including P3O services.

The Post Project Review concluded that this had resulted in a clear view of the totality of its Programme and Project portfolio, its total resource commitment to the portfolio and greater certainty of commitment and ability to deliver.

P3O Services: Portfolio / Planning & Prioritization, Monitoring, Capacity Planning, Reporting; Delivery/ Planning & Estimating, Reporting.



BENEFIT: IMPROVE BENEFIT REALISATION As well as targeting the best value changes to undertake, the P3O model also takes on the challenge of realising the maximum benefits possible from those changes. One way this occurs is through reduced project cycle times, which enable earlier benefit realisation (and we’ll take the attendant cost reductions as a bonus!). The following services and activities lead to quicker projects:

• Facilitated start-up and initiation speeds planning and decision making.

• Risk and issue reduction through assurance activities reduce project delays.

• Provision and support of standard programme and project methods – evidence shows they lead to better on time/budget/quality delivery.

The P3O is also active in the benefits planning and realisation cycle. It supports and assures benefit estimation & realisation planning, monitors realisation progress and compares benefit achievement with the original investment decision. Where benefit realisation is underperforming the P3O provides an escalation process.

CLIENT FOCUS Illustrating P3O Services: for Centre of Excellence/Planning & Estimating creating shorter project lifecycle, thus savings and earlier benefits. A Government Agency PMO provided a Startup and Initiation facilitation service to help new PMs get through these activities. This was well received by the PM's and resulted in the projects moving forward more quickly and with better definition.



BENEFIT: REDUCE WASTE FROM FAILURE A P3O provides many services and facilities which reduce the risk of programme and project failure which represents waste. The table below summarises some of the main contributions. P3O Function / Service / Activity Area(s) of reduced risk (failure) Stakeholder engagement and communications.

Management support. Staff resistance. Customer resistance. Team member resistance. Unmatched expectations.

Portfolio Planning. Unmanaged dependencies. Programme, Project and Business As Usual. Poor estimating.

Capacity planning and resource management.

Skill shortages. Poor resource utilisation. Over commitment to changes.

Assurance, monitoring and review. All areas. Risk management. Portfolio, programme, operational

and project specific risks. Issue resolution. Broad impact issues remaining buried

in specific change initiatives. Change control. Poor change control practices. Finance (usually in conjunction with the organisational A&F function).

Cash flow shortfalls. Overspending. Excessive cost of funds / resources.

Quality Assurance. Unsatisfied “customer” expectations. Poor products leading to inferior benefits.

Information and configuration management3.

Product and meta-data loss or corruption. Weak change impact analysis.

Standards and methods provision. All areas. Organisational Learning and Knowledge Management.

Poor estimating. Repeated errors / issues. Weak Risk identification and analysis.

People and Skills. Resource inefficiency. Poor practices / errors. Poor resource to work allocation.

3 In many organisations this is a weak, poorly-understood practice so a P3O could really raise the bar.



BENEFIT: EFFICIENCY This is one benefit that is easy to understand. The most basic level P3O, providing only Delivery and/or Centre of Excellence functions can offer numerous programme and project services more efficiently than the projects and programmes by themselves. It’s essentially the same philosophy as a shared services model (or out-sourcing). Many of the services can be more efficiently (and effectively) provided by skilled, focused and well equipped (with tools) experts. This leaves the programme and project management teams the “quality time” to focus on the specific management challenges of their change initiative. Some of the key services a P3O model can deliver more efficiently include:

• Providing, supporting and maintaining standards, methods and tools. • Providing standard automated reporting and management dashboards. • Collecting and recording project, programme and portfolio data for progress

and performance metrics. • Carrying out specific complex tasks such as resource leveling, schedule

creation, workshop facilitation, earned value analysis, configuration management, investment appraisal, etc.

• Managing resource supply, training, development and capacity. • Capturing Lessons Learned and operating a Knowledge Management facility. • Commercial services (Vendor / supplier negotiations and management,

contracts).

CLIENT FOCUS

A NSW Government Business Unit PMO provided a tool based service which collected and consolidated Project Team actual data, thus efficiently providing the Project and Programme Managers with the data they needed to assess and control progress. The same data and tool set provided a senior management dashboard to support decision making at the Portfolio level.

ANALOGY

Contrast the concept of P3O services with Accounting and Finance services. We don’t get all our business units to have their own accounting and finance function – they do the basics but the serious stuff is done by experts – why should programme and project delivery be any different? Imagine what would have to be done to maintain A&F services if there was no A&F unit? Answer: outsource it (which is equivalent) or embed the resources to do it all in the business units - that would surely be less efficient and less effective.



BENEFIT: REDUCED RESOURCE COST A major part of the P3O function is to provide Centre of Excellence (COE) in the various disciplines needed to deliver change. One aspect of a COE is to build skills in the organisation which assist programmes and projects have greater access to internal skills which are generally less expensive than external resources. Internal resources should also be productive more quickly as they require less familiarisation time in the organisation. The effective resource cost is also reduced by the portfolio / planning services. By managing resource capacity for these skills, higher utilisation can be maintained, so the effective cost is lower. Capacity management also enables additional resources to be obtained at lower cost because demand for them is forecast ahead of time. This allows the optimal approach to obtaining those resources to be taken, be that in-house development or competitive supply from vendors, in short, avoid last minute panic buying. Lastly, the P3O provides support services to programmes and projects which are generally less expensive resources than fully skilled programme and project managers. This leaves those highly skilled more expensive resources more availability for high value management tasks.

CLIENT FOCUS A P3O in a Government agency coordinated tailored PRINCE2 training for their project staff allowing consolidated assessment of the training. The courses used real project examples enabling participants to emerge with a clear head start on establishing their project teams, Project Briefs and Plans. The P3O also arranged follow-on mentoring to embed the new skills.



A CURRENT DRIVER FOR GOVERNMENT ORGANISATIONS: The recently published Gershon Review (August 2008) into Federal Government use of Information & Communication Technology (ICT) has strong implications for the use of P3O. Since the tabling of the Review, the Federal Government has committed to and begun implementing the recommendations. Additionally, Tanner James fully expects that in time the State Governments will also mirror many of these changes, in fact, some State Governments are already pursuing improvements which are equivalent in some areas (the use of OGC best practices are already widespread in state administration) and the Gershon Review itself certainly considers some of the connection between Federal and State Government ICT management (although state ICT was not formally in scope). Although the Gershon Review specifically addresses management of ICT, the following key recommendation from the report has broader application to the management of Portfolios, Programmes and Projects in general. It is therefore the recommendation with the most direct implications for the use of P3O models.

“Improve agency capability to commission, manage and realise the benefits from ICT-enabled projects through the implementation of a common methodology for assessing agency capability based on self-assessment and periodic independent audit. Each agency Chief Executive to propose a target level of capability based on their agency’s and the Government’s strategic priorities, and for this to be independently validated. Agencies to develop a capability improvement plan with commitment, and agreed actions, to address identified gaps.”

The assurance, standardisation, challenge and support services of a P3O model will be instrumental in implementing this recommendation. The OGC’s P3M3 (Portfolio, Programme and Project Management Maturity Model) is a firm candidate from which to build the common methodology referenced in the above recommendation. P3O model services would support the deployment, maintenance and assurance of this mechanism. The report further recommends the appointment of a lead government agency for Benefits Realisation Best Practice. This is clearly a capability that is part of a P3O model, specifically, those parts dealing with portfolio planning and management and those providing Centre of Excellence services.



OTHER RELATED PRACTICES/GUIDANCE A fully functional P3O model will draw upon and interface with many other process and practices, both organisation specific and external. It is worth outlining some of the key external best practice sources that should be involved. Firstly, a number of existing OGC best practices are clearly in the frame:

1. MSP (Managing Successful Programmes) can be the basis of the P3O supported standards for managing change programmes.

2. Likewise, PRINCE2 (PRojects In Controlled Environments version 2) is an

ideal basis for the P3O’s standards for project management. Of additional value is the fact that it is fully integrated with MSP.

3. As mentioned previously, the P3O can use the OGC’s Portfolio, Programme

and Project Management Maturity Model (P3M3) to assess and improve the above two practice areas.

4. The OGC Gateway review process is a powerful tool for assurance of major

programmes and projects. 5. The Management of Risk (M_o_R) guidance will form a integral part of the

P3O Delivery services for Risk Management. 6. The ITIL (IT Infrastructure Library) guidance has a role to play in the P3O

services for change control, issue management, and organisational learning & knowledge management among others.

did you know … The Gateway process is already in use in a number of Victorian, New South Wales and Queensland Government organisations?

MSP™ is a Trade Mark of the Office of Government Commerce.PRINCE2® is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries.

P3O® is a Registered Trade Mark of the Office of Government Commerce ITIL® is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries.

M_o_R® is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries



HOW TO MAKE IT HAPPEN? It can be easily seen that the implementation of a P3O model is a significant undertaking for most organisations and involves changes in processes, tools, organisation structure, roles and culture at many levels. Within Tanner James we view the implementation of a P3O model as a ‘Change Initiative’ which must add value to your organisation as you build the support functions. Your key stakeholders must collectively agree to the Vision or ‘End-Goal’ for your P3O model and must clearly understand and be satisfied with the outcomes and benefits that you plan to deliver to the organisation as well as the timeframes for delivery and the proposed cost/investment. It is therefore clearly a strong recommendation of the P3O guidance that an Implementation Programme, employing MSP or similar discipline, is used to plan and deliver the P3O model. This recommendation is in complete agreement with Tanner James’ views on the implementation of it’s Seven Pillars PMO Model developed in 2004 (further details provided ahead). The P3O guide offers the following generic lifecycle for P3O model implementation. It is based on MSP principles and is described in detail in Chapter 4 along with common implementation risks – foremost among these being the need for continuous senior management commitment (in MSP terms the Senior Responsible Owner and the Business Change Managers). Useful case studies and tips are also provided. Figure 3: Permanent P30 Lifecycle Source: Adapted from P3O Manual, page 68

P3O model lifecycle - permanent Indentify the P3O

Define the P3O

Deliver the P3O Closure

Assess current state of P30 provision. What problems are you trying to solve?

Define Vision Statement Set objectives & goals Outline Business Case

DEFINITION Design how P3O will operate: Design team Develop governance Develop Blueprint Develop full Business Case

Plan stages or tranches of delivery Develop & agree phased implementation or transition plan

Implementation in stages or tranches Deliver implementation or transition plan Realise benefits

Programme or project closure and review Formal closure, evaluation and lessons learned

Mandate Brief PID/Programme Definition and Plan

End Programme or Project report

Stakeholder engagement and communications



Tanner James created its Seven Pillars Model, initially, to provide a framework for establishing a Project Management Office. Over the last four years, this model has been enhanced to include support functions required for running a Programme Management Office. This model supplies detailed Product Descriptions for the numerous capabilities needed to support the delivery of P3O services - in effect a set of deliverable specifications for the outputs of the P3O Implementation Programme. It represents a ‘pick and mix’ guide to the functions and services that may be implemented. The functions implemented may vary depending on whether portfolio, programme and project management are to be supported at that time point of the implementation. The timing of implementation of the functions should align with the Benefits Realisation Plan for the P3O model Implementation Programme, i.e. functions should only be implemented when they are seen to be enabling outcomes or benefits or clearly adding value.

PMO (Seven Pillars)

Programme & Project Management Practice Support mechanisms

Information Hub & Tool Set

Training & Skills Development mechanisms

Communication Mechanisms

Ongoing Training & Support Funding

Compliance Framework

Continuous Improvement Framework



PORTFOLIO, PROGRAMME, PROJECT OFFICE CHECKLIST Does your Portfolio, Programme, Project Office adequately enable the following? [ ] The selection of the best value programmes and projects to

pursue

[ ] Continuous alignment of change initiatives with strategy

[ ] Evaluation of new changes against organisational capability and maturity

[ ] Optimal allocation of scarce resources to programmes and projects

[ ] Change initiatives receive appropriate levels of assurance and challenge

[ ] Cross initiative dependencies are adequately managed

[ ] Suitable levels of risk management across all changes

[ ] Senior management are accurately and punctually informed of change progress against key targets

[ ] Programme and project delivery is consistent and improving

[ ] The change portfolio is actively managed to obtain the best value and investment selection is improving by exploiting lessons learned

[ ] Rationalisation of programmes and projects minimises redundancy to improve value for money

[ ] Programme and project resources are skilled and efficient

[ ] The change portfolio is appropriately balanced with respect to the needs of Business as Usual, organisational capacity and the ability to absorb change

[ ] Accountability for change benefit realisation is reflected in the Performance Management mechanisms

[ ] Levels of research and development investment are sufficient for long term organisational survival

If not, we at Tanner James would be happy to discuss how we can assist your organisation in improving your P3O capability.



ABOUT THE AUTHOR – CRAIG BATES Craig is Tanner James’ P3O subject matter expert and has over twenty-five years of experience on projects in Process Management, IT and Finance within the public and private sectors. Since 1993 Craig has held senior consulting positions specialising in the implementation of best practices for project management, service management, process management and software engineering. In line with the SEI/CMM, he has guided major software process improvement programmes for organisations in Australia, USA and England. Craig has delivered process assessments, established and facilitated process improvement programmes in major Australian organizations based on the UK OGC best practices for Programme, Project and IT Service Management. Prior to this he has established a solid track record for the delivery of software application and IT infrastructure projects with organizations in the Telecommunications, Finance, Defense and Education markets. As well as strong project, IT, consulting and mentoring skills he has a sound understanding of strategic and operational business issues plus effective communication skills for all organizational levels.

Craig is a qualified trainer with extensive experience delivering training in project management, service management and software engineering practices and tools.

He has facilitated many successful structured workshops in major organizations for project initiation, programme planning, process design and software requirements engineering.



ABOUT TANNER JAMES Tanner James is a management consultancy specialising in the provision of programme and project management training and consultancy services. Our business model is to work alongside your organisation to understand your objectives and problems and to identify a solution that delivers value. Our core business is enhancing our clients Programme and Project Management capability, and in contrast to the majority of professional services firms, we are focused on skills transfer to organisations, not seeking to place our resources into positions within an organisation. This orientation means our services help create staff motivation, stimulation and job satisfaction. Unlike many external suppliers we are not seen as a threat by organisations, so we enjoy productive, collaborative working relationships with staff at all levels. This greatly assists coaching outcomes and therefore organisation and staff capabilities. Whether we develop the skills and understanding of your people, assist your projects to pragmatically apply best practice principles, facilitate the effective stand-up of a business critical programme or help you to standardise the application of programme and project management across your organisation, our key focus is on skills transfer to enhance your programme and project management capability. Our solution is founded on world's best practice methodologies and frameworks including:

• Managing Successful Programmes (MSP™), • PRojects IN Controlled Environments version 2 (PRINCE2™), • the Project Management Body of Knowledge (PMBOK®). • and Gateway Review™

Having introduced both PRINCE2 and MSP to the Australian market place, and having trained thousands of individuals and assisted scores of organisations to successfully implement the methods and realise business benefits, Tanner James is the leading supplier of PRINCE2 and MSP services.

CONTACT US Head Office (Canberra) Level 4, Law Society Building 11 London Circuit Canberra ACT 2601 GPO Box 1561 Canberra ACT 2601

Phone: 1800 PRINCE (1800 774 623) or +61 2 6545 9839 Fax: (02) 6162 0462 Email: [email protected] Other Offices: Brisbane, Sydney, Melbourne Servicing Clients in: Australia, New Zealand, South East Asia


mailto:[email protected]



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