PMI’s 2013 ‘Pulse of the Profession’ Survey

PMI’s 2013 ‘Pulse of the Profession’ Survey makes interesting reading, particularly given most of the world is in or near recession. PMI predicts that between 2010 and 2020, 15.7 million new project management roles will be created globally across seven project-intensive industries. China and India will lead the growth in project management, generating approximately 8.1 million and 4 million project management roles through 2020, respectively.

Along with job growth, there will be a significant increase in the economic footprint of the project management profession which is expected to grow by USD$6.61 trillion. This enormous anticipated growth, along with higher-than average salaries, will make the next seven years an opportune time for professionals and job-seekers to build project management skills.

The squeeze on talent has already started! PMI’s Pulse of the Profession shows that high-performing organizations don’t just emphasise strategy and improve efficiency. They cultivate talent resources to deliver successful projects and programs. With that talent, they can reduce risk, increase stability, improve growth and build a strong competitive advantage.

In contrast, poorly performing organisations that don’t see talent as part of the success equation – they believe the job market is a bottomless pit of skilled people that can be bought in as needed. This puts their projects and their organizations at risk! Whilst more and more successful organisations have adopted talent management as a core competency, many others fail to invest in skilled project management talent and talent development initiatives, and this shows in their performance.

The contrast is stark – high performing organisations are likely to find some $20 million at risk for every 1$billion invested in projects, whereas low performing organisations place $280 million at risk, over 10 time the amount.

The low-performing organizations – those which complete 60% or fewer projects on time, on budget and within scope – are significantly less likely to provide a defined career path for project managers, a process to develop project management competency, and / or training on project management tools and techniques. Poaching talent is a zero sum game that simply drives up costs for everyone.

As a result of this lack of investment, a talent gap exists in project management. A large number of skilled practitioners are reaching retirement age, organisations that train staff hold onto staff and the rest are going to find recruitment becoming increasingly difficult. Talent simply does not grow on trees – skills need developing and nurturing within the organisations that need them.

The reason this matters is that at a time when project success rates are declining and risks are increasing, organisational leadership needs to fill an anticipated 15.7 million new project management roles worldwide by 2020. If they don’t, $344.08 billion in GDP will be at risk – and that’s not even counting the $135 million that organizations already risk for every $1 billion spent on projects.

The ‘high performers’ achieve their results through a combination of good governance and good management. They see project, program and portfolio management as strategic capabilities needed to invest in their organisation’s future. They recognise process improvement and talent management are the two key elements that need investment to deliver outcomes. And they use well proven governance and management processes such as requiring active sponsors (79% of project have active sponsors in high performing organisations -v- 43% in low performing organisations).

Talent management needs investments in selection, training, mentoring and coaching; ideally from internal resources but when necessary using external help to kick-start the development of the internal capabilities. (see more on mentoring and training)

Are you and your team ready to make talent management a strategic priority? Download:
PMI’s Pulse of the Profession™ In-Depth Report: Talent Management,  and
PMI’s Project Management Skills Gap Report, and see how you can build your organization’s success – one project manager at a time. To help PMI have developed a sophisticated career framework, see: http://www.mosaicprojects.com.au/Training-PMI_Framework.html#CareerCentral

Project Governance and Controls Symposium

Canberra hosted the inaugural Governance and Controls Symposium this week – it was a relatively small event packed with highlights.

The first PTMC (Project Time Management Certificate) workshop to be held in Australia – based on feedback from the attendees, this will grow to become a very popular training.

A free networking evening looking at the future of ‘project controls’ in Australasia. During the meeting the final wind-up of the Australian Performance Management Association was completed.

The main symposium included three outstanding key note addresses supported by stream papers and an engaging panel session.

The two days of concentrated learning and discussion were finished with animated networking sessions. All together an intense and enjoyable two days for both project controls professionals, and the executive managers responsible for governing this area of an organisation’s business. Two of the key outcomes from the Symposium were:

• Gary Troop, the President of the newly independent College of Performance Management (CPM) and symposium key note speaker announced a limited time offer to anyone in Australia to join the for US$25.  The CPM was a part of PMI from 1999 to 2012 but has reverted to an independent status to better serve the needs of the Earned Value community.  The College has a major on-line library of EV publications and plans to develop its conferences and webinars on a global basis – there is even talk of establishing an Australian Chapter – to be part of the exciting new development visit www.mycpm.org/aus and become part of the worlds leading EV community.
  
• The project controls professionals present in Canberra expresses a strong desire to see a network established to link all of the various ‘controls focused’ components within professional associations such as AIPM and PMI, independent bodies such as CPM and Planning Planet and individual controls professionals to help raise the profile of project controls, amplify the message from any one component member, and through the network assist in career development and finding the ‘right person’ for work when needed.

To help with this initiative, PM Global are starting to plan the second Symposium to be held in Canberra at around the same time in 2014 and discussions are underway to frame a proposal for a ‘no cost’ network designed to meet the needs of the ‘controls community’.

There’s a lot to do to maximise the gains made this week – watch this space……

In the meantime, if EV and /or ES is your ‘thing’ the US$25 offer is limited and needs prompt attention!  And to understand the link between controls and project governance see: http://www.mosaicprojects.com.au/Resources_Papers_172.html

Defining Governance

In a previous post, we defined management; this post seeks to achieve a similar definition of governance.

Governance is the act of governing. It is the way rules are set and implemented, and relates to the way decisions are made that define expectations, grant power, and verify the performance of people within the entity being governed.

To distinguish the term governance from government, governance is what a governing body does. It might be the governing body of a geo-political entity (nation-state – typically referred to as the government), a corporate entity (typically the Board of Directors), or another type of organisation. When looking at organisations and corporations (Corporate Governance), the governing body may be the individual that owns an organisation, but more typically is a small group of people at the apex of the organisation’s hierarchy.

Sir Adrian Cadbury (2002) defined the aim of corporate governance as aligning as nearly as possible the interests of individuals, organisations and society. Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. It is the system by which business corporations are directed and controlled.

Stewardship is an important governance concept. It includes:
- Fealty: A propensity to view the assets at ones command as trust for future generations rather than available for selfish exploitation.
- Charity: A willingness to put the interests of others ahead of ones own.
- Prudence: A commitment to safeguard the future even as one takes advantage of the present.

The governance framework, set by the governing body, specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and defines the means of attaining those objectives and of monitoring performance.

The Functions of Governance
The governance function has two key aspects; the first is deciding what the organisation should be and how it should function. These governance decisions are communicated to management for implementation and the primary outputs from this part of the governance system are:

• The strategic objectives of the organisation framed within its mission, values and ethical framework.
• The policy framework the organisation is expected to operate within.
• The appointment of key managers to manage the organisation.

These aspects are best developed using a principle-based approach that recognises and encourages entrepreneurial responses from all levels of management.

The second aspect of the governance system is oversight and assurance. The governing body should pro-actively seek assurance from its management that the strategic objectives and policies are being correctly achieved or implemented. The assurance and oversight functions include:

• Agreeing the organisations current strategic plan (in conjunction with executive management). The strategic plan describes how the strategic objectives will be achieved.
• Suggesting or approving changes to the strategic plan to respond to changing circumstances.
• Requiring effective assurance from management that the organisations policy framework is being adhered to.
• Requiring effective assurance from management that the organisations resources are being used as efficiently as practical in pursuit of its strategic objectives.
• Communicating the relevant elements of the assurances received from management to appropriate external stakeholders.
• Assurance to the organisation’s owners the strategy and policies are being adhered to by management and the organisation as a whole.
• Assurance to a wider stakeholder community (including regulatory authorities) the organisation is operating properly.

The role of management is the mirror image of governance:

• Providing input to develop the strategic plan
• Implementing the approved strategic plan within the policy guidelines set by the governing body.
• Providing assurance to the governing body that the management structure is:
  • Operating ethically and accountably
  • Providing effective stewardship of the resources available to the organisation
• Providing timely and accurate information on achievements and issues.

Managing the organisation and making the executive level and operational level decisions needed to implement the agreed strategy and run the organisation within the ethical and policy framework set by the governing body are the core skills and responsibility of management.

Governance and sustainability
The key challenge for the governing body is balancing the competing needs of the organisations stakeholders, including but not limited to its owners, employees, suppliers, customers and society at large, so as to align as nearly as possible the interests of each stakeholder, the organisation and ‘society’ in a sustainable way.

The four elements of sustainability are the three depicted above plus time. The current governors of an organisation need to be cognisant of sustaining the organisation into the future and governing so that the organisation can continue as a valuable contributor to the needs of its stakeholders in the medium and long term, as well as the current short term.

The Governance of PPP
Within this overall framework, the governance of project, program and portfolio management (PPP) is simply an integral part of the overall governance process. Whilst there are specific skills and elements associated with governing PPP these are governance requirements, the responsibility of the governing body.

Similarly the management of the organisation’s portfolios, programs and projects at both the overall enterprise level and the operational level is an integral part of the management process. So whilst there are specific skills and elements associated with the overarching management of the PPP domain at the enterprise level, these are management skills, and are the responsibility of the management team. In short, Governors govern, Managers manage.

Some final thoughts on Governance
Governance is a holistic process that requires careful balance. Decisions in any one aspect of the organisation being governed affect all of the others, some examples include:

• A project failure can affect the organisations reputation and share price;
• An accident to an employee may have direct personal liability implications for the Directors;
• A poorly worded press release may damage the organisation’s reputation and have direct personal liability implications for the Directors.
• There are a range of legislative requirement that impose significant ‘duties’ on the governors of commercial and other organisations including financial reporting and disclosure requirements, environmental, OH&S and employment requirements and taxation and superannuation requirements (eg, CLERP9, SOX, etc.). The governors are legally required to govern!

Because of this interconnectedness, governance operates at the organisational level which means you govern an organisation that does projects; you do not govern the individual projects; if the project teams are part of the overall organisational structure – you manage them! There is no effective difference between temporary project teams and permanent teams within the organisation.

Exceptions to this are when a project is set up as a temporary organisation external to the main organisation either as an isolated ‘skunk works’ or ‘major project team’ focused on developing something independent of the work of the main organisation, or as a joint venture between two different organisations. Then, as with any subsidiary, if the project organisation is operating as a largely autonomous entity, it becomes an organisation in its own right that requires governing and any parent organisation is one of the key stakeholders the governing body of the project has to consider.

To access our other papers looking at different aspects of governance see: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html#OrgGov

PMBOK 5 – Some final thoughts

We are now well into the process of updating materials and writing new questions based on the PMBOK® Guide 5th Edition – From being something new, the book is now becoming increasingly familiar:

• Our daily PMP question has had a 5th Edition reference for the last 3 months, you can follow the questions on Twitter: see today’s question (the questions are good for PMP, CAPM and PMI-SP)
• Updates to our CAPM, PMP and PMI-SP courses are planned and under development – our new Mentored Email™ courses will start in late April.
• Our last classroom course based on the 4th Edition will be at the end of May 
• The PMI examination date changes are:
  - CAPM 1st July
  - PMP 1st August
  - PMI-SP 1st September
• The initial rush of people interested in buying the 5th Edition has subsided and we are effectively out of stock of the 4th Edition. 

Overall as we become more familiar with the 5th Edition we are finding it to be a significant improvement. There are certainly a few issues and problems highlighted in earlier posts in this series (view the full series) but the enhancements significantly outweigh the odd regression.

One of the minor but important improvements is he ranges for cost estimates are back to the industry standards of -25% to +75% for ROM and -5% to +10% for detailed estimates. This pessimistic shift in the ranges more accurately reflects reality.

The rearrangement of the first three chapters is also significant and is aligned with the standards for Program and Portfolio management:

• Chapter 1 sets the scene with:
  - definitions of a project and project management,
  - discussion of the relationships between project, program and portfolio management, in the context of organizational project management,- Discussions of the relationship between project management, operations management, strategy and business value
  - the role of the project manager.
• Chapter 2 focuses on organisational influences including the influence of project stakeholders and governance on the project team and the overall project lifecycle.
• Chapter 3 looks at project management processes and the structure of the rest of the PMBOK.

The reorganisation of this front section, facilitated in part by the move of the ANSI standard to Annex A1 is probably the quiet achievement in the standard. The section flows far more sensibly and logically than in previous editions.

In conclusion – the quality of the PMBOK® Guide 5th Edition has been enhanced by hundreds of small changes that make the work of transitioning our course materials hard work and will certainly require some hard work from anyone who has to update their exam preparation.

So a word of warning: If you are trained for the current exam make sure you sit before the change over dates – PMI do not have any flexibility in the timing of the system changes!! This includes re-sits. After the change over date, all new exams are based on the new standards.

But once through these changes we certainly have a better book for the next 4 years and the development team deserve congratulations for a job well done.

Defining Management

A consistent theme in these posts is the assertion that governance and management are different processes undertaken by different entities within an organisation. In short, Directors or their equivalent govern, Managers manage.

This assertion is supported by the unequivocal view of governments, the OECD, stock exchanges world-wide, various ISO Standards, various Institutes of Company Directors and the Association for Project Management in the UK. The various laws, standards, definitions and guidelines published by these bodies all agree the Board has the exclusive responsibility to govern all aspects of the organisation and this includes the governance of project and program management activities.

The governance function has two key aspects; the first is deciding what the organisation should be and how it should function. These governance decisions are communicated to management for implementation and the primary outputs from this part of the governance system are:

• The strategic objectives of the organisation framed within its mission, values and ethical framework.
• The policy framework the organisation is expected to operate within.
• The appointment of key managers to manage the organisation.

The second aspect of the governance system is oversight and assurance. The governing body should pro-actively seek assurance from its management that the strategic objectives and policies are being correctly achieved or implemented. The assurance and oversight functions include:

• Agreeing the organisations current strategic plan (in conjunction with executive management). The strategic plan describes how the strategic objectives will be achieved.
• Suggesting or approving changes to the strategic plan to respond to changing circumstances.
• Requiring effective assurance from management that the organisations policy framework is being adhered to.
• Requiring effective assurance from management that the organisations resources are being used as efficiently as practical in pursuit of its strategic objectives.
• Communicating the relevant elements of the assurances received from management to appropriate external stakeholders.
• Assurance to the organisation’s owners the strategy and policies are being adhered to by management and the organisation as a whole.
• Assurance to a wider stakeholder community (including regulatory authorities) the organisation is operating properly.

From the list above, it is obvious that the governance system cannot operate without the effective support of the organisation’s management system. And, if governance and management are different systems within an organisation, they should have different functions creating different outputs. We believe this is the case and the purpose of this post is to define what management is and does.

The functions of management were defined by Henri Fayol (1841 – 1925) in his general theory of business administration and surprisingly, this is still seen as a one of the basic definitions of management. He proposed that there were five primary functions of management and 14 principles of management:

Fayol’s Functions of Management

1. to forecast and plan,
2. to organise
3. to command or direct
4. to coordinate
5. to control (French: contrôller: in the sense that a manager must receive feedback about a process in order to make necessary adjustments and must analyse the deviations.).

Inherent in these functions is decision making!  The primary role of management is to make decisions and value judgements within the framework set by the governing body to achieve the objectives set by the governing body. The primary output from management can be defined as information and instructions that have to be communicated to others.

The communication is firstly to the workers so they understand what has to be produced, where and when; secondly to the governing body to provide assurance that the right decisions have been made and the right things are being produced in the right ways applying the organisation’s policy framework correctly.

Fayol’s Principles of Management

The principles of management define some of the ways the functions of management can be implemented – some of theses principles need adjusting to remain effective in modern organisations but the concepts are still valid:

1. Division of work. This principle is the same as Adam Smith’s ‘division of labour’. Specialisation increases output by making employees more efficient.
2. Authority. Managers must be able to give orders. Authority gives them this right. Note that responsibility arises wherever authority is exercised.
3. Discipline. Employees must obey and respect the rules that govern the organisation. Good discipline is the result of effective leadership, a clear understanding between management and workers regarding the organisation’s rules, and the judicious use of penalties for infractions of the rules.
4. Unity of command. Every employee should receive orders from only one superior, from top to bottom in an organisation (not practical in matrix organisations).
5. Unity of direction. Each group of organisational activities that have the same objective should be directed by one manager using one plan.
6. Subordination of individual interests to the general interest. The interests of any one employee or group of employees should not take precedence over the interests of the organisation as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralisation. Centralisation refers to the degree to which subordinates are involved in decision making. Whether decision making is centralized (to management) or decentralized (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralisation for each situation.
9. Scalar chain. The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain. However, if following the chain creates delays, cross-communications can be allowed if agreed to by all parties and superiors are kept informed.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within the organisation.

Whilst some authorities have added to and changed some aspects of Fayol’s work in the intervening 100 years, these additions and changes have generally expanded and clarified the concepts outlined above. In general terms Fayol’s work has stood the test of time, has been shown to be relevant and appropriate to contemporary management and defines what management is and does. A person undertaking any of the five functions, or employing any of the 14 principles is engaged in management (not governance).

What I believe this post makes crystal clear though is the difference between governance and management – when a manager is deciding the best options or seeking information on actual performance to use in decisions the manager is managing.

The Standard for Program Management—Third Edition

The most noticeable thing about the new Standard for Program Management - Third Edition is that is has gone on a major diet! The 2nd Edition was 271 page long (plus appendix), the 3rd Edition is less than half the size at 106 pages plus appendix. Unfortunately the price has not moved in the same direction.

The Standard still provides a detailed understanding of program management and promotes efficient and effective communication and coordination among various project management groups. The major updates include:

• Program Life Cycle has been assigned its own chapter for the third edition to provide the details of the unique set of elements that makes up the program management phase.
• The third edition highlights the full scope of program management and clarifies the supporting processes that complete the delivery of programs in the organizational setting.
• A more detailed definition of program management within an organization is provided, including the fundamental differences between project management and program management.

The major focus of the revision seems to be removing a lot of the ‘project management’ information that is found in the PMBOK® Guide and focusing on the role of program management in organisations, the unique characteristics of program management work and the role of the program manager. A shift from process to principle, that is aligned with the Program Management Role Delineation Study that forms the basis for the PgMP examination.

The framework in the Third Edition is:

• Introduction
• Program Management Performance Domains
• Program Strategy Alignment
• Program Benefits Management
• Program Stakeholder Engagement
• Program Governance
• Program Life Cycle Management
• Program Management Supporting Processes

The relationship between the Program Management Performance Domains that makes up the bulk of the standard is illustrated below.

In addition to the core standard, Appendix X4 on Program Management Competencies, and X5 on Program Management Artefacts are very succinct and useful.

A couple of shortcomings in this version of the standard are firstly the limited recognition of the different type of program that organisations run. The PMI standard is very much centred on the ‘strategic program’ defined in the GAPPS typology discussed in our White Paper Defining Program Types. In particular the GAPPS ‘Operational Program’ typology has been largely ignored in the PMI standard.

The other is the classic confusion between the Enterprise level executive management responsibilities that are critical for the support and oversight of the work of the Program Manager and Organisational Governance, typical of documentation produced by working managers. What the standard describes as ‘governance’ is the critical management responsibilities of senior executives to adequately support oversight and manage the process of ‘program management’. Governance is the process of oversighting the whole management system, that is performed by the ‘governing body’ which is the Board of Directors in most commercial organisations and their equivalent in other types of organisation – governors govern, managers manage! For more on this critical distinction see: WP1084 Governance Systems & Management Systems. The contents of the ‘governance’ section are good, just miss-labelled.

Summary
Overall this is a significantly improved standard – a lot of duplication and redundancy has been removed, and the key functions and processes of program management and what organisations need to do at the enterprise level to support programs are well though through and laid out. This new standard is available in Australia from: http://www.mosaicprojects.com.au/Books.html#PMI

AustPMA – Final Meeting

The meeting to formalise the closure of the Australian Performance Management Association and discus the formation of a less structured network for project controls professionals will be held on the 9th April 2013, at the Rydges Capital Hill, Canberra, ACT.

The AustPMA – Final Meeting is being held in conjunction with the Project Controls Community Evening (free event) which will start at 6:00pm to conclude at approximately 7:00pm – a cash bar will be available from 5:30pm.

The free Community Evening will include:

• The formal finalisation of the AustPMA
• A brief presentation on developments in the International Standards Arena (ISO) and the work of the ISO Technical Committee focused on project, program and portfolio management.
• An update on the qualification of planners and schedulers including the launch of the CIOB PTMC (Project Time Management Certificate) qualification in Australia
• An update of the CIOB contract for ‘complex projects’ and its approach to proactive time management.
• An open discussion on the ‘way forward’ to establish a dynamic community of project controls professionals in Australia, effectively linking the work of the AIPM Controls SIGs, the Governance and Controls Symposium, the College of Performance Management, Planning Planet, and any other group working to advance skills and knowledge in this important discipline.

The costs of the room hire are being covered by the not-for-profit, PM Global Foundation, the organisers of the Governance and Controls Symposium that will be in the same location on the 10th April.

Any former AustPMA members may download:

• The Notice of meeting.
• Form of proxy. 

Or email me to request copies at patw@mosaicprojects.com.au (many of you have moved and we don’t have your current email).

Regardless of your involvement with AustPMA in the past, we cordially invite all project controls professionals and interested project managers to attend this free community meeting to network and discuss the future direction of our discipline, as well as bidding a short but fond farewell to the AustPMA.

To assist in organising, please register for the free Project Controls Community Evening at: http://wired.ivvy.com/event/GCSM13/ (scroll down page for details).

Project Time Management Workshops for Planners & Schedulers

We are pleased to be part of the team launching the Project Time Management Certificate (PTMC) in Australasia. Mosaic’s Project Time Management Workshops are designed to:
- Offer a practical one-day scheduling and planning course.
- Underpin studies for the CIOB PTMC examination.
- Start a Blended training course for the PMI-SP credential.

In cooperation with the Chartered Institute of Building, Mosaic will be running a series of practical 1 Day Project Time Management Workshops that will be followed by a PTMC examination conducted by CIOB in the same city a few weeks later. Our first workshop will be held in Canberra as part of the Project Governance and Controls Symposium on the 9th & 10th April:
- Project Time Management Workshop – 9th April
- Free Controls Professional networking evening – 9th April (follows workshop)
- Project Governance and Controls Symposium – 10th April
- PTMC Examination – 4th May

These events are designed to re-frame project controls in Australia and provide an on-going forum for cross-industry, cross-association, cross-discipline discussions to advance the status and understanding of project controls. 2013 is the foundation year for what is planned to be a regular annual event.

The PTM Workshop is a valuable 1 Day course as well as providing a foundation leading to professional credentials.

Unlike the PMI-SP credential which requires formal training and a minimum of 3 years of experience for a candidate to be eligible for the examination, the PTMC is designed as a rigorous knowledge test that is open to anyone. Potential candidates can choose to self-study or take a course or any combination that works for them:

The PTMC is designed to provide experienced schedulers with proof they understand their discipline and offer graduates and others wishing to become a scheduler an opportunity to learn the art and skills associated with being a professional planner and scheduler – there is far more to the profession than simply using software!

More information:
- The PTMC Credential.
- PTM workshops (full schedule of dates).
- Book into the Canberra PTM workshop.
- Book into the free networking evening  (scroll down page – cash bar)
- Join us at the Project Governance and Controls Symposium.

The Symposium and networking events are underwritten by the not-for-profit PM Global Foundation and apart from physical costs, all of the income from the PTM workshop will be used to help develop this important initiative. We look forward to your support.

Be careful what you govern for!

Governance is an interesting and subtle process which is not helped by confusing governance with management or organisational maturity. A recent discussion in PM World Journal on the subject of governance and management highlighted an interesting issue that we have touched on in the past.

The Romans were undoubtedly good builders (see: The Roman Approach to Contract Risk Management). They also had effective governance and management processes, when a contractor was engaged to build something, they had a clear vision of what they wanted to accomplish; assigned responsibilities and accountability effectively; and failure had clearly understood, significant consequences.

Roman bridge builders were called pontiff. One of the quality control processes used to ensure the effective construction of bridges and other similar structures was to ensure the pontiffs were the first to cross their newly completed construction with their chariots to demonstrate that their product was safe.

An ancient Roman bridge

This governance focus on safety and sanctions created very strong bridges some of which survive in use to the present day but this governance policy also stymied innovation. Roman architecture and engineering practice did not change significantly in the last 400 years of the empire!

No sensible pontiff would risk his life to test an innovative approach to bridge design or construction when the governance systems he operated under focus on avoiding failure. Or in more general terms; the management response to a governance regime focused on ‘no failure’ backed up by the application of sanctions is to implement rigid processes. The problem is rigid process prevents improvement.

To realise the significance of this consider the technology in use in the 17th century compared to the modern day – the vast majority of the innovations that have resulted in today’s improved living standards are the result of learning from failure (see: How to Suffer Successfully).

But the solution is not that simple, we know that well designed and implemented, processes are definitely advantageous. There is a significant body of research that shows implementing methodologies and processes using CMMI, OPM3, PRINCE2, P3M3 and other similar frameworks has a major impact on improving organisational performance and outcomes.

However, organisational maturity is a similar ‘two edged sword’ to rigid governance and management requirements. We know organisational maturity defined as the use of standardised processes and procedures creates significant benefits in terms of reduced error and increased effectiveness compared to laissez-faire / ad hoc systems with little or no standardisation. But these improvements can evolve to become an innovation-sapping straightjacket.

Too much standardisation creates processes paralysis and a focus on doing the process rather than achieving an outcome. In organisations that that have become fixated on ‘process’, it is common to see more and more process introduced to over come the problem of process paralysis which in turn consume more valuable time and resources until Cohn’s Law is proved: The more time you spend in reporting on what you are doing, the less time you have to do anything. Stability is achieved when you spend all your time doing nothing but reporting on the nothing you are doing.

Avoiding this type of paralysis before a review is forced by a major crisis is a subtle, but critical, governance challenge. The governing body sets the moral and ethical ‘tone’ for the organisation, determines strategy and decides what is important. Executive Management’s role is to implement the governing body’s intentions, which includes determining the organisation’s approach to process and methodology, and middle and lower level management’s role is to implement these directives (for more on this see: Governance Systems & Management Systems). The governance challenge is working out a way to implement efficient systems that also encourage an appropriate degree of innovation and experimentation. The ultimate level in CMMI and OPM3 is ‘continuous improvement’. But improvement means change and change requires research, experimentation and risk taking. As Albert Einstein once said, “If we knew what it was we were doing, it would not be called research, would it?”

To stay with the Roman theme of this post: Finis origine pendet (quoting 1st century AD Roman poet and astronomer Marcus Manilius: The end depends upon the beginning). The challenge of effective governance is to encourage flexibility and innovation where this is appropriate (ie, to encourage the taking of appropriate risks to change and improve the organisation) whilst ensuring due process is followed when this is important. The challenge is knowing when each is appropriate and then disseminating this understanding throughout the organisation.

Organisations that follow the Roman approach to governance and avoid taking any form risk are doomed to fade into oblivion sooner or later.

_______________

Note: According to the usual interpretation, the term pontifex literally means “bridge-builder” (pons + facere). The position of bridge-builder was an important one in Rome, where the major bridges were over the Tiber, the sacred river (and a deity). Only prestigious authorities with sacral functions could be allowed to ‘disturb’ it with mechanical additions.

However, the term was always understood in its symbolic sense as well: the pontifices were the ones who smoothed the ‘bridge’ between gods and men. In ancient Rome, the Pontifex Maximus (Latin, literally: greatest pontiff) was the high priest of the College of Pontiffs (Collegium Pontificum), the most important religious role in the republic. The word pontifex later became a term used for bishops in the early Catholic Church and the Bishop of Rome, the Pope, the highest of bridge-builders sumus pontiff.

PMI’s Standard for Portfolio Management

The publication of the third edition of PMIs Standard for Portfolio Management represents a significant step forward in linking the performance of project and programs to the achievement of the organisations vision, mission and strategy.

One of the key additions is the introduction of the ‘Portfolio Strategic Management’ process group. The standard’s fundamental proposition is that efficient portfolio management is integral to the implementation of the organization’s overall strategic plan. While project and program management focus on doing the work right, the purpose of portfolio management is to ensure the organisation is investing its limited resources in doing the right work.

As with any portfolio the optimum return is achieved through an appropriate diversification of risk. Short term, low risk, low return projects will not build the organisation of the future, investments to maintain and expand current capabilities need to be off-set by some future focused, high risk high reward projects to develop new capabilities, products or services. The challenge is developing a balanced portfolio that maximises stakeholder value overall, and this needs a practical strategic plan as the basis for developing the portfolio strategy.

The challenge facing most organisations is developing systems to efficiently link innovation, strategy, portfolio management, project execution, organisational change management and the realisation of value. Any weak point in this ‘value chain’ will reduce the return on its investment in projects and programs achieved by the organisation. Establishing systems to achieve this linkage is a key management challenge, ensuring they are in place is a key governance responsibility. We have posted on this topic several times:

- Linking Innovation to Value

- The failure of strategic planning

- Who Manages Benefits?

- Benefits and Value (White Paper)

The updated Standard for Portfolio Management provides an authoritative resource to assist organisations in the overall development of an effective value delivery capability.

One of the elements we really like if that PMI have separated the management of the portfolio (effectively investment decisions and oversight) from the need for organisations to manage their project delivery capability. The ‘enterprise project management’ system that develops and nurtures project delivery capability (see: PCD White Paper) should be quite separate from the portfolio investment decision making process. There is a fundamental conflict of interest created if the same management body is responsible for decisions to ‘kill’ projects that are no longer viable whilst at the same time supporting and nurturing the project team to help them remain viable. PMI have not fallen into this trap!!

Stocks of the PMI Standard for Portfolio Management Third Edition are available world-wide. Australian readers can buy from: http://www.mosaicprojects.com.au/shop/shopexd.asp?id=37&bc=no

For other PMI standards see: http://www.mosaicprojects.com.au/Books.html#PMI