Tag Archives: Organizational Project Management Maturity Model

PMI’s Practice Guide for the Governance of Portfolios, Programs, and Projects

governance-of-portfolios-programs-and-projectsPMI’s newly released Practice Guide for the Governance of  Portfolios, Programs, and Projects, provides some useful guidance to organisations and practitioners on the implementation of the management of portfolios, programs, and projects, but very little on the governance of this important aspect of most organisations.

The understanding of project management, program management and portfolio management is well developed and easily accessible to all organisations, many of which have well developed capabilities in these areas, but most still see their projects and programs fail on a regular basis.  Our 2012 post Project or Management Failures? highlighted the issues.

The source of many of these failures lies in the organisation’s ability to manage the overall function of ‘doing projects’ – defined by Professor Peter Morris as ‘the management of projects’ to differentiate this area of middle and executive management from traditional ‘project and program management’. The overall domain covered by the ‘the management of projects’ concept is outlined in our White Paper WP1079 The Strategic Management of Projects.

Despite confusing the governance function and the management function, this PMI Practice Guide is a valuable contribution to this area of management and to a lesser extent the governance of projects, programs and portfolios.  As previously mentioned, the major weakness in the PMI Practice Guide is its failure to differentiate and understand the different functions of governance and management.  Whilst this confusion is common in documents prepared by practitioners and academics focused on IT management and project management, it is rarely seen in any other area of management.

Governance is the exclusive responsibility of an organisation’s governing body; in corporations this is the ‘board of directors’, in other types of organisation, their equivalent.  The governing body is responsible for setting the objectives, culture, and ethical framework for the organisation, employing the organisation’s senior management, oversighting the organisation’s management functions and providing assurance to external stakeholders the organisation is operating effectively and conforming to its obligations (for more on this see: WP 1096 The Functions of Governance). Elements of some of these functions can be delegated to management, particularly in the areas of surveillance and assurance, but accountability remains with the governing body. Importantly in a well governed organisation, the governing body does not interfere in or directly undertake the management of the organisation – it is impossible to govern your own work!

The functions of management were defined 100 years ago by Henri Fayol in his book Administration Industrielle et Generale.  Management involves planning, forecasting, employing other managers and workers, and organising as in creating the organisation; then coordinating, controlling and directing the work of suppliers and subordinates to achieve the organisation’s objectives; whilst working within the ethical and cultural framework set by the governing body (for more on this see: WP 1094 The Functions of Management). A key function of every management role is ensuring subordinates and suppliers conform to the ‘rules’ set by the governing body.

In short, the role of governance is to set the objectives and rules; the role of management is to manage the resources of the organisation to achieve its objectives, working within the ‘rules’. This approach to governance is clearly defined in ISO 38500 the international standard for the corporate governance of information technology, and ISO 21505 the draft international standard for the governance of projects, programs and portfolios.  PMI has completely failed to understand this distinction and as a consequence invented a range of meaningless definitions in the Practice Guide along with a framework that defines basic management functions such as providing resources to undertake work as ‘governance’.

The simple fact of life is the governing body employs managers to undertake management functions and this involves allocating resources, deciding on priorities and making decisions within the strategic framework approved by the governing body. The basic functions of management were clearly defined by Henri Fayol in 1916 had have stood the test of time and the rigours of academic scrutiny.

The tragedy of the decision by PMI to ignore legislation, international standards and a range of governance authorities ranging from the OECD to Cadbury and try to invent its own definition of governance, is that in the PMI model, virtually every management role above that of the project manager is turned into a ‘governance role’.

The proposition made by PMI that every manager responsible for organising and coordinating the work of subordinate managers is engaged in governance is simply untenable – good effective prudent management is simply good effective prudent management!

The role of governance is to create the environment that allows good effective prudent management to occur; ensure the organisation employs people capable of implementing good effective prudent management and to oversee the working of management so the governors can provide assurance to the organisation’s stakeholders that their management team is in fact providing good effective prudent management. The actual work of providing good effective prudent management to achieve the objectives of the organisation is the role, responsibility and duty of managers

Strangely enough most people in real governance positions know what governance is and know what management is.  Alienating this group is a real pity because once you get past the problem of describing almost every management role as a ‘governance role’ the Guide contains a lot of very useful information focused on improving the abysmal performance of many organisations in the complex area of the ‘management of projects’.

  • Section 2 describes organisational project management and the tailoring management practices to meet organisational needs; the essential relationships and considerations; roles and responsibilities; and domains, functions, and processes. It describes how ‘the management of projects’ can be implemented as a program or project for integrated portfolio, program, and project management.
  • Section 3 describes portfolio management, its links to governance and its central role in the ‘management of projects’.
  • Section 4 describes program management and Section 5: management at the Project Level.

In summary PMI’s Practice Guide for the Governance of Portfolios, Programs, and Projects is a good attempt to focus attention on the vital executive and middle management roles that routinely fail to properly support the delivery of projects and programs; the Practice Guide is spoiled by the delusion that middle level managers and executives undertaking their normal management responsibilities are somehow ‘governing’ the organisation.  As a consequence, the governing bodies of organisations and corporations will tend to dismiss the Practice Guide as an irrelevance.

The key element missed by PMI is the understanding that good management practice is an outcome of good governance, and bad management practice is a symptom of governance failure. The role of governance is to ensure its organisation’s management structures and systems are ‘good’. The fact PMI have completely missed this important distinction in their Practice Guide and as a consequence significantly reduced its value to organisations is an opportunity lost! In most organisations both the governance of projects programs and portfolios needs improving and the overall management of projects programs and portfolios needs improving – these are both important, but require very different improvement processes!

PDC = Project Delivery Capability

My last couple of posts have identified a gap in the overall management of projects and programs that is present in most organisations. This ‘Zone’ covers a range of organisational capabilities from the innovation and assessment of ideas that may develop into projects through to achieving the value the project was created to enable; see: Disappearing into the Zone.

Effective project or program management cannot save a project that has been set up to fail by the organisation. Doing the wrong project ‘right’ or doing the right project as ‘right as possible’ with inadequate funding, resources, skills and management support may reduce the extent of the disaster but cannot prevent failure; see: Cobb’s Paradox is alive and well.

The solution to this perennial problem, first identified by Cobb in 1995, is for the organisation’s leadership to demand that their executive create an effective project delivery capability (PDC). This name is suggested to place focus on the delivery of value to the organisation as a result of doing the ‘right’ projects ‘right’. Managing the selected projects effectively is just one step in this overall value chain.

PDC includes all of the aspects of project delivery discussed in our White paper PPP Taxonomy and outlined above, with a focus on realising value for the organisation.

Implementing an effective and rigorous PDC structure will require a major change effort in many organisations and will challenge existing cultures, particularly the tendency to focus on ‘project failure’ rather than ‘organisational failure’ when the organisation fails to adequately manage the management of its projects. The extent of this challenge is outlined in our White Paper Organisational Change Management.

The three layers of PDC are defined above:

  • Governance the organisations directors / leaders have to set the right strategy, ask the right questions and require the right answers from their executive.
  • Executive management (Purple) are responsible for creating the capability and culture of accountability needed to deliver projects successfully and realise the intended benefits. A key element in this is developing a rigorous portfolio management capability to select the best projects to fulfil the organisation’s strategy, based on consideration of each project’s feasibility and viability, within the organisational constraints of capability and capacity.
  • Organisational support processes (Orange) including opportunity identification and assessment, plus developing and enhancing the organisation’s project delivery capability including: organisational enablers, support systems, oversight systems, change management systems and value realisation.

Program management can fulfil some of these support functions where several projects are being managed in an integrated way to maximise benefits. However, where programs are used by the organisation, the organisation’s overarching support processes need to be capable of supporting and overseeing the work of the programs as well as other independent projects.

PDC reframes the project delivery/success paradigm. Change is needed, the approaches currently used in many organisations are generating project failure rates in excess of 50% and to keep doing the same thing, expecting different outcomes is, to quote Einstein, ‘the definition of insanity’!

Focusing on developing an effective PDC will enable organisations to improve the way they manage the ‘doing of their projects’ and as a consequence increase the success rate resulting in increased value for their stakeholders. The ROI from improving an organisation’s PDC should be significant!

The Management of Project Management

A significant gap in the current standardisation of project, program and portfolio management relates to the senior management functions necessary to effectively manage the projects and programs initiated by the organisation.

Project Management, as defined by PMI, ISO21500 and a range of other standards commences when the project is funded, and concludes on the delivery of the outputs the project was established to deliver.

Program Management focuses on the coordinated management of a number of projects to achieve benefits that would not be available if the projects were managed in isolation. Different types of program have been defined by GAPPS ranging from optimising annual budgets to maintain a capability (eg, the maintenance of a railway system) through to creating a major change in the way an organisation operates.

Processes for identifying the best projects and programs for an organisation to invest in through portfolio management and tracking benefits realisation are also well defined within the context of strategic management, but are generally not as well implemented by organisations.

Finally the overall governance of organisations and its key sub-set, project governance is recognised as essential for the long term wellbeing of the organisation.

Within this overall framework, the element not well defined, that is essential to achieving the optimum benefits from the ‘doing of projects and programs’, is the organisation’s ability to manage the management of its projects and programs.

At the overall organisational level, the management of project management includes developing and supporting the capabilities needed to provide executive oversight and leadership so that the organisation is able to undertake projects and programs effectively. This includes the organisations ability to develop and enhance its overall project management capabilities, develop project and program managers and project team members, implement appropriate methodologies, provide effective sponsorship, and achieve the benefits and value the projects and programs were set up to facilitate.

At the individual department level, the ability to manage multiple projects in an effective way is equally critical. Typically the role of a Project Director, multi-project management differs from program management in a number of key aspects:

  • There is limited correlation between the objectives of the various projects, eg a number of design and fabrication projects may each have a different external customer.
  • The function is relatively stable and permanent (programs close once their objectives are achieved).
  • The primary focus of this management function is resource optimisation, minimising conflicts and process clashes, and developing the project/program delivery capability of the department/facility.

A number of recognised roles such as the Project/Program Sponsor, project governance and PMOs contribute to the organisations ability to manage the management of projects and programs and develop effective multi-project management capabilities, what is missing is an overall framework that supports the ongoing development of these functions to facilitate the effective governance of projects, programs and portfolios.

Peter Morris and Joana Geraldi have recently published a paper focused on ‘Managing the Institutional Context for Projects’ (Project Management Journal, Vol.42, No.6 p20-32), this paper defines three levels of project management:

Level 1 – Technical ‘project management’; the processes defined in standards such as the PMBOK® Guide and ISO21500.

Level 2 – Strategic ‘management of projects’; the overall management of the project from concept to benefits realisation, starting with identifying and validating concepts, through portfolio selection to delivery and the creation of the intended value.

Level 3 – Institutional context; developing an institutional context for projects and programs to enable them to succeed and enhance their effectiveness. The focus is on creating an environment that encourages improved levels of success in all of the organisation’s projects and programs.

The theoretical framework described in Morris’ paper covers the same concepts (but from a different viewpoint) to the technical framework of organisational entities and roles defined in our White Paper, a PPP Taxonomy (and the linked White Papers focused on specific elements of the structure), see: http://www.mosaicprojects.com.au/WhitePapers/WP1074_PPP_Taxonomy.pdf

What developing the PPP Taxonomy identified within our White Papers, and Morris highlights in his paper, is the critical need for organisations to develop an intrinsic capability to manage the overall management of projects and programs. Over the next few weeks I hope to complete two additional White Papers to start filling this gap:
The Management of Project Management – the institutional context.
Multi-project Management – the departmental context.

In the meantime, a PPP Taxonomy defines the overall project governance and control framework these two critically important elements fit within.

On reflection, many of the project and program failures identified in our earlier posts as generic ‘governance failures’ are likely to be shown to be directly caused by the absence of systems designed to ‘manage project management’, this is still a governance failure but now the root cause of some of these failures may be able to be specifically defined.

This is an emerging area of thinking, you are invited to download the White Papers and post any thoughts, comments or disagreements, as well as make use of the ideas to help improve your organisations. There’s a long way to go, at present there’s not even a clearly defined term for this aspect of project governance/management……

Project and Organisational Governance

One of the themes running through several of my recent posts is the importance of effective Governance. Both organisational governance and its sub-set project governance.

Good governance is a synonym for ‘good business’, structuring the organisation to deliver high levels of achievement on an ethical and sustainable basis. This requires the optimum strategy and the right approach to risk taking supported by sufficient processes to be reasonably confident the organisations limited resources are being used to achieve the best short, medium and long term outcomes.

Project governance focuses on the portfolios of programs and projects used by the organisation to deliver many of the strategic objectives. This process focuses first on doing the right projects and programs constrained by the organisations capacity to undertake the work – Portfolio Management; secondly, creating the environment to do the selected projects and programs right- developing and maintaining an effective capability; and lastly systems to validate the usefulness and efficiency of the ongoing work which feeds back into the selection and capability aspects of governance.

 

Within this framework, portfolio management is the key. Strategic Portfolio Management focuses on developing the best mix of programs and projects to deliver the organisations future within its capacity to deliver. This means taking the right risk and having sufficiently robust system in place to identify as early as possible the ‘wrong projects’, so they can be either be reframed or closed down and the resources re-deployed to other work.

It is impossible to develop an innovative future for an organisation without taking risks and not every risk will pay off. Remember Apple developed the ‘Apple Lisa’ as its first GUI computer which flopped in the market, before going on to develop the Apple Macintosh which re-framed the way we interact with machines.

Apple Lisa circa. 1983

Obviously no organisation wants to have too many failures but good governance requires ‘good risk taking’. Apple had no guarantees the i-Pod and its i-Tunes shop would succeed when it started on the journey of innovation that has lead to the i-Phone, i-Pad and Apple becoming one of the largest companies in the world based on capitalisation. As Richard Branson says – ‘you don’t bet the company on a new innovation’ but if you don’t innovate consistently, obsolescence will be the inevitable result.

The balance of project governance focuses around creating the environment that generates the capability to deliver projects and programs effectively, effective sponsorship, effective staff development, effective and flexible processes and procedures, simple but accurate reporting and good early warning systems to identify issues, problems and projects no longer creating value (a pharmaceutical industry saying is that if a project is going to fail it is best to fail early and cheap!).

Good questions outrank easy answers! Every hour and dollar spent on governance processes is not being spent on developing the organisation. The challenge of good governance is to have just enough reporting processes embedded in an effective culture of openness and accountability to provide an appropriate level of assurance the organisation’s resources are being used effectively; whilst at the same time allowing innovation and development. Restrictive and burdensome governance processes are simply bad governance – they restrict the organisation’s ability to achieve excellence.

To help organisations understand these key governance processes we have updated our two White Papers on the subject:
Corporate Governance: http://www.mosaicprojects.com.au/WhitePapers/WP1033_Governance.pdf
Project Governance: http://www.mosaicprojects.com.au/WhitePapers/WP1073_Project_Governance.pdf

For more discussion around the subject of governance see the previous posts on this blog.

Valuing Project Procedures

I am frequently asked to quantify the value of improving an organisations project management capabilities or how to establish the ROI for a new PMO.

Whilst these questions are sensible they are nearly impossible to answer. Certainly there are strong indicators of the value generated by an effective PMO, this has been demonstrated repeatedly in studies by KPMG, PWC and others (Download the PMO studies).

OPM3 is more difficult. The most useful option is a comparison with CMMI.  The larger user base for CMMI makes statistical analysis possible and demonstrates a consistent value proposition for improving organisational maturity and capability (see more on OPM3).

The question is can the generic data generated by these studies be translated to a specific proposal in a single organisation. Unfortunately the answer is no.  On average an organisation can expect a significant return on monies invested in PMOs and improving project, program and portfolio management maturity but as risk practitioners know only to well, on average, nothing is average.  Some situations will fail, other will generate stellar returns.

This is not a new problem.  In June of 1962 the USA Dept. of Defense promulgated PERT/COST as a new general purpose management system for use on major military system acquisition programs. In 1964 a major study was undertaken by The Mitre Corporation to investigate the question of how to evaluate the design of the PERT/COST management system. This study still makes interesting reading today.

The overarching conclusions in the report were:

  • That there is no single, simple straightforward way of deriving value judgments as to the PERT/COST system design, or probably any other general purpose management system.
  • The interrelationships between a management system and the quality of its implementation operation (including the capability of the managers who use it), presents serious difficulties in the assessment of the value of the management system alone.
  • The value of the system is intimately related to both the quality of its implementation and the capability and willingness of the appropriate managers to use it.
  • An evolutionary approach is a good way to evolve the development of the system capability in an orderly fashion over period of time. It is ideal in cases where the ultimate capability to be required of the system cannot be precisely defined, but where the direction toward which increasing system capabilities should be oriented are predictable.

My post on Cobb’s Paradox asked the question why do executive managers allow poor quality systems to exist in their organisations. Possibly one answer is the difficulty of generating a simple investment proposition discussed in this post.

Better informed executives are capable of bypassing set minimum ROI values or payback periods, focusing instead on the demonstrated competitive advantage to be gained by selecting the right projects and programs to do, then doing them right!  The challenge for project management professionals in other organisations is making the necessary information available in ways that can be received and understood by the executives.

In conclusion, Harry S Truman said The only new thing in the world is the history you don’t know.”  To help you avoid this problem, the 1964 Mitre Report, authored by R. L. Hamilton, can be downloaded from the link (Handle) on  http://oai.dtic.milAD0603425

Cobb’s Paradox

Cobb’s Paradox states, ‘We know why projects fail; we know how to prevent their failure – so why do they still fail?’  PMI has recently published its latest Pulse of the Profession survey which shows some improvements on the 2008 and 2006 results but not much. Nearly half the projects surveyed in 2010 still failed to meet time and cost targets.

However, the PMI survey did highlight a stark difference between high performing organisations with a better than 80% success rate, and low performing organisations with a greater than 40% fail rate. And, the survey also clearly showed the processes typically used by the high performing organisations (and ignored by low performing organisations) are straightforward to implement and use; they include:

  • Using standardised project management processes.
  • Establishing a process to mature project, program and portfolio management practices.
  • Using a process to increase project management competency.
  • Employing qualified project managers.

Most of these elements coalesce around an effective project management office (PMO). Simply by standardising project management processes, the survey shows an organisation can expect a 25% increase in project success.

None of this new is new, KPMG demonstrated exactly the same point in its 2002 and 2003 surveys, supported by similar findings by PwC in 2004 (see: http://www.mosaicprojects.com.au/Resources_Papers.html#Proj_Off).

What’s worrying me is the large number of organisations whose middle and senior management are simply failing their stakeholders by not implementing these simple pragmatic steps. The question that should be asked is WHY?

The stakeholders whose rights are being ignored include the owners who have a right to expect efficient use of resources entrusted to the organisation and the people employed on the failed projects whose work life is made unnecessarily stressful.

As Deeming pointed out in the 1950s, quality is a management responsibility. Therefore, allowing poor quality project management processes to exist in an organisation is a management failure. To quote another mantra: quality is designed in not inspected in. Workers and project managers cannot be expected to retrofit quality into defective systems; systemic failures are a failure of management.

What makes the situation even more worrying is that the tools to develop a quality project management system are readily available. Models such as CMMI, P3M3 and PMI’s OPM3 maturity model has been around for years and are regularly updated.

PMI has recently moved to improve the availability and support for its OPM3 Self-Assessment Module (SAM). This basic assessment system is now sold and supported by organisations such as Mosaic that are qualified to deliver the full range of OPM3 services and help businesses achieve the best return on their investment (for more see: http://www.mosaicprojects.com.au/OPM3.html). OGC have similar arrangements for P3M3 as does CMMI.

So, given the tools are available, the knowledge is available, and the value has been consistently demonstrated; why are organisations still prepared to squander $millions on failed projects rather than investing a fraction of that amount in simple systems that can significantly improve the value they deliver to their stakeholders?
I would be interested to know the answer.

CPO – Chief Project Officer

CPOs should become CP3Os – Chief Project, Program and Portfolio Officers! It is impossible to deliver value to an organisation if any of the layers of project governance are ineffective. Like C-3PO in Star Wars, the CP3O needs to be an expert in communication and understand the right language and protocols to use at different levels of the organisation to tie the project, program and portfolio management processes directly to the creation of value.

The original C-3PO

At the portfolio management level, selecting the ‘right’ projects and programs to continue, cancel or start is vital to the future success of the organisation. The CP3O should be a key advisor to the executive team responsible for the strategic plan and selecting the on-going mix of work for the organisation; balancing high-risk, high-reward projects that may define the future of the organisation with ‘safer’ projects that help keep the lights on and grow today’s business. The capacity and capability of the organisation’s program and project delivery systems is a key enabler and the primary constraint on this process. The CP3O should be the person with the knowledge to facilitate effective decision making.

Program management focuses on the efficient coordination of multiple projects to deliver benefits. Each program is focused on delivering key elements of the organisation’s overall strategy and consequently has a significant contribution to make to the organisation’s ability to deliver value to its stakeholders. The CP3O should be actively engaged in ensuring the programs meet their businesses objectives. The program sponsor and other managers may have line responsibility for the initiative, the CP3O focuses on skills and support.

Project management is focused on the efficient creation of the deliverables defined in the Project Charter. Projects are most effective when their objectives are clearly defined and unnecessary change is minimised. Whilst Project Managers may report to a variety of managers, the CP3O should focus on skills development and performance.

Most organisations have developed PMOs to support the delivery of Projects and Programs and to provide the data needed for both governance and Portfolio Management decisions. The development and operation of the organisation’s PMO structure should be a core responsibility of the CP3O.

The role of a Project Director (at least in Australia) is as the manger of project managers. The difference between Project Directors and Program Managers is the Program is created to deliver a defined benefit (the responsibility of the Program Manager) and projects are created to deliver the outputs required to enable the benefit. The Program Manager has overall responsibility for both the performance of the projects within the program and enabling the benefit; whereas Project Directors tend to be responsible for oversighting the performance of the projects within their area of responsibility. The Project Director is typically discipline and location based; eg, the Director for IT projects in Sydney. The project deliverables may contribute to a range of initiatives within the organisation. Project Directors should be direct reports of the CP3O.

The CP3O (or CPO) role is becoming more common. Defining the value proposition for this executive will be critically important to the improvement in delivering value through projects and programs. One of the key initiatives a CP3O can use to drive continuing improvements within the organisation is to develop a focus on process improvement using an effective maturity model. PMI’s OPM3 is probably the best tool from the perspectives of rigour and its focus on projects, programs and portfolio management.

This post has covered a lot of ground. For more information on specific topics see:
Portfolio Management: See White Paper1017
Types of Program: See White Paper1022
Programs -v- Projects: See White Paper1002
PMOs: See White Paper1034
OPM3: http://www.mosaicprojects.com.au/OPM3.html