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COPYRIGHT
Most of the material in this presentation has been taken or adapted from several sources: Harold Kerzner, Advanced Project Management: Best Practices on Implementation, 2nd Edition, 2004, John Wiley & Sons Publishers Harold Kerzner, Project Management Best Practices: Achieving Global Excellence, 1st Edition, 2006; and 2nd Edition, 2010, John Wiley & Sons and IIL Publishers Harold Kerzner and Frank Saladis, Value-Driven Project Management, 2009, John Wiley & Sons and IIL Publishers Carl Belack and Harold Kerzner, Managing Complex Projects, 2010, John Wiley & Sons and IIL Publishers
2010 by Dr. Harold Kerzner. All rights reserved. Material and slides cannot be copied or transmitted in any electronic format without written permission of Dr. Harold Kerzner. 2010 International Institute for Learning, Inc.

Changing Times: The PM Becomes a Business Manager

TODAYS VIEW OF PROJECT MANAGEMENT

Project management has evolved into more of a business process rather than just a project management process. Today we are managing our business by projects, and project management is being applied to both traditional and nontraditional projects. Each project is seen as a collection of value scheduled for realization.

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CHANGES IN PROJECT MANAGEMENT

HISTORICAL VIEW
ROLE AND RESPONSIBILITY WHEN BROUGHT ON BOARD KNOWLEDGE REQUIREMENTS MONITOR AND CONTROL DURING EXECUTION AFTER CONTRACT AWARD OR AT END OF INITIATION TECHNICAL KNOWLEDGE (COMMAND OF TECHNOLOGY) DELIVERABLES

1990s

TODAY (AND IN THE FUTURE)

STRATEGY DEVELOPMENT, PROJECT SELECTION AND PROJECT EXECUTION INPUT BEGINNING OF COMPETITIVE BIDDING AND PROTFOLIO SELECTION OF PROJECTS MOSTLY BUSINESS BUT SOME TECHNICAL KNOWLEDGE (UNDERSTANDING OF TECHNOLOGY) BUSINESS SOLUTIONS MULTIPLE SUCCESS CRITERIA (PROJECT AND BUSINESS VALUE SUCCESS)

PLANNING FOR PROJECT EXECUTION DURING PROPOSAL PREPARATION MOSTLY TECHNICAL BUT SOME BUSINESS KNOWLEDGE DELIVERABLES MEETING THE TRIPLE CONSTRAINT

CUSTOMER EXPECTATIONS DEFINITION OF SUCCESS

MEETING THE TRIPLE CONSTRAINT

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EXECUTIVE VIEW OF PROJECT MANAGEMENT

OLD VIEW
Project management is a nice to have career path, but not necessary We need our people certified as a PMP

NEW VIEW
Project management is a strategic or core competency We need people certified in project management and in business processes

PMs are used for project execution only

Strategy and execution are separate activities

PMs should be involved in portfolio management and capacity planning

PMs must bridge strategy and execution

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GLOBAL VERSUS NON-GLOBAL COMPANIES

FACTOR
Core business PM satisfaction level PM methodology Supporting tools Continuous improvement

NON-GLOBAL
Sell products and services

GLOBAL
Sell business solutions (value)

Must be good at project Must excel at project mgt. mgt. Rigid Minimal Follow the leader A framework Extensive A necessity for survival

Business knowledge

Your companys business strategy

Co-located
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Clients business strategy as well as yours

Virtual

Type of team

Managing Complex Projects

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PERCENT OF PROJECTS USING PROJECT MANAGEMENT

Current use of project management

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Integrated Processes Behavioral Culture Excellence Informal Management Project Training Support Mgmt. and Education
HEXAGON OF EXCELLENCE

CHANGES DUE TO NONTRADITIONAL PROJECTS

DEFINITION

VALIDATION DISCOVERY

MANAGEMENT CLASSIFY REVALIDATE PUBLICATION UTILIZATION

IMPLEMENTATION

Traditional Nontraditional

CAPTURING BEST PRACTICES

CEO CEO Americas CFO

NETWORKED PMO

PMO EPM
PROJECT MANAGEMENT MATURITY

PMO Mexico

PMO Brazil Brazil PMO/Europe PMO Asia Asia PMO PMO UK/Europe PMO

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LIMITATIONS TO SELECTING A COMPLEX PROJECT

No project portfolio management function Poor understanding of capacity planning Poor understanding of project prioritization Lack of tools for determining value Lack of project management tools/software

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PROJECT MANAGEMENT SOFTWARE

95% of Todays Software

INITIATION PLANNING

EXECUTION CONTROLLING

CLOSURE

Areas of Deficiency Portfolio Management

Benefit-Cost Analyses Feasibility Studies Criteria Definition KPI Definition Assumptions Defined Evaluation (Value) Criteria Risk Management Behavioral Software
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Best Practices Library Failure Analyses Lessons Learned KPI Library Stakeholder Management Library

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THE COMPLEXITY OF DEFINING COMPLEXITY

Projects are usually defined as being complex according to one or more of the following elements interacting together: Size Dollar value Uncertain requirements Uncertain scope Uncertain deliverables Complex interactions Uncertain credentials of labor pool Geographical separation across multiple time zones Other factors
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THE TRADITIONAL PROJECT

Time duration of 6-18 months The assumptions are not expected to change over the duration of the project Technology is known and will not change over the duration of the project People that start on the project will remain through to completion (the team and the sponsor) The statement of work is reasonably well-defined The target is stationary Few stakeholders

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THE NONTRADITIONAL (COMPLEX) PROJECT

Time duration can be over several years The assumptions can and will change over the duration of the project Technology will change over the duration of the project People that approved the project (and are part of the governance) may not be there at completion The statement of work is ill-defined and subject to numerous changes The target may be moving Multiple stakeholders
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TRADITIONAL vs. NONTRADITIONAL PROJECTS

MANAGING TRADITIONAL PROJECTS MANAGING NONTRADITIONAL PROJECT

Single person sponsorship

Possibly a single stakeholder Project decision-making Inflexible project management methodology Periodic reporting Success is defined by the triple constraint KPI are derived from EVM Stakeholder mgt. noncritical

Governance by committee
Multiple stakeholders Both project and business decisionmaking Flexible or fluid project management methodology Real-time reporting Success is defined by the triple constraint and value Unique value-driven KPI Stakeholder mgt. critical

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MODIFYING THE TRIPLE CONSTRAINTS

Image/ Reputation Risk Quality Value Cost

Scope

Risk Time

Scope
Traditional Projects

Image/Reputation
Complex Projects

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THE NEED FOR VALUE AS A DRIVER

Factors promoting value-driven project management include: Identifying the value of business opportunities that do not yet exist Identifying better ways of selecting projects with the greatest potential value Identifying better ways of measuring the value of projects once they begin and/or end Making better decisions in turbulent and highly dynamic markets Measuring value has become a competitive necessity Implementing client-value programs
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THE BENEFITS OF "VALUE" AS A DRIVER

Value-driven project management leads to: Better decision-making especially when considering non-financial (intangible) benefits Better analysis of options especially when considering scope changes and tradeoffs Better alignment of projects to corporate objectives during business case development Easier to get stakeholder consensus on value than on just the triple constraint Better persuasive and defendable justification for funding during portfolio project selection activities Typical project portfolios can expect an increase of 30% or higher in total portfolio value, but can be industry-specific
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THE NEED FOR BUSINESS SOLUTION PARTNERS

Not all companies have the ability to manage complexity Solution providers must learn while managing the project Solution providers can bring years of history to the table Solution providers have a greater understanding of cultural change and the ability to work within almost any culture

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CUSTOMER RFP REQUIREMENTS

Contractors must have PMPs Contractors must have an EPM system, and it may have to be qualified or approved by the client Contractors must capture best practices and share intellectual property with the client Contractors must identify a reasonable maturity level in project management

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ENGAGEMENTEXPECTATIONS
Customers Expectations
Business Solutions

Contractors Expectations
Long-Term Strategic Partnerships

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BEFORE AND AFTER ENGAGEMENT PROJECT MANAGEMENT

BEFORE ENGAGEMENT PROJECT MANAGEMENT
Continuous competitive bidding

AFTER ENGAGEMENT PROJECT MANAGEMENT

Sole-source or single-source contracting (fewer suppliers to deal with) Focus on lifetime value of the deliverable Contractor supports the client in project portfolio management

Focus on near-term value of the deliverable Client develops their own business strategy

Client has access to limited PM tools Access to contractors tool kits

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AREAS OF BEST PRACTICES (GIVEBACKS)

Others Type of Best Practice Scheduling

Risk Management Financial/Portfolio Mgt.

Project Planning/Execution
Number of Best Practices
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Project Management Skills

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SKILL SET

All project managers have skills, but not necessarily the right skill set for the projects at hand or in the future. What skills/competencies will project managers need in 3 years, 5 years and 10 years from now?

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PMBOK GUIDE LIMITATIONS

COMMUNICATIONS MGT. RISK MGT. INTEGRATION MGT. SCOPE MGT.

POLITICS BUSINESS/ STRATEGY CULTURE/ RELIGION

TIME MGT.

QUALITY MGT. HUMAN RESOURCE MGT.

STAKEHOLDER MGT.
PROCUREMENT MGT.

COST MGT.

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CAREER PATH OPPORTUNITIES

Project Sponsor

Global Project Manager Senior Project Manager

Project Manager Junior Project Manager Project Management Growth
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FUTURE EDUCATION FOR PROJECT MANAGERS

New seminars, courses, literature and books: Understanding business strategy and portfolio mgt. How to manage nontraditional/complex projects How to perform feasibility studies and cost-benefit analyses How to establish project metrics (KPI) How to estimate and measure project value How to design project dashboards How to establish and validate project assumptions How to establish project governance How to design fluid or adaptive EPM systems How to manage multiple stakeholders How to design and manage a knowledge repository How to provide project leadership without either authority or wage & salary administration How to design project competency models
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THE VALUE OF PM EDUCATION

Can we determine the return on investment on project management education? Should executives be willing to invest in education for the future?

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New Developments

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NEW DEVELOPMENTS IN PROJECT MANAGEMENT

New Success Criteria Governance
Key Performance Indicators

Dashboard Design Measurement

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POSTULATE #1

It doesnt matter if you execute a project extremely well or extremely poorly if you are working on the wrong project.

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POSTULATE #2

Being on time and on budget is not necessarily success.

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POSTULATE #3

Completing a project within the triple constraint does not guarantee that the necessary business value will be there at project completion.

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POSTULATE #4

Having mature project management practices, including an enterprise project management methodology, does not guarantee that business value will be there at project completion.

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POSTULATE #5

Price is what you pay. Value is what you get.

Warren Buffett

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POSTULATE #6

Business value is what your customer perceives as worth paying for.

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POSTULATE #7

Success is when business value is achieved.

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POSTULATE #8

Following a project plan to conclusion is not always success if business-related changes were necessary but never implemented.

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THE CHANGING DEFINITION OF SUCCESS

Success is simply the triple constraint Customer satisfaction must also be considered (2004) There are other (secondary) factors to be considered Success must have a business component The constraints must be prioritized There are multiple definitions of success (each customer/stakeholder can have a different definition) (2008) There are categories of success, and value is now part of the success criteria
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NEW DEVELOPMENTS IN PROJECT MANAGEMENT

New Success Criteria Governance Key Performance Indicators

Dashboard Design

Measurement
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DEFINING VALUE METRICS (KPI)

PAST VIEW
Metrics are fixed for the duration of the project

PRESENT VIEW
Metrics can change over the duration of the project

(Time and Cost Metrics Only)

(Metric-Driven Project Management)

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NEW DEVELOPMENTS IN PROJECT MANAGEMENT

New Success Criteria Key Performance Indicators

Governance

Dashboard Design Measurement

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DASHBOARD DESIGN
Dashboard

90 80 70 60 50 40 30 20 10 0 1st Qt r 2 nd Qt r 3 r d Qt r 4 t h Qt r
Qua l i t y M a nuf a c t ur i n g Engi ne e r i ng

P r oj e c t M a na ge m e nt

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DASHBOARDS VERSUS SCORECARDS

FACTOR
Performance WBS level for measurement Frequency of update Target audience

DASHBOARDS
Operational issues Work package level Real time data Working levels

SCORECARDS
Strategic issues Summary level Periodic data Executive levels

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NEW DEVELOPMENTS IN PROJECT MANAGEMENT

New Success Criteria Key Performance Indicators

Governance

Dashboard Design

Measurement
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Variable
Time Cost Quality Scope Risks Tangibles Intangibles

EVMS

EPM

VMM

Benefits
Value Tradeoffs
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MEASURING VALUE
Expected Benefits, Results or Outcomes Profitability Customer Satisfaction Value Conversion Easy Hard

Goodwill
Penetrate New Markets Develop New Technology Technology Transfer

Hard
Easy Medium Medium

Reputation
Stabilize Work Force Utilize Unused Capacity
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Hard
Easy Easy

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TYPES OF PERFORMANCE REPORTS

Progress Reports Status Reports Forecast Reports

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BENEFITS AND VALUE AT COMPLETION

Forecast Reports
Future Reporting

Traditional Reporting

Time at Completion Cost at Completion

Time at Completion Cost at Completion Benefits at Completion Value at Completion Other Metrics at Completion (Business Leading Indicators; i.e., time to value)

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NEW DEVELOPMENTS IN PROJECT MANAGEMENT

New Success Criteria
Governance Key Performance Indicators

Dashboard Design
Measurement
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CONCLUSIONS AND WALKAWAYS

Project managers are more knowledgeable about the business Project managers should participate in project portfolio management Clients perception of value may be more important than time or cost Executives must invest in the future of project management in their organizations Project managers are not and will not be a threat to senior management

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