Strategic Planning for Excellence in Project

Management

SUBMITTEDTO: Dr. Tariq Majeed
SUBMITTED BY: Muammad !"i
#oll $o. %&

D!TED: '%(%%('))*

De+artment of Electrical
Pa,i-tan In-titute of Engineering . !++lied Science-
$ilore I-lama/ad.
Acknowledgement
I express gratitude and praise to Allah Almighty, the creator of the beautiful
universe, Great respect for Holy Prophet Hazrat uhammad !P"#H$ who is our path
finder%
I am greatly thankful to &r% 'ari( a)eed who provided me with the chance to
work on such an interesting term pro)ect% His constructive suggestions, especially in
report writing, and friendly attitude encouraged me to work in a better manner%
In the end I would like to thank my parents whom kind prayers and care have
facilitated me to achieve all the success in my life% ay they always with me
Muhammad Ali
PIEAS Nilore, Islamabad
Nov 14
th
, 2007
ii
Table of Cotets
*% Introduction%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*
+% ,hat is General -trategic Planning%%%%%%%%%%%%%%%%%%%%%%%+
+%*% .ormulation Process%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%+
2.1.1. Formulation%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%+
+%+% 'ranslation and Implementation of .ormulated Plan%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%+
/% -trategic Planning for Pro)ect anagement%%%%%%%%%%/
/%*% Implementation of ethodology%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%/
0% Identifying -trategic 1esources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%0
0%*% 'angible 1esources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%2
0%+% Human 1esources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%3
0%/% 4onhuman 1esources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%3
0%0% 5rganizational 1esources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%6
0%2% .inancial 1esources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%6
0%3% Intangible 1esources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%6
0%6% -ocial 1esponsibility%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%7
0%7% ,hy does -trategic Planning for Pro)ect anagement .ails8%%%%%%%%%%%%%%%%%%%%%%%%%%%%7
4.8.1. Lack of CEO Endorsement%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%7
4.8.2. Failure to Reexamine%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%7
4.8.3. Being linded ! success"%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%9
4.8.4. O#er res$onsi#eness to information%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%9
4.8.%. Failure of organi&ational acce$tance%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%9
4.8.'. Failure to kee$ t(e met(odolog! sim$le%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%9
4.8.). Blaming failures on t(e met(odolog!%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%9
iii
4.8.8. Failure to $rioriti&e%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*:
4.8.*. 1apid ac(uisitions%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*:
2% ;ritical -uccess .actor for Pro)ect anagement *:
2%*% Influence of <conomical ;onditions%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%**
%.1.1. +istorical Basis%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%**
2%+% -trategic .actors in Achieving <xcellence%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%**
%.2.1. ,ualitati#e factors%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%**
%.2.2. Organi&ational Factors%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*+
2%+%+%*% ;onclusion%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*/
%.2.3. ,uantitati#e Factors%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*/
3% Pro)ect anagement aturity odel%%%%%%%%%%%%%%%%%*/
3%*% 'he .oundation for <xcellence%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*0
'.1.1. Common language%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*0
'.1.2. Common $rocesses%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*0
'.1.3. -ingular met(odolog!%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*0
'.1.4. Benc(marking%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*2
'.1.%. Continuous im$ro#ement%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*2
6% ;ontinuous Improvement%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*2
6%*% ;apacity Planning%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*3
6%+% -trategic -election of Pro)ects%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*6
).2.1. .otential enefits of a $ro/ect%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*6
).2.2. ,ualit! of Resources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*6
6%/% Horizontal Accounting%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*7
).3.1. Budget0ased $lanning%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*7
).3.2. Cost1$erformance determination%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*7
).3.3. 2$dating and re$orting%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*9
6%0% 5rganizational 1estructuring%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*9
6%2% ;arrier Planning%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%+:
iv
!ist of "i#ures
.igure /=*> ethodology structuring%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%/
.igure 0=*> Pro)ect resources%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%2
.igure 6=*> 'he need for continuous improvement%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*2
.igure 6=+> ;apacity Planning%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%*3
v
vi
%. Introduction
-trategic planning for excellence in pro)ect management needs to consider all aspects of
the company> from the working relationship among employees and manager and between
staff and management, to the roles of various players !especially the role of executive
sponsors$, to the company?s corporate structure and culture% 5ther aspects of pro)ect
management must also be planned% -trategic planning is vital for every company?s health%
<ffective strategic planning can mean the difference between the long=term success and
failure% <ven career planning for individual pro)ect managers ultimately plays a part in a
company?s excellence in pro)ect management or its mediocrity%
'. 0at i- 1eneral Strategic Planning
-trategic planning is the process of formulating and implementing decisions about an
organization?s future direction% 'his process is vital to every organization?s survival
because it is the process by which the organization adapts to its ever=changing
environment, and the process is applicable to all management levels and all types of
organizations%
2$1$ "ormulatio Pro%ess
'he formulation process is the process of deciding where you want to go, what
decisions must be made, and when they must be made in order to get there% It is the
process of defining and understanding the business you are in and how to remain
competitive within that business%
'he formulation process is performed at the top levels of the organization% Here,
top management values provide the ultimate decision template for directing the course of
the firm%
2.1.1. Formulation
Scans the external environment and industry environment for
changing conditions.
Interprets the changing environment in terms of opportunities or
threats.
Analyzes the frms resource base for asset strengths and
weaknesses.
efnes the mission of the business by matching environmental
opportunities and threats with resource strengths and
weaknesses.
Sets goals for pursuing the mission based on top management
values and sense of responsibility.
+
2$2$ Traslatio ad Im&lemetatio of "ormulated Pla

!he formulated "lan are translated into policies and procedures
for achieving the grand decision% Implementation involves all levels of management in
moving the organization toward its mission. #iddle and lower$level
managers spend most of their time on implementation activities.
%&ective implementation results in stated ob'ectives( action plans(
timetables( policies and procedures( and results in the organization
moving e)ciently toward fulfllment of its mission.
2. Strategic Planning for Project Management
-trategic planning for pro)ect management is development of a standard
methodology for pro)ect management, which can be used over and over again, and which
produce a high likelihood of achieving the pro)ect?s ob)ectives% Although strategic
planning and execution of methodology does no guaranties profits or success, it does not
improve the chance of success%
'$1$ Im&lemetatio of Methodolo#(
Advantage of developing an implementation methodology is that it provides the
organization with a consistency of action% 'he methodology with a pro)ect definition
process that is broken down into technical baseline, functional and management baseline,
and financial baseline% .igure /=*> shows the @skeletonA for the development of a simple
pro)ect management methodology%
/
"i#ure ')1* Methodolo#( stru%turi#$
'he technical baseline includes, at minimumB
-tatement of work !-5,$
-pecifications
,ork breakdown structure !,"-$
'iming !i%e%, schedules$
-pending curve !- curve$
'he functional and management baselines indicate how you will manage the technical
baseline% 'his includes>
1esumes of the key players%
Pro)ect policies and procedures
'he organization for the pro)ect
1esponsibility assignment matrices!1As$
'he financial baseline identifies how cost will be collected, analyzed, variances
explained, and reports prepared% 'his is simplistic process that can be applied to each and
every pro)ect%
0
3. Identif4ing Strategic #e-ource-
All businesses have corporate competencies and resources that distinguish them from
their competitors% 'hese competencies and resources are usually identified in terms of a
company?s strengths and weaknesses% -trengths and weaknesses can be identified at all
levels of management%
-enior management may have a clearer picture of the overall company?s position in
relation to the external environment, whereas middle management may have a better
grasp of the internal strengths and weaknesses% All organizations have strengths and
weaknesses as no organization is e(ually strong in all areas%
-trengths and weaknesses are internal measurements of what a company can do and
assessment of them must be based upon the (uality of the company?s resources%
ethodologies, no matter how good, are executed by use of resources% Pro)ect
management methodologies do not guarantee success% 'hey simply increase the chances
for success provided that
*% 'he pro)ect ob)ective is realistic
+% 'he proper resources are available along with the skills needed to achieve the
ob)ective%
4$1$ Ta#ible +esour%es
'he strengths and weaknesses of a firm are usually described in the terms of its
tangible resources% 'he most common classification for tangible resources is>
<(uipment
.acilities
anpower
aterials
oney
InformationCtechnology
2
Pictorial representation of resources is shown in .igure 0=*%
"i#ure 4)2* Pro,e%t resour%es$
#nfortunately, these crude types of classification do not readily lend themselves to an
accurate determination of internal strengths and weaknesses for pro)ect management% A
ore useful classification would be human resources, nonhuman resources,
organizational resources, and financial resources%
4$2$ -uma +esour%es
Human resources are the knowledge, skills, capabilities, and talent of the firm?s
employees% 'his includes the board of directors, managers at all levels, and employees as
a whole% 'he board of directors provides the company with considerable experience,
political astuteness, and connections, and possibly sources of borrowing power%
'op management is responsible for developing the strategic mission and making
sure that the strategic mission satisfies the shareholders% 'he biggest asset of senior
management is its decision=making ability, especially during pro)ect planning and
defining clearly its own managerial values and the firm?s social responsibility%
3
Dower and middle management are responsible for developing and maintaining the
@coreA technical competencies of the firm% <very organization maintains a distinct
collection of human resources% iddle management must develop some type of cohesive
organization such that synergistic effects will follow% It is the synergistic effect that
produces the core competencies that lead to sustained competitive advantages and a high
probability of successful pro)ect execution%
4$'$ Nohuma +esour%es
4onhuman resources are physical resources that distinguish one organization from
another% "oeing and I" both have sustained competitive advantages but have different
physical resources% Physical resources include plant and e(uipment, distribution
networks, proximity of supplies, availability of a raw material, land, and labor%
;ompanies with superior nonhuman resources may not have a sustained
competitive advantage without also having superior human resources% .irms that
endeavor to develop superior manufacturing are faced with two critical issues% .irst, how
reliable are the suppliers8 &o the suppliers maintain (uality standards8 Are the suppliers
cost effective8 'he second concern, and perhaps the more serious of the two, is the ability
to cut costs (uickly and efficiently to remain competitive% 'his usually leads to some
form of vertical integration%
4$4$ .r#ai/atioal +esour%es
5rganizational resources are the glue that holds all of the other resources together%
5rganizational resources include the organizational structure, the pro)ect office, the
formal !and sometimes informal$ reporting structure, the planning system, the scheduling
system, the control system, and the supporting policies and procedures% &ecentralization
can create havoc in large firms where each strategic business unit !-"#$, functional unit,
and operating division can have its own policies, procedures, rules, and guidelines%
ultiple pro)ect management methodologies can cause serious problems if resources are
shared between strategic business units
6
4$0$ "ia%ial +esour%es
.inancial resources are the firm?s borrowing capability, credit lines, credit rating,
ability to generate cash, and relationship with investment bankers% ;ompanies with
(uality credit ratings can borrow money at a lower rate than companies with non (uality
ratings% ;ompanies must maintain a proper balance between e(uity and credit markets
when raising funds% A firm with strong, continuous cash flow may be able to fund growth
pro)ects out of cash flow rather than through borrowing% 'his is the usual financial=
growth strategy for a small firm%
4$1$ Ita#ible +esour%es
Human, physical, organizational, and financial resources are regarded as tangible
resources% 'here are also intangible resources that include the organizational culture,
reputation, brand name, patents, trademarks, know=how, and relationships with customers
and suppliers% Intangible resources do not have the visibility that tangible resources
possess, but they can lead to a sustained competitive advantage% ,hen companies
develop a @brand name,A it is nurtured through advertising and marketing and is often
accompanied by a slogan% Pro)ect management methodologies can include paragraphs on
how to protect the corporate image or brand name%
4$7$ So%ial +es&osibilit(
-ocial responsibility is also an intangible asset, although some consider it both
intangible and tangible% -ocial responsibility is the expectation that the public perceives
that a firm will make decisions that are in the best interest of the public as a whole% -ocial
responsibility can include a broad range of topics from environmental protection to
consumer safeguards to consumer honesty and employing the disadvantaged% An image
of social responsibility can convert a potential disaster into an advantage%
.or example Eohnson F Eohnson, earned high marks for social responsibility in the
way it handled the two 'ylenol tragedies in the *97:s% 4estle, on the other hand, earned
low marks for its role in the infant=formula controversy%
7
4$2$ 3h( does Strate#i% Plai# for Pro,e%t Maa#emet
"ails4
,e have developed a strong case earlier for the benefits of strategic planning for
pro)ect management% Gnowledge about this process is growing, and new information is
being disseminated rapidly% ,hy, then, does this process often fail8 .ollowing are some
of the problems that can occur during the strategic planning process% <ach of these
pitfalls must be considered carefully if the process is to be effective%
4.8.1.Lack of CEO Endorsement
Any type of strategic planning process must originate with senior management%
'hey must start the process and signal their own aspirations% A failure by senior
management to endorse strategic planning may signal line management that the process is
unreal%
4.8.2.Failure to Reexamine
-trategic planning for pro)ect management is not a one=shot process% It is a
dynamic, continuous process of reexamination, feedback, and updating%
4.8.3.Being linded ! success"
-imply because a few pro)ects are completed successfully does not mean that the
methodology is correct, nor does it imply that improvements are not possible% A belief
that @you can do no wrongA usually leads to failure%
4.8.4. O#er res$onsi#eness to information
'oo many changes in too short a time frame may leave employees with the
impression that the methodology is flawed or that its use may not be worth the effort% 'he
issue to be decided here is whether changes should be made continuously or at structured
time frames%
4.8.%. Failure of organi&ational acce$tance
;ompany=wide acceptance of the methodology is essential% 'his may take time to achieve
in large organizations% -trong, visible executive support may be essential for rapid
acceptance% People cannot implement successfully and repetitively a methodology they
do not understand% 'raining and education on the use of the methodology is essential%
9
4.8.'.Failure to kee$ t(e met(odolog! sim$le
-imple methodologies based upon guidelines are ideal% #nfortunately, as more
and more improvements are made, there is a tendency to go from informality using
guidelines to formality using policies and procedures%
4.8.).Blaming failures on t(e met(odolog!
Pro)ect failures are not always the result of poor methodologyB the problem may
be poor implementation% #nrealistic ob)ectives or poorly defined executive expectations
are two common causes of poor implementation% Good methodologies do not guarantee
success, but they do imply that the pro)ect will be managed correctly%
4.8.8.Failure to $rioriti&e
-erious differences can exist in the importance different functional areas, such as
marketing and manufacturing, assign to strategic pro)ect ob)ectives% A common, across=
company prioritization system may be necessary%
4.8.*. Ra$id +c,uisitions
-ometimes an organization will purchase another company as part of its long=term
strategy for vertical integration% "ackward integration occurs when a firm purchases
suppliers of components or raw materials in order to reduce its dependency on outside
sources% .orward integration occurs when an organization purchases the forward channels
of distribution for its products% In either case, the company?s pro)ects will now re(uire
more work, and this must be accounted for in the methodology% ;hanges may occur
(uickly%
5nly by watching out for these potential problems can a firm hope to avoid them
!or at least to minimize their negative effects$% 'his is the path to success in strategic
planning for pro)ect management
*:
&. 5ritical Succe-- 6actor for Project
Management
;ritical success factors for strategic planning for pro)ect management include those
activities that must be performed if the organization is to achieve its long term ob)ectives%
ost businesses have only a handful of critical success factors% However, if even one of
them is not executed successfully, the business?s competitive position may be threatened%
'he critical success factors in achieving pro)ect management excellence apply
e(ually to all types of organizations, even those that have not fully implemented their
pro)ect management systems%
0$1$ Iflue%e of E%oomi%al Coditios
<conomic conditions can be favorable or unfavorable% Het in either case, an astute
company can convert someone else?s misfortune into its own good fortune% <very place
we look we find windows of opportunity% "ut to take full and prompt advantage of these
windows of opportunity, to be truly successful, management must have a repeatable
process predicated upon speed and (uality of execution%
%.1.1.-istorical Basis
&uring favorable economic times, changes in management style and corporate
culture occur very slowly% <xecutives are reluctant to @rock the boat%A "ut favorable
economic conditions don?t last forever% 'he period between recognizing the need for
change and garnering the ability to manage change is usually measured in years% As
economic conditions deteriorate, change occurs more and more (uickly in business
organizations, but still not fast enough to keep up with the economy% 'o make matters
worse, windows of opportunity are missed because no pro)ect management methodology
is in place%
0$2$ Strate#i% "a%tors i A%hievi# E5%elle%e
Det?s look at the three critical success factors in achieving pro)ect management
excellence> (ualitative, organizational, and (uantitative factors%
**
%.2.1..ualitati#e factors
.or companies to reach excellence in pro)ect management, executives must learn to
define pro)ect success in terms of both what is good for the pro)ect and what is good for
the organization% success in pro)ects has traditionally been defined as achieving the
pro)ect?s ob)ectives within the following constraints>
Allocated time
"udget cost
&esired performance at technical or specification level
Iuality standards as defined by customers or users
In experienced organizations, the four preceding parameters have been extended to
include the following>
,ith minimal or mutually agreed upon scope changes
,ithout disturbing the organization?s corporate culture or values
,ithout disturbing the organization?s usual work flow
5rganizations that eventually achieve excellence are committed to (uality and up=
front planning so that minimal scope changes are re(uired as the pro)ect progresses%
'hose scope changes that are needed must be approved )ointly by both the customer and
the contractor%
%.2.2.Organi&ational Factors
;oordination of organizational behavior in pro)ect management is a delicate
balancing act, something like sitting on a bar stool% "ar stools usually come with three
legs to keep them standing% -o does pro)ect management> one is the pro)ect manager, one
is the line manager, and one is the pro)ect sponsor% If one of the legs is lost or unusable,
the stool will be very difficult to balance%
In successful pro)ects, pro)ect and line managers are more likely to have shared
authority% ,hile in unsuccessful pro)ects, the pro)ect manager has often been vested with
power !authority$ over the line managers involved% In successful pro)ect management
systems, the following e(uation always holds true>
Accountability J 1esponsibility K Authority
*+
,hen pro)ect and line managers view each other as e(uals, they share e(ually in
the management of the pro)ect, and thus they share e(ually the authority, responsibility,
and accountability for the pro)ect?s success% A few suggestions for executive pro)ect
sponsors follow>
&o not increase the authority of the pro)ect manager at the expense of the line
managers%
Allow line managers to provide technical direction to their people, if at all
possible%
<ncourage line managers to provide realistic time and resource estimates, and
then work with the line managers to make sure they keep their promises%
Above all, keep the line managers fully informed%
0$2$2$1$ Co%lusio
<xecutive pro)ect sponsorship must exist and be visible so that the pro)ectLline
manager interface is in balance% 1ecommendations for obtaining maturity include>
<ducate the executives as to the benefits of pro)ect management%
;onvince the executives of the necessity for ongoing, visible support in the
capacity of a pro)ect sponsor%
;onvince executives that they need not know all the details% Provide them with
the least information that tells the most%
%.2.3..uantitati#e Factors
'he third factor in achieving excellence in pro)ect management is the
implementation and acceptance of pro)ect management tools to support the methodology%
Pro)ect management education must precede software education% Also, executives must
provide the same encouragement and support for the use of the software as they do for
pro)ect management%
'he following recommendations can help accelerate the maturity process>
<ducating people in the use of sophisticated software and having them accept its
use is easier if the organization is already committed to pro)ect management%
*/
<xecutives must provide standards and consistency for the information they wish
to see in the output%
<xecutive knowledge !overview$ in pro)ect management principles is necessary
to provide meaningful support%
4ot everyone needs to become an expert in the use of the system% 5ne or two
individuals can act as support resources for multiple pro)ects%
7. Project Management Maturit4 Model
All companies desire to achieve maturity and excellence in pro)ect management%
#nfortunately, not all companies recognize that the timeframe can be shortened by
performing strategic planning for pro)ect management% 'he simple use of pro)ect
management, even for an extended period of time, does not necessarily lead to
excellence% Instead, it can result in repetitive mistakes and, what?s worse, learning from
your own mistakes rather than from the mistakes of others%
-trategic planning for pro)ect management is unlike other forms of strategic planning
in that it is most often performed at the middle=management, rather than executive=
management% <xecutive level management is still involved, mostly in a supporting role,
and provides funding together with employee release time for the effort% <xecutive
involvement will be necessary to make sure that whatever is recommended by middle
management will not result in unwanted changes to the corporate culture%
1$1$ /(e Foundation for Excellence
'he foundation for achieving excellence in pro)ect management can best be
described as the pro)ect management maturity model !P$, which is comprised of
five levels, as shown in .igure 3=*% <ach of the five levels represents a different degree of
maturity in pro)ect management% <ach level is discussed in detail in the remaining
chapters% 'he levels are>
*0
'.1.1.Common language
In this level, the organization recognizes the importance of pro)ect management
and the need for a good understanding of the basic knowledge on pro)ect management
and the accompanying languageCterminology%
'.1.2.Common $rocesses
In this level, the organization recognizes that common processes need to be
defined and developed such that successes on one pro)ect can be repeated on other
pro)ects% Also included in this level is the recognition of the application and support of
the pro)ect management principles to other methodologies employed by the company%
'.1.3.0ingular met(odolog!
In this level, the organization recognizes the synergistic effect of combining all
corporate methodologies into a singular methodology, the center of which is pro)ect
management% 'he synergistic effects also make process control easier with a single
methodology than with multiple methodologies%
'.1.4.Benc(marking
'his level contains the recognition that process improvement is necessary to maintain a
competitive advantage% "enchmarking must be performed on a continuous basis% 'he
company must decide whom to benchmark and what to benchmark%
'.1.%.Continuous im$ro#ement
In this level, the organization evaluates the information obtained through
benchmarking and must then decide whether or not this information will enhance the
singular methodology%
,hen we talk about levels of maturity !and even life cycle phases$, there exists a
common misbelieve that all work must be accomplished se(uentially !i%e%, in series$% 'his
is not necessarily true% ;ertain levels can and do overlap% 'he magnitude of the overlap is
based upon the amount of risk the organization is willing to tolerate%
*2
8. 5ontinuou- Im+ro9ement
All too often complacency directs the decision=making process% 'his is particularly
true of organizations that have reached some degree of excellence in pro)ect management
and become self=satisfied% 'hey often realize only too late that they have lost their
competitive advantage% 'his occurs when organizations fail to recognize the importance
of continuous improvement% .igure 6=* illustrates the need for continuous improvement%
"i#ure 7)'* The eed for %otiuous im&rovemet$
As companies begin to mature in pro)ect management and reach some degree of
excellence, they achieve a sustained competitive advantage% Achieving this edge might
very well be the single most important strategic ob)ective of the firm% 5nce the firm has
this sustained competitive advantage, it will then begin to exploit it%
7$1$ Ca&a%it( Plai#
As companies become excellent in pro)ect management, the benefits of performing
more work in less time and with fewer resources become readily apparent% ;ompanies are
now struggling to develop capacity planning models to see how much new work can be
undertaken within the existing human and nonhuman constraints% #sing the approach
shown in .igure 6=+, pro)ects are selected based upon such factors as strategic fit,
profitability, consideration of who the customer is, and corporate benefits%
*3
"i#ure 7)4* Ca&a%it( Plai#$
'he next step points up one critical difference between average companies and
excellent companies% An excellent company will identify capacity constraints from the
summation of the schedules and plans% Pro)ect managers will meet with pro)ect sponsors
to determine the ob)ective of the plan, which is different than the ob)ective of the pro)ect%
Is the ob)ective of the plan to achieve the pro)ect?s ob)ective with the least cost, least
time, or least risk8 'ypically, only one of these applies, whereas immature organizations
believe that all three can be achieved on every pro)ect% 'his, of course, is unrealistic%
7$2$ Strate#i% Sele%tio of Pro,e%ts
,hat a company wants to do is not always what it can do% 'he critical constraint is
normally the availability and (uality of the critical resources% ;ompanies usually have an
abundance of pro)ects they would like to work on but, because of resource limitations,
they have to develop a prioritization system for the selection of pro)ects% 5ne commonly
used selection process is the portfolio classification matrix% <ach potential pro)ect
undergoes a situational assessment for strengths, weaknesses, opportunities, and threats%
'he pro)ect is then ranked on the nine=s(uare grid, based upon its potential benefits and
the (uality of resources needed to achieve those benefits%
*6
).2.1.1otential enefits of a $ro2ect
"roftability
*ustomer Satisfaction+,oodwill
"enetrate -ew #arkets+.uture
/usiness
evelop -ew !echnology
!echnology !ransfer
0eputation
Stabilize 1ork .orce
2tilize 2nused *apacity
).2.2..ualit! of Resources
3nowledge of /usiness
#anpower
.acilities( %4uipment( #achinery
"roprietary 3nowledge
Special %xpertise
0eputation
0elationship with 3ey Stakeholders
"ro'ect #anagement Skills
#oney
'his classification techni(ue allows for proper selection of pro)ects, as well as
providing the organization with the foundation for a capacity planning model to see how
much work the organization can take on% ;ompanies usually have little trouble figuring
out where to assign the highly talented people% 'he model, however, provides guidance
on how to make the most effective utilization of the average and below average
individuals as well%
*7
7$'$ -ori/otal A%%outi#
1ecessions and poor economic times have put pressure on the average company to
achieve better cost control% Historically, costs were measured on a vertical basis only%
'his created a problem in that pro)ect managers had no knowledge of how many hours
were actually being expended in the functional areas to perform the assigned pro)ect
activities% -tandards were very rarely updated and, if they were, it was usually without
the pro)ect manager?s knowledge% -trategic planning for cost control on pro)ects is a
three=phase effort%
).3.1.Budget3ased $lanning
'his is the development of a pro)ect?s baseline budget and cash flow based upon
reasonably accurate historical data% 'he historical databases are updated at the end of
each pro)ect%
).3.2.Cost4$erformance determination
'his is where the costs are determined for each work package and where the
actual costs are compared against the actual performance in order to determine the true
pro)ect status%
).3.3.5$dating and re$orting
'his is the preparation of the necessary reports for the pro)ect team members, line
managers, sponsors, and customer% At a minimum, these reports should address the
(uestions of>
1here are we today 5time and cost67
1here will we end up 5time and cost67
1hat problems do we have now and will we have in the future( and
what mitigation strategies have we come up with7
Good methodologies provide the framework for gathering the information to answer
these (uestions%
*9
7$4$ .r#ai/atioal +estru%turi#
<ffective pro)ect management cultures are based on trust, communication,
cooperation, and teamwork% ,hen the basis of pro)ect management is strong,
organizational structure becomes almost irrelevant% 1estructuring an organization only to
add pro)ect management is unnecessary and perhaps even dangerous% ;ompanies may
need to be restructured for other reasons, such as making the customer more important%
"ut successful pro)ect management can live within any structure, no matter how awful
the structure looks on paper, )ust as long as the culture of the company promotes
teamwork, cooperation, trust, and effective communication 'he organizations of
companies excellent in pro)ect management can take almost any form% 'oday, small= to
medium=size companies sometimes restructure to pool management resources% Darge
companies tend to focus on the strategic business unit as the foundation of their
structures% any companies still follow matrix management% Any structure can work with
pro)ect management as long as it has the following traits>
!he company is organized around non dedicated pro'ect teams.
It has a 8at organizational hierarchy.
It practices informal pro'ect management.
It does not consider the reporting level of pro'ect managers to be important.
'o sum it all up, effective cross=functional communication, cooperation, and trust are
bound to generate organizational stability%
7$0$ Carrier Plai#
In organizations that successfully manage their pro)ects, pro)ect managers are
considered professionals and have distinct )ob descriptions% <mployees traditionally are
allowed to climb one of two career ladders> the management ladder or the technical
ladder% !'hey cannot, however, )ump back and forth between the two%$ 'his presents a
problem to pro)ect managers, whose responsibilities bridge the two ladders% 'o solve this
problem, some organizations have created a third ladder, one that fills the gap between
technology and management% It is a pro)ect management ladder, with the same
opportunities for advancement as the other two%
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