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The Case for a Full-Function Project Office

By Scott S. Perry, PMP and Louis Leatham, CPM
Contributed by Kanbay Inc.

 

 

Introduction

In the United States, we spend more than $250 billion each year on IT application development of approximately 175,000 projects. The average cost of a development project for a large company is $2,322,000; for a medium company, it is $1,331,000; and for a small company, it is $434,000. Many of these projects will fail. Software development projects are in jeopardy and we can no longer ignore the calling for greater project discipline and best practice sharing.

The Standish Group research showed a staggering 31.1% of projects would be canceled before they ever get completed. Further results indicated 52.7% of projects would cost 189% of their original estimates. The cost of these failures and overruns are just the beginning. The lost opportunity costs were not measurable, but could have easily been in the trillions of dollars.

Based on this research, The Standish Group estimated that in 1995 American companies and government agencies would have spent $81 billion for canceled software projects. These same organizations would have paid an additional $59 billion for software projects to be completed, but would have exceeded their original time estimates. Risk was always a factor when pushing the technology envelope, but many of these projects were as mundane as a drivers license database, a new accounting package, or an order entry system.

On the success side, the average was only 16.2% for software projects that were completed on-time and on-budget. In the larger companies, the news was even worse: only 9% of their projects come in on time and on budget. And, even when these projects are completed, many were no more than a mere shadow of their original specification requirements. Projects completed by the largest American companies had only approximately 42% of the originally proposed features and functions. Smaller companies faired significantly better. A total of 78.4% of their software projects would get deployed with at least 74.2% of their original features and functions.

Purpose

This paper is intended to outline a suite of project office processes that are designed to reverse the project failure trend. Project Management is a discipline. It takes more than good project managers to have successful projects. It takes management commitment and support. It takes project participants that can accept new methodologies that they did not create on their own and accept more streamline approaches for the global benefit. It takes resources and an investment in tools and new processes. Finally, it takes time. Implementing a project office will take a minimum of three months until significant benefits are realized. However, when these benefits are realized, they can be significant and long lasting. Can you imagine the following?

  • Project completed on time and under budget as the norm instead of the exception?

  • Consistent coordination between users and developers so that there are minimal scope changes late into the projects?

  • Efficient use of personnel among multiple projects?

  • Higher reliability in production systems?

  • Projects aligned with business objectives?

  • Projects that implement reusable tools so that stakeholders have more predictability in project results?

  • Projects withdrawn at an early feasibility stage rather than after costly investment in development and testing?

  • Schedules that come in on a date proposed months earlier?

  • Improved project management skills throughout the enterprise?

These are just some of the benefits that can result with a fully functional project office. I had the opportunity of developing and operating a true project office for a cross-functional Year 2000 project. The project was so encompassing that we developed sub-projects and ran the organization as a true project office. We had direct reporting authority to the CIO and shared the table with a steering committee of cross-functional vice-presidents.

As a member of a core team chartered to implement a Project Office for the IT division of a major corporation, I experienced the development and implementation of the Project Office infrastructure through collaborative efforts. The PMI nine Knowledge areas were exercised to identify deliverables and ensure their quality and on time delivery.

The greatest difference a project office can make is leadership. Our client used its most experienced project manager and together, we formed a team that could effectively communicate project issues in business terms that executives could understand and act upon. Also, leveraging multiple projects allowed project leads to work under a consistent process, which helped them become better project managers. There also was a greater sense of sharing best practices that eventually worked to break down the inevitable stovepipe mentality.

Let’s drill down another level to uncover the components of projects and the process and tools of a successful project office in action.

Components of Projects

While projects tend to center around the specific deliverables, they indeed have an infrastructure. In most organizations, these infrastructural components are not formalized. Therefore, practices and methods are constantly being reinvented based on prior experience and the pressure to deliver the project on time and within budget. Certainly, formal methods and processes are not required for all projects; however, each organization should establish criteria that qualify them for varying degrees of formalization.

There are many slices of project management components. We felt it most beneficial to seek the most generally accepted body of knowledge. As of recent years, the Project Management Institute’s Project Management Body of Knowledge (PMBOK) is considered the most generally accepted. While the PMBOK is not tailored specifically to application development and maintenance projects, it handles them well.

The PMBOK lists nine knowledge areas of projects:

  • Project Integration Management: these disciplines include aligning projects with all other activity of the enterprise ensuring that projects are well-planned and executed within a structure of continual business readjustment.

  • Project Scope Management: these disciplines create identifiable boundaries of a project highlighting the work required to be performed and eliminating work that is not necessary to accomplish the project’s objectives.

  • Project Time Management: these disciplines ensure that projects complete consistently on time. This includes identifying and time-boxing all significant activities so those milestones can be appropriately anticipated.

  • Project Cost Management: these disciplines ensure that all project costs are included, estimated and managed against an approved budget.

  • Project Quality Management: these disciplines ensure that project processes are operating satisfactorily against predetermined standards.

  • Project Human Resource Management: these disciplines ensure that project personnel are effectively utilized.

  • Project Communications Management: these disciplines ensure that all stakeholders are properly informed of project information relevant to their position in the organization.

  • Project Risk Management: these disciplines address identifying, analyzing and taking action upon adverse factors that impact the project from achieving its objectives on time and within budget.

  • Project Procurement Management: these disciplines ensure that all goods and services required for the projects are obtained fairly and expeditiously under an agreed contract.

For those organizations that need to improve all project management disciplines, we recommend first focusing on Project Integration Management, then Project Scope, Time and Cost Management, then the rest.

Candidate Project Processes and Tools that should be considered for Project Office Implementation

Initiating:

Many projects are hampered from the very beginning. Initiating a project should require close scrutinization and analysis of the feasibility of a proposed project. The appropriate decision-makers need to be involved in this evaluation process. Each project needs to be compared in some objective manner to overall business plans. A Senior Management Champion was recruited by demonstrating the benefits of a Project Office and its integration with other processes such as software development. Identification of a sponsor was key in managing the conflicting interests of affected functional groups. A kickoff meeting was held to present the mission, goals and objectives of the initiative to all stakeholders and a question and answer session proved very productive in clarifying interpretations and identifying open issues and risks.

PMI materials such as the PMBOK Guide, PMI Membership Packets, and PMP Certification information was distributed at the meeting to encourage functional unit managers to begin local efforts to projectize their work and be in step with the Project Office.

Planning:

Many projects are planned poorly. Planning is an investment that pays dividends throughout the project life cycle. But invariably proper planning is not performed because it is inadequately budgeted, undervalued, and misunderstood. Many planning steps are often ignored since they are not considered important to the development of the final project deliverables. And that is where the fundamental problem lies.

What are key planning processes and tools that should be considered in every project?

Project Plan:  

Most uninitiated project leaders believe that a project plan is nothing more than a Gantt chart with milestones. However, it is much more comprehensive and valuable. At a minimum, a proper project plan contains the following elements:

  • Project Charter

  • Project Management methodology or approach

  • Scope and description of deliverables

  • A Work Breakdown Structure that breaks down project tasks into manageable components

  • Cost and performance measurement baselines

  • Constraints and assumptions

  • Technical requirements

Scope Plan:  

Each project should have rigid boundaries that clearly identify what is and is not included within the project deliverables and activities. Many derailed projects have trouble maintaining rigid boundaries due to pressures from executive and customer stakeholders.

Project Schedule and Cost Estimates:  

Many projects have repeatable and predictable tasks. One of the many benefits of a Project Office is to retain metrics on project tasks so that realistic data can be used for project schedule and cost estimates.

It is important not to take on too much, too soon. In our past projects, Project Office deliverables were staged, thereby instilling confidence in the sponsor and other stakeholders by offering a means of tracking progress and planning for use of the deliverables. A steering committee was organized from key stakeholders for conflict resolution and to ensure quality deliverables.

Executing and Controlling:

Many project managers put together a solid project plan, distribute the plan to all the stakeholders, then leave it alone for the balance of the project. Then comes the inevitable scope creep, user requirement changes, cost overruns, and open-ended delivery time. Most time on projects is spent in executing and controlling project activities. Project managers need easy-to-follow processes and tools to help control projects and deliver projects on time and within budget. Here are some key tools and processes that should be coordinated by the Project Office:

Formal Work Authorization Process:  Work packages have a greater chance of delivery within expectations when all stakeholders agree to them up-front. This process includes authorizing the inventory of components, the staff performing and supervising the work, and the sequence of activities. Work authorization systems should also be tailored with consideration to the scale of the project.

Scope Verification: This process includes inspection of various delivery components to ensure that they match to original scope and specifications. This process is done early enough in the project life cycle to reduce costs and delay.

Change Control: Change within projects is inevitable. However, it should not come without reasonable scrutiny and control. Formal change standards should be maintained to consider scope, cost, schedule, and quality control changes that become necessary to various stakeholders due to the fluid business environment.

Performance Reporting: Two of the urgent questions raised by senior stakeholders during project reviews are, "Will the project complete on time?" and " Will we be within budget?" Performance reporting metrics are critical in taking cost and schedule data for project progress to date and extrapolating them to the remaining stages. There is a cadre of performance reporting tools and techniques to choose from in the marketplace.

In past projects, the value of good communications to everyone was proven by use of a communications plan consisting of a monthly newsletter and a web page. Progress was tracked and next steps explained. This facilitated smooth integration of the deliverables with other processes and reduced misunderstandings by providing timely reports and relevant information.

Closing:

The closeout of projects is often ignored yet can provide critical lessons learned and project measurement documentation for a project management repository. The capturing and re-use of this documentation optimizes future projects. There are many knowledge management tools and techniques on the market; the chief threat to this activity is the lack of understanding of its true importance.

In past projects, the Project Office was closed with a recognition event and the following activities:

  • closing of all work orders

  • initiation of billing processes

  • notification/declaration of project completion

  • internal and external reviews to determine satisfaction and derive lessons learned

  • release of team members

  • a client satisfaction determination (agreed to scope and schedule, overall effectiveness of the PM)

Components of the Project Office

Now that we have introduced key aspects of projects that should be streamlined, engineered and re-used, what is the role of the Project Office? The Project Office is an evolving body of project management knowledge and tools that are dedicated to assist the enterprise in consistently delivering projects on time and within budget. The components of the Project Office are:

  • Project Management Training: in-house or contracted courses on project management disciplines

  • Project Management Methodology: project management processes including those considered best practices; maintenance of a repository of lessons learned

  • Evaluate Project Management Software: the standardization of tools and techniques used in projects throughout the organization

  • Project Management Consulting: the implementation of project management disciplines and best practices tailored to specific projects and situations.

  • Project Support: temporary hands-on direction of project activities to help recover projects that are off-track or out of scope.

  • Project Manager Human Resources: personnel management of a pool of experienced Project Managers that can be deployed when needed. They encourage that Project Managers are appropriately trained and certified.

Implementation of a Project Office

The emergence of project offices on the Information Technology (IT) landscape has been driven by a desire to improve the success rate of projects that are continually becoming more complex. Many organizations find themselves faced with the short-term need for project recovery on failing projects and the long-term need for a formal Project Office for project portfolio management.

The Project Office can take the following two-track approach to address the above short-term and long-term project management issues:

  • Project Recovery Approach

  • Project Office Implementation.

Track 1 - Project Recovery Approach

"The project is behind schedule, over budget and has been ‘almost done’ for months. The system is implemented—it just doesn’t work!"

Projects in need of recovery usually are faced with an escalating business problem (e.g., can’t pay employees correctly, extended cycle times), low trust levels between management and the project team or between information services and the business users, and several failed attempts to correct the situation. The problems often span across multiple organizational functions. Frequently, no single point of control exists to address the entire problem.

A project recovery approach provides resolution to existing business problems. Technical expertise, experience, and objectivity are exercised to:

  • Identify project symptoms and determine common root causes.

  • Define interim solutions to address major business issues.

  • Establish prioritized problem logs to define a common approach for improvement across systems.

  • Develop procedures to ensure that problems do not recur.

  • Develop workplan and communication processes to address current and new issues.

The project recovery approach focuses on providing immediate business solutions followed by lasting technology and business process adjustments. The following are key characteristics of a project recovery approach:

  • Focus on solving the urgent business problem first, not allocating blame.

  • Incorporate involvement of cross-functional management.

  • Include comprehensive assessment and solution, encompassing:

    • Project Management Practices

    • Business Processes and Procedures

    • System Design and Data Integrity

  • Recognize importance of a customized approach to each project.

  • Employ a tactful style that nonetheless acknowledges the urgency of the project.

Track 2 - Full-Function Project Office Implementation

The full function Project Office can be implemented in a three-stage process. The staged approach, as opposed to the big bang approach, ensures project management basics are in place before moving to the next stage of project services.

First Stage:

The Project Office develops and delivers project management training courses and a project management methodology. Strong project managers become trainers; new project managers become more disciplined. The Project Office is formally kicked off and recognized throughout the enterprise. The Project Office Charter is published. The Director of the Project Office is assigned along with the Program Manager, Project Management Consultants and at least one Administrative Assistant. These individuals identify training requirements and make these available to staff and management. Also, the new group develops a methodology of best practices that may be a hybrid of existing tools and techniques with off-the-shelf models.

Training:

Courses are designed to cover project management basics and are available to anyone involved in project management. They are designed to give a working knowledge of the Project Management Institute’s nine knowledge areas: Integration, Scope, Time, Cost, Quality, Human Resources, Risk, Communications, and Procurement Management.

Methodology:

The project management methodology consists of processes, best practices; lessons learned, and project management software. The processes and tools can be a combination of ready to use templates and off the shelf software. An overall process is developed to receive, assign, manage, and close out projects. Metrics are developed to measure project performance.

Lessons learned and best practices are maintained in an electronic repository for ready access by both local and remote sites. This information is reviewed during project plan development.

Second Stage:

The Project Office provides consulting services, as-needed project support, and project portfolio management. This stage allows the Project Office to become an integrated part of delivering projects. Deliverables and methodologies become consistent and predictable. At this point, glaring holes in projects are identified and fixed. The Program Manager begins to analyze the portfolio of projects for selection and sequencing. Also, the Project Office begins to be recognized as a Center of Excellence for project management as Project Management Consultants are deployed for as-needed support and project consulting.

Project Management Consulting Services:

Assistance is provided in project recovery strategies, start-up activities, writing project proposals, and plans. The consultant transfers project management knowledge to the team but does not administer the project.

As-Needed Project Support:

The Project Office monitors project processes and assistance is provided to ensure project success. Earned value, schedule and cost variances are tracked and used to project success based on the industry-standard concept of the triple constraints (cost, time, and quality) of projects.

Portfolio Management:

There are two parts to the portfolio management process: project selection and portfolio review:

The portfolio selection management process includes project inventory, selection, and prioritization. The Project Office establishes a project selection and review committee composed of senior members from business operations and the IT organization.

The portfolio review process is a presentation to the committee by the project manager of summarized project data. The purpose is to verify status against plan and determine if the project should continue. The entire project portfolio mix should provide the organization with the greatest return on investment.

Third Stage:

The Project Office provides direct project services and deploys full time project managers for projects. At this point the organization becomes truly projectized and the benefits of the Project Office are optimized. Project Managers and Project Administrators are finally deployed and provide full-function project office activities.

Project Services

Project services include task scheduling, report consolidation (Master Schedule) and distribution, and maintenance of the project binder and repository. The Project Office is also involved with resource estimating, project control, variance analysis, and administrative support. A centrally controlled database of personnel resources available for project work is used to manage the resource pool.

Project Managers

The project managers are assigned projects of varying duration and complexity based on availability and experience. The project managers provide full life-cycle project management using the Project Office methodology. The project office establishes a career path for project managers and encourages them to become certified project managers within 1-2 years. The Project Management Professional (PMP) certification from the Project Management Institute is the most widely recognized certification. Some organizations have developed internal project management certification programs to address specific skill requirements.

Case Study: Anatomy of Project Office Implementations

We had the opportunity of developing and operating a true project office for a cross-functional Year 2000 project. The project was so encompassing that we developed sub-projects and ran the organization as a true project office. We had direct reporting authority to the CIO and shared the table with a steering committee of cross-functional vice-presidents.

In another instance, as a member of a core team chartered to implement a Project Office for the IT division of a major corporation, we experienced the development and implementation of the Project Office infrastructure through collaborative efforts. The PMI nine Knowledge areas were exercised to identify deliverables and ensure their quality and on time delivery.

The greatest difference a project office can make is leadership. Our client used its most experienced project manager and together, we formed a team that could effectively communicate project issues in business terms that executives could understand and act upon. Also, leveraging multiple projects allowed project leads to work under a consistent process, which helped them become better project managers. There also was a greater sense of sharing best practices that eventually worked to break down the inevitable stovepipe mentality.

A senior management champion was recruited by demonstrating the benefits of a Project Office and its integration with other processes such as software development. Identification of a sponsor was key in managing the conflicting interests of affected functional groups. A kickoff meeting was held to present the mission, goals and objectives of the initiative to all stakeholders and a question and answer session proved very productive in clarifying interpretations and identifying open issues and risks.

PMI materials such as the PMBOK Guide, PMI Membership Packets, and PMP Certification information was distributed at the meeting to encourage functional unit managers to begin local efforts to projectize their work and be in step with the Project Office.

It is important not to take on too much, too soon. Project Office deliverables were staged, thereby instilling confidence in the sponsor and other stakeholders by offering a means of tracking progress and planning for use of the deliverables. A steering committee was organized from key stakeholders for conflict resolution and to ensure quality deliverables.

The value of good communications to everyone was proven by use of a communications plan consisting of a monthly newsletter and a web page. Progress was tracked and next steps explained. This facilitated smooth integration of the deliverables with other processes and reduced misunderstandings by providing timely reports and relevant information.

The Project Office was closed with a recognition event and the following activities:

  • closing of all work orders

  • initiation of billing processes

  • notification/declaration of project completion

  • internal and external reviews to determine satisfaction and derive lessons learned

  • release of team members

  • a client satisfaction determination (agreed to scope and schedule, overall effectiveness of the PM)

Conclusion:

The time has come for an implementation of a full-function Project Office in all enterprises that deliver projects. The benefits unquestionably outweigh the costs. However, the key in making the decision is understanding the discipline that will be required throughout the organization to standardize processes and evolve the organizational model.


References:

Mairs, Scott 1997. Why Now is the Right Time for You to Start a Grassroots Project Management Movement within Your Company!

Schneidmuller, James J. 1997. The Making of a Professional Project Management Organization.

Block, Thomas R. 1997. The Project Office - Why More Companies Are Adopting It to Help Manage IT Projects.

The Standish Group 1995. The CHAOS Project Management Research Study

PMI Standards Committee 1996. A Guide to the Project Management Body of Knowledge

Block, Thomas R. 1999, The Seven Secrets of a Successful Project Office


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