It’s been shown again and again that business components from R&D to systems, engineering to manufacturing can benefit from a project-centered management approach. Now, organizations that have had success at the departmental or divisional level are taking the project management approach to new levels, adopting PM standards into across-the-board management philosophies and business strategies. This new model is known as the Project Management Center of Excellence. PMCoEs need every group within the organization to work under the PM model, but more important, they need the proper tools to implement PM standards in new areas. A crucial tool in developing project management objectives across the company, this book covers: * Positioning project management as a business strategy * Creating and managing an organizational PM portfolio * Education, training, and internal PM certification programs * Classifying projects, benchmarking, and mapping a methodology
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About the Author
Dennis Bolles (Holland, MI) is a project management consultant and the vice president, Certification and Education, for the Project Management Institute (PMI), Western Michigan chapter.
Read an Excerpt
Building Project Management Centers of Excellence
By Dennis Bolles
AMACOMCopyright © 2002 Dennis Bolles
All rights reserved.
Today's global market companies, regardless of industry and size, are looking to improve their systems and processes to become more competitive. One way they are attempting to do this is by establishing project management as a core competency throughout the organization. By setting up standardized procedures within the company, they hope to learn from past mistakes, make processes more efficient, and develop people's skills and talents to work more effectively. This book is written for those organizations that are considering taking, or that have already taken, this first step, but are having difficulty gaining the level of acceptance necessary to achieve complete success. The list of organizations attempting to integrate project management disciplines and best practices into the way they manage their businesses is expanding daily; however, those who have succeeded in doing so is significantly smaller. The answer for many of these companies is positioning. By positioning we mean that the group charged with the implementation of project management and best practices is positioned in the uppermost levels of the firm. It is critical that all levels of workers and managers see that the executive level of the firm supports it without hesitation, publicly, and completely. Without support from the top, it won't get off the ground. Typically, the group charged with the responsibility to get the system up and running is called a Project Management Center of Excellence (PMCoE). Positioning is a critical aspect of establishing project management as a company's enterprise-wide core competency. It must first be viewed and treated as a key business function throughout the organization. It is the first critical step toward successfully institutionalizing project management best practices as a core competency. The first step that is required to achieve the goal of establishing project management enterprise-wide is the creation of a PMCoE that has the authority and responsibility to get the job done.
This book provides examples that show how to implement project management disciplines and practices successfully. Establishing project management centers of excellence should not be viewed as a quick-fix solution, but rather as a long-term, foundation-building effort. It is not a trivial pursuit. Deciding to establish an effective PMCoE is the opening action. It requires significant changes in organizational structure and obliges people at all levels in the company to learn new concepts of managing by applying new methods to complete the work they do. Careful planning with the tenacity to stay on track and not lose sight of the end goal is essential.
In this book, we identify the structural changes required; how to effectively manage and distribute company resources; how to develop and distribute an effective project management methodology; how to identify education and training criteria, curriculum, and performance evaluation methods; how to ensure a project's readiness before work begins; and, finally, how to identify the growth levels the organization must progress through as it matures.
The Driving Forces
Competing globally, increasing market share, reducing costs, and improving profits — all in the pursuit of producing better products and services faster through the use of high technology solutions — are just a few of the reasons why most organizations seek better ways to improve time-to-market, cost-to-market, and quality-to-market. The effective use of project management techniques is a critical element for achieving improvements in these areas. Some firms even view project management as a key weapon in their arsenal to increase customer satisfaction and beat the competition. Dr. Harold Kerzner, Executive Director for Project Management at the International Institute for Learning, states the case well in this excerpt from the preface of his book, In Search of Excellence in Project Management:
Project management is no longer viewed as a system internal to the organization. It is now viewed as a competitive weapon that brings quality and value added to the customer.
Kerzner identifies twenty-seven companies that are considered world-class organizations that excel at using project management as a strategic management tool and that have either achieved some degree of excellence or are headed in the right direction to achieve excellence in the future.
The organization as a whole must recognize and adopt new attitudes that embrace project management best practices as the normal way of working. This enables them to bring the full power of this new competitive weapon to bear in the battle of continued business growth and, in many cases, ultimate survival in today's highly competitive global market.
PMCoEs are created for many different reasons; however, they typically share an origin that involves some degree of pain, which brings about a need to take action to relieve or eliminate the pain.
Changes often occur as a result of pain, which is caused by some circumstance — either internal or external — that is outside the control of the organization. Figure 1-1 shows a simple example of how changes typically come about. These circumstances may motivate organizations to establish a PMCoE. Some examples include:
Losing market share due to increasing global competition
Poor cost vs. profit ratios resulting in falling or stagnant stock values
Competition with faster time-to-market
Changing economic conditions that force downsizing
Effective use of fewer resources caused by downsizing
Implementing new technology to become more efficient
Managing changes brought on by dynamic growth
New executives who have seen it add value elsewhere
Understanding the motive behind the decision to create a PMCoE is very important, because if the motive is unclear or poorly communicated, then defining the purpose, goals, and objectives of the PMCoE becomes challenging.
The desire to set up a PMCoE can originate from any level of the organization, but frequently emerges from an area of the organization whose projects have the greatest impact on all sectors of the company. Information Technology (IT) is typically the functional area where PMCoE start out in most organizations, regardless of industry. This happens for several reasons.
The rapid growth in technology and desktop use of business applications have generated a large number of projects that affect the whole organization.
IT is most often where the greatest number of strategic, mission-critical projects affecting the whole organization occur.
The Y2K issue brought the effectiveness of project management to the forefront for many IT executives.
IT consumes a significant portion of the annual operating budget in most large organizations, thereby giving mission-critical projects high visibility.
Reports from IT watchdog groups, such as Gartner and Standish, indicate a poor record of successes for IT projects in general.
Where the PMCoE is positioned in the organization's management structure has a significant impact on the overall success of establishing project management disciplines enterprise-wide. Positioning also affects the title you give this function or unit and how you define the role it plays in the organization.
Giving It a Name
Assigning a name to a function gives it significance and differentiates it from other functions within the organization. The names or titles typically given to this function include:
Corporate Project/Program Management Office (CPMO)
Project Management Center of Excellence (PMCoE)
Project Management Office (PMO)
Project Support Office (PSO)
Project Office (PO)
These titles are often used interchangeably, and it is usually a matter of personal preference rather than application of any particular standard. A recent effort by various authors who have written about the Project Office provides some definition for these titles. Table 1-1 contains the definitions used in this book, which are also being used in a number of organizations.
Two key issues affect the assigning of titles: first, defining where the function will reside within the organization structure (the direct line of report), and second, what purpose it will serve in that position. This second issue is discussed in greater detail in Chapter 2. Titles often add significance to the roles, responsibility, accountability, and requisite authority (RRAA) of the position. Table 1–2 provides brief descriptions for each of the roles listed in Table 1–1.
The project management organization structure shown in Figure 1–2 illustrates how the PMCoE might be implemented in a large organization with multiple divisions or business units or geographical regional operations. The number of layers and the number of project management units within each layer depends on the size of the unit, the number of annual projects in the portfolio, and the complexity of the projects within the various levels of the organization. For small to mid-sized organizations, the number of layers and functional units may be adjusted to fit the amount of control required by the project activity at each level. The need to accommodate different management styles, work environments, and product life cycle issues means there is no one-size-fits-all organization structure. The main concern in developing a project management organization structure is establishing the functional ownership and leadership of the discipline at the highest level within the company. Further decomposition of the project management structure depends on the amount of support and control required at each level.
As we mentioned earlier, titles also make a difference. Different titles eliminate confusion when communicating the distinctions among the various project management "offices" within the organization structure. It is important to note, however, that positioning the project management function in the organization's management structure has far more importance and has a greater impact on institutionalizing project management best practices than what title it is given.
Unfortunately, establishing a Project Office is most often done at a functional department level rather than at the corporate level. Positioning the office at the corporate level is especially important, however, if the long-term objective is to instill project management best practices in all areas of the company as a core competency.
The Importance of Positioning
Consider what would happen if a company did not have the typical business functional departments — engineering, finance, purchasing, etc. — established at the corporate level. Without these enterprise-wide business functions, the managers within each business unit would have to decide how engineering, finance, purchasing, etc., would be done in their areas of responsibility without considering the need to manage shared resources and communicate important information with other departments. Because the business functions critical to managing the company as a whole would differ from department to department, there would be few, if any, common processes. Work would be completed in an ad hoc environment, and chaos would be the rule of the day. Fortunately, most organizations understand the importance of establishing ownership and leadership of key business functions at the corporate level, and common processes and practices across the organization are the norm rather than the exception.
Positioning is equated with authority in organization structures; the closer something is to the top, the higher its level of autonomy, authority, and responsibility. Establishing project management in most organizations is very difficult to do, because managers are afraid of losing their authority and control over the resources that are assigned to them. Workers are afraid of being held accountable for performing a new set of requirements. This fear, expressed as resistance, comes from lack of information and understanding about how the changes will affect their jobs. Positioning the project management function at the highest level within the organization provides the measure of autonomy necessary to extend its authority across the organization while substantiating the value and importance the function has in the eyes of executive management.
Project Management as a Business Function
Project management has the greatest impact on a customer's recognition of an organization as a world-class leader in time-to-market, cost-to-market, and quality-to-market. Completing projects successfully on a consistent basis is a basic requirement to receive excellence awards from most customers. This is the goal of every organization. If projects are an integral part of the business, it stands to reason that there should be a clear understanding of what is and isn't a project, and what is required to satisfy the customer.
Organizations that sell products or services should recognize that their business livelihood depends on completing projects that directly affect their bottom line. They also should realize that completing projects successfully on a consistent basis requires the application of specific knowledge, skills, tools, and techniques. Doesn't it make sense then that such an important business function be established at the executive management level of the organization? How else can a company ensure that projects are managed successfully across the organization, and that strategic, mission-critical projects are given the best opportunity to succeed from the very start?
Positioning the project management function in a hierarchical organization structure establishes its autonomy and thus "ownership" of the responsibility for setting up, distributing, supporting, and managing the application of project management best practices within the company, as shown in Figure 1–2.
Enterprise-wide adoption of project management best practices calls for single ownership of the function. Establishing common practices across an organization at all levels is very difficult, if not impossible, without a sole ownership being clearly established. Ownership must be recognized as an independent business function at the highest level of the organization to enable the authority that is required to distribute, monitor, and control the distribution of the disciplines required to achieve enterprise-wide project management best practice capabilities.
The next step is to determine how to begin putting the project management organization structure in place, starting with the PMCoE. Establishing the PMCoE organization structure is a significant undertaking. It will meet with resistance at various levels of the organization for many different reasons. One of the major reasons is the most obvious, but it is seldom given sufficient consideration. People generally resist changes because they don't understand why the changes are necessary and how the changes will impact them. Most prefer the status quo to doing something new, especially when it involves how they perform their work. Department managers, sometimes referred to as "the frozen middle," resist organizational changes because they fear they may lose their most valued employees — their project managers — if they are moved into a PMCoE/PMO/PSO as part of the restructuring process, and people = power in most companies.
Two typical scenarios describe where project managers could reside in a PMCoE organization structure, and hence where the shift in power will occur. Scenario 1 has all of the project managers reporting directly to the PMCoE with a dotted line responsibility to the function department where they previously resided. Scenario 2 is just the opposite, with the project managers remaining with and directly reporting to the functional department heads with a dotted line responsibility to the PMCoE as shown in Figure 1–3.
Table 1–3 lists some of the advantages and disadvantages of selecting scenario 1 over scenario 2.
The advantages noted in scenario 1 are certainly legitimate, however, they probably don't outweigh the disadvantages enough to tip the scales. This is because the advantages don't actually occur until the organization reaches a higher level of maturity. Keeping the disruptions to a minimum during the initial stages of establishing the PMCoE structure is the right thing to do.
PMCoE Organization Roles
Roles and staffing requirements vary depending upon the size, structure, support requirements, and average number of projects being managed concurrently within the various business units. Table 1–4 identifies roles, education, experience, and core capabilities that could be required within the various levels of the PMCoE structure. We do not suggest that all these positions be created, nor are they needed during the early stages of establishing the PMCoE organization structure. After the PMCoE organization structure is in place, staffing can be added as needed.
Excerpted from Building Project Management Centers of Excellence by Dennis Bolles. Copyright © 2002 Dennis Bolles. Excerpted by permission of AMACOM.
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Table of ContentsSection I:Establishing the PMCoE
1. Positioning Means Everything
2. The First Moves Affect the Outcome
3. Creating & Managing a Project Portfolio
4. Key Ingredients of a Methodology
5. Education & Training Critical Success Factors
6. Read-Set Go!
7. Maturity Takes Time
Section II: Project Management Methodology Guidelines
9. Project Authorization
10. Project Initiation
11. Project Planning
12. Project Execution
13. Project Closing
14. Education and Training