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Updated for today's businesses-a proven model FOR assessment and ongoing improvement
Using the Project Management Maturity Model, Second Edition is the updated edition of Harold Kerzner's renowned book covering his Project Management Maturity Model (PMMM). In this hands-on book, Kerzner offers a unique, industry-validated tool for helping companies of all sizes assess and improve their progress in integrating project management into every part of their organizations.
Conveniently organized into two sections, this Second Edition begins with an examination of strategic planning principles and the ways they relate to project management. In the second section, PMMM is introduced with in-depth coverage of the five different levels of development for achieving maturity. Easily adaptable benchmarking instruments for measuring an organization's progress along the maturity curve make this a practical guide for any type of company.
Complete with an associated Web site packed with both teaching and learning tools, Using the Project Management Maturity Model, Second Edition helps managers, engineers, project team members, business consultants, and others build a powerful foundation for company improvement and excellence.
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Using the Project Management Maturity Model
By Harold Kerzner
John Wiley & SonsISBN: 0-471-69161-5
Chapter OneThe Need for Strategic Planning for Project Management
For more than 40 years, American companies have been using the principles of project management to get work accomplished. Yet, for more than 30 of these years, very few attempts were made to recognize project management as a core competency for the company. There were three reasons for this resistance to project management. First, project management was viewed as simply a scheduling tool for the workers. Second, since this scheduling tool was thought to belong at the worker level, executives saw no reason to look more closely at project management, and thus failed to recognize the true benefits it could bring. Third, executives were fearful that project management, if viewed as a core competency, would require them to decentralize authority, to delegate decision-making to the project managers, and thus to diminish the executives' power and authority base.
As the 1990s approached, project management began to mature in virtually all types of organizations, including those firms that were project-driven, those that were non-project-driven, and hybrids. Knowledge concerning the benefits project management offered now permeated all levels of management. Project management came to be recognized as a process that would increase shareholder value.
This newknowledge on the benefits of project management allowed us to dispel the illusions and misconceptions that we had believed in for over 30 years. These misconceptions or past views are detailed below, together with current views.
Cost of Project Management
Misconception: Project management will require more people and increase our overhead costs.
Present view: Project management allows us to lower our cost of operations by accomplishing more work in less time and with fewer resources without any sacrifice in quality.
Misconception: Profitability may decrease.
Present view: Profitability will increase.
Misconception: Project management will increase the number of scope changes on projects, perhaps due to the project manager's desire for creativity.
Present view: Project management provides us with better control of scope changes. Good project managers try to avoid scope changes.
Misconception: Because of multiple-boss reporting, project management will create organizational instability and increase the potential for conflicts.
Present view: Project management makes the organization more efficient and effective through better organizational behavior principles.
Misconception: Project management is really "eyewash" for the customer's benefit.
Present view: Project management allows us to develop a closer working relationship with our customers.
Misconception: Project management will end up creating more problems than usual.
Present view: Project management provides us with a structured process for effectively solving problems.
Misconception: Project management is applicable only to large, long-term projects such as in aerospace, defense, and construction.
Present view: Virtually all projects in all industries can benefit from the principles of project management.
Misconception: Project management will increase the potential for quality problems.
Present view: Project management will increase the quality of our products and services.
Misconception: Multiple-boss reporting will increase power and authority problems.
Present view: Project management will reduce the majority of the power/authority problems.
Misconception: Project management focuses on suboptimization by looking at the project only.
Present view: Project management allows us to make better decisions for the best interest of the company.
Misconception: Project management delivers products to a customer. Present view: Project management delivers solutions to a customer.
Misconception: The cost of project management may make us noncompetitive. Present view: Project management will increase our business (and even enhance our reputation).
WALL STREET BENEFITS
The benefits recognized by the present views of project management are now seen to be strategic initiatives designed to enhance shareholder value. Perhaps one of the best examples showing this is the effect on stock price illustrated in Figure 1-1. An executive who wishes to remain anonymous believes that the difference between the target selling price of his company's stock and the actual selling price can be attributed to the quality of the company's project management system and management's ability to execute projects within time, cost, and quality constraints and to the customer's satisfaction. If the actual selling price was below the target selling price, it might indicate that the company, especially if it were project-driven, was having fundamental problems with project execution, which would affect competitiveness and profitability.
The concept behind Figure 1-1 may seem plausible from a theoretical point of view. In reality, other forces may exist that can have a significant impact on the stock price, such as recessions, lack of new products, competitor's activities, legal problems, and ratings by financial institutions.
It may take years for a company just beginning to adopt project management to reap the potential benefits shown in Figure 1-1. Some of the organizations that believe they are achieving the benefits of Figure 1-1 are in these fields:
Automotive subcontractors, some of whom are now treated as "partners" by their customers due to the quality of their project management systems.
Financial institutions, especially those that are aggressively acquiring and assimilating other organizations and rapidly integrating both cultures into one without any appreciable negative effect on earnings.
High technology companies who have beaten their competitors to the marketplace with new products.
Not all companies have the ability to reap the benefits of project management. Some do not yet recognize the benefits of or need for strategic planning for project management. Others recognize its importance but simply lack expertise in how to do it. In either event, strategic planning for project management is a necessity.
Given the fact that project management is no longer seen as just a quantitative tool for the employees, but is recognized as a source of benefits to the whole corporation, project management must satisfy the needs of its stakeholders. Stakeholders are individuals or groups that either directly or indirectly are affected by the performance of the organization. These individuals are not only affected by the organization's performance, but may even have a claim on its performance. As an example, unions can have a strong influence on how a project management methodology is executed. The general public and government agencies may be affected through health, safety, and ethical issues in the way projects are executed.
Although there are several ways to classify stakeholders, the most common method is as follows:
Financial institutions (suppliers of capital)
The Product/Market Stakeholders
Local government committees
Board of Directors
Employees in general
Any strategic planning efforts must focus on the best interests of all of an organization's stakeholders, not merely a few.
There are two primary reasons for wanting to perform strategic planning for project management. First and foremost is the desire to secure a competitive advantage. The second reason is to minimize the competition's competitive advantage or to strengthen your own competitive advantage.
The key to reducing any disadvantage that may exist between you and your competitors is the process known as gap analysis. Figure 1-2 illustrates the basic concept behind gap analysis. You can compare your firm either to the industry average or to another company. Both comparisons are shown in Figure 1-2.
Just for an example, using Figure 1-2, we can compare the gaps in total sales. According to Figure 1-2, the gap between your firm and your major competitor is significant and appears to be increasing. The gap between your organization and the industry average is also increasing, but not as greatly as the gap between you and your major competitor.
For a company aspiring to perform strategic planning for project management, there are three critical gaps to analyze:
Speed to market
Competitiveness on cost
Competitiveness on quality
Figure 1-3 shows the gap on speed to market or new product development times. If the gap is large between you and either the industry average or your major competitor, then to win the battle you must develop a project management methodology that allows for the overlapping of life cycle phases combined with appreciable risk-taking. The larger the gap, the greater the risks to be taken. If the gap cannot be closed, then your organization must decide if its future should rest on the shoulders of a "first-to-market" approach or if a less critical "me-too" product approach is best. Another unfavorable result would be the firm's inability to compete on full product lines. The latter could impact the firm's revenue stream.
Another critical aspect of the schedule gap analysis shown in Figure 1-3 is customer's future expectations. Consider, for example, the auto manufacturers and their tier one suppliers. Today, these organizations operate on a three-year life cycle from concept to first production run. If you were a tier one supplier, however, and you found out that your primary customers were experimenting with a 24-month car, then you would need to perform strategic planning, not only to be competitive but also to be able to react quickly should your customers mandate schedule compression.
A gap on cost is an even more serious situation. Figure 1-4 illustrates the cost or pricing gap. Strategic planning for project management can include for provisions in the methodology for better estimating techniques, the creation of lessons learned files on previous costing, and possibly the purchasing of historical databases for cost estimating.
Good project management methodologies allow work to be accomplished in less time, at lower cost, with fewer resources, and without any sacrifice in quality. But if a cost/pricing gap still persists despite good project management, then the organization may either have to be more selective about which projects it accepts or choose to compete on quality rather than on cost. The latter assumes that your customers would be willing to pay a higher price for added quality or added value features.
Gaps on time and cost may not necessarily limit the markets in which you compete. However, gaps on quality, as shown in Figure 1-5, can severely hinder your firm's ability to compete. The critical gap in Figure 1-5 is the difference between the customer's expectations of quality and what you can deliver. Good project management methodologies can include policies, procedures, and guidelines for improving quality. However, the gap on quality takes a lot longer to compress than the gaps on time and cost.
Strategic planning for project management, combined with a good project management methodology, can compress the gaps on time, cost, and quality. However, there are still critical decisions that must be made. Marketing must decide what products to offer and which markets to serve. The information systems people must assist in the design, development, and/or selection of support systems. And senior management must provide sufficient and qualified resources.
Strategic planning for excellence in project management needs to consider all aspects of the company: from the working relationships among employees and managers and between staff and management, to the roles of the various players (especially the role of executive project sponsors), to the company's corporate structure and culture. Other aspects of project management must also be planned. Strategic planning is vital for every company's health. Effective strategic planning can mean the difference between long-term success and failure. Even career planning for individual project managers ultimately plays a part in a company's excellence, or its mediocrity, in project management. All of these subjects are discussed in the following chapters.
Excerpted from Using the Project Management Maturity Model by Harold Kerzner Excerpted by permission.
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Table of Contents
Foreword to the First Edition xiii
1 The Need for Strategic Planning for Project Management 1
Wall Street Benefits 3
Gap Analysis 5
Concluding Remarks 9
2 Impact of Economic Conditions on Project Management 11
Historical Basis 11
3 Principles of Strategic Planning 15
General Strategic Planning 15
What Is Strategic Planning for Project Management? 16
Executive Involvement 25
The General Environment 26
Critical Success Factors for Strategic Planning 28
Qualitative Factors 29
Organizational Factors 30
Quantitative Factors 32
Identifying Strategic Resources 34
Why Does Strategic Planning for Project Management Sometimes Fail? 38
4 An Introduction to the Project Management Maturity Model (PMMM) 41
The Foundation for Excellence 42
Overlap of Levels 43
Assessment Instruments 47
5 Level 1: Common Language 49
Advancement Criteria 51
Assessment Instrument for Level 1 52
Answer Key 63
Explanation of Points for Level 1 66
6 Level 2: Common Processes 67
Life Cycles for Level 2 68
Advancement Criteria 72
Overlapping Levels 73
Assessment Instrument for Level 2 73
Explanation of Points for Level 2 76
7 Level 3: Singular Methodology 77
Integrated Processes 78
Management Support 82
Informal Project Management 83
Training and Education 83
Behavioral Excellence 85
Advancement Criteria 86
Overlapping Levels 88
Assessment Instrument for Level 3 88
Answer Key 94
Explanation of Points for Level 3 96
8 Level 4: Benchmarking 99
The Project Office/Center of Excellence 101
Benchmarking Opportunities 103
Advancement Criteria 105
Assessment Instrument for Level 4 106
Explanation of Points for Level 4 109
9 Level 5: Continuous Improvement 111
Continuous Improvement Areas 112
The Never-Ending Cycle 114
Examples of Continuous Improvement 115
Developing Effective Procedural Documentation 116
Project Management Methodologies 122
Continuous Improvement 122
Capacity Planning 124
Competency Models 125
Managing Multiple Projects 127
End-of-Phase Review Meetings 129
Strategic Selection of Projects 130
Portfolio Selection of Projects 133
Horizontal or Project Accounting 136
Organizational Restructuring 138
Career Planning 140
Assessment Instrument for Level 5 141
Explanation of Points for Level 5 142
10 Sustainable Competitive Advantage 145
Strategic Thrusts 146
The Need for Continuous Improvement 149
Project Management Competitiveness 150
Products versus Solutions 151
Enterprise Project Management 152
Engagement Project Management 153
11 Special Problems with Strategic Planning for Project Management 155
The Many Faces of Success 156
The Many Faces of Failure 157
Training and Education 161
Cultural Change Management 162
The Impact of Risk Control Measures 177
Dependencies between Risks 179
Selecting the Appropriate Response Mechanism 182
12 The Project Office 185
The Project Office: 1950–1990 186
The Project Office: 1990–2000 186
The Project Office: 2000–Present 188
Types of Project Offices 190
Project Management Information Systems 190
Dissemination of Information 195
Development of Standards and Templates 197
Project Management Benchmarking 198
Business Case Development 199
Customized Training (Related to Project Management) 200
Managing Stakeholders 201
Continuous Improvement 202
Capacity Planning 202
Risks of Using a Project Office, Reporting and Structure 203
Reporting and Structure 205
13 Six Sigma and the Project Management Office 207
Traditional versus Nontraditional Six Sigma 208
Understanding Six Sigma 210
Six Sigma Myths 212
Use of Assessments 215
Project Selection 218
Typical PMO Six Sigma Projects 220
14 How to Conduct a Project Management Maturity Assessment 223
Find Ways to Bypass the Corporate Immune System 223
Explain Why You Are Doing This 224
Pick the Model That Is Best for Your Organization 225
Maturity Models: How Do They Compare? 226
Create the Right Fit 227
Choose an Appropriate Delivery Method 227
Establish Responsibility 231
Decide Who Should Participate 231
Turn the Results into an Action Plan 232
Develop a Remedial Training Curriculum 233
Keep Top Management Informed 234
Virtual Reporting 235
Benchmark Your Results to Others 235
Do It Again 235
15 Understanding Best Practices 237
What to Do with a Best Practice 238
Critical Questions 239
Levels of Best Practices 240
Common Beliefs 242
The Best Practices Library 243
Case Studies 247
Case 1: Packer Telecom 247
Case 2: Luxor Technologies 249
Case 3: Altex Corporation 253
Case 4: Acme Corporation 256
Case 5: Quantum Telecom 258
Case 6: Lakes Automotive 260
Case 7: Ferris HealthCare, Inc. 261
Case 8: Clark Faucet Company 263
Case 9: Hyten Corporation 266
Case 10: Como Tool and Die (A) 276
Case 11: Como Tool and Die (B) 280
Case 12: Macon Inc. 283
Case 13: The Trophy Project 285
Case 14: The Blue Spider Project 288
Case 15: Corwin Corporation 301
Case 16: MIS Project Management at First National Bank 311