dr_kerzner_2.pdf

• Most of the material in this presentation has been taken or adapted from several sources:

• Harold Kerzner, Advanced Project Management: Best Practices on Implementation, 2nd Edition, 2004, John Wiley & Sons Publishers

• Harold Kerzner, Project Management Best Practices: Achieving Global Excellence, 1st Edition, 2006; and 2nd Edition, 2010, John Wiley & Sons and IIL Publishers

• Harold Kerzner and Frank Saladis, Value-Driven Project Management, 2009, John Wiley & Sons and IIL Publishers

• Carl Belack and Harold Kerzner, Managing Complex Projects, 2010, John Wiley & Sons and IIL Publishers © 2010 by Dr. Harold Kerzner. All rights reserved. Material and slides cannot be copied or transmitted in any electronic format without written permission of Dr. Harold Kerzner.

COPYRIGHT

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© 2010 International Institute for Learning, Inc.

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Changing Times: The PM Becomes a Business Manager

TODAY’S VIEW OF PROJECT MANAGEMENT

• Project management has evolved into more of a business process rather than just a project management process.

• Today we are managing our business by projects, and project management is being applied to both traditional and nontraditional projects.

• Each project is seen as a collection of value scheduled for realization.

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ROLE AND

RESPONSIBILITY

MONITOR AND

CONTROL DURING

EXECUTION

PLANNING FOR

PROJECT

EXECUTION

STRATEGY DEVELOPMENT,

PROJECT SELECTION AND

PROJECT EXECUTION INPUT

WHEN BROUGHT

ON BOARD

AFTER CONTRACT

AWARD OR AT

END OF INITIATION

DURING

PROPOSAL

PREPARATION

BEGINNING OF COMPETITIVE

BIDDING AND PROTFOLIO

SELECTION OF PROJECTS

KNOWLEDGE

REQUIREMENTS

TECHNICAL

KNOWLEDGE

(COMMAND OF

TECHNOLOGY)

MOSTLY

TECHNICAL BUT

SOME BUSINESS

KNOWLEDGE

MOSTLY BUSINESS BUT

SOME TECHNICAL

KNOWLEDGE

(UNDERSTANDING OF

TECHNOLOGY)

CUSTOMER

EXPECTATIONS DELIVERABLES DELIVERABLES BUSINESS SOLUTIONS

DEFINITION OF

SUCCESS MEETING THE

TRIPLE

CONSTRAINT

MEETING THE

TRIPLE

CONSTRAINT

MULTIPLE SUCCESS

CRITERIA (PROJECT AND

BUSINESS VALUE SUCCESS)

HISTORICAL 1990s TODAY

VIEW (AND IN THE FUTURE)

CHANGES IN PROJECT MANAGEMENT


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OLD VIEW NEW VIEW

Project management is a nice to have career path, but not necessary

Project management is a strategic or core competency

We need our people certified as a PMP®

We need people certified in project management and in business processes

PMs are used for project execution only

PMs should be involved in portfolio management and capacity planning

Strategy and execution are separate activities

PMs must bridge strategy and execution

EXECUTIVE VIEW OF PROJECT MANAGEMENT


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GLOBAL VERSUS NON-GLOBAL COMPANIES FACTOR NON-GLOBAL GLOBAL

Core business Sell products and services

Sell business solutions (value)

PM satisfaction level Must be good at project mgt.

Must excel at project mgt.

PM methodology Rigid A framework

Supporting tools Minimal Extensive

Continuous improvement

Follow the leader A necessity for survival

Business knowledge Your company’s business strategy

Client’s business strategy as well as yours

Type of team Co-located Virtual


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Managing Complex Projects

Current use of project management

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PERCENT OF PROJECTS USING PROJECT MANAGEMENT


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CHANGES DUE TO NONTRADITIONAL

PROJECTS Behavioral Excellence

Culture

Informal Project Mgmt.

Training and

Education

Management Support

Integrated Processes

HEXAGON OF EXCELLENCE CEO

Americas

EPM

PMO Brazil PMO UK/Europe PMO Asia

CEO

CFO

PMO

PMO Mexico PMO Brazil PMO/Europe PMO Asia

NETWORKED PMO

Traditional

Nontraditional

CAPTURING BEST PRACTICES

DEFINITION

DISCOVERY

VALIDATION

CLASSIFY

MANAGEMENT

REVALIDATE

UTILIZATION

PUBLICATION IMPLEMENTATION

PROJECT MANAGEMENT MATURITY

• No project portfolio management function

• Poor understanding of capacity planning

• Poor understanding of project prioritization

• Lack of tools for determining value

• Lack of project management tools/software

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LIMITATIONS TO SELECTING A COMPLEX PROJECT


INITIATION PLANNING EXECUTION CONTROLLING CLOSURE

95% of Today’s Software

• Portfolio Management

• Benefit-Cost Analyses • Feasibility Studies • Criteria Definition • KPI Definition • Assumptions Defined • Evaluation (Value) Criteria • Risk Management • Behavioral Software

• Best Practices • Library • Failure Analyses • Lessons Learned • KPI Library • Stakeholder Management Library

Areas of Deficiency

PROJECT MANAGEMENT SOFTWARE

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THE COMPLEXITY OF DEFINING “COMPLEXITY”

• Projects are usually defined as being complex according to one or more of the following elements interacting together:

• Size

• Dollar value

• Uncertain requirements

• Uncertain scope

• Uncertain deliverables

• Complex interactions

• Uncertain credentials of labor pool

• Geographical separation across multiple time zones

• Other factors

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THE “TRADITIONAL” PROJECT • Time duration of 6-18 months

• The assumptions are not expected to change over the duration of the project

• Technology is known and will not change over the duration of the project

• People that start on the project will remain through to completion (the team and the sponsor)

• The statement of work is reasonably well-defined

• The target is stationary

• Few stakeholders

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THE “NONTRADITIONAL” (COMPLEX) PROJECT

• Time duration can be over several years

• The assumptions can and will change over the duration of the project

• Technology will change over the duration of the project

• People that approved the project (and are part of the governance) may not be there at completion

• The statement of work is ill-defined and subject to numerous changes

• The target may be moving

• Multiple stakeholders

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MANAGING TRADITIONAL

PROJECTS

MANAGING NONTRADITIONAL

PROJECT

Single person sponsorship Governance by committee

Possibly a single stakeholder Multiple stakeholders

Project decision-making Both project and business decision-making

Inflexible project management methodology

Flexible or “fluid” project management methodology

Periodic reporting Real-time reporting

Success is defined by the triple constraint

Success is defined by the triple constraint and value

KPI are derived from EVM Unique value-driven KPI

Stakeholder mgt. noncritical Stakeholder mgt. critical

TRADITIONAL vs. NONTRADITIONAL PROJECTS


MODIFYING THE TRIPLE CONSTRAINTS

Scope

Image/ Reputation

Risk

Quality Value

Image/Reputation

Scope

Risk

Cost Time

Traditional Projects Complex Projects

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THE NEED FOR “VALUE” AS A DRIVER

• Factors promoting value-driven project management include:

• Identifying the value of business opportunities that do not yet exist

• Identifying better ways of selecting projects with the greatest potential value

• Identifying better ways of measuring the value of projects once they begin and/or end

• Making better decisions in turbulent and highly dynamic markets

• Measuring value has become a competitive necessity

• Implementing client-value programs

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THE BENEFITS OF "VALUE" AS A DRIVER

• Value-driven project management leads to:

• Better decision-making especially when considering non-financial (intangible) benefits

• Better analysis of options especially when considering scope changes and tradeoffs

• Better alignment of projects to corporate objectives during business case development

• Easier to get stakeholder consensus on value than on just the triple constraint

• Better persuasive and defendable justification for funding during portfolio project selection activities

• Typical project portfolios can expect an increase of 30% or higher in total portfolio value, but can be industry-specific

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THE NEED FOR BUSINESS SOLUTION PARTNERS

• Not all companies have the ability to manage complexity

• Solution providers must learn while managing the project

• Solution providers can bring years of history to the table

• Solution providers have a greater understanding of cultural change and the ability to work within almost any culture

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• Contractors must have PMP®s

• Contractors must have an EPM system, and it may have to be qualified or approved by the client

• Contractors must capture best practices and share intellectual property with the client

• Contractors must identify a reasonable maturity level in project management

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CUSTOMER RFP REQUIREMENTS


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Customer’s Expectations

Contractor’s Expectations

Business Solutions

Long-Term Strategic Partnerships

“ENGAGEMENT”EXPECTATIONS


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BEFORE ENGAGEMENT PROJECT MANAGEMENT

AFTER ENGAGEMENT PROJECT MANAGEMENT

Continuous competitive bidding Sole-source or single-source contracting (fewer suppliers to deal with)

Focus on near-term value of the deliverable

Focus on lifetime value of the deliverable

Client develops their own business strategy

Contractor supports the client in project portfolio management

Client has access to limited PM tools Access to contractor’s tool kits

BEFORE AND AFTER ENGAGEMENT PROJECT MANAGEMENT


Project Planning/Execution

Financial/Portfolio Mgt.

Risk Management

Scheduling

Others

Number of Best Practices

Typ

e o

f B

est

Pra

cti

ce

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AREAS OF BEST PRACTICES (GIVEBACKS)


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Project Management Skills

SKILL SET

• All project managers have skills, but not necessarily the right skill set for the projects at hand or in the future.

• What skills/competencies will project managers need in 3 years, 5 years and 10 years from now?

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INTEGRATION MGT.

SCOPE MGT.

TIME MGT.

COST MGT.

PROCUREMENT MGT.

HUMAN RESOURCE MGT.

COMMUNICATIONS MGT.

RISK MGT.

QUALITY MGT.

POLITICS

CULTURE/ RELIGION

BUSINESS/ STRATEGY

STAKEHOLDER MGT.

PMBOK® GUIDE LIMITATIONS


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Project Management Growth

Junior Project Manager

Project Manager

Senior Project Manager

Global Project Manager

Project Sponsor

CAREER PATH OPPORTUNITIES


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FUTURE EDUCATION FOR PROJECT MANAGERS

• New seminars, courses, literature and books:

• Understanding business strategy and portfolio mgt.

• How to manage nontraditional/complex projects

• How to perform feasibility studies and cost-benefit analyses

• How to establish project metrics (KPI)

• How to estimate and measure project value

• How to design project dashboards

• How to establish and validate project assumptions

• How to establish project governance

• How to design “fluid” or adaptive EPM systems

• How to manage multiple stakeholders

• How to design and manage a knowledge repository

• How to provide project leadership without either authority or wage & salary administration

• How to design project competency models

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THE VALUE OF PM EDUCATION

• Can we determine the return on investment on project management education?

• Should executives be willing to invest in education for the future?

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New Developments

New Success Criteria

Key Performance Indicators

Dashboard Design

Governance

Measurement

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NEW DEVELOPMENTS IN PROJECT MANAGEMENT


POSTULATE #1

• It doesn’t matter if you execute a project extremely well or extremely poorly if you are working on the wrong project.

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POSTULATE #2

• Being on time and on budget is not necessarily success.

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POSTULATE #3

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

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POSTULATE #4

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

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POSTULATE #5

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

Warren Buffett

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POSTULATE #6

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

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POSTULATE #7

• Success is when business value is achieved.

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

POSTULATE #8

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THE CHANGING DEFINITION OF SUCCESS

• Success is simply the triple constraint

• Customer satisfaction must also be considered

• There are other (secondary) factors to be considered

• Success must have a business component

• The constraints must be prioritized

• There are multiple definitions of success (each customer/stakeholder can have a different definition)

• There are categories of success, and value is now part of the success criteria

(2004)

(2008)

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Dashboard Design

Governance

Measurement

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DEFINING VALUE METRICS (KPI)

PAST VIEW PRESENT VIEW

Metrics are fixed for the duration of the project

Metrics can change over the duration of the project

(Metric-Driven Project Management)

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(Time and Cost Metrics Only)




Dashboard Design

Governance

Measurement

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Dashboard

0

10

2 0

3 0

4 0

50

6 0

70

8 0

9 0

1st Qt r 2 nd Qt r 3 rd Qt r 4 t h Qt r

Engi ne e r i ng

M a nuf a c t ur i n

g

Qua l i t y

P r oj e c t

M a na ge me nt

DASHBOARD DESIGN


DASHBOARDS VERSUS SCORECARDS

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FACTOR DASHBOARDS SCORECARDS

Performance Operational issues Strategic issues

WBS level for measurement

Work package level Summary level

Frequency of update Real time data Periodic data

Target audience Working levels Executive levels




Dashboard Design

Governance

Measurement

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Variable EVMS EPM VMM

Time

Cost

Quality

Scope

Risks

Tangibles

Intangibles

Benefits

Value

Tradeoffs


MEASURING VALUE Expected Benefits, Results or Outcomes Value Conversion

Profitability Easy

Customer Satisfaction Hard

Goodwill Hard

Penetrate New Markets Easy

Develop New Technology Medium

Technology Transfer Medium

Reputation Hard

Stabilize Work Force Easy

Utilize Unused Capacity Easy

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Progress Reports

Status Reports

Forecast Reports

TYPES OF PERFORMANCE REPORTS


Forecast Reports

• Time at Completion • Cost at Completion

Traditional Reporting

Future Reporting

• Time at Completion • Cost at Completion • Benefits at Completion • Value at Completion • Other Metrics at Completion

(Business Leading Indicators; i.e., time to value)

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BENEFITS AND VALUE AT COMPLETION




Dashboard Design

Governance

Measurement

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CONCLUSIONS AND WALKAWAYS

• Project managers are more knowledgeable about the business

• Project managers should participate in project portfolio management

• Client’s perception of value may be more important than time or cost

• Executives must invest in the future of project management in their organizations

• Project managers are not and will not be a threat to senior management

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© 2009 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.

The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market

conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation.

MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

dr_kerzner_2.pdf

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