wiley - strategic planning for project management using a project management maturity model

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STRATEGIC PLANNING FOR PROJECT

MANAGEMENT USING A PROJECT

MANAGEMENT MATURITY MODEL



This book is printed on acid-free paper.

Copyright © 2001 by John Wiley & Sons. All rights reserved.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means,

electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the

1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through paymentof the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400,

fax (978) 750-4744. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley &

Sons, Inc., 605 Third Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail: PERMREQ @

WILEY.COM.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold

with the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert

assistance is required, the services of a competent professional person should be sought.

L ibrary of Congress Cataloging-i n-Publi cation Data

Kerzner, Harold.

Strategic planning for project management using a project management maturity model / Harold Kerzner.

p. cm. Includes index. ISBN 0-471-40039-4 (alk. paper) 1. Industrial project management. 2. Strategic planning. I. Title.

HD69.P75K494 2001 00-043814 658-4! 04 — dc21

Printed in the United States of America.

10 9 8 7 6 5 4 3 2 1

∞



Contents

Foreword ix Preface xi Introduction xiii

1 The Need for Strategic Planning for Project Management 1

Introduction 1 Misconceptions 1 Wall Street Benefits 3 Stakeholders 4 Gap Analysis 5 Concluding Remarks 9

2 Impact of Economic Conditions of Project Management 11

Introduction 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

v



vi CONTENTS

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

Introduciton 41 The Foundation for Excellence 42 Overlap of Levels 43 Risks 45

5 Level 1: Common Language 47

Introduction 47 Roadblocks 48 Advancement Criteria 49 Risk 50 Assessment Instrument for Level 1 50 Questions

51

6 Level 2: Common Processes 67

Introduction 67 Life Cycles for Level 2 68 Roadblocks 71 Advancement Criteria 72 Risk 72 Overlapping Levels 73

Assessment Instrument for Level 2 73 Questions 74

7 Level 3: Singular Methodology 77

Introduction 77 Integrated Processes 78 Culture 81 Management Support 81 Informal Project Management 82

Training and Education 82 Behavioral Excellence 84 Roadblocks 85 Advancement Criteria 85 Risk 86 Overlapping

Levels 87 Assessment Instrument for Level 3 87 Questions 87



Contents vii

8 Level 4: Benchmarking 97

Introduction 97 Characteristics 98 The Project Office/Center of Excellence 99 Benchmarking Opportunities 101

Roadblocks 103 Advancement Criteria 103 Assessment Instrument for Level 4 104 Questions 104

9 Level 5: Continuous Improvement 109

Characteristics 109 Continuous Improvement Areas 110 The Never-Ending Cycle 112 Examples of Continuous

Improvement 113 Developing Effective Procedural Documentation 114 Project Management Methodologies 120

Continuous Improvement 120 Capacity Planning 122 Competency Models 123 Managing Multiple Projects 125

End-of-Phase Review Meetings 127 Strategic Selection of Projects 128 Portfolio Selection of Projects 131

Horizontal Accounting 134 Organizational Restructuring 136 Career Planning 138 Assessment Instrument for Level

5 138 Questions 139

10 Sustainable Competitive Advantage 143

Introduction 143 Strategic Thrusts 144 The Need for Continuous Improvement 147 Project Management

Competitiveness 148

11 Special Problems with Strategic Planning for Project

Management 151

Introduction 151 The Many Faces of Success 152 The Many Faces of Failure 153 Training and Education 157

Change Management 158 Partnerships 162



viii CONTENTS

The Impact of Risk Controls Measures 163 Dependencies between Risks 165 Selecting the Appropriate Response

Mechanism 168 Conclusions 170

11 Case Studies 171

Case 1: Packer Telecom 171 Case 2: Luxor Technologies 173 Case 3: Altex Corporation 177 Case 4: Acme

Corporation 180 Case 5: Quantum Telecom 182 Case 6: Lakes Automotive 184 Case 7: Ferris HealthCare, Inc. 185

Case 8: Clark Faucet Company 187 Case 9: Hyten Corporation 190 Case 10: Como Tool and Die (A) 200 Case 11:

Como Tool and Die (B) 204 Case 12: Macon Inc. 207 Case 13: The Trophy Project 209 Case 14: The Blue Spider

Project 212 Case 15: Corwin Corporation 225 Case 16: MIS Project Management at First National Bank 235

Index 247



Foreword

To win a decathlon requires the extreme best from the participant. It is a very gru- eling and demanding set of

events. The decathlete is usually very good and in fact the best in one or two events and in good standing in the

other eight or nine events. The objective is to be the overall best in all ten events. Decathletes like most athletes must

complete in head to head events to know if they are able to win the overall decathlon. They must study their

competitors in the greatest detail and know their strengths and weakness. They must learn from the other decathletes

what allows them to put out that extra 5% that means the difference between win- ning and just participating. They

must also compete in an environment where the performance standard required to win is always becoming higher.

Being a project manager is similar to the decathlete and in the business of projects, the field is very

competitive. Similar to a decathlon there are events (nine knowledge areas) in the Project Management Body of

Knowledge. The decathletes in project management are the companies that are controlling costs, schedule and

quality on a project level. The project-driven companies must find ways to learn “best practices” in a competitive

world and apply these lessons to their processes, systems, and tools. This method of continuous improvement

through measuring and comparing is referred to as benchmarking as described by Dr. Kerzner.

Nortel aspires to win the decathlon prize, but realizes it is not possible without both internal and external

benchmarking measurements and continuous im- provements. The internal benchmarking is similar to intramuraldecathlons where learning comes from watching the friendly decathletes. A significant opportunity for learning and

continuous improvement occurs when the “best in class” have entered the decathlon.

Nortel has particapted in the Kerzner five-step Project Management Maturity Model survey for the last year and

a half. The five steps measure the desired di-

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