Author: Jim Conroy

The Importance of Knowing When to Stop

Written by Jim Conroy on August 7, 2019. Posted in Articles. 5 Comments on The Importance of Knowing When to Stop

We have all read the headlines about Crossrail’s overspend and now the spiralling financial projections for HS2.

These situations are the norm rather than the exception. When managing a portfolio of capital projects, it is inconceivably complex to try staying on track without the tools and organisational culture to make rapid, informed decisions.

A PwC analysis has found that these so called ‘mega-projects’ – investments of $1bn upwards – often exceed their budgets by 50% or more. But what about other capital projects? New plant constructions, offshore explorations, new product developments? They may have a lower public profile, but they are no less important for their investors and they are also at risk. According to a 3 year study by KPMG, just 31% of all capital projects came within 10% of initial budgets and as the complexity of projects increases, so do the risks. In the construction sector, a further analysis by the Construction Industry Institute into the performance of 975 light and heavy industrial projects in its benchmarking database, found that only 5.4% met its measures for “best in class” predictability in terms of cost and schedule.

Project issues leading to reduced share value

Taking the obvious financial implications out of the equation, a PwC analysis of capital project issues at public companies highlights the bigger strategic risks of project failures. This revealed that after a public announcement of a capital project delay or shutdown, the majority of companies experience a steady decline in share price. By the three-month mark following the announcement, the decline in share price averaged 15 percent and in the most severe cases, it rose to a 90 percent decline. These are the real repercussions of poor project and portfolio decision making and shareholders are now extra sensitive to failure given the global economic situation. Early warnings of possible conflicts have risen up the corporate agenda.

Capital projects require high levels of governance and control to support investment decision making and ensure they do not fail. Portfolio managers are responsible for ensuring the right decisions are being made, or a lot of money can be wasted. The challenge is less about making sure that the day’s ‘to do’ items get done, and rather, about getting immediate answers to questions like: ‘How are we progressing overall on the project?’, ‘Are we managing the significant risks that could derail the project?’ or ‘Are we managing over runs on the budget?’

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Appreciate an early warning

The organisation as a whole may also need to develop a culture of greater transparency to support people in the PMO if they need to report that a project is ‘in trouble’. It’s a classic case of not blaming the messenger and instead focusing on appreciating that although the news might not be positive, getting an early warning provides an opportunity to take corrective action.

However, many PMOs don’t have the tools to establish the right portfolio monitoring procedures and lack the visibility to spot these issues early enough. They don’t have an aggregate level view of what is going on and whether projects will indeed deliver the right business objectives as expected. Most importantly, they don’t have the visibility to quickly terminate floundering initiatives and save their resources for where they are best applied. This is always critical for new product developments, but an important issue for all capital projects. In the end, every initiative has an opportunity cost. If a project is not performing in line with projected value to justify the ongoing investment, it should be terminated. Being able to do this quickly requires strong governance and control, the ability to evaluate all aspects of a project and its position within an entire portfolio on regular – ideally quarterly- basis.

Quarterly management accounts

Many organisations can’t do this because although they have the day to day project tasks well under control, they rely on spreadsheets and disparate systems for their aggregated portfolio intelligence. They can’t collate the information easily and end up performing an annual review. That’s too infrequent, PMOs need the equivalent of quarterly management accounts to keep their projects on track and to be able to make quick decisions about whether they are meeting the requirements of the original business case, need to adjust the case to reflect events, or, at the worst case, terminate the project and recoup any losses.

A capital project is rarely derailed by a single problem; it usually takes a series of failed steps along the way. Providing visibility at all levels is a key part of the value to be derived from a PPM solution – helping to inform the strategic decisions business leaders need to make in order to avoid costly or at worst, failed and terminated projects.

5 ways to improve benefits realisation by the PMO

Written by Jim Conroy on June 13, 2019. Posted in Articles. 5 Comments on 5 ways to improve benefits realisation by the PMO

Establishing the benefits that can be derived from a project remains one of the most elusive things for the PMO to achieve.

Each season, it tops the delegate issues agenda and this year’s #gartnerppm conference in London is no exception.

Without an effective benefits realisation process, it is difficult to measure the business impact of projects, the contribution made by the PMO to achieving strategic goals or to justify ongoing expenditures and investment in PM maturity initiatives. According to PwC, only 62% of programmes can demonstrate a relationship between project objectives, company strategy and the resulting benefits. This is an essential aspect of strategic portfolio management to master and this article outlines 5 ways to improve benefits realisation in your organisation.

A continuous lifecycle

The first thing to understand is that benefits realisation is not a single step, but a process that can be sub divided into lifecycle components. This starts with the planning of anticipated project benefits and concludes with understanding how a project has not only been concluded successfully, but has also contributed as expected to strategic objectives.

Secondly, there needs to be an initial baseline against which benefits can be measured. Without it, there is nothing to compare and track. For instance, taking operational efficiency as a simple example and target to improve that can be measured, how long does it take to generate reports today? If getting the monthly reporting pack out takes a week to prepare, use this as the baseline and then by putting in the right sort of assistance to create reports in a day, you can easily see what the improvements are.

The diagram below created by Serra & Kunc, 2015 illustrates the complexity of all the inter-relationships very well as an interconnected ‘Chain of Benefits’. Starting with project outputs, how can the PMO help to steer the outcomes towards a clear realisation of strategic objectives? What needs to be in place and understood?

Firstly, the use of IT systems – PPM and EPPM software – can significantly improve measurement outcomes, through built in reporting and tracking features. IT solutions can provide the PMO with a clear view of the interdependencies between portfolios, programmes and projects. It is also possible to utilise integrated PMO dashboards and control sheets to support improved decision making, monitoring, reporting and measuring. Before IT can contribute at this level, foundations need to be in place.

These are as follows:

The five foundations for successful benefits realisation

Benefits realisation needs to be an integrated part of the whole project management process and built in from the outset. It sounds obvious, but projects should be started with a clear view of what ‘success’ looks like – and all too often this isn’t present at the planning stages. Together with PwC, we recommend creating a framework from which to measure the achievement of strategic objectives at a high level, including how project governance and metrics will be applied
Stakeholders at all levels need to be engaged to avoid a disconnect between strategy and operations. Using PPM software makes this significantly easier to achieve, by providing a central communications portal through which all aspects of the projects can be recorded, tracked and measured. At the top of the organisation, the C-suite needs to understand the strategic benefits and those who manage outputs at a tactical level should be able to see that their individual contributions are on track to achieve the required changes.
A benefits dependency map helps to ensure the right stakeholders and decision makers are both engaged and aware of their involvements. Who needs to do what, when, why and how. This helps to crystalise how project goals will link to wider strategic objectives.
- What are the project objectives?
- What are the measureable end outcomes?
- How can project outputs be transformed to business outcomes?
- What specific deliverables are required?
Identify what is important to measure and how to go about it. One key aspect of this is to ensure that all the stakeholders are equally engaged to be able to agree a common starting baseline for measurement. This ensures that future disputes about what benefits have actually been realised are avoided.
Communicate the proposed benefits realisation plan widely. How this is achieved will vary between organisations but there needs to be a consistent way to communicate how benefits are being achieved with all the stakeholders, in a way that is relevant to them. For example, Network Rail achieves this using a graphical benefits tracker and visualisation boards, with clear accountability and ownership at each stage.

It is important that organisations try to embed benefits realisation into their project and portfolio management and to make it as scientific as possible. This means having a clear view of the ‘why are we doing this’ at the outset and creating a set of processes, which can be supported by software tools to take away any subjectivity and make it objective and clear for all stakeholders to appreciate.

Can Agile PM be Applied Outside of IT Environments?

Written by Jim Conroy on March 19, 2019. Posted in Articles. 7 Comments on Can Agile PM be Applied Outside of IT Environments?

Agile methodologies are most frequently discussed in relation to software development projects and have been proven highly effective at ensuring projects can complete on time and are delivered according to original stakeholder expectations.

There is now strong evidence to support the use of agile working to deliver enterprise wide projects, such as the introduction of a new applications, managing large R&D projects or the creation of an organisation-wide PMO, complete with an enterprise PPM solution as its backbone.

As an organisation, when implementing our software, we’ve also embraced agile working at multiple levels and merged two very different environments into one ‘wagile’ platform. On the one hand, our customers need a top down waterfall PPM approach to control projects and link their strategic goals to execution. On the other hand, customers want the ability to retain a high degree of creativity with their IT, R&D, Project and Product work teams, allowing them to work in a more agile, Kanban type environment.

A ‘wagile’ approach provides the depth of functionalities required for complex projects to link strategy with execution, to manage portfolios to make more effective decisions, to manage resources, to manage costs and to drive on-time completion of projects while also providing an easy to use agile, Kanban approach for the team to collaborate and execute on the projects. Our model is the glue between outputs of work managed within agile teams and the overall project waterfall framework. We transform agile data into enterprise assets to support PM, PMO and Executives in their strategic decisions.

From experience, one fundamental reason why an agile approach makes sense at the enterprise project level is because these projects are highly complex and long term. They are transformative, typically involving a cultural change and it is difficult to envisage the full project scope at the outset.

Where some companies are mistaken about the viability of adopting an agile approach for projects, comes from outdated thinking that they have to take an either/or approach. ‘It has to be either waterfall or agile’. The world is changing and a hybrid ‘wagile’ model, taking the best of agile and waterfall approaches has emerged as an ideal compromise.

There is also a perception that for some companies in some industries, a completely agile way of running their projects is fundamentally flawed and that such a ‘loose’, iterative approach could have catastrophic consequences, not to mention become extremely costly. How can an aircraft engine or an oil rig be engineered iteratively, they argue? Clear stages must be completed before the next phase can begin, or it would simply be uneconomical.

In our experience that is misguided, it is possible to adopt the founding principles of agile and run any project according to an agile worldview. Each stage could be completed iteratively, but with the overall production phase run according to a stage gate approach. Softer aspects such as designing the user interface could also be approached in an agile way, perhaps using a methodology like ‘user teach back’ because mistakes at the software level are easier to rectify.

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Our customers are typically running capital projects – in the oil and gas, utilities, construction and engineering, consumer products and financial services sectors, so we have learned a great deal about the viability of adopting a ‘wagile’ way of working outside the software development industry. Experience has highlighted that whilst aspects of agile can highly benefit the ability to deliver a project to its successful conclusion, the sheer complexity of enterprise projects, the costs associated with an entirely agile, iterative approach and the likelihood that the said project will involve extensive cultural change, means waterfall must be retained as the underlying framework.

Increasing numbers of companies are now also actively adopting the hybrid ‘wagile’ approach where, for example, the PMO can leverage an integrated view resulting from the consolidation of the Engineering teams agile work into the overall project waterfall planning and control framework.

What aspects of agile working will most enhance waterfall project management?

Incremental or iterative working

This is the very essence of agile and one fundamental aspect that is most useful to enterprise projects. This is because, the complexity involved makes it so difficult to predict and scope in advance. In fact, trying too hard to be predictive and prescriptive can significantly increase project risks. Instead, successful organisations are allowing traditional scheduling and project management to co-exist with agile techniques that are primarily applied at the tactical level. This means project cadence can be increased, plus stakeholders can naturally become more involved, which increases user acceptance and the likelihood of long term benefits realisation.

Sprints

Essentially a mini project within the overall project design, when sprints are incorporated into an enterprise waterfall methodology, the project timescales are significantly improved. Stakeholders work more efficiently and the overall feeling of user empowerment is enhanced. Unlike a traditional schedule where people can be lulled into thinking there is plenty of time to spare, people tend to work harder in a sprint, to ensure they are not the team members who didn’t accomplish their tasks before the end of the sprint.

Timeboxing

This is one of the best examples to illustrate the benefits of a wagile approach that takes in the best of each methodology. Timeboxing takes a scope of work and puts it into a schedule – a ‘time box’. Regardless of how ‘agile orientated’ an organisation becomes, there will always be a need to deliver projects on time and according to budget.

Cross functional working

Part of the complexity inherent in enterprise projects is a result of the diversity of different stakeholders involved. The greater the ongoing levels of cross functional involvement, as found in an agile approach, the lower the likelihood of any redundancy. A cross functional team comprised of functional experts working together will always operate with greater efficiency and focus.

SAFe agile framework

There is also a perception that agile methodologies only work well for smaller companies and shorter-term projects. This is a misnomer and well proven frameworks exist to enable agile techniques to be scaled for an enterprise setting, the most common of which is SAFe. Enterprise PPM can act as the canvas where SAFe can be implemented to handle most of the important assets such as strategy, ideation, resource, financials and project execution.