“How are you doing?” I asked one of my American colleagues from the IT industry recently. I hadn’t seen her in a year.

“We’re working in a ‘foreclosure economy’,” she replied.

She was talking about the challenging economic times that have hit much of the US and how difficult it can make technology sales. It made me think about how the project management industry responds in a recession vs. a boom economy. I’ve been in the Enterprise Project Management (EPM) software business now since the early 80s, so I’ve seen a couple of boom and bust cycles come and go. It’s very interesting to see how EPM can sell in both good times and bad times.

In good times, EPM is attractive to companies that are enjoying rapid growth. We can look back to the very first large scale project management systems during the cold war and see how different countries’ defense departments’ multi-billion dollar budgets fueled the desire to innovate and manufacture faster in the defense sector. In the 70s during the last “oil crisis” we’d have typically thought of the economy as being in a terrible state. Yet, project management at the enterprise level flourished with the discovery of oil in the North Sea. Artemis, one of the first project management tools made for a mini-computer owed a lot of its growth to companies drilling for, delivering and refining oil.

The challenging economy of the early 80s saw the explosion of use of PC-based project tools. Suddenly, tools that had only been available at tremendously high cost were being adopted by organizations trying to be the most efficient possible.

The tech boom of the late 90s saw project management tools used at a corporate level to try to overcome a tremendous shortage in the tech world, and to organize the billions being spent by venture capital firms for whom time-to-market was the critical success factor. In the “tech-bust” of the first half of this decade, project management sales continued to grow at a furious pace as technical organizations tried to survive by being the most efficient possible.

So, how does a ‘foreclosure economy’, affect the EPM industry?

First of all, we have to think about what happens in a challenged economy. There are a couple of things to think about.

First, it’s common that if one part of the economy is challenged, another is booming. I’m in Houston, Texas as I write this article and the economy here is heavily oriented around the oil industry. Needless to say, with $150/barrel oil, the economy is doing rather nicely overall in Texas. In Canada, we see some hard-hit sectors in the manufacturing sector, yet the Alberta oil patch is seeing record income. So, one of the ways the EPM and the EPM systems industry can react to this economy is to follow the money, and it does. There are many deployments of project management tools in the oil industry and its offshoots right now and a growth business at the moment is to be able to offer a turnkey project management environment for organizations which cannot afford the time to train themselves in the methodology or the tools, yet want the benefits. That’s low-hanging fruit for the EPM and EPM software industry.

Next, where the economy is doing poorly, organizations will attempt a couple of things to survive. Profit is a simple algorithm: revenue – costs = profit and companies need to look at both sides of the equation to see where they can get the best situation possible for themselves. Ultimately it’s about being the most efficient possible.

Cutting Costs

The first and most obvious place a company can improve profits is by cutting costs. Project management systems can play a huge part in this. Our own TimeControl timesheet business here at HMS has seen a number of companies implementing enterprise timesheets for activity-based-costing as a way to identify what employees are working on. There are a number of questions an enterprise timesheet system can answer:

• Are employees spending too much time in unproductive meetings?
• Are they spending too much time on corporate reports?
• What is the ratio of project-productive vs. non-project-unproductive time?
• Where can we use our own employees instead of contractors for work?
• What projects are the most costly?

Some organizations can realize huge savings by redirecting their staff to more productive work.

Increasing Revenue through Better Competition

It’s an often-said truism that ‘no company ever cost-cut its way to growth.’ If a company wants to improve its bottom line, it needs to work not only on the cost side but also the revenue side. But, in a challenged economy isn’t there often less revenue to go around? Indeed. So, if you can’t grow the size of the pie, the only way to grow your revenue is to have a bigger slice. That means being measurably more competitive. EPM is often used to help companies become more competitive. With good project management practices and the systems that support them, an organization can improve on its estimates or bids through a reiterative planning process. It can bid lower by having more efficient processes and it can deliver more projects by optimizing its throughput. Project management is, in the end, about being more efficient and in a challenged economy, the most efficient survives, the least efficient does not.

Getting Benefits
There are often benefits which are government sponsored and only available if you are applying good business practices like using an enterprise timesheet system or enterprise project management. Research and Development Tax Credits are a good example. These programs insist that the companies who apply have a managed project plan, that hours are tracked against the plan and that accounting balances the payroll, the project plan, the timesheets and the tax return to all match. That takes enterprise systems for project management and project-based timesheets.

Improving Portfolio Selection
I remember being at a large aerospace manufacturer years ago and asking why their commitment to EPM was so low. “We are the only source for this product,” said one arrogant staff member. “The clients will darned well wait until we’re ready to deliver no matter how long that takes.” In an economy that’s booming so hard you don’t need to be efficient, an organization will feel comfortable accepting all kinds of business even if it is disruptive to other clients, if it is marginally profitable or if it is outside their core competency. That’s just not the case in a challenged economy. In a challenged economy, it’s critical to make sure you’re taking on the projects you can be most successful with. That means putting in the effort to identify the business drivers that make the business successful, creating metrics to measure the association of prospective projects against those drivers, and deploying a process that ensures that project selection results in a mix of projects that are best for the organization. That’s portfolio selection in a nutshell and it’s perhaps no surprise that PPM or Project Portfolio Management and selection are one of the hottest concepts in our industry today. If you can choose the right projects, then the organization’s ability to deliver on projects more effectively is assured.

“It’s the economy stupid” was the phrase that Bill Clinton coined during his first successful presidential campaign. It’s no accident that this campaign slogan was revived just this week in American politics. In a challenging economy, those of us in the EPM business can be just as successful as during a boom economy if we keep our focus on making organizations as effective as possible.

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Chris Vandersluis is the founder and president of HMS Software based in Montreal, Canada. He has an economics degree from Montreal’s McGill University and over 22 years experience in the automation of project control systems. He is a long-standing member of both the Project Management Institute (PMI) and the American Association of Cost Engineers (AACE) and is the founder of the Montreal Chapter of the Microsoft Project Association. Mr. Vandersluis has been published in numerous publications including Fortune Magazine, Heavy Construction News, the Ivey Business Journal, PMI’s PMNetwork and Computing Canada. Mr. Vandersluis has been part of the Microsoft Enterprise Project Management Partner Advisory Council since 2003. He teaches Advanced Project Management at McGill University’s Executive Institute. He can be reached at chrisv@hmssoftware.

Why is this the first question that PMs get asked when someone is looking to bring someone in to manage a project? What happened to the days when skills and ability mattered? What about the need for someone to bring value to the project and see it through successfully? Has that all been trumped by the hourly or daily cost figure? It sure seems that way.

In the past two weeks, I have had three different colleagues contact me for potential project manager contract roles and all three started off by asking “what is your rate? I just want to see if it fits into our (or the client’s) budget.” We never even discussed the project details, project size, its scope, timelines, etc….nothing at all. Imagine their surprise when I told them that I could not quote a price for the project work until I had many more details about the project and the value that I could bring. The response was a bit of a shock for them. I think most people assume that contractors and consultants are just sitting around waiting for the phone to ring.

My point being that how can we even discuss the price of anything before we know the details? How can clients be making project management decisions purely on cost? I recognize that there is only a finite amount of money available to be spent, but we need to focus our efforts on identifying the right candidates before worrying about how much they will cost. As I am sure we have all experienced, it is much more expensive to fix a job that someone has done poorly than to pay a little more to have it done right in the first place.

If you bring a contractor to do some work on your house, do you ask him his hourly rate before he ever steps foot inside? No, you walk through the renovations you want to do, give the contractor the opportunity to take measurements, ask questions, clarify assumptions, etc. Only after all of that has been done does the contractor provide you a quote. Why are project managers any different? By giving an arbitrary rate before knowing the project, we are just coming across as an extra pair of hands to be used as needed instead of being looked at as a value-added advisor supporting the success of the project.

How do we strike that balance between properly documenting activities of the project and delivering the product of the project on time, on budget, on scope?

Indeed there are many considerations, not the least of which is the culture of the organization. It’s the culture that will ultimately determine the balance.
By considering the characteristics of the cultural and matching this to the kinds of documentation necessary, we can optimize the project plan to include the right amount of documentation.

We know we need to follow good project management practices and plan well, communicate well, manage changes well, track and manage progress well, etc…All these of course involve some level of documentation. This is project documentation. In larger organizations an audit trail of the project controls may be important.

What about documentation of the project deliverable? For development projects there may be any number of documents required such as requirements, design, detailed design, test plans, etc…These would be defined by the SDLC (Systems Development Life Cycle) process. The product, customer and industry itself may drive the requirement for product documentation. For example, there may be regulations or compliance issues that require a degree of documentation.

So what are the cultural characteristics a project manager might consider?

There are five key cultural drivers that will help you gauge the right level of project and product documentation for your project.

First there is the means vs. ends driver. This is how much management focuses on the outcomes of the project over the processes and approaches used to achieve the outcomes. The controls driver is the degree that industry regulations and company policies impact on the product of the project and on employee behaviour.

The team driver relates to how much work is centered on groups rather than the work of a collection of individuals. Related to this is the integration driver. This is the degree that various groups function in a coordinated or interdependent way.

Finally there is the risk driver. Every organization exhibits a tolerance to the risk of untried innovations and aggressive business practices.

By understanding the documentation requirements for the product and the cultural drivers project managers can optimize the dollars spent on documentation for their projects. This puts them in a better position to plan documentation activities and set expectations with the customer, sponsor and contributing team members.

Most companies today face the necessity of executing a continuing stream of strategic and highly complex projects. Examples of such projects include the development and introduction or implementation of new products, processes, and systems; design, construction, maintenance, or relocation of major facilities; marketing campaigns; mergers and acquisitions; and special events. Any given company may have dozens of such projects underway at all times, and success on each project is essential to achieving and maintaining competitiveness.

Each project team is typically quite diverse – consisting of people who represent different functional areas of the company, have different educational backgrounds, live and work in different nations and cultures, and may even speak different languages. The individuals who are selected to manage these projects face major challenges, especially since their primary job (such as engineering, marketing, etc.) may not involve project management as a primary requirement or skill.

To support their project managers and to increase their probability of success, many companies have established a Project Management Office (PMO). In this article we will look at the general concept, purposes, specific responsibilities, and requirements associated with an effective project management office.

Concept

The project management office is a staff function that:

• Builds, maintains, and improves the project management system (project management policies and procedures, planning templates, project management software tools, standard codes for identifying resources and costs, standard report formats, etc.) in the organization
• Supports project managers and their teams in the effective application of sound project management principles and techniques to achieve project success.

Specifically excluded from this definition (although they may be included in other versions of the project management office concept) are the following responsibilities:

• To conduct financial or cost/benefit analyses to determine what projects will be undertaken.
• To actually manage projects, including the unilateral development of project plans and the direct control of performance. This is the responsibility of the individual appointed to manage each project working collaboratively with their team.
• To perform tasks in projects which are normally the responsibility of other functional groups, such as procurement, quality assurance, legal, or human resources departments.

Purposes

While recognizing that projects are managed by project managers and their teams, the over-riding purpose of the project management office is help ensure the success of every project with respect to the quality, time, and cost dimensions of performance. More specifically, the purposes of the project management office are:

• To provide for ongoing ownership and responsibility for the application of project management in the organization.
• To provide a permanent home for project management expertise/knowledge, as individuals enter and leave the organization over time.
• To acquire the tools required to manage projects effectively and efficiently.
• To ensure the consistent application of project planning and control processes on all projects.
• To promote concise communication regarding projects within the organization.
• To provide computer support for the project management process, freeing project managers to focus on building the team and managing the work.
• To organize and maintain an organizational repository of project information that has value in planning future projects.
• To conduct portfolio-level analyses (such as workload projections for specific resources) across multiple projects.
• To continuously improve the project management system and the practice of project management within the organization.

Responsibilities

The responsibilities of the project management office can be divided into two groups: (a) those related to building and maintaining the project management system, and (b) those related to supporting the effective application of sound project management principles and techniques on specific projects:

• Responsibilities in building, maintaining, and improving the project management system.
• Determine training needs for project managers/teams and acquire the appropriate training at the appropriate time.
• Establish and document project management policies and procedures.
• Create an approach to establish priorities across multiple projects and a methodology to apply those priorities to the project planning and control processes.
• Analyze the requirements for project management and related software tools; and acquire, implement, integrate, and maintain those tools. Evaluate new tools as they become available.
• Develop and disseminate standard coding structures and report formats.
• Create project planning templates (charters, work breakdown structures, precedence networks, schedules, budgets, etc.)
• Collect and organize databases of actual project performance data (durations, resource usage, costs, quality measures, etc.)
• Perform project management process audits and take action to correct process deficiencies.
• Responsibilities in supporting the effective application of sound project management principles and techniques on specific projects
• Facilitate (and ensure proper methodology of) the project chartering/planning process as performed by the project team.
• Facilitate (and ensure proper methodology of) the project control/updating process as performed by the project team.
• Perform data entry of project plan and actual performance information.
• Utilize the project management software tool(s) to perform analyses and generate reports as required.
• Analyze technical, policy, and resource relationships across multiple projects.
• Perform workload, cost, and cash flow roll-ups across multiple projects.

Requirements

For the project management office concept to work effectively, the following conditions must exist:

• Senior management must be committed to the disciplined and consistent application of formal project management to all projects.
• The project management office should report directly to an executive or an executive group at the level of project sponsorship; that is, the same level to which project managers report.
• The project management office must be staffed with individuals who collectively possess the following types of knowledge, skills, and personal traits:
  • Expertise in project planning and control methodologies
  • Expertise in using project management software tools
  • Expertise in implementing and integrating software tools
  • Familiarity with the business, technical, and political aspects of the projects performed in the organization.
  • Interpersonal skills
  • Group facilitation skills
  • Analytical skills
  • Communication skills
  • Process discipline
  • Attention to detail
• The project management office must be equipped with the computing hardware and software necessary to support the function.

 

Since 1983, Atlanta, GA based Project Success Incorporated (formerly YCA) has been providing Project Success Method project management training and consulting services to hundreds of successful organizations, including many of the largest and most profitable Fortune 500 companies.

The Project Success Method is a blueprint for planning and controlling projects of all sizes and provides the missing link between strategy formulation and implementation. The methodology is not software-specific and requires no prior project management training or professional certification. Most importantly, the Project Success MethodSM is easy to learn, highly effective and can be implemented quickly in as little as five days.

PSI consultants have been engaged in more than 10,000 projects in 25 countries on six continents. For more information contact [email protected] 519-766-9295 or visit www.projectsuccess.com.

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Thomas B. (Tom) Clark is Co Founder Executive VP Project Success, Inc. (formerly YCA)
Tom is heavily involved in the development and delivery of PSI’s courses. In addition to his work with PSI, he is Professor Emeritus of Management at Georgia State University. He also served the University as Chair of the Department of Management and as Interim Dean of the College of Business Administration. Previously, he was an Assistant Professor of Industrial and Systems Engineering at Georgia Tech.

Tom has provided project management consulting and training services for a variety of business, government, and non-profit organizations. He developed and marketed one of the first PC-based software tools for project scheduling and cost control. Prior to beginning his academic career, Tom served in the U.S. Army Management Systems Support Agency at the Pentagon and was employed as an industrial engineer with a national firm in the printing industry. He holds bachelors and masters degrees in Industrial Engineering from Georgia Tech and a Ph.D. in Business Administration from Georgia State University. Tom has received several awards for teaching excellence and public service.