Project Program and Portfolio Management Maturity
Project, Program and Portfolio Management has become one of the most highly demanding and difficult areas of responsibility for staff from project manager to senior executive.
Industry findings have found a direct correlation between project management maturity, predictability of performance and reduction of cost. Increasing maturity often starts with the introduction of methodologies/frameworks.
Across business, many business units have divergent methods and disciplines associated with the management and delivery of projects, program and portfolio. To address this issue and as part of governance role, many Project Management Offices (PMOs) and Enterprise Project Management Offices (EPMOs) are introducing overarching Project Management Methodologies/Frameworks and Governance models to provide consistency in project management practices across the organisation.
These Project Management Methodologies/Frameworks need to be tailored to businesses and include areas such as Governance, Lifecycle Management, Alliance Management, Scope Management, Scheduling Management, Stakeholder Management, Procurement, Risk, Issue and Change Management, Financial Management, Human Resource Management, Contract Management, Reporting, Quality Management, Commissioning and Acceptance, Closure and Evaluation.
Project Management Methodologies/Frameworks need to be broadened to include Program and Portfolio Management for consistent program and portfolio practices and operations. Program and Portfolio management is more applicable for the PMOs or EPMOs, Program Managers and Investment Groups/Committees. The differences between these areas are shown in the following definitions:
- Projects are groups of related activities that are typically managed using traditional approaches.
- Programs are groups of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. Programs do not have a clear path towards a well defined goal and can rarely be managed using traditional approaches.
- Portfolio management is a corporate strategic level process for coordination across an organisation's entire set of programs and projects, which may or may not be related. The portfolio provides the organisation with a complete view of the programs and projects within an organisation that represents the organisation's commitment of resources and investment to delivering its strategic objectives.
A complete Project, Program and Portfolio framework provides the processes and standards to enable a business to:
- Provide a single enterprise view of the project portfolio where initiatives can be managed and prioritised.
- Provide visibility and the ability to see alignment with Business plan.
- Provide visibility to Project Review Boards/Project Review Committee to enable strategic decision-making and ensure business and technical approvals.
- Join projects with similar needs.
- Provide awareness of interdependencies.
- Be proactive and have a clearer understanding of resource requirements.
- Continue the development of its project management competency to include consistent program and portfolio practices.
Integrated approach to increase maturity
Project and Program Management is today seen as a mainstream management skill. It is not enough just to issue methodologies and frameworks though-out the business. These need to be supported with People Development, PMO facilitation, and Systems.
- People development requires the up-skilling of Project Directors, Project Managers, PMOs, EPMOs, and Investment Groups/Committees in all aspects of portfolio, program and project management practices and operations. Competency in this discipline is a journey, through continual up-skilling combined with experience over time.
- PMO facilitation is useful to disseminate the information to Project Managers and Project Directors/Program Managers. The PMOs provide a broad based project management communication channel for the uptake of the Framework/Methodologies as well as providing the communication channel for feedback to further development of frameworks and courseware.
- Systems are required to support the entire program project life cycle, from forward program planning to delivery as well as reporting, for consistency of information. An integrated approach of frameworks, people and information systems is needed to increase maturity in this discipline.
Australian Public Sector Findings
As the Australian National Auditor General stated in his speech titled "Project Management - some reflections on the management of projects in the Australian Public Sector" Hobart October 2007, "Government programmes, policies and projects need to be delivered on time, on budget and to expectations. And, while sound project management may well be the centrepiece in achieving this, other factors such as governance arrangements, people skills, stakeholder involvement and monitoring systems are key drivers for success".
The Project Management Institute, one of the lead project management industry bodies, has found that:
- Companies with more mature practices have better project performance.
- Project maturity is strongly correlated with more predictable project performance (each project maturity level reduces Schedule Performance Index and Cost Performance Index by 0.1, so the aim would be 0.3 - 0.5 reduction in delays and cost).
- Good project management companies have lower direct project management costs (each project maturity level reduces direct costs by 1%).
Kevin Chui, Vice President PMI Hong Kong, presented more specific findings related to increasing project management maturity. These included:
1. Companies with more mature project management practices have better project performance.
- Companies with more mature practices deliver projects on time and on budget
- Less mature companies may miss their scheduled targets by 40 % and their cost targets by 20%.
2. Project management maturity is strongly correlated with more predictable project schedule and cost performance
- More mature companies have a schedule performance index (SPI) variation of 0.08 and a cost performance index (CPI) variation of 0.11.
- Less mature companies can have corresponding values of 0.16 for both indices.
- For a US$10m project, we are talking about US$1.6m cost variation.
3. Good project management companies have lower direct costs than poor project management companies.
- High maturity companies have project management costs in the 6-7% range.
- Low maturity companies have an average of 11%.
- Organisations with low project management maturity also jeopardize the likelihood of project success, leading to increased indirect costs (e.g. Late delivery, missed market opportunities, dissatisfied customers)
Office of Government Commerce (OGC) UK Findings
The following extract comes from the Office of Government Commerce (OGC) UK, Version 1.0 OGC - Portfolio, Program & Project Management Maturity Model (P3M3).
"The OGC has for some time considered why projects fail and the impact of the causes of failure on the actual project outcome. The major causes of failure have been placed in the following categories:
- Design and definition failures where the scope of the program and / or project(s) are not clearly defined and required outcomes and /or outputs are not described with sufficient clarity.
- Decision making failures due to inadequate level of sponsorship and commitment to the program and / or project(s), i.e. there is no person in authority able to resolve issues.
- Program and Project discipline failures, including weak arrangements for managing risks and inability to manage change in requirements.
- Supplier management failures, including lack of understanding of supplier commercial imperatives, poor contractual set-up and management.
- People failure, including disconnect between the program and / or project(s) and stakeholders, lack of ownership, cultural issues.
A project management maturity model has been found to assist organisations address fundamental aspects of managing portfolios, programs and projects, improve the likelihood of a quality result and successful outcome and reduce the likelihood of risks impacting projects adversely.
In the absence of an organisation-wide program and project infrastructure, repeatable results depend entirely on the availability of specific individuals with a proven track record and this does not necessarily provide the basis for long-term success and continuous improvement throughout the organisation.
The levels described within the maturity model indicate provide transition states for an organisation. The levels facilitate organisational transitions from an immature state to become a mature and capable organisation with an objective basis for judging quality and solving program and project issues.
An organisation that is judged immature in program and project management terms may deliver individual programs and projects that produce excellent results occasionally. However, managers are more likely to work in a reactive mode, i.e. focused on solving immediate issues. Program and project schedules and budgets are likely to be exceeded because of the lack of sound estimating techniques. If deadlines are imposed, program and project deliverable quality is likely to be compromised to meet the schedule. For example, verification and validation activities, including reviews may be skimped or dropped if the program and projects fall behind schedule.
A mature organisation has an organisation-wide ability for managing programs and projects based on standard, defined program and project management processes. These processes can be tailored to meet the specific organisational needs. The program and project approaches are communicated to program and project team members and stakeholders, and activities are carried out in accordance with the plans and the defined processes.
The organisation ensures that the defined processes are updated when necessary, and improvements are developed and implemented in accordance with a sound business case and development plan. Roles and responsibilities for carrying out all program and project-related activities are defined and are clear throughout the organisation.
In a mature organisation, managers monitor the progress of the program and /or project(s) against the appropriate plan(s), including the quality of program and project deliverables and customer satisfaction. There should be an objective, quantitative basis for judging the quality of deliverables and analysing problems with deliverables, program and/or project approach, or other issues.
The mature organisation should have program and project information from previous programs and projects on which to evaluate schedules and budgets, ensure they are realistic and review performance.
Learning from previous programs/projects, establishing and embedding program and project management processes, and ensuring that programs and projects acquire the skills and competencies to undertake the necessary activities are significant to successful project delivery.
Such endeavours should enable an organisation to gain confidence in a program and/or projects ability to deliver the expected outcomes, to cost and schedule and achieve the required quality characteristics."
Maturity of Project Program Portfolio
The project maturity model illustrated below is based on the maturity models from the Office of Government Commerce UK (OGC) and the Project Management Institute.
The project management maturity model above aligns with the five stage model of the OGC.
- LEVEL 1 reliant on the skills of the individual project manager – heroic model.
- LEVEL 2 recognises the need for localised standards and the PMO/EPMO. This level includes the introduction of Project Management Methods.
- LEVEL 3 recognises the need for organisational consistency in processes, policies, standards, methodology. This includes the development and introduction of Project Program Portfolio Methodologies/Framework, alignment of business unit PMOs and EPMO practices, and the introduction of technology to support project program and portfolio management. This level requires increasing project directing, program management and portfolio management skills.
- LEVEL 4 is instilled project management practices. It includes instilling of project management practices, strengthening the forward program and realization of outcomes and benefits.
- LEVEL 5 is continuous improvement.
The following diagram illustrates the activities and detailed elements to move up the maturity curve to a target level 3+. These activities build on each other as the organisation capability increases.
Benefits of Increasing Project, Program and Portfolio Management Maturity
Increasing Project, Program and Portfolio Management maturity has the following benefits.
Benefits to Individuals
Project and Program Management is today seen as a mainstream management skill and is included in the Professional Skills requirements across multiple industries. It also enhances individuals' recognised transferable skills across and outside the business. Potentially the discipline also leads to improved rewards and career prospects.
Benefits to Business
The major benefit of the Project, Program and Portfolio management discipline is that it helps to embed program and project management skills and helps business deliver projects more efficiently and effectively.
An integrated approach of project, program and portfolio frameworks, people and information systems has been seen to contribute to the following business outcomes:
- Effective service provision through consistent program and project delivery.
- Efficient program and project delivery.
- Increased professionalism.
Through the implementation of frameworks, consistent facilitation through the PMOs, up-skilling of staff, and supportive systems, business can expect the following key benefits:
- Consistent project, program and portfolio practices and operations across the
- Consistent governance and delivery practices.
- Reduced duplication and fragmentation with clear and accountable roles.
- Reduced duration of projects.
- Reduced staff attrition.
- Reduced direct project management costs 3% based on the PMI findings.
- More predictable project performance, with a lower Schedule Performance (SPI) and Cost Performance (CPI) index.
- Increased consistency of information and reporting.
- Increased effectiveness of project performance.
- Increased on-time deliveries.
- Increased levels of project maturity in the organisation:
- Increased project outcome contribution.
- Rationalised and integrated technology environment.
- Increased professional reputation and credibility of department across Government.
In summary, the industry has found a direct correlation between project management maturity, predictability of performance and reduction of cost. These findings include:
- Companies with more mature practices have better project performance.
- Project maturity is strongly correlated with more predictable project performance.
- Mature project management companies have lower direct project management costs.
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