Developing Strategic Project Management Maturity
Developing an effective PDC will enable organizations to improve the way they
manage the "doing of their projects" and as a consequence increase the success
rate resulting in increased value for their stakeholders. The ROI from improving
an organization's PDC should be significant!
The value proposition for developing an effective PDC (itself a business change
program) is compelling. Worldwide research undertaken by Jed Simms at the Boston
Consulting Group in the 1990s defined five levels of PDC maturity, and found that the return
on investment (ROI) from projects increased substantially at each level.[34]
While the PDC itself has four management layers, five levels of maturity can be described as follows:
- Level 1 capability is represented by executive complacency, project
teams doing their own thing, no benefits management, and on average projects typically
show a small negative ROI but results are wildly variable with some successes
(which are always highlighted).
- Level 2 capability sees the imposition of processes focused on
measuring activity rather than outcomes. The business imposes forms, requirements
and checklists; "methodology police" enforce a one-size-fits-all policy. The process
of developing "approvable" businesses cases and standardized project reporting
creates more uniform outcomes but there's little understanding of risk -v- reward
and virtually no follow through to implementation and benefits realization. As
a consequence there is typically a neutral ROI - despite the glowing promises
in the business case, the value actually created eventually covers the costs.
- Level 3 capability sees the organization gaining sufficient experience
and confidence to allow measured flexibility into its processes for managing projects.
The basic disciplines are retained, but the way they are implemented is adjusted
to suit the needs of the project. The executive view moves from imposing "controls"
towards an outcome focus using elements of portfolio management.
However, project success still tends to be measured in terms of time, cost and
scope at the end of the project rather than the benefits gained by the organization.
That is, an output focus rather than an outcome focus. Organizations at this Level generate
a reasonable ROI measured at the project Level but largely miss the potential
for substantially enhanced business outcomes. The majority of "maturity models"
such as OPM3 and P3M3 primarily focus on achieving this Level of capability.
- Level 4 capability[35]
introduces a paradigm shift in executive thinking. Rather than focusing on project
outputs, the work of the project is seen as a key enabler needed to achieve valuable
business outcomes - the project is merely a means to achieving a more important
"end state". This requires an integrated process flow from the identification
of a need or opportunity within the business through to implementing the changes
required to delivery of the expected business outcomes to meet the need or exploit
the opportunity.
Ownership of this value chain is vested in the business; the role of projects
and project management is to support this overall effort by delivering the outputs
best suited to achieving the business objective. The model defined in PDC (Project
Delivery Capability) represents the framework needed to support this level. Simms's
research suggests there is an increase in ROI of 2 to 3 times that achieved at
Level 3 once the focus of the organization's executive's shift to achieving
business related outcomes and the value achieved.
This paradigm shift is supported by assigning executive responsibility for, and
then measuring, the benefits actually realized by the organization.
- Level 5 capability expands on Level 4 with the whole PDC
system focused on efficiently supporting the strategic objectives of the business.
Effective strategic alignment linked to pragmatic risk management, supported by
simple but effective processes, is the key to generating another significant increase
in ROI!
Based on observation rather then measurement, it seems the majority of organizations
in both the public and private sectors are currently operating at Level 2,
typically with the PMO fulfilling the role of "methodology policeman", a few more
mature organizations, mainly private sector, are achieving Level 3 maturity
whilst many public and private sector organizations remain at Level 1.
Very few have taken the step to Level 4 where the executive hold their
business managers accountable for achieving the outcomes defined in the business
case and invest in the PDC capability needed to properly support their business's
program and project managers.
34. Source,
Project Delivery Capability — the next competitive battleground,
Jed Simms, TOP — Totally Optimized Projects Pty Ltd: www.totallyoptimizedprojects.com
35. Project Business Management is a concept that looks
towards an Enterprise-Wide project management function that recognizes portfolio,
program, and project management as business functions. That is, a core enterprise-wide
competency within the enterprise (organization), potentially supported by a Project
Business Management Office (PBMO). This recognition is the key change between
Levels 3 and 4.
The PBMO is an executive Level management business function organization
that addresses setting policy and establishing charters. The PMBO develops an
organizational model for the business management of portfolios, programs, and
projects and oversees the establishment of portfolio, program, and project management
offices (PMOs).
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The
Four Layers of PDC
