Wednesday, April 3, 2013

Blog Articles

The Quick Task  blog presents actionable ideas for boosting the effectiveness and efficiency of IT management in large organizations. We pursue near-term measurable results, and we embrace our Quick Tasks as building blocks for long-term organizational performance.  Our perspective is that of management consultants with decades of experience in carrying out work for CIOs and senior managers in the Federal government.




Jim Kendrick, CMC, PMP
P2C2 Group, Inc. 
kendrick@p2c2group.com

Monday, April 1, 2013

Building a Better Business Case



Business cases for IT investments are often developed quickly—because of an urgent need to address strategic objectives, or cost-cutting, or migration to a cloud environment. However, the rush to prepare and gain approval of a business case carries significant risk and, if poorly prepared, can hang like an albatross around the neck of the executive sponsor and investment manager for years.

The business case, including its many supporting components, will provide the framework for the project or program investment throughout the entire lifecycle. That’s either good or a nightmare, depending on how well the business case is prepared.

The Problem

Take a look at the PMI Book of Knowledge™, and you will see that there are many pieces to the puzzle, and they must all fit together. In addition to PMI processes and integration steps, there are additional dimensions to a well-prepared business case:

  • Identifying expected strategic outcomes including measurable indicators of success
  • Streamlining business processes
  • Harmonizing the investment with “to be” Enterprise Architecture
  • Exploring strategies for cost reduction
  • Reviewing inputs necessary for establishing the Performance Measurement Baseline
  • Defining “agile management” is embraced for this investment
  • Identifying supporting documents needed for the enterprise’s System Life Cycle documentation.

Developing a robust business case requires a strategy to incorporate all of the necessary elements. During the early stages, it is helpful to be open to options—and not just the solution(s) that are most readily available.

The Solution

The first step, of course, is background review and a Project Charter. While not a formal part of the PMI process, we believe that it is important to lead the Business Sponsor and the Integrated Project Team (IPT) through an early process that includes:

  • Expected Strategic Outcomes
  • Concept of Operations
  • Preliminary identification of alternative business and technical solutions
  • A Road Map for developing the business case (i.e., a task plan).

One of the best ways to accomplish these early processes quickly is to conduct a Business Case Planning Workshop with the Business Sponsor and the IPT. In addition to discussing the processes mentioned above, the workshop will also assign responsibilities regarding who provides inputs for:


  • The detailed scope of the investment including Work Breakdown Structure (WBS)
  • Risk management and data for risk-adjusted costs
  • Time management and integrated master schedule (IMS)
  • Cost estimating including for alternatives
  • Acquisition planning and management
  • Quality management
  • Stakeholder and communication management
  • Resource and staffing management
  • Definition of “Agile Management” if applicable to this investment
  • Integrated master plan (IMP) for lifecycle
  • Pre-IBR Performance Measurement Baseline and Earned Value Management plan
  • Business case documentation

In addition to assigning responsibilities for the business case, there should also be a detailed schedule. A detailed business case also generates a need for a variety of documents:

  • Business Case
  • Statement of Work, WBS, and technical milestones, including for alternatives
  • Alternatives and Cost-Benefit Analysis
  • Risk Management Plan
  • Acquisition Plan
  • Time-Phased Budget
  • Integrated Management Plan
  • Exhibit 300 (if Federal agency).

We recommend that the entire IPT review all deliverable and inputs, to make sure everything is realistic and fits together. The reviews should be done at the draft stage, so that refinements may be made to all documents. The final output should be of a quality that can be submitted for an Integrated Baseline Review.

What’s New

Cloud computing has generated a need for new business cases. Many of these replace one or more legacy systems.

There is a trend away from consulting firms preparing slick and expensive turnkey business cases for client enterprises. Business cases that become successful projects and programs need the in-depth involvement of your enterprise's executive sponsor, stakeholders, and IT team.

QT Plan

This task will require 3 – 4 months, depending on the availability of information and the schedule of the IPT. Milestones are as follows:

  1. Entry meeting to discuss task and scope, and to collect background documents
  2. Define Project Charter including IPT, if not already available
  3. Draft preliminary task plan for Business Case
  4. Convene workshop with Business Sponsor and IPT: conduct preliminary discussion, assign responsibilities, establish schedule
  5. Finalize task plan for business case
  6. Commence research and planning
  7. Brief Business Sponsor and IPT about findings and proposed approach to Business Case
  8. Prepare draft Business Case and supporting documents (may be phased into several stages)
  9. Convene IPT to review draft documents (likely to require several meetings)
  10. Prepare final Business Case and supporting documentation
  11. Finalize Exhibit 300
  12. Gain acceptance and closure with Business Sponsor and IPT
  13. Closeout task.

Reference
OMB Capital Programming Guide, version 3.0, July 2012.
See PMBOK Guide (© 2013 Project Management Institute), Fifth Edition.
How to Build a Business Case, Government Computer News
Integrated Baseline Reviews, P2C2 Group, Inc., 2013.

More Help
Jim Kendrick and the P2C2 Group, Inc. provide Facilitator/Coach and Subject Matter Expert services in this Quick Task area: kendrick@p2c2group.com. This includes experience with cloud computing.

Last Word
Business Cases should be durable and provide the foundation for the entire lifecycle and provide a framework for change and investment evolution.

Saturday, March 16, 2013

Managing the Cost of IT Risk in the Enterprise


Spending for IT inevitably includes the cost of risk. A common problem for enterprise IT management is how to estimate and budget for the cost of risk, how to avoid or mitigate these costs when possible, and how to provide guidance to the people who plan, budget, and manage IT investments.

Financial horror stories are widely publicized, particularly in the public sector where IT budgets and spending are more accessible to the media. Most of us have read about major systems that overrun estimates by millions of dollars, fail to meet business requirements, or become very expensive to operate and maintain.

However, estimates are just that, and actual costs, schedules, and outcomes may vary. The cost of risk may encompass cost overruns, the financial impact of schedule delays, diminished performance of the delivered system, unexpected training or support costs, or failure to achieve financial benefits—to name a few.


The Problem

The cost of risk is poorly understood at the enterprise level in many organizations, and underlying reasons for this vulnerability often encompass the following:

  1. Cost estimates and risk assessments are often performed on a piecemeal basis at the individual project level, rather than the overall investment level
  2. Most major IT investments actually involve multiple projects throughout the system lifecycle, and inadequate attention is given to a holistic review of costs and risks at the planning, development, deployment, and maintenance steps
  3. The corporate Knowledge Base is fragmented, meaning that investment managers may not have access to past experience with the cost of risk within the enterprise
  4. Inadequate attention to establishing, validating, and managing the Performance Measurement Baseline at the beginning of projects greatly increases the risk of unexpected costs
  5. The enterprise has insufficient standards, guidance, and governance for estimating, tracking, and controlling the cost of risk.

Another problem is that the cost of risk is an unpopular item in budget reviews. If an investment estimates an overall cost of risk of 14 percent, for example, there could be push back from budget reviewers. “Can’t you manage better so there is less risk to the budget?” they may say. In such an environment, investment planners will be tempted to cover up the cost of risk by using various fudge factors and reducing the publicized risk to more palatable levels.

However, the problem with covering up some of the risks is that the enterprise never really knows the true cost of risk. Failure to identify and acknowledge risks is actually an unacceptably expensive game:

  • If you don’t identify and acknowledge all risk costs, you can’t develop enterprise policies and processes that might avoid or mitigate them
  • Understated risk costs are misleading for planning and budgeting future investments—so that the enterprise remains locked into a continuing cycle of unexpected overruns.

Published Earned Value Management (EVM) data, such as that appearing in the OMB IT Dashboard, is at a high level. While these data provide useful overall performance indicators, they seldom pinpoint the detailed risk issues. If the EVM data are truly maintained according to the 32 criteria of the 748-B standards, a much better understanding can be obtained by drilling down into the details, reviewing the Corrective Action Plans, and analyzing the changes to the Performance Measurement Baseline (and/or re-baseline requests).

There may also be situations where reliable corporate experience isn’t available to a new investment (such as a huge system or new areas of cloud or mobile computing). In these cases, it may be necessary to have a policy of developing external case studies to document the experience of outside organizations that have implemented investments of similar scope and functionality. As we have stated in our newsletter articles, it is best to get the data from a host organization rather than a vendor. Even highly-respected vendors are trying to make a sale, offer optimistic estimates, minimize risk, and may not be aware of all costs or risks which are experienced by a host organization.

In addition to specific investment risks, the enterprise should also consider the impact of risks on the organization as a whole, its mission, and its strategic plan. Failure to support the core mission or accomplish strategic objectives can be a disaster.

The Solution

The Quick Task solution seeks to achieve the following:



  • Increase consistency in estimating, budgeting, and reporting the cost of risk throughout the enterprise
  • Strengthen the focus on risk assessment and management at the IT investment level (program or multi-project system level) in addition to project-level risk
  • Improve the corporate Knowledge Base about the cost of risk
  • Identify risk patterns in the enterprise that may be avoided or mitigated—to reduce the cost of risk
  • Strengthen enterprise-wide policies and processes for estimating, reporting, and overseeing IT investment risks.

The task will require involvement of IT leadership, key personnel responsible for risk and performance metrics, and representatives of program and project management. Information will be needed about policies, practices, performance data, and supporting documents. The task will include detailed analysis and discussions. The output will be a Plan of Action for Enterprise-Wide IT Investment Risk Management.

What’s New

For Federal agencies, there is sharply increased scrutiny of IT budgets. Strengthened enterprise-wide oversight of investment risks is essential for maintaining credibility with OMB, GAO, and Congress.

QT Plan

This task will require 3 – 4 months, depending on the availability of information and the schedule of the Leadership Team. Milestones are as follows:

  1. Entry meeting to discuss task and scope, and to collect background documents
  2. Draft the Quick Task management plan
  3. Form the Leadership Team for the task and review draft Quick Task plan
  4. Finalize Quick Task task plan
  5. Review the current enterprise-level policies, processes, and knowledge bases for overseeing and documenting the cost of risk
  6. Identify a representative cross-section of major investments to review in detail, and:
6.1. Review current risk assessment and cost estimating practices at the project and investment levels
6.2. Drill down into risks encountered by representative investments
6.3 Conduct group interviews with selected investment managers and PMs

  1. Analyze and categorize investment risks, seeking opportunities to avoid or mitigate risks
  2. Present findings to the task Leadership Team
  3. Conduct additional fact-finding
  4. Develop a draft Plan of Action for Enterprise-Wide IT Investment Risk Management, covering:
10.1. Enterprise policies, processes, and governance
10.2. Guidance for documenting and reporting cost estimates, cost of risk, Performance Measurement Baseline, Earned Value Management, risk management, and re-baselining
10.3. Enterprise Knowledge Base for project, program, and investment risks and cost of risks
10.4. Opportunities for cost cutting through avoidance or mitigation of investment risks
10.5. Other actions

  1. Conduct workshop for task Leadership Team to refine the plan of action
  2. Finalize the Plan of Action for Enterprise-Wide IT Investment Risk Management
  3. Conduct a Closeout Briefing for all participants and outline follow-up steps (including assignment of roles and responsibilities).

Reference

GAO Cost Estimating and Assessment Guide, Best Practices for Developing and Managing
Capital Program Costs. See especially Chapters 13 Sensitivity Analysis and 14 Risk Cost and Uncertainty. Government Accountability Office, GAO-09-3SP, March 20009.

2008 NASA Cost Estimating Handbook; see especially Volume 2 Cost Risk.

See PMBOK Guide(© 2013 Project Management Institute), Fifth Edition:  11. Project Risk Management.

See The Standard for Program Management (© 2013 Project Management Institute), Third Edition: 8.7 Program Risk Management.

See The Standard for Portfolio Management (© 2013 Project Management Institute), Third Edition: 8. Portfolio Management.

Using Risk-Adjusted Costs for Projects, P2C2 Group, Inc.

Smarter Enterprise Management with Earned Value Management, P2C2 Group, Inc.

Managing the Project Risks of Federal Initiatives, P2C2 Group, Inc.

Financial Models for IT Investments, White Paper, P2C2 Group, Inc.

Make Better Decisions Using Case Studies, P2C2 Group, Inc.

Seven Steps to Smarter CPIC, P2C2 Group, Inc.

Enterprise-Wide Corporate Knowledge Base for IT, QT Blog, Jim Kendrick.


More Help

Jim Kendrick and the P2C2 Group, Inc. provide management consulting and Subject Matter Expert services in this Quick Task area: kendrick@p2c2group.com.

Last Word

The objective of portfolio risk management is to accept the right amount of risk commensurate with the anticipated reward to deliver the optimum outcomes for the organization in the short, medium, and longer term.
–PMI, The Standard for Portfolio Management.

Tuesday, March 5, 2013

Managing Your Portfolio of PMOs


                                                
A large enterprise often has dozens of IT PMOs. These substantial investments need to be recognized and managed as a PMO portfolio.

PMOs have become commonplace and are often known as Portfolio Management Offices, Program Management Offices, and Project Management Offices. They should boost project and investment performance and reduce risk, right?  Maybe; it depends. PMI’s Pulse of the Profession™ reported that, while PMOs are increasing, there was evidence that having a PMO does little to improve project success rates. This finding was communicated in PMI Community Post, February 25, 2013, and the article further stated “It is not surprising, therefore, that many PMOs have a short ‘shelflife.’”

Many additional reasons for short “shelflife” are suggested in a global, multi-year study reported by Hobbs and Aubry (see Reference section). For example, they write “The PMO is an organizational innovation that is a recent and important phenomenon. But if it is an innovation, it is unstable and still evolving.” (Page 162)  They further state:

Tension emerges naturally on the issue of control of projects. In some organizations a distinction is introduced between monitoring and controlling. Many PMOs monitor project progress and performance. Some are limited to the monitoring function, while others have a role to play in controlling projects. Tensions emerge when PMOs exert control over projects for which they do not have primary responsibility. In some situations, PMOs are allowed to report information on projects, to ask questions, to integrate information by portfolio, but are not allowed to make judgments and even less to dictate actions on projects. This leads to a paradox where a PMO cannot take action but at the same time can be criticized for its inability to affect project performance.  (Page 156)

In its introduction to the book by Hobbs and Aubry, the Project Management Institute states “…, the authors address the roles that PMOs play in organizations, which provides valuable insights for better creating, structuring and governing PMOs. When designing a PMO, an organization has a variety of choices regarding the PMO’s structure and role assignment. By providing a way to define PMOs by type, this research explores how to set up and define a PMO, depending upon the specific type of PMO The authors discuss the many bases for the types of PMOs, including structural characteristics and functions, and how these types affect the PMO’s role in the organization.”

The variety of purposes and roles of PMOs can lead to confusion and misunderstanding at the enterprise level. As Prasad Kamath is quoted as saying in the PMI Community Post cited above,

“One thing that I have seen missing is a sound understanding of what exactly a PMO is,” he says. He has rarely seen a charter for a PMO signed off by executive management.


The Problem

The PMO can be one of the most incorrectly managed and underutilized portions of an organization, according to ProjectSmart.. Findings presented at the 2010 Gartner ITxpo indicate that nearly half of all PMOs result in failure. The question, then, is why do such a drastic number of businesses feel that their PMOs do not deliver value?

The P2C2 Group’s viewpoint is that PMOs need enterprise-level leadership and oversight. We are not suggesting that all PMOs in an organization must be alike, or have the same functions, or the same structure. However, there is value in making conscious decisions about each PMO’s role, its charter, its estimated lifespan, and how it supports the overall enterprise IT management strategy.

PMOs can be expensive, both in terms of personnel assigned to them and the amount of work required by others to respond to PMO monitoring and reporting requirements. If the enterprise treats each PMO as a project—an investment—it can be evaluated in rational terms: objectives, scope, costs, benefits, risks, executive sponsorship, plans, execution, and control. Each can also be evaluated in terms of value to the organization and stakeholders.

In such a context, an enterprise has a portfolio of PMOs. It is incumbent upon enterprise IT leadership to manage this portfolio on a continuing basis. Since some PMOs are embedded in programs or large projects, it may be necessary to take a matrix management approach, where such a PMO is reviewed both in the PMO portfolio and as part of the portfolio in which it is embedded.

Given that PMOs are generally “projects” with a defined timeframe or duration, it is important to view the completion and termination of a PMO project as normal—and not necessarily an indicator of failure. Moreover, individual PMOs may evolve and encompass changes in roles or workloads. These changes should be treated like other projects, with transparent management decisions authorizing modification of the performance measurement baseline.

The Solution

Enterprise IT leaders should organize a portfolio of its PMOs and develop policies and processes for their authorization, establishment, oversight, performance review, enhancement, and (when appropriate) closeout and termination. The portfolio management framework should be flexible enough to encompass PMOs with varied roles and timeframes.

We recommend the following overarching principals for managing PMOs:

-       Oversee all PMO investments at the enterprise level as a portfolio
-       Identify, assess, and monitor PMO and PMO-like functions within the overall enterprise
-       Increase the visibility of the PMO portfolio in the governance process
-       Treat each PMO investment as a project
-       Harmonize enterprise policies and practices with PMO operations
-       Support, develop, and promote a vibrant PMO culture including use of best practices
-       Make decisions about PMO investments as part of the capital investment process—initiate those needed to support priorities, modify those that need to be strengthened, consolidate those which overlap, and terminate those that are underperforming or no longer needed.

In general, the development of strong, successful PMOs throughout the enterprise will be an evolutionary process. In recognition of this, we have broken down our action steps into three limited-duration Quick Tasks:

#1, Roadmap for Enterprise-Level PMO Portfolio Management. The purpose of this step is to define a plan of action for an enterprise-level PMO oversight, governance, policy and process. It requires involvement of enterprise leadership and formulation of an action plan (roadmap). The roadmap becomes the core of a charter for developing and implementing enterprise-level PMO management.

#2, Enterprise-Wide PMO Identification and Review. This step inventories and analyzes the characteristics of existing (and any planned) PMOs in detail. It collects detailed input from stakeholders, PMO directors, and others. It categorizes each PMO by roles and identifies strengths, benefits, and issues. Best practices and lessons learned are identified. A comparison is made to PMO processes and current enterprise policies and processes. There will be an assessment of the feasibility of establishing an enterprise PMO portfolio. The output will be a summary report with findings and recommendations.

#3. Enterprise-Wide Strategic Plan for the PMO Portfolio.  This step builds on detailed information available regarding PMOs in the enterprise, as developed in the previous step. The objective will be to develop a comprehensive strategy for the governance, policy, and processes applicable to PMOs in the enterprise. The task should be guided by a leadership team with opportunities to review and interact regarding findings. Output will be a strategic plan for enterprise oversight of PMOs, including an implementation plan.

There are many relate considerations. For example, communications and change management will be important. Establishing an enterprise-wide PMO community may help. It could be helpful to explore options for a Wiki, workshops, and facilitated reviews along the evolutionary path.

What’s New

IT is changing rapidly. Keeping PMOs aligned with these changes can be challenging. Cloud computing, mobile computing, and social media are all having an impact, as is a trend toward system consolidation. Like any other major cluster of investments, the PMO portfolio should be managed on an ongoing basis.

QT Plan

The Quick Plan needs to be tailored to each enterprise’s situation and the general characteristics of its PMOs. The P2C2 Group’s approach would be to tailor the plan of action following additional discussion. We have segmented the work into three Quick Tasks, to illustrate our general approach.

QT #1, Roadmap for Enterprise-Level PMO Portfolio Management. The purpose of this task is to define a plan of action for an enterprise-level PMO oversight and governance policy and process. Duration would be approximately 6 weeks, resulting in a roadmap, scope, and schedule for follow-up action.

-       Organization of an enterprise leadership team for the task
-       Summarization of available information about PMOs in the organization
-       A workshop to discuss needs and opportunities, group meetings with stakeholders
-       Summary of findings
-       Draft roadmap and action plan
-       Detailed meeting of leadership team to make decisions
-       A Roadmap (Plan-of Acton Report)
-       A project charter for enterprise-level PMO management.

QT #2, Enterprise-Wide PMO Identification and Review. This task is an in-depth review of the review items discussed above. Task duration would be about three months, and the objective would be to establish an accurate snapshot of PMOs in the enterprise including related problems and opportunities. The task should be guided by a leadership team with opportunities to review and interact regarding findings. Output would be a report that addresses the following information:

-       Brief the enterprise leadership team about the task
-       Identify all PMOs and PMO-like units in the enterprise
-       Document the roles, cost, and timeframe of each
-       Review current enterprise-wide accountability requirements for PMOs
-       Discuss expectations of executive/business sponsors of each PMO
-       Review problems and successes with a cross-section of PMO directors and programs/projects reporting to PMOs
-       Assess how current organizational policy and processes impact PMOs
-       On a preliminary basis, categorize PMOs by role/function or other key attributes and identify the most salient benefits
-       Look at lessons learned and identify any potential “best practices”
-       Assess the feasibility of establishing an Enterprise PMO Portfolio
-       Prepare a draft report of findings and recommendations
-       Present the findings to the enterprise leadership team
-       Prepare a final report of findings and recommendations

QT #3. Enterprise-Wide Strategic Plan for the PMO Portfolio.  This task builds on detailed information available regarding PMOs in the enterprise. Task duration would be three to four months, and the objective will be to develop a comprehensive strategy for the governance, policy, and processes applicable to PMOs in the enterprise. The task should be guided by a leadership team with opportunities to review and interact regarding findings. Output would be a strategic plan for enterprise oversight of PMOs, including an implementation. Preparation of the plan should consider questions such as:

-       How does the plan—and PMOs—support the overall IT strategic plan?
-       What is the strategy for enhancing the value and likelihood of success for the portfolio of PMOs?
-       Who will provide enterprise-level governance for the portfolio?
-       Should PMOs be considered projects and follow project management protocols?
-       Should a PMO charter be required, and should it have approval at the enterprise level?
-       Are PMO investments aligned with enterprise IT strategy and priorities?

o    Could some PMOs be consolidated?

o    Are there urgent priorities that need a PMO?

o    Should some PMOs be terminated?
-       How will PMOs embedded in other investments be treated?
-       Should all or most PMOs support a core of enterprise-level metrics?
-       By what criteria will PMOs be reviewed for cost, benefits, and intended results?
-       How will the enterprise support PMOs with training, career development, and collaboration about best practices?


Reference

PMI Community Post, PMO Survival – Can Charters Help?  February 25, 2013.

Discussion of the 2011 CHAOS Study and Project Management Software, in a Girl’s Guide to Project Management (blog),

The Project Management Office (PMO): A Quest for Understanding.  Brian Hobbs, PhD, MBA, PMP; and Monique Aubry, PhD, MPM.  © 2010, Project Management Institute.  ISBN” 978-1-933890-97-5. Book available for purchase. PMI members can get link to download for free at  http://www.pmi.org/Knowledge-Center/Research-Completed-Research/The-Project-Management-Office-PMO-A-Quest-for-Understanding.aspx.

Project Smart, a U.K. perspective on PMOs.

Top 10 PMO Worst Practices: Pitfalls to Avoid. Daptive White Paper.

The Standard for Portfolio Management, Third Edition. 2013, Project Management Institute.  ISBN: 978-1-935589-69-3.  See 1.9 Role of the PMO for Portfolio Management.

Measures and Metrics for PMO Success, Jim Kendrick, P2C2 Group. Project Management Office Summit.


More Help

Jim Kendrick and the P2C2 Group, Inc. provide Facilitator/Coach and Subject Matter Expert services in this Quick Task area: kendrick@p2c2group.com.

Last Word

The study “confirms that the PMO is deeply embedded in its host organization, and the two coevolve.” Hobbs and Aubry, in reference cited, page 162.