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Project Management the Siemens way

F i t f o r p r o j e c t s –

f i t f o r s u c c e s s

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((U2))

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C o m

m i t m

e n t

Commitment

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Introduction

Dr. Heinrich von Pierer

“We are close”

Here at Siemens we see professional project management as a crucial factor

in our success. Projects make up the bulk of our business. This is why the

Corporate Executive Committee is stressing the ongoing development of

project management to ensure that project managers are optimally qualified.

With the PM@Siemens Initiative, we have devised an effective tool enabling

us to handle projects more profitably than was frequently the case in the

past. We are on the right track with our initiative so far – the goals are clearly

formulated, measures have been defined, and roll-out in the Regions means

that we are close to arriving at our objective of a uniform project manager

culture. Now it is up to you to lead the PM@Siemens Initiative to success

through committed Best Practice Sharing, resolute actions and the poolingof our strengths, both at Group headquarters and in the Regions.

Dr. Heinrich v. Pierer

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As an important contribution to improving profitability at Siemens, we

started the Siemens Project Management Initiative PM@Siemens in fiscal

00/01, initially with 8 Groups (PG, I&S, ICM, ICN, TS, SD, SBS and PTD).

Our aim is to improve project management throughout Siemens, by means

of Best Practice Sharing, and to put into practice a range of standard

approaches, tools and control variables in all groups.

We are proud to say that since then we have achieved results which are

taking visible effect throughout Siemens. The SV and SBT Groups joined the

Initiative a good six months ago while the A&D and Med Groups also decid-

ed recently that they would participate. Roll-out in the Regions as well as in

the USA is under way.

This updated PM Guide is a good example of our Best Practice Sharing at

Siemens, as it already incorporates the learning curve from our experience

with the “old” guide:

a an uniform defined project process throughout Siemens

a 7 enhanced modules

a 5 new modules (Processes/Roles, Operative QM, Knowledge Management,

Project Purchasing, Small Projects)

All the obligatory and optional measures must now be implemented rigorous-

ly in your Group. This is where everything depends on you: Do not re-invent

the wheel, but instead put the recommended Best Practice to use. In doing so,

you will be supported by a committed team led by Dr. Schloss, who heads thisInitiative.

To track your progress use a proven most effective tool: project management

assessments (self assessment as well as CT SE conducted assessment). The in-

dividual Groups will keep me regularly updated on progress, on assessments

(PMA and CT SE) and on the quality of results yielded by the projects.

I wish you every success.

Edward G. Krubasik

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Dr. Jürgen Schloss, PTD

”Fit for projects – fit for success“ means for me a global approach on the part

of our Project Managers. We want our Project Managers to never lose sight

of their objectives and to manage our projects professionally and efficiently.

We want our customers to come back to us with their future business as well;

we want them to be satisfied and to be successful with our systems andequipment. I believe this collection of examples and recommendations for

our project management offers a sound basis for long-term success in our

projects and processes. With the roll-out in the Regions our ultimate aim is a

worldwide project culture throughout all the Groups. It is precisely in the in-

ternational implementation of projects that a great deal of potential lies.

Our commitment toproject management

Joachim Möller, I&S

One of the crucial factors responsible for the success of our systems business

is that our project management has become something we can take for

granted.

It is very important to me that our Project Managers are among the best in

their respective areas of responsibility or that they are on their way to attain-

ing that status.

I will personally focus more on Project Controlling and will participate in the

process.

Alfred Ötsch, A&D

Profitable solutions business is conditional on professional project manage-

ment, and professional project management means satisfied customers who

come back to us with their future orders.

This is what the PM@Siemens Initiative is all about.

Learning from others and Siemens-wide Best Practice Sharing are the key

levers that will give us a competitive edge and ensure the sustained profita-

bility of our solutions business.

We at A&D are glad to be taking part in this worldwide Siemens Initiative.

The success of our products business is both an incentive and a guide for oursolutions business.

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Lothar Pauly, ICM

In ICM Networks, we see the Project Manager as an entrepreneur. We have

therefore established an organization in Sales/Project Management whereby

the Project Manager is given the necessary room to move. We support the

PM@Siemens Initiative in order to provide our Project Managers with

extensive tools for handling their projects successfully.

Anton Hendrik Schaaf, ICN

Based on the proven methods of PM@Siemens, ICN has made significant

progress in project management – the PM Improvement Program has taken

effect. Methods proven in the other Groups have helped us a great deal.

The task facing us now is to further put our findings into practice quickly and

rigorously, so that we can gain a profitable position in the telecommuni-cations market.

Goetz Steinhardt, Med

Our customers expect us at Medical Solutions to understand their workflows

from start to finish; they want us to optimize the procedures involved in

terms of both efficiency and effectiveness.

Quality up, Cost down is what we strive for.

Just like the projects we handle for our customers, our internal processesmust be equally up to the mark.

Project management is a core competence at Med.

PM@Siemens is yet another opportunity to strengthen this competence.

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Norbert König, PG

Project management is one of our core disciplines, ensuring sustained high

profitability and a determined reduction of non-conformance costs (NCCs).

An effective continuous improvement process is therefore the vital key for

driving the quality of project processing to excellence throughout the com-

pany.Learning better solutions (Best Practice Exchange) from other Siemens

Groups and introducing them is an effective and smart way of improving our

processing quality and consequently our profitability.

Jürgen Frischmuth, SBS

On-schedule and customer-specific project management must be second

nature to us. The finalizing of complex customer projects with effective

deployment of resources and clear value added for our customers is crucial

to our success. This is why professional project management is the central

lever in a sustained improvement of our results and in setting ourselves

apart from our competitors.

Dr. Peter Drexel, SD

Our objective in systems business is to achieve profitability and customer

satisfaction on the basis of convincing quality. Best Practice Sharing in thecontext of the Siemens Project Management Initiative grants SD access to all

the Siemens project management know-how – a great advantage for our

young enterprise.

We are making good use of this opportunity in our PM@SD Group project

and have introduced uniform minimum PM standards and principles

throughout SD. This is already bearing fruit: an improvement in process

quality resulting from higher margins in new orders and reduced cost

overruns during processing are already evident at this early stage. The long-lasting effect is ensured by stringent controlling.

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Oskar Ronner, SBT

In Autumn 2002, SBT resolved to standardize and harmonize worldwide the

core processes of our three Solutions Divisions for Sales, Project Execution

and Service. Only this way can we arrive at the necessary Excellence in Oper-

ations. Roll-out in the various countries is under way and is scheduled for

completion by the end of 2004. Although SBT's average project volume

amounts to around EURO 30,000 and thus is significantly below the figures

of other Groups, our local entrepreneurs who execute these projects world-

wide in 500 branches face the same challenges as do those dealing with the

larger-scale projects. Consequently, we are now dedicating a great deal of ef-fort to the new module, ”Small Projects“.

Günter Hauptmann, SV

Well-handled projects make an essential contribution to profitable business.

Top-class project management as a success factor reduces cycle times and

improves quality in a global context.

In this process, the PM@Siemens Initiative creates added value through

knowledge sharing/Best Practice Exchange, providing further acceleration

on our way towards Project Management Excellence.

Hans-Dieter Bott, TS

Successful projects are an essential feature of the Transportation System

Group's business success. Continuous improvement of systematic project

management promotes the professional processing and successful comple-

tion of all projects.

Mutual exchange of Best Practice with other Groups is a vital element in en-suring that project management is standardized at the highest quality level

throughout Siemens as a whole. TS enthusiastically welcomed the career

model for Project Managers, as this model recognizes the great significance

of the Project Manager function and provides career prospects for all project

staff.

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Overview

O v e r v

i e w

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Fit for projects – fit for success

“Fit for projects – fit for success” is the motto

of the PM@Siemens Initiative. These words

signal primarily that we have achieved mea-

surable success since the Initiative got going

and secondly that we have come a lot closer

to our ultimate objective of a uniform

project culture. It is precisely in times oftough predatory competition and cautious

customer decisions that projects business is

only attractive if it is handled successfully –

in terms of both customer satisfaction and

positive results. We can move the goalposts

on both issues: optimized processes make us

reliable and calculable for our customers;

they also improve our EBIT, irrespective of

whether large or small-scale projects are con-

cerned.

This is why we have dedicated a separate

chapter to the topic of “Small Projects”.

“Small” may denote the volume or complexi-

ty of a project, but not necessarily its signifi-

cance for us.

Project Managers – our future success is in

your hands. With your know-how, your com-

mitment and your will to use the resources

at your disposal and establish them in your

teams, we will meet our targets in project,

system and service business.

Dr. Jürgen Schloß, PTD Joachim Fischer, PTD

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On the home stretch

Customer requirements are shifting, the mar-

ket is changing continuously, technological

leaps are enormous – this is why ongoing

training and learning are vital for successful

project management. You, the ProjectManager, must rise to this challenge. The

PM@Siemens Initiative will provide the re-

sources and training facilities. Here the

PM@Siemens Academy will play a particular-

ly important role in offering career and quali-

fication concepts that have meanwhile es-

tablished themselves throughout Siemens.

The first Project Managers have already

been certified.This PM@Siemens Guide provides informa-

tion on the current status of the

PM@Siemens Initiative.

Consolidating what has beenachieved so far – meeting futuretargets

The PM@Siemens Initiative was introducedto the Groups last fiscal year as a significant

means of improving profitability, with the

aim of giving Siemens a clear edge over the

competition through a standardized scale of

qualifications for its Project Managers. In ad-

dition to the first Groups to join (PG, I&S,

ICM, ICN, TS, SD, SBS and PTD), SV, SBT, A&D

and Med have since adopted parts of theInitiative. No small measure of success has

been recorded:

a 53 recommendations have meanwhile

been drawn up. Group-specific implemen-

tation thereof is now complete, including

Scorecard Controlling.

a A career model applicable throughout

Siemens has been devised, in close coop-

eration with CP. This model comprises

uniformly organized qualification stages:

Team Member, Project Manager, Senior

Project Manager, Project Director.

a The PM@Siemens Academy is firmly

established and already offers the stan-

dard course program PM4 to PM1, which

will in the future be organized and run

by the Learning Campus.

a All Groups apply standard assessment

procedures to measure the level of

maturity in processes and projects.

a The PM@Siemens Portal – a joint venture

project with CIO – is in course of develop-

ment and is setting new standards for

communication and international cooper-

ation in project teams.

a A standard auditing module for project

management has been devised jointly

with CD A and is already being applied.

a Rollout has taken place in 20 Regional

Companies and in the US.

The positive response to the PM@Siemens

Initiative and the committed cooperation ofall Groups demonstrate not only the para-

mount importance of such activities but also

the strong will to succeed.

With all this, we have taken a further signifi-

cant step on the road towards a uniform

project culture, an aim which is vital to our

success.

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Our commitment toproject management

Success is feasible

When the Initiative kicked off, the founda-

tions were laid for managing success like a

project and for managing projects with suc-

cess. Thanks to cross-Group efforts and the

active support of all involved, we have estab-

lished a solid and enduring “house” within

Siemens AG in just a few short months.

Comprehensive success in projects business

essentially depends on the personal apti-

tudes and qualifications of all Project Man-

agers and staff – be it in the coordination of

local development departments or in the

context of large-scale international projects.

The aim is always to manage projects suchthat they are completed successfully. Pro-

ject management is thus more than just a

methodological approach. It is instead a lead-

ership concept which we must resolutely

apply.

We expect the same commitment to project

management from all our executive staff.

Each and every one of you is responsible for

ensuring that all business coordinators and

project staff are aware of the need to contin-

uously improve project management. You

will have support in the form of detailed andpractical recommendations provided by

Project Management. To avoid mistakes and

minimize risks, you must likewise ensure

that any experience gained is subsequently

incorporated into projects and processes. As

a result, in your capacity as a leader and a

Project Manager, you exert considerable in-

fluence on the quality of project manage-

ment in our company, and consequently onthe quality of project results.

Active Best Practice Sharing will provide us

with valuable synergy effects, which will be

of great benefit to everybody.

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O r g a n i z a t i o n

o f t h e I n i

t i a t i v e

The Siemens way

Group Coordinators:

Steering Committee:

ICM

Pauly

Kurfer

ICN

Schaaf

Bamberger

I&S

Möller

Schott

PG

König

Eckert

SD

Dr. Drexel

Husemeier

PTD

Dr. Schloss

Dr. Schlegel

SBS

Frischmuth

Piegsa

SBT

Ronner

Kessler

SV

Hauptmann

B. David

TS

Bott

Dr. May

Chairman: Dr. Schloss, PTD CEC

Coordination: Fischer, PTD QM

Initiator: Dr. Krubasik

Med

Steinhardt

Dr. Viethen

A&D

Ötsch

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Small Projects

PM Assessment

Knowledge Management

PM Portal

Personnel Management

Contract Management

Project Procurement

Processes, Transfer and Implementation

Operative Quality Management

Qualification

Project Controlling

Processes and Roles

T h e

m ai n t o pi c s

Project Management the Siemens way

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Processes

and Roles

R o l e s

a n

d

P r o

c e

s s e

s

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In order to achieve our objective, i.e. to ar-

rive at “Siemens-wide project management

standards”, it is essential that the processes

relevant for project handling be defined in a

uniform fashion and integrated into the

Siemens Process House.

This creates the basis for implementing pro-cess improvements into practice throughout

Siemens, through the application of uniform

procedures, methods and roles in project

handling.

The planned further detailing will also reveal

cross-Group synergies for IT tools.

The generic project phase model was de-

vised as a first but crucial step involving pre-

cise milestones. It forms the basis for further

detailing and introduces a uniform process-

ing language.

Processes and Roles

PM010AcquisitionGo/No Go

decision

PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailed

planning

The PM@Siemens project phase model formsthe basis for further work.

Pre-acquisition

Projectacquisition

Bidpreparation

Contractnegotiation

Projecthandover

Projectopening andclarification

Detailedplanning

Einkauf &Herstellung Versand Errichtung

Inbetrieb-setzung

Abnahme-Messung

Garantie-Phase

Purchasing &manufacture Dispatch

ErectionInstallation

Commis-sioning

AcceptanceWarranty-phase

PM300Dispatchapproval

PM400Material

and resourcesat site

PM550Erection

completed

PM600Commissioning

completed

PM650Provisionalcustomer

acceptance

PM700Final

customeracceptance

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The individual process operations are stag-

gered in a practical fashion, on the basis of

the integrated project schedule; hence this

linear process approach also makes sense

for projects business.

To record the completion of a process step,

each milestone is accorded mandatory re-sults. This provides the basis for introducing

Key Performance Indicators, allowing the

quality of project processing as well as on-

time performance to be measured.

Mandatory results for each project milestone

Depending on the type of business, some

project phases may be inapplicable (e.g.

component delivery order).

The representation of a complex handling

process as a linear phase model entails the

seemingly insuperable, system-inherent

problem that the real process passesthrough the described phases several times.

The process representation with its mile-

stones is still valid, however – for each com-

ponent as well as for the system – and is

thus a valuable tool.

PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailedplanning

1 Investment approval for defined sales resources

2 Outline description of customer and business context

3 Outline description of the identified expected order(scope of supply and anticipated sales)

PM010AcquisitionGo/No Godecision

Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning

Pre-acquisition

Projectacquisition

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1 Investment approval for defined bid preparation resources

2 Supplemented expected order document

3 Documented customer inquiry

4 Analysis of context (strengths, weaknesses, opportunities, and risks)

5 Rough risk and cost estimate

6 Planned project/service share and volume, expected profit

7 Resources for the bid team, project schedule and planned bid costs

Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning

Pre-acquisition

Projectacquisition

PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailedplanning


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1 Detailed project description (project plan and solutions)

2 Detailed project cost calculation (sales, EVA)

3 Completed bid documentation

4 Approval by all organizations involved

5 Current risk assessment

6 Current project classification

7 Approval for submission of bid to customer

8Signed bid approval

9 Defined negotiation framework


PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailedplanning


Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning

Pre-acquisition

Projectacquisition

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Pre-acquisition

PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailedplanning

1 Signed acknowledgement of order

2 Final contract documentation

3 Described changes to the bid(resources, legal aspects, solutions, etc.)

4 Revised risk evaluation incl. risk assessment, likelihood of occurrenceand actions to reduce risk

5 Approval by risk Review Board in charge

6 Adapted escalation level

Projectacquisition

Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning

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PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailedplanning

1 Project Manager and Commercial Project Manager appointed

2 Complete contract and bid documents handed over to Project Manager

3 Changes between contract and bid documented

4 Scope of delivery and cost calculation adapted

5 Risk analysis and adjustment of actions to reduce risk

6 Final dialog held with Bid Manager

Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning


Pre-acquisition

Projectacquisition


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Pre-acquisition

PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailedplanning

1 Project organization completed

2 Detailed agreement with customer on scope of deliveries/services and specifications

3 Change and claim strategy completed

4 Contract structures adapted

5 Target agreements drawn up

6 Project structure created

7 As sold cost calculation finalized

Projectacquisition

Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning

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1 Approved documents for erection

2 Approved documents for purchasing

3 Selected suppliers/service providers

Pre-acquisition

Projectacquisition

Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning


4Completed service concept

PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entryorder

clarified

PM200Approval

of detailedplanning

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1 Notification of completion ready

2 Packing list with current weights anddimensions of packing units

3 Export declarations prepared

4 Pro-forma invoice for customs clearance

5 Packaging and dispatch information

6 Notification of readiness for erection



Commis-sioning

Acceptance Warranty-phase

PM400Material


PM550Erection

completed

PM600Commissioning

completed


acceptance

PM700Final customer

acceptance

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1 Goods received and incorporated in inventories

2 Site ready for erection

3 Resources available




Commis-sioning


PM400Material


PM550Erection

completed

PM600Commissioning

completed


acceptance

PM700Final customer

acceptance

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1 Erection completed

2 Erection reports prepared

3 Handover of all documents to commissioning

4 Commissioning instructions prepared

5 Site ready for commissioning



Commis-sioning


PM400Material


PM550Erection

completed

PM600Commissioning

completed


acceptance

PM700Final customer

acceptance

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1 Commissioning completed

2 Documented list of open points

3 Documented commissioning results/tests

4 Updated execution documents prepared




Commis-sioning


PM400Material


PM550Erection

completed

PM600Commissioning

completed


acceptance

PM700Final customer

acceptance

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1 Provisional customer acceptance signed

2 List of open points adopted together with customer

3 Acceptance test documentation completed

4 Provisional customer documentation drawn up



Commis-sioning


PM400Material


PM550Erection

completed

PM600Commissioning

completed


acceptance

PM700Final customer

acceptance

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1 Final customer acceptance signed

2 Bank bonds obtained

3 Final customer documentation prepared

4 Final project report prepared

Depending on the relevant business, all mile-

stone results may also be attained in an earli-

er project phase but must be achieved in theindicated project phase at the latest, in order

to ensure a trouble-free process.

Furthermore, each project phase has been

subdivided into project steps:



Commis-sioning


PM400Material


PM550Erection

completed

PM600Commissioning

completed


acceptance

PM700Final customer

acceptance

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Analyze inquiry/identify expectedbusiness

Identify internalbusinesscoordinators

Create/adaptbusiness plan andassess expectedbusiness

Information forproduct portfolioprocess

Record pre-acquisition andproject data

PM@Siemens View

PM020Bid

decision

PM050Bid

approval

PM070Project

won/lost

PM080Start project

PM100Entry

order clarified

PM200Approval of

detailedplanning

Projectacquisition

Bidpreparation

Contractnegotiation

Projecthandover

Projectopening and

clarification

Detailedplanning

RPH View

Evaluateexpectedbusiness

Set upbid project

Hand overbid to customer

Allocate over-all and com-mercial ProjectManagers

Set up projectorganization incl.roles and respon-sibilities

Determinetechnical basis,solutions andimplementation

of approval

Level 0

Level 1

Level 2

Level 3

to

Level 4

Level n

Analyzeand structurecustomer re-quirements

Analyzecustomer’sbusiness field

Developrough financingconcept

Define bidscope and deter-mine respon-sibilities

Angebots-budgetFreigabeeinholen

Createbid parts

Analyzeand supple-ment riskassessment

Review and

confirmproject classi-fication

Preparebid approval(LOA docu-ments)

Prepareand realizecustomerpresentation

Processcustomerfeedback andchange bid

Developnegotiationstrategy

Organize andconduct contractnegotiations

Obtainapproval forcontractsigning

Updateproject data

Hand overproject docu-mentation

Analyzewon/lostorders

Open aproject accountand projectstructure

Performdetailedsite check

Clarify con-

tract in legaland commercialterms

Create projectstructure andcomplete as-soldcost calculation

Change andclaim strategydocumented

Performdetaileddesign

Create andrelease detailedspecifications

Freeze basicschedule

Completesourcingconcept

Completequality plan,risk analysis

T h e pr o j e c t s t e p s d ef i n

e d b yP M @ S i em en s f or m t h e

b a s i s f or t h el i nk t o t h eR P H

Obtainbid budgetapproval

Pre-acquisition

Perform aprojectassessment(PMA)

Performrough riskassessment

PM010Acquisition

Go/No Go decision

3

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PM300

Dispatchapproval

Manufactureown products

Place orders

Trace/Expeditemanufacture

Perform worksacceptance

PM@Siemens View

PM400

Material andresources at site

PM550

Erectioncompleted

PM600

Commissioning completed

PM650

Provisionalcustomer

acceptance

PM700

Finalcustomer

acceptance

Dispatch Erection

InstallationCommis-sioning


Enabler

Obtain approvalfor dispatch

Installplant/system

Commissionplant/system

Plan andprepare accep-tance test

Reduceoutstandingpoints

Level 0

Level 1

Level 2

Level 3

to

Level 4

Level n

Purchasing &manufacture

Planand monitordispatch

Organizeinfrastructure(tools, approvalsetc.)

Plan assign-ment of internaland externalresources

Preparecommissioning

Performinternalsystem/planttests

Create finalexecution docu-mentation

Performacceptance test

Createprovisionalcustomer docu-mentation

Create finalcustomer docu-mentation

Archiveproject

Create finalproject report

Dissolveproject organi-zation

Concludewarranty

Request FAC

Riskmanage-ment

Change/claim manage-ment

Qualitymanage-ment

PMAssessment

Scheduling

Cost andassetcontrolling

Request PAC

Hold final

dialog withcustomer

Organize

customertraining

Inspect

dispatch goodsfor damage

RPH View

Projectreporting

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Purchasingand manu-facture

DispatchErection

Installation

Commis-

sioningAcceptance Warranty-

phase

The project phases defined by PM@Siemensform the basis for the link-up to the RPH.

Outlook for further work

In the next steps, the project phase model

will be aligned to the Reference Process

House (CRM, SCM, PLM), in close coordina-

tion with process standardization activities

at CIO. An integrated project view of the

RPH is thus created.

Bidpreparation

Contractnegotiation

Projecthandover


Detailedplanning

Pre-acquisition

Projectacquisition

Project view RPH

Level 0

Level 1

Level 2

Level 3

Alignment

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Recommendationsof the module:

Recommendation 1:

Introduction of theproject phases using thedescribed milestone system

Recommendation 2:

Introduction of the mandatoryresults for milestones

Recommendation 3:

Introduction of project roles

Recommendation 4:

Introduction of the project steps

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Contract Management

C o n t r a c t

M a n a g e

m e n t

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C M

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Especially in the bid phase, the integration

of the Contract Manager into the organiza-

tion should be close to the operative busi-

ness concerned; however, he/she should be

sufficiently independent so as to be

able to bring matters before the relevant

Divisional or Subdivisional management in

the event of any conflicts.

The introduction of the bid/no bid and bid

approval procedure (graded according to

project and risk categories) is still recom-

mended as an important precondition for im-

plementing the Contract Management con-

cept in the Groups. For the highest risk

categories, Group Executive Management

must be consulted.

Using this structured approach, non-confor-

mance costs (liquidated damages, additional

costs) can be reduced significantly, thereby

achieving a sustained improvement in pro-

ject results. Further considerable savings

can be achieved by way of a more focused

project selection (bid/no bid; improved hit

rate; see recommendation 3).

Introduction/Management Summary

Contract Management plays a crucial role

during order execution but is even more im-

portant in the bidding phase. It begins with

preparation of the bid, proceeds to the stage

where the contract is signed and continuesinto the implementation phase, where the

focus is on Claim and Change Order Manage-

ment.

The Contract Management team of experts

within the context of PM@Siemens recom-

mends that a global concept be implement-

ed for the Siemens Groups as well as for all

project and risk categories throughout theterm of a project. Additionally, there are rec-

ommendations for Contract Management

Tools, Communication & Training, Roll-Out

and Feedback.

In this area, Contract Management provides

expert support in drafting or commenting

on and negotiating the commercial terms &

conditions of a bid, supply and service con-

tracts and also cooperation agreements,

along with support (in terms of contract

law) during the implementation phase.

It is recommended, at least for the highest

risk projects (e.g. A projects), that a full time

Contract Manager be assigned to the Project.

For this purpose, experts must be appointed

and trained in the Groups. Contract Man-

agers perform their duties in close coopera-tion with Legal Services but act neither as le-

gal advisors nor as legal counsel to the

Groups.

Contract Management

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The recommendations issued within the

scope of the PM@Siemens roll-out in March

2001 were revised and adapted by a team of

experts in April 2003. We no longer differen-

tiate between the mandatory and optional

introduction of the individual recommenda-

tions, as all of the recommendations should

be adopted without exception.

Recommendation framework

The recommendation framework developed

by the team of experts consists of the follow-

ing:

A. Concept for Contract Management

B. Standard Contract Management Tools

C. Communication & Training

D. Roll-Out and Feedback

Overview of recommendations


at Siemens1. Independent Contract Management

function

2. Provision of full-time Contract Managers

in the bid and negotiation phases for pro-

jects of the highest project/risk category

3. Documented bid/no bid procedure/

approval for preparing a bid

4. Implementation of a bid approval proce-

dure with project and risk categories uni-

form for all Groups

5. Final bid approval by a Review Board, in

the highest project or risk category jointly

with Group Executive Management

6. Provision of full-time Contract Managers

for the implementation of projects of thehighest project/risk category


7. Mandatory observance of “unacceptable

regulations”8. Mandatory specification of a Group policy

for Group projects business

9. Intensive use of available standards and

tools

C. Communication and Training

10. Mandatory training in Contract Law andClaim Management for Sales & Marketing

and Project Management (technical/com-

mercial)

D. Roll-Out and Feedback

11. Continuation of the Siemens Contract

Management Community, which was estab-lished in October 2002

12. Implementation of the recommenda-

tions issued by PM@Siemens in the form of

a defined Group project

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Concept for Contract Management

Standard Contract Management Tools

Communication/Training

Roll-Out/Feedback

11 12

9

1

3

5

10

7 8

2

4

6

Mandatory observance of “unacceptable

regulations”

Mandatory training in Contract Law and Claim Management for Sales & Marketing and

Project Management staff (technical/commercial)

Independent Contract Management

function

Intensive use of available standards

and tools

Mandatory specification of a Group policy

for Group projects business

Continuation of the Siemens Contract

Management Community, established in

October 2002

Implementation of the recommendations

issued by PM@Siemens in the form of a

defined Group project

Documented bid/no bid procedure/approval

for preparing a bid

Final bid approval by a Review Board, inhighest project or risk category jointly with

Group Executive Management

Provision of full-time Contract Managersfor the implementation of projects of the

highest project/risk category

Implementation of a bid approval procedure

with project and risk categories uniform for

all Groups

Provision of full-time Contract Managers in

the bid and negotiation phases for projects

of the highest project/risk category

Contract Management in the

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Contract Management in theproject phases

Business

acquisition

phase

Bid/no biddecision

Bid

phase

Negotiation

phase

Warranty

phase

Project

implementation

Bidapproval

Signingof contract

Provisionalacceptance

Finalacceptance

Contract Management up tocontract signature

a Contract analysis, commenting,

revising of supply and service contracts

and cooperation agreements

a Negotiation support up to final contract

draft and contract signing

a Risk management within the project

team concerning terms and conditions

C o n t r a c t M a n a g e r p r o f i l e

M a i n r e s p o n s i b i l i t i e s

a Commercial and/or contractualbackground

a Experience in sales and/or project

implementation

a Comprehensive know-how in project

business, negotiation skills

a Technical or business administration

background, possibly as quantity

surveyor

a Training and experience in Contract

Law and Claim Management

a Comprehensive know-how in projects

business

Contract Management aftercontract signature

a Contract analysis in terms of oppor-

tunities and risks, claim potential

and the procedures to be applied

a Drafting and controlling of subcon-

tractor agreements

a Analysis of contract and issues for claim

risks and opportunities

a Implementation of the claim concept/

claim strategy in the project

A Concept for Contract Management

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1. Up to contract signature

Recommendation 1:

Independent Contract Manage-ment function

The independent activity of a Contract

Manager covers mainly the project phase up

to the stage where the contract is signed.It is his/her responsibility to provide expert

support in drafting or commenting on and

negotiating the commerical terms and condi-

tions of a bid, supply and service contracts

as well as a cooperation agreement (legal ad-

vice is provided by Legal Services). In this

context, Contract Management plays an im-

portant role in risk management by ensur-

ing that the identified technical, financial,customer and country risks are taken into

account in the contract, and creates the con-

Recommendation 2:

Involvement of full-time ContractManagers in the bid and negotia-tion phases for projects of the high-est project/risk category

At least in the highest project and risk cate-

gory, the function described under Re-

commendation 1 must be performed by a

named full-time Contract Manager appoint-

ed for the project, but Contract Managermay be involved in several projects. In organ-

izational terms the Contract Manager should

be incorporated such that he/she is entitled

or even sometimes in some cases obliged to

bring matters before the relevant Divisional

or Subdivisional general management in the

event of conflict.

tractual basis for Change Order and Claim

Management. Contract Management is also

responsible for ensuring compliance withbusiness principles and procedures in the

bid process, as well as for ensuring involve-

ment of the specialist departments (Legal

Services, VVK etc.), where applicable.

A Contract Manager should have sales &

marketing and project experience, business

administration knowledge, sound experi-

ence in contract law/preparation of

contracts, negotiation skills and a goodknowledge of business principles and

processes.

Recommendation 3:

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On the basis of a Group-specific procedure,

the responsible sales unit submits the pro-

ject using in standardized presentation docu-

ments to the relevant management team for

the latter’s decision in a meeting in which

the management of the necessary specialist

units take part. The Group-specific determi-

nation of the decision-maker level dependson the risk or project category.

Within the context of risk management, this

meeting is very important for identifying

and dealing with opportunities and risks at

an early stage.

Recommendation 3:

Documented bid/no bid proce-dure/approval for preparing a bid

On that basis, the meeting serves to discuss

the bid strategy, the factors involved in suc-

cess and the prospects thereof, the unit’s

own competitive position (if applicable, its

unique characteristics) etc., and the extent

to which the project reflects the core busi-

ness policy of the unit. The budget for prepa-

ration of the bid should also be approved inthis meeting.

In case an addendum is required, it must al-

so be presented to the same decision group.

Depending on the business requirements,

risk categories are identified for the projects.

In particular, the criteria include:

a Business volume and result

a Financial risks (payment, production and

export risks, implementation risk, financ-

ing risk etc.)

a Contractual risks (liability, acceptance,

warranty, liquidated damages for delay

and non-achievement of performance

guarantees, applicable law etc.)

Recommendation 4:

Implementation of a bid approvalprocedure with project and riskcategories uniform for all Groups

a Technical and schedule risks (innovation,

“exotic” solutions, critical performance

guarantees, non-Siemens products etc.)and

a Organizational or process risks (consortial

cooperation, involvement of Regional

Company, internal resources etc.).

For the individual risk categories, the rele-

vant approval processes and decision-

making levels should be defined Group-

specifically.

The bid approval procedure should include

three elements

a Technical LoA

a Commercial LoA

a Cost/price LoA.

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The technical part of the bid is approved by

the responsible technical units in accord-

ance with a stipulated risk classification.

To this end, the technical units must pro-

duce binding commitments, incl. perform-

ance characteristics.

In a parallel process, the units responsiblefor calculating costs submit their binding es-

timates which are taken into consideration

in the total cost and price calculation.

The essential contractual contents (liability,

warranty, liquidated damages etc.) are also

to be approved in a standardized fashion

that is to say in accordance with Terms &

Conditions. Limits of Authority Guidelines or

corporable procedures issued by the Group

or Division.

Recommendation 5:

Final bid approval by a ReviewBoard, in the highest project or riskcategory jointly with GroupExecutive Management

The Review Board approves the bid on the

basis of a standardized brief project presen-tation which, in addition to pricing/costing,

points out significant technical and contrac-

tual risks as well as other possible frame-

work conditions of importance for the deci-

sion. Approval is given in a meeting, maybe

in a video conference. At least one member

of Group Executive Management and of

management of the sales or business unit

affected must take part in this meeting if thehighest project/risk category is concerned.

At least the manager(s) of the technical

units responsible for significant perform-

ance characteristics and for the scope of sup-

ply and service, the technical and business-administration project management and the

Contract Manager must also attend this

meeting.

Composition of the Review Board can vary,

depending on the project/risk category.

2. After contract signature

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In view of the importance of claim manage-

ment and the effects of any deviations from

a contract, the appointment of a full-time

Contract Manager to assume the aforemen-

tioned duties is recommended in the high-

est project/risk categories. Depending on

project size and complexity, a Contract

Manager may be involved in one or more

projects. For large-scale project business

comprising installation and commissioning,

a Contract Manager is required at the site.

Recommendation 6:

Provision of full-time ContractManagers for the implementationof projects of the highest project/risk category

Proof for defending, incoming claims and ex-

plaining and substantiating outgoing claims

must be recorded.

Consequently, the requirements to be met

by Contract Management during contract im-

plementation differ substantially from those

during the bid phase. In the implementationphase, the main emphasis lies not on draft-

ing the contract and analyzing the risk poten-

tial inherent in the terms and conditions of

request for tender. The primary goal in the

implementation phase is to identify causal

links in such areas as deviations from agreed

deadlines and quantities, obstacles, other

contract problems and the various interfaces

to subcontractors/consortium members. Theskill profile in this phase therefore calls for a

technically trained Claim Manager who not

only knows how to analyze schedules and to

portray complex subject matters briefly and

in a form illustrating causal relationships,

but is also sufficiently experienced in interna-

tional contract law.

From the time the contract is signed, the

main focus of Contract Management lies on

pro-active Claim Management (including

Change Order Management). By analogy

with Contract Management prior to signing

of the contract, Claim Management plays an

important role in risk management as it anal-

yses the opportunities and risks inherent inthe customer contract (including the techni-

cal sections), identifies the potential for

changes and claims and defines the proce-

dural rules that have to be observed. Apart

from that, the second main task of Contract

Management is to support the drafting and

administration of subcontractor agreements,

for the purpose of risk transfer and defend-

ing or enforcing claims.

Contract implementation (customer, consor-

tium and subcontractor agreements), also in-

volves identifying out events relevant to the

contract and assessing them in terms of

claim risks (incoming claims) and claim op-

portunities (outgoing claims). Such inci-

dents must be documented and the conse-

quences thereof (costs and time) note.


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make them available to their sales units and

Contract Managers via their Intranet.

We also recommend that Group-specific

tools and regulations be made accessible to

other Groups via a central Intranet platform.

Recommendation 9:

Intensive use of availablestandards and tools

As a central provider for the Groups, Legal

Services (LS) devises and updates both

standard contracts for the Groups as well as

the LS Legal Manual (which is standard

throughout Siemens). In addition, the

Groups can formulate Group-specific stand-

ard contracts in agreement with LS and

Recommendation 8:

Mandatory specification of aGroup policy for Group projectsbusinesss

The Group-specific project policy is defined

in a binding manner by Group Executive

Management. Obligatory elements, key fig-

ures (mandatory) and optional elements for

Recommendation 7:

Mandatory observance of“unacceptable regulations”

“Unacceptable regulations” must be integrat-

ed by each Group into its catalog of criteria,

for the project approval procedure.

the liability concept, warranty, liquidated

damages etc. are defined and specified in

this project policy.

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Recommendation 10:

Mandatory training in ContractLaw and Claim Management forSales & Marketing and ProjectManagement staff (technical/commercial)

We recommend that staff in Sales &

Marketing and Project Management

undergo mandatory modules in order toacquire further knowledge of Contract Law

and Claim Management. For this purpose,

the existing courses offered by LC (Learning

Campus) are being integrated into module 5

“Qualification Programs for Project Manage-

ment” and further developed.

Group-specific training courses (e.g. busi-

ness-oriented Claim Management) shouldbe devised and offered in cooperation with

LC and LS.

Recommendation 11:

Continuation of the SiemensContract Management Communityestablished in October 2002

It is recommended that the existing Siemens

Contract Management Community be con-

tinued within the scope of a PM@Siemens

Community.

D. Roll-Out & Feedback

Recommendation 12:

Implementation of the recom-mendations of PM@Siemens in theform of a defined Group project

Unless already done, it is recommended that

the Contract Management project be de-fined as a Group project in the Divisions and

Regions or Regional Companies, with partic-

ular regard to the organization and process.

Only this way will the relevant modules get

through to the Groups and be uniform.

Implementation should be assisted by a

sponsor in Group Executive Management,

and if applicable by a sponsor at DivisionVice President (Business Administration)

level, as well as by a Contract Management

Community in the Group.

C. Communication &Training

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Project Controlling

C o n t r

o l l i n g

P r o

j e c t

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Project Controlling

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These questions were the key topics in the

Project Controlling module. Project Control-

ling is sufficiently regulated in all Groups.

The standard variables for Project Control-

ling related to the business management da-

ta and risk management are based on CF

specifications for all Groups according to USGAAP (US Generally Accepted Accounting

Principles) and according to the KonTraG law

on risk management.

Other key variables not related to financial

aspects such as

a Technical controlling

a Milestone and project progress

controlling

a Change order and business opportunity

management

a Resource management

a Customer and employee satisfaction

are stipulated in a business-specific manner

in the individual Groups.

Various Good Practices related to these

areas were taken from all Groups and

analyzed by the evaluation team.

Project Controlling is a significant tool for

handling projects successfully. Ultimately,

the success of a project is measured in terms

of profits and customer satisfaction.

a Which key variables must be recorded in

the context of Project Controlling so as to

permit a reliable forecast of the profits atthe end of the project?

a How risks can be determined at the right

time and minimized by taking appropri-

ate action?

a How can Project Controlling, which in-

cludes project reporting, be integrated

uniformly and systematically in the busi-

ness processes of the Groups?

General recommendationsfor successful Project Con-

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In summary, the following recommenda-

tions can be made for successful Project Con-

trolling.

Recommendation 1:

Project-driven organization

for successful Project Controlling

Establish a project-driven organization, and

assign project teams (with clearly defined

authorities and responsibility in the hands of

the Project Manager as entrepreneur).

Modern Project Controlling that points out

problem areas at the right time to its Project

Manager and its own management must beintegrated in a consistent project handling

process that is characterized by a free flow

of communication between the hierarchic

levels concerned. However, Project Control-

ling can contribute to improving the results

of the project only if clearly defined overall

responsibility and authorities are assigned to

the Project Manager. As a result, integration

of projects in a project-driven organization

becomes a matter of course.

Empirical data shows that 60% to 70% of all

non-conformance costs are identified during

the handling of a project, but the causes of

these costs lie in the bid phase of a project.

For this reason, the Project Controlling pro-

cess must be performed continuously, all

the way from the bid through to the end of

all obligations entailed in a project.

Modern Project Controlling supports the

management of risks/opportunities, claims

and change orders as an integral part of the

project process and lies within the Project

Manager’s sphere of responsibility.

Recommendation 2:

Consistent Project Controlling pro-

cess from the bid/no bid decisionthrough to finalization of theproject, in particular integratedrisks, change order/opportunitiesand claim management

Recommendation 3:

Mandatory milestones in the

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Best PracticerecommendationsBest Practice examples of standardized

methods and processes from the Siemens

Groups are available on the homepagehttp://projectmanagement.siemens.com,

under the heading, “Regions/Groups”.

Mandatory milestones in theproject process

Recommendation 4:

Regular management-drivenproject meetings on the basis ofstandardized reporting

Standardized and regular reporting takes

place at Group level; associated controllingparameters are defined in a business-

oriented fashion.

The main tasks of Project Controlling are to

ensure that the project activities of all organi-

zational units involved in the project are

clear, and that support is provided for com-

mercial project processing.

The result-oriented processing of projects

requires current and up-to-date controllingof business administration, technical and

contractual parameters.

The controlling process, in dialog with man-

agement, is supported by standardized

project meetings.

A project must be implemented consistently

in accordance with defined rules and deci-

sion levels as early as in the bid phase. Man-

datory milestones and associated documen-

tation of the results have thus been

introduced as a basis.

The milestones of the project process are de-

fined in module 1 (Organization and Process-

es). In the project process, the mandatory

milestones play an important role in the

success of project activities.

Best Practice examples of standard-ized methods and processes from theSi G il bl th

Best Practice recommendations:

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TS info onproject reporting:

http://topplus-in.ts.siemens.de/controlling/controlling.cfm

SD info onproject reporting:

http://intranet.sd.siemens.com/Arbeitsmittel/Projektmanagement/

PM_SD/PMSiemensDematic.jsp (--> Project Controlling)

PTD info on

project reporting:

ICM N info onproject reporting:

https://mchh9w1a.mchh.siemens.de (à PCS)

ICN info onproject reporting:

http://intranet.icn.siemens.de/scb/pmn/ (à Project Controlling)

I&S info on

Claim Management:

http://fpinfo.erlm.siemens.de/atd/gemeinsam/cm/de/pm/rl/

SBS info onrisk management:

http://risk-management.sbs.de/html/index.asp

http://regiond.sbs.de/commerce/risk.htm

PG W info on planningand reporting:

http://www-i1.kwu.erl.siemens.de/f/w5/de/

Platohandbuch_Entwurf.ppt

http://info.ev.siemens.de/ev_ga/pm-ptd/de/Quellen/home-quellen-tools-

vorlagen_scorecards.htm?PIdent=1144&SIdent=1150&TIdent=1151

Siemens Groups are available on thehomepage.

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M a n a g e m e n t

P e r s o n n e l

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But what does the term “project

entrepreneurship” mean? What tangible

results in this area are already available in

Siemens AG? And which of these solutions

can be recommended for implementation in

all Groups?

In order to answer these questions, the

panel of experts on Personnel Management

focused on three main areas:

“A project should be managed like a

company” – this guiding principle defined

by the Corporate Executive Committee has

a very decisive influence on the entire

PM@Siemens Initiative, particularly on Per-

sonnel Management.

A c t i o n s

O b j e c

t i v e

Project Manager as entrepreneur

Reward &

recognition

PM Training and Qualification

Letter of Empowerment

Target Agreements

Salaryand

Project Incentives

PM Career Model

Adequate Placement

Responsibility

Delegating and

Assuming

Empowerment

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Recommendation 1:

Introduction of PM Career Model

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Management of B/C projects

Management of A projects,large-scale projects,

general contractor projects

Management ofC projects

Project assignmentTeam leadershipChange of tasksor functions

M a n a g e m e n t l e v e l s

( w i t h p r o f i t / l o s s

r e s p o n s i b i l i t y )

T e c h

n i c a l l e v e l s

( w i t h o u t p r o f i t / l o s s

r e s p

o n s i b i l i t y )

Approximately1–2* years professional

experience

Approximately2–3* years professional

experience

*Guide values

Qualification levelswith confirmation

Project Director (PDir)Cross-Group or

external certification

Basic training

Embarkingon processing/assembly/commissioning/engineeringor sales

Project categories

Senior Project Manager (SPM)Internal certification

at Group level

Project Manager (PM)Internal certification

at Divisional level

Personnel development in projectmanagement

Personnel development in project manage-

ment is divided into two main levels: the

technical level without profit/loss responsibil-

ity and, based on this, the three manage-

ment levels with profit/loss responsibility.Embarking on a career in project manage-

ment calls for 2–3 years experience in a tech-

nical field or in sales. The next 1–2 year

stage includes project work with a variety of

tasks. Throughout these years, the would-be

PM receives basic project manager training

(PM4) and qualifies as a future Project Man-

ager by assuming the role of a technical

team leader.

The essence of the management levels is

based upon responsibility for results. The dif-

ferentiation stems from the entrepreneurial

leadership of projects in the three categories,

A, B and C. For each of the three manage-

ment levels, requirements profiles (see

graphics) have been drawn up as a qualifica-

tion guide. These profiles contain a descrip-

tion with examples of the areas of responsi-

bility involved in project management and

the relevant knowledge, experience and

skills expected in the Siemens competence

model.

Requirements profilesfor project management

*Recommendation

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*Recommendation

* Group-specific adaptation necessary

** supporting qualification through the PM4 to PM1

modules provided by the PM@Siemens Academy

Job profile

Project Manager

Job profile

Senior Project Manager

Job profile

Project Director

Project

categoryC B A

Areas of

responsibility

Responsibility for results, customer, partner, finance and employee management,

business development in the ongoing project, proposal management, contactmanagement, planning, Project Controlling and reporting, risk management, project

completion, corporate networking, personal development

PM3** PM2** PM1**

≥ 1 year responsible workin projects,

≥ 1 year technical

responsibility for employees

≥ 2 years responsibleleadership of C projects

≥ 2 years leadership of

project teams

≥ 6 years responsibleleadership of B projects

≥ 6 years leadership of

project teams

Knowledge Methods/tools: Project, contract, claim and risk management (etc.)

Expertise: Procedures and practice in the context of projects, contract and labor law,

Group-specific languages, knowledge of sectors and customers

Experiences

Skills Assertiveness – motivation and inspiration – organization and quality orientation –

results orientation – customer focus – decision-making – communication skills

The career model enables a candidate inter-

ested in a PM career to align his/her profes-

sional ideas to the expertise and responsibili-

ties shown in the development roadmap,

and thus provides him/her with a guide for

his/her professional development.

It also provides the decisive reference param-

eter for an ongoing status determination,

for future assignments and also for systemat-

ic qualification planning. Project success de-

pends heavily on the selection of a well-

qualified Project Manager. The career modelcreates the clarity necessary for efficient re-

source management.

Certification ofProject Managers

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Internal certification at Siemens is proof of a

Project Manager’s competence and profes-

sionalism. A voluntary procedure, it takes

place at the end of the competence manage-

ment and PM qualification process and

lies within the responsibility of individual

Siemens Groups.

The aim of certification is to review project

management (PM) expertise on the basis of

the job profile of the appropriate level and al-

location to the Project Manager, Senior

Project Manager and Project Director levels.

Required and existing skills of a Project

Manager as well as the PM levels Project

Manager, Senior Project Manager and

Project Director should be rated by a superi-or preferably within the staff dialogue

process. The SPM and PDir levels might be

additionally dealt with at a staff dialogue

round table as a best practice (as per the

EFA process).

Essentially, for an assessment of a Project

Manager’s competence and professionalism,

project experience defined in the require-ments profile will be decisive. This project ex-

perience is shaped by the relevant project as-

signments which have been completed. The

target agreement (see recommendation 3)

and project outcome will be compared to

ensure continuous evidence of successful

leadership of A, B and C projects and hence

of maintaining a Project Manager’s quality

standard.

A PM’s technical knowledge is verified by

way of a qualification certificate from the

PM@Siemens Academy, issued after the

Project Manager’s participation in the Learn-

ing Programs 4–1 or his/her attendance at

selected seminars from the curriculum, in

addition to a successful knowledge test

(optional). At the Project Practitioner (PP)

level, competence is established withoutcertification.

The 5 modules of the staff dialogue are well

suited to bring in the previous PM experi-

ence, to receive feedback regarding person-

al performance and to discuss specific meas-

ures for the future PM career. Additional

documents may be helpful here, such as a

technical CV, a project list, project report etc.

The superior checks whether all conditions

are met for a certificate to be issued.

The PM@Siemens Certification

Process

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Group

Competenceanalysis,

qualificationrequirementsin staff dialogue(EFA)

Gaining experiencein projects inaccordance withthe PM@Siemens job profile

Inpute.g. and/or

a Qualification

certificatea Proof of experience

through technical CVand project list

a Project report orproject study

Output:

a Documentation

in the appropriate HR tool

Verification of thequalification level

within staff dia-logue (roundtable)EFA/Assessment

PM@SiemensAcademy

Qualification

a PM LearningProgram

a PM@SiemensCurriculum(selected

seminars) +knowledge test(optional)

CertificationHandover of

certificate

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Once the scope of the PM’s experience and

responsibility, along with the skills relevant

for project management (in accordance withthe Siemens competence model) have been

confirmed at the appropriate level and it has

been verified that the Project Manager also

possesses the required technical knowledge,

the Siemens certificate is issued and present-

ed to the Project Manager.

Group-specific solutions (such as assess-

ment procedures or self-assessments forstaff dialogue/EFA preparation, or individual

determining of qualification requirements)

remain.

Experts for the certification ofProject Directors

The certification process for Project Directors

is supported by a team of qualified Project Di-

rectors who act as cross-Group experts. They

provide advice to managers in the context of

certification. Their statements are included

in the staff dialogue/EFA process, if required.

The aim of involving these experts is to im-

prove the quality and standardized nature of

the Project Director certification process

throughout Siemens. In addition, the ex-

perts promote an exchange of technical is-

sues between the Groups and reinforce the

common project management culture. They

meet once or twice yearly to exchangeviews and prepare procedures for Siemens

as a whole.

They must be qualified as follows:

a Broad project experience (PDir or superior

responsible for Project Managers)

a Management experience

a Social skills

a Communicative competence

a Seniority

Project managers are Siemensmanagers

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Project managers think and act as entrepre-

neurs and with that assume the commensu-

rate responsibility. On this basis, both line

managers and Project Managers are on a par;

the Project Manager career is thus a part of

a management development landscape.

As before, a Project Manager can change to

line management; however, he/she shouldnot do this for career reasons alone.

New additional structure of project

management functions

Once he/she takes over a project, the Project

Manager bears responsibility for leading the

project staff; he/she is authorized to make

decisions within the scope of competencies

allocated to him/her (see Letter of Empower-

ment). With the management of projects

comes recognition of services, through an

appropriate distinguished status in the or-ganization as well as in the form of ade-

quate income.

Management development roadmap

R e s p

o n s i b i l i t y / q u a l i f i c a t i o n l e v e l

Division Manager President

Subdiv. Manager Vice President

Segment Manager Director

Department

Manager

Senior Manager

Management ofprograms

(cross-process

general management)

ProgramDirector

D e f i n e d v i a M P M @ S i e m e

n s Management of A

projects

Project

Director

Management of B/C

projects

Senior Project

Manager

Management of C

projects

Project

Manager

Already performs valid

management functions

Recommendation 2:

Letter of Empowerment

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The Letter of Empowerment assigns respon-

sibility and authorities to the Project Manag-

er and makes them clearly visible in the cor-

porate organization.

The panel of experts recommends inclusion

of the following in the Letter of Empower-

ment:

a Project designation and period of validity

of the Letter of Empowerment

a Assignment of authorities and obligations

for handling of the project in conformity

with the contract (also worded precisely

in the enclosed target agreement)

a Assignment of responsibility for results;

customer and employee satisfaction mustalso be included

a Reference to the valid project manage-

ment method (process manual)

a Provision of resources by the responsible

and supporting offices (if required, en-

close as appendix)

a Right and duty to submit reports (regular

controlling, special incidents)

Recommendation 3:

Target Agreement

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Recommendation 4:

Incorporation of project targets inthe annual bonus and individual

special payments

In Divisions with heterogeneous and com-

plex projects, it is crucial not to define the

targets on the basis of a fixed system but in-

dividually and in a customer/project-related

manner. This is not only important for

achieving business success but also for the

personal further development of the Project

Manager.

The individual special payment method

should be applied in such cases as it allows

you to remunerate the PM for his/her excel-

lent results individually and on a perfor-

mance basis. The amount of special remu-neration must always be agreed with the

Group’s Human Resources office.

Specific target agreements are the basis for

a clear, target-oriented incentive ruling. The

panel of experts recommends that you take

the following criteria into account when de-

fining the content of the target agreements

(project goals):

a EBIT (Economic Value Added)

a Deadlines (milestones)

a New orders and sales (for programs)

a Costs

a Strategic goals (for programs)

a Quality targets

a Customer satisfaction

The target agreement forms part of the staff

dialogue (EFA). The project targets achieved

serve as a basis for a PM’s further develop-

ment (functional level, potential, salary,

SMR) and also for determining variable ele-

ments of salary. In addition, the experts

recommend the use of balanced scorecards

which should also be considered in the staffdialogue (EFA).

The recommended time scale is:

a For programs: fiscal year basis (end-of-

fiscal forecast)

a For projects: completion of the project.

In A projects, control based on Percent-

age of Completion (PoC).

Recommendation 5:

Project incentive system

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Key points of the project incentive system

Project incentive systems are one method of

recognizing the performance of Project Man-

agers as entrepreneurs. The aim of giving

the Project Managers a share in the success

of “their” projects is to continuously improve

project results and to create a link between

performance and recognition of such per-

formance (close to the time it is attained).In addition, incentive systems offer the

Project Managers an attractive way of im-

proving their salaries.

The Personnel Management panel of ex-

perts analyzed Best Practice examples from

the SBS, TS and PTD Groups which were

agreed with the Joint Employees’ Council.

On the basis of the results of this study, the

panel recommends adoption of the key

points specified in the table below in the

context of a Group-specific solution.This provides significant support for the vari-

ous types of business. Experience with exist-

ing incentive systems furthermore shows that

any necessary adaptations of the model to

Group-specific circumstances are made easier.

a Key points of a project incentive system

– On-top solution

– Agreeing an incentive regulation at the beginning of a project

– Assessment criteria: absolute improvement in staff dialogue (EFA) or absolute

improvement of sales margin

– Taking business development and change requests into consideration

– Only customer projects of the categories A, B and C (in systems business)

– Target staff: project management, and, if required, subproject management,without Senior Management (PTD); all staff involved in a project, but not from

other companies (SBS)

– The basis for payment is a percentage of an improvement in the project results

exceeding those targets agreed at the beginning of the project

– Amount of payment depends on number of hours of personal work,

with reduction for any quality deficits (SBS)

– Fixing upper limits, for instance via percentage of annual salary

– Accounting/payment time with milestone reference

a Motivation for ensuring project success can be achieved through:

– Clear presentation of targets

– Clearly defined measurement criteria (key financial figures in the project)

– Immediate share in the success of the project on the basis of an agreement

a The content of the project incentive systems must clearly reflect the type of business,

hence the recommendation to devise Group-specific solutions

a PTD, SBS and TS can be contacted for Best Practice examples

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Qualification

Q

u a l i f i c a t i o n

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Qualification

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PM@Siemens Initiative and is controlled by

representatives of the Groups and the

Learning Campus. The Academy’s work is

described in Rules of internal Procedure.

As the Siemens know-how center for project

management qualification and coaching,

the PM@Siemens Academy has the task of

enhancing project management and of en-suring that project management standards

are put into practice throughout Siemens via

appropriate qualification programs. The

PM@Siemens Academy supports shorter

innovation cycles, ensures a standard level

of training quality throughout Siemens and

thus sharpens Siemens' competitive edge.

“Training costs less than having to learn the

hard way in a project”. Here at the Academy

we ensure that you are trained well.

We incorporate Best Practices into all our

training programs. We hope to see more of

you and your team members at the

Academy in the future.”

Quote from the presentation given byProf. Krubasik at the PM@Siemens Initiative

forum on November 22, 2002.

PM@Siemens Academy

In addition to the technological expertise of

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