Welcome to 71 Fenchurch Street

Project Management in the Age of Austerity

Project Management in the Age of Austerity

© Outperform UK Ltd & Team Animation Ltd

Is project management a cost to be reduced or an enabler for cost reduction?

Austerity Implications

• What is austerity?– a government policy of deficit-

cutting, lower spending, and a reduction in the amount of benefits and public services provided

• What is affected?– Government departmental

budgets generally

– Government development/infrastructure projects and welfare spending specifically

– Suppliers who sell to Government

– The economy generally

• About the debate– We provide 4 different

perspectives. There are many others

– Presentations are a catalyst to the debate

– We will capture the output and make available as an article

Agenda

• 0800 – 0830 Registration & breakfast • 0830 – 0845 Introduction • 0845 – 0900 Strategic context • 0900 – 0915 Project culling • 0915 – 0945 Debate - portfolio decision making?• 0945 – 1000 Cost of project management • 1000 – 1015 Culture and leadership implications • 1015 – 1045 Debate – cost or enabler?• 1045 – 1100 Summary • 1100 – 1130 Optional Tour

Introduction

Roger Clutton

Strategic Context

Trevor Band

Team Animation

ProjectsProjects

EnvironmentEnvironment

StrategyStrategy

AdaptAdapt PerformPerformUnderstandUnderstand

Can Today’s Austerity = Future Opportunity ?

What to Adapt?

Organisational Leadership

Culture Capability Ways of Working

processes, methods, tools, techniques, templates

Decision-Driven Organisation

“Is there anything more important to the success of a project than making good decisions?” Schuyler 2001

“Ultimately a company’s value is no more (and no less) than the sum of the decisions it makes and executes” Harvard Business Review June 2010

People

Business Process

Architecture

Systems

Leadership Accountability

Organisational Design & Culture

MANAGED CHANGE

External Best Practice

‘AUSTERITY ADAPTATION'

Decisions, Decisions, Decisions

Analysing Decision-Making

Portfolio

Programmes

Projects

Business As Usual

SHAREHOLDERS

STAKEHOLDERS

What are the value and cost drivers in your organisation?

What critical decisions determine value and cost?

What accountabilities are needed to make and execute decisions?

Business StrategyDelivery Strategy

PPM Requirements

Developing Understanding

Adaptation Road Map

Business StrategyDelivery Strategy

PPM Requirements

Adaptation Road Map

Vision & Objectives Portfolio

Management PM Code of Practice

newPMTM Best Practice Benchmarking: being informed to make and execute PPM decisions faster and better than the competition

Developing Understanding

... is that “project culling”?

Portfolio Alignment

Mike Ward

Director, Outperform

Characteristics

• Good governance– Optimal process – not too little,

not too much

– Adds the costs of fire prevention [doing best practice project management]

– Improves predictability

– Repeatable

– Comparing projects enable informed decision making

– Ensures strategic alignment

– Dependencies clear

– Change is controlled

– Success can be measured

• Winging it– No process

– Fire fighting

– The leap of faith – trust me

– I can do it

– Pet projects prevail

– Decisions made in silos

– Subject to surprises when things go wrong

– Change is normal – we don’t need no baseline!

– I said you could trust me!

PHEW!

Do you know all the answers?

Are we on track to deliver our strategy?

Executive

Have we got enough

resources to do this?

Line Manageror Stakeholder

What’s the impact on the benefit plan if we change the

project’s timescale?

Benefits or Business Change Manager

Project or Programme Manager

What are the earliest and

latest completion

times?

How do the projects

contribute to the objectives

Portfolio Manager

Portfolio appraisal decisions

• Existing projects– Cancel

• need to make safe and/or salvage work in progress

– Suspend• as above but leave in a

position such that it can easily be restarted

– Carry on• And keep monitoring

– Accelerate• for existing projects

yielding high returns at low cost

• New projects– Reject (never start)

– Defer (not now)

– Go (now)

PrioritisationDimensions

Strategic Fit

Business Value

Resources Risk

Weighting

25% 40% 20% 15%

Rank Project Name Sponsor/PX HL Process D/ND Flag

Next Gate Type Flag

2008 Approved

2008Unapproved

Running Total

1 Portfolio Management Improvement Project Phase1 Barry Hatton Plan - Plan (Portfolio, Programme & Project) D D 5-yr plan £237,427 £0 £237,427

2 Cable Management Richard Harpley Deliver - Execute Work D B IT & Telecomms £80,000 £900,000 £1,217,427

3 Inventory Visibility Richard Harpley Deliver - Execute Work D C IT & Telecomms £460,000 £1,120,000 £2,797,427

4 IFI Embedded Generation Steve Dallas Plan - Design D D Other £77,753 £0 £2,875,180

Portfolio Management Improvement Project Phase2Barry Hatton Plan - Design D C IT & Telecomms £415,800 £1,617,200 £4,908,180

6 GIS MAP Digitisation Colin Gardner Deliver - Plan Work D D IT & Telecomms £3,704,000 £0 £8,612,180

8 Next Generation Resource ManagementAlan Feakins Deliver - Plan Work D B IT & Telecomms £265,690 £953,000 £9,830,870

9 Optimiza Chris Matthews Deliver - Execute Work D D IT & Telecomms £113,663 £0 £9,944,533

10 Network Modelling Colin Gardner Plan - Design D C IT & Telecomms £587,000 £0 £10,531,533

11 Resourcing Strategy for OPEX workAlan Feakins Deliver - Execute Work D C IT & Telecomms £15,910 £0 £10,547,443

12 Data Modelling Barry Hatton Plan - Plan (Portfolio, Programme & Project) D C IT & Telecomms £72,000 £303,000 £10,922,443

13 Managing Health & Safety within Customer Operations Alan Feakins Deliver - Plan Work ND C Zero Harm £53,800 £150,000 £11,126,243

14 First and Second Response ModelAlan Feakins Deliver - Execute Work D B IT & Telecomms £60,000 £930,250 £12,116,493

15 Telephony Upgrade for SchedulingMark Adolphus Deliver - Execute Work D D IT & Telecomms £194,305 £0 £12,310,798

16 RM Programme: Measurement & Metrics Ph2Alan Feakins Deliver - Plan Work D B IT & Telecomms £33,349 £0 £12,344,147

17 Standby Generation Policy Clive Witherly Run - Restore Supply D B IT & Telecomms £30,000 £266,000 £12,640,147

18 Tracker Pilot Angelo Fitzhenry Deliver - Execute Work D C* IT & Telecomms £294,581 £1,811,196 £14,745,924

20 DigSilent Outage Planning Barry Hatton Run - Control Network D D IT & Telecomms £246,000 £0 £14,991,924

But don’t do this!

New way

Cancel or SuspendDecisions

Reject or Defer Decision

Go Decisions

Accelerate Decision

Note: this is just one way of viewing a portfolio [diagram courtesy of ChangeDirector]

Weight

< £1 M 100 M >

1 6

< £1 M 100 M >

1 6

Weight

<1 M 1 - 5 M 5 - 10 M 1

<1 M 1 - 5 M 5 - 10 M 1

<1 M 1 - 5 M 5 - 10 M 1

ONE OFF BENEFIT

10

SUSTAINABLE MULTI YEAR BENEFIT

30

4

Benefit (one-off or sustainable - multi years)

Level of Impact on the Operating Units / Functions during Implementation

1 2 3

3

Low Med High

1 2 3

1 2 3

1

1

1 2

Low

31 2

ENABLING

1

Level of Risk to Realising the Benefits (Outcomes)

Level of Risk to Delivering the Capability

Timescale to commence realising the Benefits

1

1

1

1

High

4 5

SIGNIFICANT INCREASE IN CONFIDENCE

4 5

20 - 50 M

4

4

6

SOME INCREASE IN CONFIDENCE

1 - 5 M

1 - 5 M

2 3 4

50 - 100 M

50 - 100 M

20 - 50 M

Assessment Criteria

Hazard Reduction (Scope acceleration)

5 - 20 M

5 - 20 M

Efficiency Savings3

10 - 30 M

MAINTAIN STAKEHOLDER CONFIDENCE

BY YEAR 1 BY YEAR 2

2

1

10 - 30 M

BY YEAR 4BY YEAR 5 &

BEYOND

30 M >

5

2 3 4

HighMed

Low Med

5

BY YEAR 5 & BEYOND

BY YEAR 4BY YEAR 3BY YEAR 2

30 M >

Primary Outcomes

Increased Stakeholder Confidence

Timescale to Implement

BY YEAR 3

Total Investment (£)

Remaining Cost to Implement (£)

10 - 30 M 30 M >10/11 Investment Estimate (£)

BY YEAR 1

NEGATIVE IMPACT ON STAKEHOLDER

PERCEPTION

Assessment

Programme Analysis Table

Rank Ref Title Status

Total Benefits

Estimated £

Risk Severity

Alignment Score

Total Cost Estimated £

Version Score

1 E5 Reduction of Overheads & Procurement Submitted 3.2m 63 9 0 258

2 I5 Kinetic and Conferencing Submitted 2.8m 21 18 140k 249 3 E4 Staff Efficiency (VR, Performance and Grading) Submitted 1.1m 25 18 65k 241 4 E3 Business Process Reviews Submitted 260k 9 22 100k 231 5 N3 Performance Reporting for the SMT Submitted 0 1 7 18k 213

6 N2 Customer Service Orientation and Empowerment Submitted 0 3 9 47k 201 7 E7 Network Printing Submitted 300k 25 13 50k 201 8 I1 Selling Direct and Indirect Services Submitted 450k 24 10 40k 199 9 E2 Initial Support Service Reviews Submitted 0 9 13 90k 185 10 E6 Web and Cash Payments Submitted 40k 18 12 87k 172 11 I3 Fundraising and Matched Funding Submitted 1.8m 81 6 30k 156 12 N1 Corporate Planning Process Submitted 0 45 7 58k 131

13 E1 Strategic Space Review & Leasing Space Submitted 100k 35 3 70k 119 14 I4 Full Cost Recovery Submitted 450k 63 2 30k 117 15 I2 Sales and Marketing Submitted 0 15 3 150k 88

Generated using ChangeDirector® Software

Programme Alignment

Presenting the results

Put your best PM on this project!

Generated using ChangeDirector® Software

Mike’s five principles for a successful portfolio office

1. Define who you are– Vision/mission

– Internal/External/Today/Tomorrow

2. Get control of the data– List of projects

– Governance & assurance to make sure the data is “real”

3. Relate the projects and programmes to the business strategy– Define how this will be done

– Understand the priority

4. Define the portfolio office processes– Approvals/Escalation/Reporting/Benefits Management

– Rules of engagement

5. Define success – Metrics, Measures, Indicators of Success, Key Performance Indicators

– Portfolio Office success metrics

Informed decision making

• Requires – clear understanding of strategic objectives, corporate

priorities and measurement systems

– transparency of analysis

– confidence in forecasts

– timely, efficient and effective reporting

– Contribution of changes to strategy

– Team work

Exercise

Starting position

How many projects are there in your portfolio?

How much money will it cost to deliver this year?

Revised position

Describe what effect this will have [i.e. changes to plan/strategy]

Tell me how you will make the decision about which projects to do in the future?

What changed?

Cost of project management

Andy Murray

Director, Outperform

PRINCE2 2009 Lead Author

Cost of project management

• Cost of managing a project

– Project Board

– Project Manager

– Project Support

– Risk Budget

• Cost of failure

– Rework

– Cost overrun

– Time overrun

– Under-delivery

– Poor outputs

– Benefits not realised / aligned

– Consequential costs / losses

• Cost of managing projects

– Centre of Excellence

• Competency Development

• Tools

• Methods

– PMO

• Support

• Monitoring

• Reporting

– Portfolio Office

• Evaluation

• Assurance

Cost saving options

• Reduce number of projects

• Reduce cost of managing a project

• Reduce cost of managing projects

• Reduce cost of failure

• Improve performance

These are related!

Cost of project management v performance

Process capability as indicated by maturity levels

30

Investing in capability

Individual Team Organisation

Behavioural Interpersonal skills Team dynamics Culture

Technical Techniques Methods Frameworks

Contextual Domain expertise Lifecycle models Strategic planning

31

© Outperform UK Ltd & Team Animation Ltd

Investing in capability – what can help?

32

Individual Team Organisation

BehaviouralPsychometric and 360’s

(e.g. Myers Brigs)

Intra-personal development

Belbin / ColourWorks / SDI

Inter-personal development including team learning

Developing shared values

Corporate leadership

Incentive schemes

TechnicalAPM BoK / PMI’s PMBoK

ISO21500 (2012)

PRINCE2

Atern (Agile)

Managing Successful Programmes (MSP)

Portfolio, Programme and Project Offices (P3O)

Contextual Domain specific knowledge and experience

Lifecycle models (e.g. product development,

policy development, etc)

OGC Gateway

Portfolio Management Guide (MoP)

If you have invested in PRINCE2...

Individual Team Organisation

Behavioural Sign-posts the topic Sign-posts the topic Sign-posts the topic

Technical Partially addressed Fully addressed Sign-posts the topic

Contextual Sign-posts the topic Partially addressed Sign-posts the topic

33

Investing in capability – what can help?

Individual Team Organisation

Behavioural

Desktop tools (e.g. MS Office, MS

Project)

Collaboration tools (e.g. Sharepoint, Groove,

Project in a Box, Principal Toolbox, LiveLink)

Enterprise tools for resource management,

portfolio analysis, status dashboards, finance (e.g.

PlanView, Primavera, Change Director, Oracle

Projects)

Technical

Contextual

34

Summary

• How project management can help with austerity...

Contribution = Increased performance + reduced cost of failure

+ lower cost of projects - cost of project management

35

What does this equation look like for your organisation?

Where’s the current pain and where’s the potential gain?

Cultural and Leadership Implications

Donnie MacNicol

Director, Team Animation

Chair, People SIG (APM)

“Is project management a cost to be reduced or an enabler for cost reduction?”

• Dependent on your perspective:– If “cost to be reduced” then P3M not linked to strategy, not seen as a

value driver, not part of the organisational culture, not strong leadership in place – ineffective use

– If “an enabler for cost reduction” then signifies that P3M is understood, linked to achieving the organisations strategy, is seen as a value driver, is part of the organisational culture, has strong leadership (at CXO level and at programme level) – effective use

• New Question - Is the leadership tackling the underlying cultural reasons for the ineffective use of P3M? Who are they?

• Note: Effective P3M is one of many enablers to value creation in an organisation – it can support others such as innovation

What is Organisational Culture?

Organisational culture represents the values and beliefs of the multiple functions and groups making up the organisation - “It’s the way things are done around here”

• way people work with each other• shapes the way decisions are made / the decisions that are made• impacts upon peoples’ attitude to change• influences the types of change undertakes / change made• influences the way the organisation interacts with stakeholders,

partners and customers• impacts the style of leadership and followership.

P3M is impacted by, and impacts on each of the above

What Shapes Culture?

Copyright Kenexa® 2010

Cultural challenges to the effective use of P3M

• P3M must be crafted to fit with an organisations strategy and culture - provides value by delivering the necessary change

• There are inherent challenges for most organisations wrt:

– Adopting / Maintaining / Maturing / Sustaining P3M

• Typically not identified OR managed

– Underlying cause of project failure

• Adoption must be run as a holistic change programme:

– behavioural and contextual, not just technical

– at an organisational as well as individual and team level

• Kingston Business School Organisational Project Management Initiative

Cultural Challenges to P3M performance• Loss of perceived power (e.g. through the loss of dedicated

resources) and resulting personal feelings this may create• Need for an increased level of openness through the need

for:• justification for programmes and follow on decision-

making from senior management and peers• facing issues and risks directly and openly due to

structured monitoring, reporting and governance• Inherent complexity of delivering often without hierarchical

position while managing multiple, conflicting, stakeholder relationships/objectives

• Potential lack of value attributed to project, programme and portfolio management by some individuals and functions.

POWERCULTUREbased on

survival

ROLECULTUREbased onstability

ACHIEVEMENTCULTUREbased on self-expression

SUPPORTCULTUREbased oncommunity

Key Words : Strength,Decisiveness, Determination

Key Words : Growth, Success, Distinction, Profit

Key Words : Order,Security, Control, Conformity

Key Words : Mutuality,Value, Service, Integration

Strong & stable leadership, but prone to fiefdoms and unquestioning followers

Known & defined roles & procedures but inflexible with emphasis on following rules & not results.

Common goals & vision with focus on results &

self-managementbut “ends justify the

means” & arrogance.

Consensus decision making, harmony, sense

of belonging & appreciation, but differences may be

ignored & slow to change.

Types of Culture – a simple model

based on Harrison & Stokes

Influence of Culture on P3M

• How P3M supports the organisation achieve its strategy and how well this is articulated

• How decisions are made around the portfolio (typically one of the most emotive aspects in the P3M family)

• What approach the organisation takes to maturing its P3M capability

• What are the challenges and opportunities for effective P3M in each type of culture?

• What is the most effective style of programme leadership?

Time – the challenge for managing the change

Change Here! Managing Change to Improve Local Services. The Audit Commission

• Step-change required to meet public, political and shareholder expectations – is the organisation “ready” and what part can P3M play?

Summary

• Do you understand:– your organisational culture and the impact it has?

– how a programme-based way of working can be best adopted / sustained in this culture?

– the drivers for making this happen?

• Have you identified how P3M can add value to the organisation and how it should be branded?

• Do you have the leadership to tackle these challenges?

Debate

Cost or enabler?

Questions for discussion and debate

• Vote: Is project management a cost to be reduced or an enabler for cost reduction?

• Discuss and propose: How can Project Management help with austerity? Some points to consider....

• What are the value and cost drivers for your organisation?

• Does you portfolio need some tactical right-sizing?

• What is the optimum balance between the tolerable cost of project management and acceptable performance?

• Does the scale of change facing your organisation require better project/programme capability than you currently have?

• What are the underlying cultural issues facing the adoption and effective use of project management?

• How long have you got before you are left with the option of last resort?

47

Further Information

About Outperform

• A specialist consultancy– Helping organisations improve their

bid, project and programme management performance through the practical application of best practice methods

• Accreditations– ISO9001 Certified– Accredited Consulting Organisation

• Professional membership– APM corporate member – Best Practice User Group™ member

© Outperform UK Ltdwww.outperform.co.uk

49

How we helpPublications

Outperform’s consultants have written a number of books/white-papers and developed handbooks/templates which are available to purchase or download from our website.

Assessments

Bid, Project and Programme audits or health-checks. Organisational maturity assessments. Portfolio review (inc culling service).

Training Workshops

One and two day workshops and business games delivered by registered consultants showing how to embed best practice. Available as public and on-site.

Facilitation

Structured workshops to help you define, assess risks in, or plan your bid, project or programme.

Coaching

Our buddy services start from half day a month and can be called off in hourly units.

Embedding

Use a maturity model to assess current capability, define an improvement roadmap, develop handbooks/ processes/ templates and supervise the roadmap implementation.

50

Inspiring:• project managers to become

leaders• project teams to develop

sustainable leadership practices

• organisations to change to support leadership practices

“Consultancy which increases business success by inspiring

leadership in project management”

Who are Team Animation

PMDevelopmentProgrammes

Indi

vidual

“Bes

t fr

om

Res

t”

TeamCoaching

Team

Solutions

Sta

kehold

erIn

sight

Community ofPractice

Coach

ing /

men

torin

g

Team

Organisation

1. 2.

3.

Management, Procurement and Law Proceedings Editorial Panel

People

Our relationships

Associate Lecturer on MSc Project Management in the Built Environment

Chair of the APM People SIG and Member of the SIG Steering Group and APM Policy Unit

Regular contributorto the Construction Journal

Associates of:

Contacts

• Contact Donnie MacNicol

– t +44 1932 589 259

– m +44 7799 766238

– e donnie@teamanimation.co.uk

– w www.teamanimation.co.uk • Contact Andy Murray

– t +44 8451 304861

– f +44 871 750 3386

– e info@outperform.co.uk

– w www.outperform.co.uk

© Outperform UK Ltdwww.outperform.co.uk

53

Acknowledgements

• M_o_R® is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries

• The PRINCE2 Cityscape logo™ is a Trade Mark of the Office of Government Commerce in the United Kingdom and other countries

• PRINCE2® is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries

• MSP™ is a Trade Mark of the Office of Government Commerce

• The Swirl logo™ is a Trade Mark of the Office of Government Commerce

• P3M3™ a Trade Mark of the Office of Government Commerce

• BPUG® is a Registered Trade Mark of Best Practice User Group Ltd

• Best Practice User Group™ and the Best Practice User Group™ logo are Trade Marks of Best Practice User Group Ltd

• Outperform™ is a Trade Mark of Outperform UK Ltd

© Outperform UK Ltdwww.outperform.co.uk

54