A Strategic Planning Approach to the Project Office..

Maturity and excellence in project management do not occur simply by using project management over a prolonged period of time. Rather, they come through strategic planning for both project management and the project office.

In the following weeks, we shall be discussing the development and key aspects of the project office approach.

The Project Office: Chronological Development

Within 40 years between 1950 and 1990, the project office functioned as a customer group project office and was comprised of a group of project management personnel assigned to a specific project, usually a large project. The majority of these projects were actually programs that were very large in dollar value and with multi-year government funding. It was not uncommon for people to spend 10 or 15 years working on just one project. Technology and schedules were significantly more important than cost. The cost of having someone assigned full-time to the project office was viewed as an insignificant over-management cost compared to the risks of under-management where part-time individuals were assigned but were needed full-time. Only during the 1980’s, military and government agencies became more cost-conscious.

The 1990’s began with a recession that took a heavy toll on white-collar ranks. Management’s desire for efficiency and effectiveness led them to take a hard look at nontraditional management techniques such as project management. Project management began to expand to nonproject-driven industries. The benefits of using project management, such as accomplishing more work in less time with fewer resources and without any sacrifice in quality, an increase in profitability, better control of scope changes, etc. were now recognized as being applicable for other industries. Consideration was being given to all critical activities related to project management to be placed under the supervision of the project office. This included topics such as: Strategic planning for project management, project management benchmarking, mentoring, continuous improvement, training and education, etc.
Each of these activities brought with it both advantages and disadvantages. The majority of the disadvantages were attributed to the increased levels of resistance (classified as low, moderate and high risk) to the new responsibilities given to the project office. The low-risk activities are operational activities to support project management efforts in the near term, whereas the high-risk activities are more in line with strategic planning responsibilities.

Low Risk: Mentorship, Standards, Training, Stakeholder Management
Moderate Risk: Strategic Planning, Lessons-Learned Files, Continuous Improvement, Performance Failure Reporting
High Risk: Capacity Planning, Benchmarking, Dissemination of Information, Business Case Development

As the 21st century dawned, the project office has the responsibility for maintaining all intellectual property related to project management and to actively support corporate strategic planning. During the past 10 years, the benefits of using a project office have become apparent. They include: Standardization of operations, company rather than silo decision-making, better capacity planning, etc. All these benefits are related either directly or indirectly to project management intellectual property. To maintain the project management intellectual property, the project office must maintain the vehicles for capturing the data and then disseminating the data to the various stakeholders. These vehicles include the company project management intranet, project Web sites, project databases, and project management information systems.

Project Management Information System

There are some processes and tools for capturing intellectual property. This information can be collected through four information systems: Earned value information systems, risk management information system, lessons learned information system, performance failure information system.

The earned value measurement informatiom system provides sufficient information to answer two questions: Where is the project today? Where will the project end up?

The risk management information system stores and allows retrieval of risk-related data. It provides data for creating reports and serves as the repository for all current and historical information related to the project risk.

The failure could be a complete project failure or simply the failure of certain tests within the project. The performance failure information system must identify the causes of the failure and possibly recommendations for the removal of the causes. The causes could be identified as coming from problems entirely internal to the organization or from the interaction with subcontractors.

If intellectual property from projects is to be retained in a centralized location, then the project office must develop expertise in how to conduct a postmortem analysis meeting.The objectives for a project are established from “mission” to “performance analysis” However, the postmortem analysis that evaluates the project’s metrics or measures goes in reverse order from “performance analysis” to “mission”.
The only true project failures are those from which nothing is learned. The company can learn just as much, or even more, from project failures compared to project successes.

Dissemination of Information

A problem facing most organizations is how to make sure that critical information are known throughout the organization. Intranet lessons-learned data throughout the organization. However, a better way might be for the project office to take the lead in preparing lessons-learned case studies at the end of each project. The case studies then could be used in future training programs throughout the organization and be intranet-based.

Mentoring

Project Management mentoring is a critical project office activity. Most people seem to agree that the best way to train someone in project management is with on-the-job training. But working of inexperienced project managers under experienced ones would be costly if the organization does not have a stream of large projects.
A better way is the one that the project office should assume mentoring role to project managers.

Development of Standards and Templates

Standards foster teamwork by creating a common language. However, developing excessive standards in the form of policies and procedures may be a mistake because it may not be possible to create policies and procedures that cover every possible situation on every possible project. Templates serve as a guide for a general audience, it may not satisfy the needs of any particular program. Templates should not be adopted “as required as written” and they should be updated as necessary.

Project Management Benchmarking

Perhaps the most interesting and most difficult activity assigned to a project is benchmarking. Just like mentoring, benchmarking requires the use of experienced project managers. The assigned individuals must know what to look for, what questions to ask, the ability to recognize a good fit with the company, how to evaluate the data, and what recommendations to make. Benchmarking is directly related to strategic planning for project management and can have a pronounced effect on the corporate bottom line based on how quickly the changes are implemented. And benchmarking is not limited with the same line of business.

Business Case Development

One of the best ways for a project office to support the corporate strategic planning function is by becoming experts in business case development. Business case development often results in a highly optimistic approach with little regard for the schedule and/or the budget. Pressure then is placed upon the project manager to accept arguments and assumptions made during business case development. If the project fails to meet business case expectations, then the blame is placed upon the project manager.

Customized Training

While many of training programs are highly successful, there are many that were viewed as failures. As an example, one division of a large company recognized the need for training in project management. But the result was a failure. There were several reasons of those failures including: the training branch did not recognize the need to have the trainer meet directly with the requesting organization, the training group received input from senior management as to what information they wished to see covered and the resulting course satisfied, the trainer requested that certain additional information be covered while other information was considered inappropriate and should be deleted but the request fell upon deaf ears, the trainer informed that department wanted only lecture, no case studies, and minimal exercises.

Managing Stakeholders

All companies have stakeholders. Those stakeholders can be categorized as organizational, product/market, and capital markets. Apprehension may exist in the minds of some individuals that the project ofice will become the ultimate project sponsor responsible for all stakeholders. While this may happen in the future, it is highly unlikely that it will occur in the near term.
The project office focuses its attention on internal (organizational) stakeholders.

Continuous Improvement

Given the fact that the project office is a repository of project management intellectual property, the project office may be in the best position to identify continuous improvement opportunities. The project office should not have unilateral authority for implementing the changes, but rather ability to recommend changes.

Capacity Planning

Of all the activities assigned to a project office, the most important activity in the eyes of senior management could very well be capacity planning. Senior management could “surf” the company intranet on an as-needed basis to view the status of an individual project without requiring personal contact with the team. But to satisfy the requirements for strategic timing, all projects would need to be combined into a single database that identifies: resources committed per time period and per functional area, total resource pool per functional area, available resources per time period per functional area.

Risks of Using a Project Office

The benefits of a project office can be neglected if the risk of maintaining a project office are not effectively managed. These ricks include: Headcount, burnout, excessive paperwork, organizational restructuring, trying to service everyone in the organization. The actual measurement can be described in both qualitative and quantitative terms. Qualitatively, the executive levels for resolution. With an effective project office acting as a filter, fewer conflicts should go up to the executive levels. Quantitatively, the executives can look at the following: Progress reviews, decision-making, wasted meetings, quantity of information.

Project Office Excellence: A Case Study
on Johnson Controls, Inc. (JCI) Automotive Systems Group (ASG)

When a company desires to become proficient at the project office concept, it finds additional applications such as Six Sigma implementation and even the creation of a project office within a project office. Such was the case at JCI.

The Organization of Project Teams Using a Project Office Concept
The Organization

In 2000, the Automotive Systems Group (ASG) of Johnson Controls, Inc. Reorganized using a new business model. Under this model, individual projects were grouped together and managed as vehicle interior platforms under a platform director who was responsible for an entire vehicle. The platform director with his/her project managers functioned as a project office viewing the entire vehicle interior and all interfacing components as one large project.

What drove this change?

ASG acquired two companies, the purpose being to allow JCI to become an integrated interiors supplier to the automotive industry. The overall result was the new business model that reorganized the company into vehicle platforms and project offices.

Acceptance
There has been high acceptance of the changeover to the new business model.

How has it worked?

This change has allowed ASG to function as an integrated company. The platform teams have become true teams and feel a sense of identity based on vehicle interiors rather than doors, seats, and cockpits. The customers are happier because they have a single point of contact for their vehicle interior instead of multiple points of contact.

Lessons-Learned

For other companies who are attempting to move to project offices: Start with a clear organizational model, change must be driven from the top, communication meetings must occur with all the impacted parties, position descriptions within the project office must be written, roles and responsibilities must be clear, the project management systems, reviews and accountability must mirror the new organization.

A Central Project Office-Organization, Roles and Responsibilities

ASG has instituted a centralized project office reporting to the vice president of project management. Responsibilities of executive director of project management include: Methods and standards, consulting/mentoring/training, project tracking/portfolio management/project metrics, project web sites, personnel development/resource management/project manager availability for new projects, execution of the strategic plan for project management, six sigma improvements of the project management systems and project execution, organizational structure for project management/position descriptions, hiring project managers, training and developing project managers who work for extended enterprise partners. And he also has the responsibility to manage all the component groups’ project management departments. Managing the project office is only part of his responsibilities.

How did ASG get here?

The functions of the project office were somewhat distributed several years ago. The key point for JCI was that the organization was ready for this change. The various groups readily gave up their resources to have them managed centrally. The notable late additions to the project management initiatives at JCI are Six Sigma for project management and the project management web sites.

Results of centralizing

The project office has been able to reduce the total headcount in project management by approximately 30% in the last two years. This is a result of being able to manage, distribute, and redistribute resources and project management intellectual property over the entire enterprise. And another significant improvement has been the ability to quickly reach concensus and decision on corporate systems and processes. The project office now has the authority to make rapid calls and decisions on these issues.

Obstacles to the project office

Because ASG has been able to reduce head count (and move some project office personnel into project management positions successfully), there is little pressure at the present time to reduce further.

The future of the project

ASG is diligently working on improved metrics and evaluation of projects. At any one time, ASG is working on 250 projects, and there is a tremendous opportunity to evaluate how the entire system is working, if the performance is looked at statistically. Additionally, it is believed that improving the performance and capacities of the project managers and supporting/providing them productivity enhancement tools is a permanent assignment. It always must be watched over and nurtured by this central organization.

Reporting and Structure

Not all companies support project management the way Johnson Controls does. Despite the benefits that are recognizable by using a project office, disagreements still exist as to where the project office should report and how to get the most out of a project office. However, given the responsibilities of the project office and its relationship to corporate strategic planning, capacity planning and project portfolio management, the project office must report to the executive levels of management. The shorter the distance between senior management and the project office, the quicker the benefits of the project management will be recognized.

References
Project Management Journal, Vol.34 No.2 June2003, HAROLD KERZNER, PhD