Organizational Project Management

Rosemary Hossenlopp PMP

• Publisher: Berrett-Koehler Publishers
• Year: 2010
• ISBN:
  9781567262988
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Gestión de proyectos

Improve Your Business Results Through Organizational Project Management
Organizational project management (OPM) aligns project deliverables with strategy. Understanding this emerging process is essential for all stakeholders, from the corporate sponsor to project team members. OPM is a valuable new tool that can enhance your organization's successful execution of projects in alignment with strategic priorities.
Under the editorship of Rosemary Hossenlopp, PMP, ten contributors from around the globe, representing a wide variety of industries, offer valuable insights on how OPM can give any organization the competitive edge. They discuss how to
• Improve business outcomes
• Better align project work with strategies
• Set priorities
• Organize project work
Whether you direct projects, fund projects, or conduct project work, Organizational Project Management: Linking Strategy and Projects is vital to your understanding of this emerging business discipline.

CHAPTER 1

OPM: Delivering Business Results from Enterprise Strategy

Russ McDowell, PMP

Are you having trouble getting the results you expect from projects you undertake? Do you struggle to decide which initiatives will deliver the best returns or benefits for your organization? Are you trying to take advantage of new opportunities or implement new initiatives in your company but finding that the implementation never seems to go right? Do you need to improve your organization’s capacity to respond to today’s challenging business environment?

In this chapter, you will discover how you can use organizational project management (OPM) to deliver project results by implementing your enterprise strategies. You will learn:

• How to use proven techniques to implement your organizational strategy—and get tangible results
• How to establish a flexible management approach to capitalize on new opportunities
• About the importance of ensuring each project delivers the business outcomes promised to stakeholders
• Effective ways to ensure the alignment of investments in projects with the strategies of the organization
• How to establish objectivity in the selection and support of projects, based on business criteria.

In today’s fast-paced business environment, a company’s overall approach to OPM will determine whether it is able to address necessary, critical changes identified in executive management’s strategic directions and decisions—and even if the organization will survive.

Most organizations are just in the beginning stages of achieving their strategic objectives through the adoption of project management (PM) best practices. Project managers have their heads down in project work. Executives are buried in bad news. What should we do about this? Start a dialog between project managers and executives on how to deliver benefits, align projects to strategy, and stop wasting time on project work that doesn’t matter.

This is OPM. It is the bridge between an organization’s strategy and operational outcomes. It is about a real conversation that needs to occur—now!

Whatever You Do, Don’t Stand Still!

Today’s organizations face many challenges, including:

• The pressure of globalization and new market opportunities
• The need to increase revenues and decrease costs
• The chaos of mergers and acquisitions
• The relentless cry to increase efficiency
• Pressure to reduce time to market for new products
• Downsizing/rightsizing/outsourcing
• The accelerating pace of technology change
• Legislative changes (e.g., the Sarbanes-Oxley Act; banking and financial reporting regulations).

In addition, the recession that began in 2008 has shown that no company or industry is immune to the current turbulence in the market. Pain is everywhere. The spectacular failures of the housing, banking, and automotive industries have provided all too many examples. If your organization is to prosper, it’s not enough to stand still. You must adapt quickly to a rapidly changing environment.

Projects, by their nature, are the ideal mechanism for implementing the fast-paced, focused changes that are so necessary to today’s business environment. By definition, projects are temporary endeavors, focused on implementing unique solutions while accommodating constraints of resources and scope.

How Can OPM Help?

To understand how OPM can help contribute to the success of your organization, it is first necessary to understand the position that OPM and “projectized activities” play in the day-to-day life of an organization.

First, let’s start with a basic definition. According to the Project Management Institute, OPM “is the systematic management of projects, programs, and portfolios in alignment with the organization’s strategic business goals.”¹ Much of the focus and literature in the field of project management has been on how to ensure that projects are done right. However, the real promise of OPM is not in the proper execution of authorized projects, although this is an important facet. The key to being successful in OPM is to ensure a tight relationship between strategic goals and the implementation of new capabilities.

The Organizational Pyramid

To appreciate what OPM can do for your business, it is important to understand the environment within which it exists. Figure 1-1 illustrates four key components of OPM.

• At the top of the pyramid are the areas traditionally covered by an organization’s executive management. This level of management is responsible for the corporate vision—articulating the mission and determining the strategy and objectives that will best attain the vision and mission.
• Below the top level of the pyramid, two approaches that must be balanced for the organization to be successful are shown. On the left side of the pyramid’s base is the operations management of the organization: the day-to-day running of the business, the “keeping the lights on.” The focus here is on implementing ongoing, repetitive functions. To compete, organizations tend to optimize for the operation of routine tasks. Thus, the tendency is for this side of the organization to focus on driving the efficiencies of current operations and incrementally improving current functions.
• On the right side of the pyramid are the projectized activities—areas related to project management—including portfolio and program management. Projectized approaches are generally aimed at implementing significant change within an organization.
• The arrows at the bottom of the pyramid, pointing to both recurring operations and projectized activities, indicate that the organization must be supported by a balanced approach to the use of its resources.

Figure 1-1 The Organizational Context of Portfolio Management

Project Management Institute, The Standard for Portfolio Management, Second Edition, Project Management Institute, Inc. (2008). Copyright and all rights reserved. Material from this publication has been reproduced with the permission of PMI.

The right side of the triangle has been the focus of most of the project management literature. Much has been said, and these multiple voices can help project participants improve the management of projectized activities.

Although PM is important to OPM, it is not our current focus. What no one is talking about is the interfaces and boundaries of operations with the projectized activities. What must happen? Senior management needs more help to optimize the allocation of resources between the operations and the projects. Both aspects require organizational resources (e.g., people, funds, facilities) to perform their roles. Tough decisions are made during high-level operations planning that result in new projects (e.g., setup of new manufacturing lines, upgrades of technology infrastructure, renewal ofcommunications networks).

Doing the Right Projects: The Top of the Pyramid

Henry Ford reportedly said, “The greatest waste in business is doing the wrong thing well.” Most organizations have more “good ideas” (i.e., ideas backed by business cases with a positive net present value, alignment to corporate strategy, and a strong cost/benefit ratio) than they have resources to implement. As a result, the executive management is challenged to select the best projects to authorize. (This challenge is addressed by one of the key process groups within the Project Management Institute’s Standard for Portfolio Management—the “aligning process group.”)²

At its heart, choosing projects is primarily a business investment decision and should be based on which projects provide the best promise of achieving strategic goals. When making these decisions, it is essential to understand the organization and its objectives and how project deliverables will help the organization achieve its desired business results.

Beginning with the End in Sight: The Bottom of the Pyramid

Organizations do not benefit from undertaking projects! This may seem like heresy in a book on project management, but it is important to realize that projects need to deliver something of value to an organization. If you look carefully at Figure 1-1, you will notice that the output of projects is directed toward the ongoing operations. In other words, the results of any project are new or enhanced capabilities for the organization. The organization will achieve benefits from these new capabilities only if the capabilities are actually used in the delivery of services to the clients served by that organization.³

Successful OPM requires the transition of key project deliverables at the end of the project. Managers must consider how these deliverables will be used by and affect the operational side of the business. Managers must also consider how the operations team will support the new capabilities delivered by the project throughout the deliverables’ life cycle. This life cycle is typically much longer and hence more costly than what it costs to deliver the capabilities through the original project itself.

What Can Outcome Management Do for Me?

Business decisionmakers do not undertake projects for the sake of the deliverables that the project will produce. Good investment decisions are made based on the probability of realizing benefits from that investment. For an organization to realize benefits from a project, it must take the project deliverables (generally, new or improved capabilities or products) and use them—that is, integrate them into operations—to achieve the anticipated benefits. Outcome management is defined as “the set of activities for the planning, managing, and realizing of the desired outcomes from initiatives.”⁴

Outcomes are different from project deliverables. For example, the deliverable of a project may be a new software product release that is anticipated to achieve a 25 percent increase in market share. The project is complete when the software is released, but the benefits from the new version of the software will be realized only after some period of exposure in the marketplace. Thus, outcome management and benefits realization normally take place outside the context of the project itself. The PRINCE2 project management methodology recognizes this, offering a specified “post-project review plan” that identifies:

• How to measure achievement of expected benefits
• When the various benefits can be measured
• What resources are needed to carry out the review work.⁵

The post-project review is a planned component of the actions that follow project closure. The executives (including the project sponsors and steering committee) are responsible for ensuring that the review happens within the appropriate time frame and that the post-project review plan measures all the benefits specified in the original business case for the project.

Determining whether the intended benefits of the original investment have been delivered allows the organization to close the feedback loop. It provides a metric against which the success of selecting investments in the portfolio can be measured. Thus benefits management is a key component in the management of investments in the project portfolio. As reported by Public Works and Government Services Canada (PWGSC), a department of the federal government of Canada,

• Benefits realization is the pre-planning for, and ongoing management of benefits promised….
• Sound project management can only enable a business owner (program) to realize intended benefits.
• Accountability for the realization of intended benefits must rest with the business function, not with the IT project.⁶

Outcome management brackets both ends of the traditional project life cycle. On one end is planning for benefits: Before the project has been selected or authorized, the documented business case should indicate the intended benefits that should result from investing in the project. This should include a clear description of how to measure those benefits after the project has finished and its deliverables are put into operational use.

On the other end of the traditional project life cycle, outcome management continues after the project to actually m...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• About the Editor
• About the Authors
• Contents
• Editor’s Preface
• Acknowledgments
• Chapter 1: OPM: Delivering Business Results from Enterprise Strategy
• Chapter 2: Organizational Alignment: The Intersection of Strategy and Project Work
• Chapter 3: How to Align Project Work with Strategic Vision
• Chapter 4: Proven Business-Leader Actions for Project Success
• Chapter 5: Executive Imperatives: The Role of Project Sponsorship in Organizational Success
• Chapter 6: Successful Business Transformation
• Chapter 7: The Effect of Culture on Projects
• Chapter 8: Performing Assessments that Dramatically Improve Business Results
• Chapter 9: OPM Practices: The Turnaround of Indian Railways
• Chapter 10: Sustainable Success: Leaders Who Transform
• Index