Does your IT organization have an effective governance framework to ensure project success regardless of the Project Portfolio Management (PPM) tool you use? Most IT organizations do not. Why do I say this? Every IT organization has some type of PPM tool they use to manage projects. You would think most projects are executed well. But this is not the case. Studies have shown project failures in the 20-30 percent range still occur because of not meeting schedule, cost, or quality goals. This is significant considering the amount of money invested in projects. Let’s say your organization spends 10 million dollars on projects next year. Statistics suggest 2-3 million dollars of that investment will be wasted due to failed projects. This is not something the board of directors wants to hear. So, why does this happen? The answer is simple. When you look at the reasons projects fail you begin to realize that it’s not the PPM tool you use to manage projects that causes failure. It’s the lack of an effective governance model to oversee project execution.
In last week’s AITS Strategic CIO column, What is Your Framework for Excellent Service Delivery?, I addressed the need for developing a governance framework for successful services delivery. This week I address the governance framework required to ensure project success.
IT organizations have difficulty in achieving project success. A recent Gartner survey reflects a 20-28 percent failure rate for projects. The causes vary. The article Project Failure Statistics identifies failure categories and the associated percentage attributed to the failure. These are captured in the following below.
As you can see, there were 6 major categories that attributed to project failure. The survey also found 53% of project cost exceeded the original estimates by 189%, and 31% of projects were cancelled before they were completed. How could this be? You would think even the most basic PPM solution would result in more favorable numbers.
Most PPM type solutions provide capabilities to track project activities, schedules, cost, and resource availability. Some even provide alerts when specified parameters are exceeded. What they don’t provide are the governance guidelines and processes necessary to ensure successful project execution. The following example clarifies my point:
Michael, a neighbor and friend, was planning to take his family on a vacation. He didn’t have time to properly organize the family vacation since he has a stressful job and works evenings and during some weekends. One day at work Michael was having lunch with John, a close colleague. Michael mentioned his wife and three children, ages 12 – 18, were forever reminding him he needed to plan the vacation and find a resort. It was getting close to summer and the longer he waited the harder it would be to find room availability. John mentioned a resort a friend recommend that was supposed to be very nice. Michael called the resort later that afternoon, asked two or three questions, and made the reservation. The resort was within driving distance. Although it was 550 miles from their home he and his wife would share the driving duties. Michael was worried about navigating the drive since the resort was located in an area he had never traveled to before. So he decided to buy a GPS system from the local electronics store to help him navigate the trip. The GPS had the following major capabilities:
- Large Screen Display
- Flexible Entry of Destination Address or Intersections
- Turn by Turn Voice and Map Directions
- Traffic Congestion Alerts
- Fuel and Food Locations
- Save Feature and Easy Retrieval of Route Directions
Three weeks later on Michael and his family started their drive to the vacation resort. When he returned I asked him about his family vacation. He said, “the drive was great but the vacation was terrible”. He cited the following top five reasons.
1. The room was too far from the pool
2. We were told there were adequate children and teenage activities
3. There wasn’t enough staff for the number of guests
4. The quality of the food was inconsistent and the variety for our kids was inadequate
5. The website advertised resort features that were closed during our stay
What Michael failed to do was investigate the resort, ask the right questions, and take the necessary time to plan the vacation. He decided that he alone would be responsible for planning the entire vacation.
Michael’s family vacation was a project. And like all projects it’s not just about the technology used to manage the activities but the governance process in place to manage the boundaries, guidelines, and oversight necessary for successful execution .
ACHIEVING PROJECT EXCELLENCE
Below is a graphic that depicts the Governance Framework for achieving project excellence. It includes 4 components: Guiding Principles; Project Excellence Governance Processes and Metrics; Project Portfolio; and Project Portfolio Management Solution(s). Following the graphic is more detail on each of the four components.
GUIDING PRINCIPLES: There are three (3) Guiding Principles: Visible Leadership, Defined Tactics, and Effective Communication
Visible Leadership focuses on the three key roles that are required for effective project governance: Executive Sponsor ,Business Owner, IT Executive
Every major project needs an executive sponsor. This executive cannot be a figurehead role. The executive sponsor:
- Must have the authority, accountability, and responsibility for the overall success or failure of a project.
- Must have decision making at the macro level, rewarded when the project is successful, and penalized-in some fashion-if the project doesn’t succeed.
- Works with the business owner and IT executive to govern the projects in a team based environment.
- Is the definitive decision maker.
Every IT Project that impacts a business process needs a business owner. If not, the project will fail.
- Make sure you assign a business executive who is directly impacted by the project results. Otherwise he or she doesn’t have a vested interest in the success or failure of the project. The process owner is a perfect candidate for this role.
- Chose a business owner with a successful track record of accomplishments, works effectively in teams, communicates well, and deals with conflict resolution in a positive way.
- The business owner is accountable and responsible for all aspects of the program on a day-to-day basis. The questions the business owner asks are: Do we have the right vision and requirements? Do we have the right financial support? Is the plan realistic and on track? Do we have a good handle on issues and risk?
- the business owner works closely with the IT Owner
Every IT Project that impacts a business process needs an IT Executive who manages the IT components of the project. The IT executive is responsible for the following:
- Responsible for all the technology components of the project
- Works with business owner and business/IT teams to translate the business requirements into IT speak
- Accountable and responsible for the architecture, infrastructure, development, quality assurance, release management, change process, etc., required for project success
- Releases the project major deliverable to the business owner after successful user acceptance testing
- Works closely with the business executive and executive sponsor
Defined Tactics address the boundaries of the project, the execution/control activities, and addresses stakeholder acceptance of business environment changes. The three components are: Scope, Plan, and Change Management.
Every IT Project requires boundaries that define the objectives, requirements, deliverables, timelines, budget, etc. If the project scope is not properly defined the project will expand in time, dollars, and resources. Following are some key tips to ensure that project scope is properly addressed:
- Document the scope of the project in detail
- Clearly define the scope so that all constituents understand it
- Make sure there is no “wiggle room” for people to interpret scope differently than intended
- Define the scope with the minimum, necessary, and sufficient boundaries to achieve the project objectives. This will help to protect the company’s investment, avoid duplication, and unnecessary expenditures
- Ask two qualifying questions to test the necessary of investing in the project. Do I have this capability today? If the answer is “yes” you might not want to invest in this project. If I don’t add this now will I lose customers or market share? If answer is “no” then put it on the wish list for the future
- Ruthlessly define the scope
Every IT Project requires a plan to define the specific day-to-day activities, financials, and resources to be successful. Some key tips in ensuring a successful plan are:
- Make sure you have the following the following key areas well defined: Activities, Timeline, Budget, Resources, Risk, Issue Management, Risk Management
- Do not approve any project for which budget dollars are not available and/or do not have all required project approvals. Don’t fall into the trap of “we have 2/3’s of the money and we’ll get the rest later”. The project will fail.
- Co-develop the plan with a team knowledgeable in each of the key areas: requirements, design, development, test, change management, quality assurance, release phases, etc.
- Include business teams in the plan development
- Include milestone reviews and issue mitigation reviews on a regular basis
- Ruthlessly review the plan and gain agreement from all the key stakeholders
- Utilize tiger teams to review the plan at various timelines to obtain an objective view of the status
- Document the project plan in a formal document which is signed by all key stakeholders indicating their approval
- Review the plan on a regular basis with key stakeholders to address status, deviations, and mitigation plan to address any project issues
Change Management addresses two key areas that most dramatically impact project success. Every project plan that is well thought out and reviewed prior to the start of the project is successful. Once the clock starts to click away, things happen: requirements are added or modified, get moved to other projects. New “rush” demands are placed on the IT organization, budgets are scrutinized and project funding is impacted, etc. Every project needs an effective change management process to provide oversight for any deviations from the original project plan. The second area that impacts project success is the acceptance by key stakeholders and users for the changes in business activities impacted by the project. It’s imperative to obtain buy-in from the stakeholders to ensure project success. Some key tips on each of these two areas are as follows:
Changes Impacting Scope, Resource, Financial, Timelines
- Utilize a change management process that is well defined, agreed to by all stakeholders, and rigorously enforced
- Ruthlessly review the plan and gain agreement from all the key stakeholders
- Document and maintain a Change Management Log that captures all changes, their impact, and resolution activities
User Acceptance of Changes for Business Activities Impacted by Project
- Include stakeholders in the requirements definition process who will be impacted by the project changes. They provide good input, are a reality check, and can become the goodwill ambassadors for the project
- Include stakeholders in project reviews to provide status, capture their input, and add reality-check to project execution
- Include stakeholders in process reviews and all testing activities to capture their input. Remember, never ignore the user in project activities. It’s the key element that will make or break the successful implementation of the project
Effective Communications is probably the most underutilized component in executing projects. It’s important for communications to be constant, incorporate a 360 degree view of the project, and be realistic. These three components result in effective communication. Also, remember to clearly identifying the benefits that result from successful implementation of the project. Remember, it’s all about achieving business outcomes. This is the common thread everyone latches onto.
Communications must be constant to be effective. The more you communicate the more informed your organization. Constant communication helps ensure project status is available to all stakeholders and employees, expectations are set, and issues and mitigation plans are visible to all.
- Develop a communication plan that details the types of communications and timeline used during the project
- Include a variety of communication techniques including: newsletters, email, webinars, town hall meetings, brown bag lunches, project website, etc. There’s no such thing as too much communication
- Celebrate small victories and include all key constituents. There is nothing better to stimulate additional adrenaline for future activities than to share accomplishments with the core and extended team
Communications should not only be directed to the project team. There are many more constituents that are affected by the project. Don’t forget to make communications bi-directional. Communications is a two-way street. Listening is as important as informing. Make sure you identify the key constituents and include them in the appropriate communications material that keeps them informed.
- Communication is a two-way process. Develop a communication process that provides for 360 degree feedback and includes a listening process to capture feedback from all stakeholders
- Identify the key constituents and include them in all communications. These include the company executive and management team, business unit head, department managers, and users of the business processes impacted by the project
- Include supply chain partners that will be impacted by the project. They have a vested interest if they are impacted by the project
Successful communications must be realistic. There is nothing worse than surprises. They can deteriorate morale and cripple the momentum of a project.
- Communications should provide complete visibility and transparency for all project related activities
- Ensure when you communicate an issue you also communicate the mitigating actions that will be used to resolve the issue. A problem without a solution sends the wrong message
- No one will blame you for issues that arise during projects. Issues occur all the time. It’s the way you manage issues that is important. Effectively Managing issues provides confidence by the project team and stakeholders that project issues will be addressed and resolved
A few words regarding the remaining three components of the Governance Framework:
- Project Excellence Processes and Metrics provide the guidelines and metrics used to oversee and manage the governance and execution of projects. The processes need to be rigorously defined and administered. If not, the chances for a successful project will diminish. You should also develop a set of governance and execution metrics that provide quantitative measurements. A set of metrics that focus on Issue Management measures both dimensions. Developing a set of metrics that measure the number and types of issues identified, the number of repetitive issues, and issue mitigation times, etc., is a key indicator of process adherence and project execution
- Project Portfolio includes all projects executed in the IT organization. They can be categorized into three distinct buckets. Sustain projects maintain the business (help desk, mail, data center, etc.). Operational projects run the business (applications that support sales, marketing, manufacturing, engineering, finance, human resources, etc.). Strategic projects innovate the business providing new products and services that drive margin and ROI (new customer service portal, new product, revamped logistics supply chain, etc.)
- Project Portfolio Management (PPM) tools manage the activities, financials, schedules, and resources of the project. There are many PPM tools on the market today. Make sure you chose the one that fits best with your organization’s culture, provides the flexibility required to effectively manage your projects, and can be easily configured for use
Statistics support a project failure rate of 20-30 percent. Major causes of project failures are bad communication, lack of planning, poor quality control, etc. To minimize risk and increase the probability of project success you need an effective governance framework.
An effective Governance Framework has four components:
- Guiding Principles
- Project Excellence Processes and Metrics
- Project Portfolio
- Project Portfolio Management Solution
Guiding Principles provide the overall guidelines for managing projects:
-Visible Leadership focuses on the following three key roles that are required for effective project governance: Executive Sponsor, Business Owner, IT Executive
-Defined Tactics address the boundaries of the project, the execution/control activities, and stakeholder issues resulting from changes to business processes. The three components are: Scope, Plan, and Change Management.
-Effective Communications is probably the most underutilized component in executing projects. To be effective communications needs to be constant, incorporate a 360 degree view of the project, and be realistic. Make sure you clearly identify the business benefits that are linked to the project. Remember, it’s all about achieving business outcomes. This is a common thread everyone will latch onto.
Project Excellence Processes and Metrics provide the guidelines and measurements used to oversee and manage the governance and execution of projects. Make sure the processes are rigorously defined and administered. Utilizing the best PPM tool could impact project success if they are not governed by project excellence processes. You should also develop a set of governance and execution metrics to provide quantitative measurements to ensure process adherence and successful project execution.
Project Portfolio includes all projects in the IT organization. They can be categorized into three distinct buckets. Sustain projects maintain the business. Operational projects run the business. Strategic projects innovate the business providing new products and services that drive margin and ROI.
Project Portfolio Management Tools (PPM) tools manage the activities, financials, schedules, and resources of the project. There are many PPM tools on the market today. Make sure you chose the one that fits best with your organization’s culture, provides the flexibility required to effectively manage your projects, and can be easily configured for use.
Developing an effective Governance Framework enables you to provide the proper guidance to the organization in executing projects. Ignoring a governance framework results in wide ranges of project successes and failures and project investment dollars that never achieve the business outcomes that drive customer value, increase revenue, and increase shareholder wealth.
I’d love to hear your feedback on this weekly column as well as any specific topics you are interested in reading about. I can be reached at email@example.com.
Phil Weinzimer is president of Strategere Consulting working with clients to develop business and IT strategies that focus on achieving business outcomes. Previously Mr. Weinzimer was Managing Principal-Professional Services for IT Business Management at BMC Software. He has also held Managing Principal positions in the Professional Services organizations for ITM Software, CAI, and Sapient.
Mr. Weinzimer has written a book concerning customer value entitled “Getting IT Right: Creating Customer Value for Market Leadership” and has a forthcoming book, “The Strategic CIO: Creating Customer Value, Increasing Revenue, Enhancing Shareholder Wealth”, will be available in 2013.
Mr. Weinzimer can be contacted at firstname.lastname@example.org