1 Creating Value vs. Triple Constraint www.wmpmi.orgBenefits Realization This afternoon I am going to introduce what some might call a blasphemous concept. The triple constraint does not determine project success, instead realizing benefits is the key indicator of project success. Creating Value vs. Triple Constraint
2 Don’t present, persuade!Agenda Introductions Mission and Vision Strategic Objectives Realizing Benefits Let’s have a collaborative discussion Don’t present, persuade! Good afternoon. Thank you for attending this 1st session of the PMI Western Michigan chapter dinner meeting Let’s get to know each other and then connect to the business value chain. We should have time for Q&A at the end of this session.
3 PMP, CISA, CGEIT, CRISC, CRMA, FLMIMike Krouse PMP, CISA, CGEIT, CRISC, CRMA, FLMI Medical Informatics Engineering, CSO & PMO STAR Financial Bank, ISO & PMO Lincoln Financial Group, IT Audit Manager and PMO Director PMI-NEIC Treasurer, President, Past-President and Region 2 Liaison InfraGard, ISSA, ISACA, IIA MIE is an innovative health IT company with three brands: WC, EH, and NMC. WebChart – EHR (electronic health record) used by physicians’ offices NoMoreClipboard – EHR for individuals Enterprise Health – SaaS solution that combines occupational health and compliance, clinical care, and employee engagement; used by Fortune 50 companies, universities and federal government. What industries and job roles are in the room? Write them down.
4 Who I am… really I am the world’s greatest grandpa and I have the t-shirt and coffee mug to prove it
5 Business Value Business value is a concept that is unique to each organization Value may be created through the effective management of ongoing operations However, through the use of PPPM, organizations will possess the ability to employ reliable, established processes to meet strategic objectives and obtain greater business value from project investments Ask attendees about how the different industries in the meeting room create business value. MIE offers a secure SaaS that is configurable and, if necessary, customizable PPPM = Portfolio, Program, Project Management Organizational strategy can be expressed through the organization’s mission and vision. ©2013 Project Management Institute: A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Page 15
6 Business Value Chain Mission & Vision Strategic Objectives PPPMM&V guides the org, M&V is supported by SO, SO are achieved by PPPM, PPPM creates bus value Mission statement defines the organization's purpose and primary objectives. Mission statements are set in the present tense and explain why your company exists. These statements tend to be short, clear and powerful. The Vision statement answers the question, "Where do we want to go?“ Vision statements focus on the organizations goals and aspirations. These statements are designed to be uplifting and inspiring. Both of these statements can be highly motivating when they are expressed clearly and with intent, and when they are communicated effectively to everyone in the organization. They also express your organization's purpose outside the organization - customers, suppliers and the media, for example.
7 Mission and Vision StatementsHerman Miller Our new 10-year sustainability strategy, Earthright, begins with three principles: positive transparency, products as living things, and becoming greener together. We have sharpened our goals around the smart use of resources, eco-inspired design, and becoming community driven. Most importantly, we are finding new ways to involve more employees, suppliers, and customers. Our commitment is to achieve the following goals by 2023: Zero waste 50% reduction in water use (30M gallons) 50% reduction in energy intensity 50% more local renewables (50,000 MWh) Megawatt (million) hours 100% Design for the Environment-approved products 100% level 3 certified products 125,000 tons of product taken back per year
8 Mission and Vision StatementsAt Gordon Food Service, Customer is King and our purpose is to serve our customers with the highest-quality food service products and services. To do this, Gordon Food Service is guided by hard work, innovation, compassion, spirit, integrity of our people and a deep commitment to what we call our "Cornerstone Values." Cornerstone Values Customer is King – customer comes first and driven to exceed their expectations Integrity – we say what we will do, and then we do it Philosophy of Sharing – teamwork and sharing knowledge, skills, ideas, and effort War Room Mentality – play fair, but never lose sight of the goal to win Rewards for Performance – encourage productivity and efficiency and rewards for jobs well done Everyone is Important – atmosphere of dignity and diversity, appreciate each other’s talents Networking Organization – strong relationships break down barriers
9 Mission and Vision StatementsDelivering high-quality care and ensuring the safety of our patients, employees and providers is integral to our mission at Spectrum Health: to improve the health of the communities we serve. Not just the safety of patients, but also employees and providers.
10 Mission and Vision StatementsDo your companies have mission and vision statements? Do you know what they are? North Star… As an employee and project manager, the mission and vision statements of your organizations should be your North Star. The Northern Star is an eternal reassurance for travelers heading north, a constant bright source on their journeys. The star is actually called the Polaris star, but is most known as the Northern Star, which is its affectionate nickname.
11 Strategic Objectives - ExamplesIncrease Market Share Strengthen Financial Resources Boost Productivity Optimize Innovation Enhance Community Involvement Most strategic objectives are directed toward generating greater profits, others at customers or society at large. SO can’t be vague, they must be SMART Specific - A clear message as to what needs to be accomplished. Measurable - There must be at least one indicator (or yardstick) that measures progress against fulfilling the objective. Appropriate - It must be consistent with the vision and mission of the organization. Realistic - It must be an achievable target; challenging, but doable Timely - there needs to be a time frame for accomplishing the objective.
12 Strategic Objectives A broadly defined objective that an organization must achieve to make its strategy succeed. Strategic objectives are used to operationalize the mission statement and keep the organization on the path towards the vision statement. According to a study that appeared in the Harvard Business Review, up to 70 percent of employees do not understand their company's strategy. Failure to understand your company's position can lead to poor decision making at all levels of an organization. To continue the metaphor – if mission and vision statements are the North Star (Polaris), then strategic objectives are maps that provide direction. In order to grow a business needs to increase their share of competitive markets. Strengthening financial resources means to build cash flow or increase assets in order to attract investors and court creditors to fund expansion. Productivity for any organization means fine tuning a business process to achieve the best result for a customer while increasing profit. Innovation is a goal that helps a business stay ahead of the competition. Placing resources into research and development to create a new product, or into offering a better service, can pay dividends by entering a new and unique product or service into the marketplace.
13 PPPM Success by ComponentPer the PMBOK, project success is triple constraint, program success is fixing a problem or exploiting an opportunity, and only portfolios create value. I propose that all three, PPP, should and do create value. PPP Management improves efficiency, increases ROI, decreases risk, and provides greater confidence of meeting customer commitments I think that we would all agree that benefits are realized by completing successful projects Table 1-1 Scope, Change, Planning, Management, Success, Monitoring Portfolios and Programs are made up of Projects Project management, then, is the application of knowledge, skills and techniques to execute projects effectively and efficiently. It’s a strategic competency for organizations, enabling them to tie project results to business goals — and thus, better compete in their markets. A program is defined as a group of related projects, subprograms, and program activities managed in a coordinated way to obtain benefits not available from managing them individually. A project may or may not be part of a program but a program will always have projects. Projects within a program are related through the common outcome or collective capability. If the relationship between projects is only that of a shared client, seller, technology, or resource, the effort should be managed as a portfolio of projects rather than as a program. Portfolio - The centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing, and controlling projects, programs and other related work to achieve specific strategic business objectives. Table 1-1. Comparative Overview of Project, Program, and Portfolio Management ©2013 Project Management Institute: A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, Page 8
14 “Controlled disruption for meaningful change”Project Management “Controlled disruption for meaningful change” This is my “elevator pitch” Controlled disruption pertains to the triple constraint Meaningful change pertains to the value created
15 Blasphemy The triple constraint should not be the key benchmark for measuring project success Project Managers needs to think outside their project. Realizing benefits or creating value should be a PMs goal, not adhering to the triple constraint.
16 Blasphemy Uncle Buck Stephen A. Smith – ESPN talk show host and analyst Uncle Buck https://www.youtube.com/watch?v=gpGHNkQT63A ESPN Stephen A. Smith goes crazy on Skip Bayless https://www.youtube.com/watch?v=LoJtwYSLeMw Lebron James 40 points, 18 rebounds, 9 assistss
17 Blasphemy Realizing benefits is the pinnacle of a successful projectBenefits Realization Triple constraint is efficiency – doing things right Benefits realization is being effective – doing the right things.
18 PM Network Gary R Heerkens, MBA, CBM, PMP Lasting Measures (July 2012)Longer Lasting Measures (October 2012) Generating Value (December 2014) © Project Management Institute To support my position, we will leverage a few article by Gary Heerkens. Gary is a contributing editor to PM Network. President of Management Solutions Group, Inc. His latest book is The Business-Savvy Project Manager
19 Generating Value Which is better? A project that runs on time and budget and meets it objectives OR A project that runs late and is over budget but overachieves on cost savings that have a “change-for-life” impact? The question was posted on a discussion thread and generated some controversy. More than 430 comments; 130 didn’t appear to understand the question or had an experiential bias that seemed to cloud their commentary. 75% of 300 (225) – there is never a valid business reason to violate the triple constraint. Metrics such as ROI should trump cost and schedule compliance. 25% of remaining 300 (75) suggested that in most cases, pursuing the option to cash a much larger benefits stream justifies exceeding the original cost and schedule targets.
20 Lasting Measures Imagine you just invested some of your own money in a variety of personal investments based on criteria you developed. What is one of the first things you would do? You would begin tracking and measuring the performance of your investments. As you understand the gain or loss you would adjust your decision-making criteria for additional future investments. Organizations do not systematically evaluate through time whether the benefits claimed match benefits received. Without tracking benefits, there is no organizational learning- resulting in the same mistakes being repeated.
21 Longer Lasting MeasuresWhat benefits should be measured and tracked? Who shouldn’t – and should – do the measuring? When should measurement take place? What challenges exist in getting reliable data? 1. Benefits identified in the business case; revised via change requests 2. Shouldn’t – any person or group with a vested interest in the success of the project. Suffer from a lack of objectivity Should – an independent person or group. Perhaps a PMO or Finance Dept with no political affiliation. 3. The timing outlined in the business case. The realization of benefits is different for each project. Benefits may be realized at the end of the project or may take awhile after the project is complete. 4. Bias and fraud – Those who propose projects often are considered the most logical choices to evaluate beneficial outcomes Traceability – Benefits claimed by some projects may also be the objectives of other organizational initiatives Resource availability – Who has the time to track and measure benefits?
22 Monitoring and ControllingProcess Groups Initiating Planning Monitoring and Controlling Executing I’m sure everyone is familiar with the Process Groups diagram. Closing
23 Process Groups and BenefitsInitiating Planning Business Case CBA BR Template Monitoring and Controlling Executing This picture shows how benefits fit into project management Realizing benefits is dependent upon project management Change Request Time Report Closing Invoices
24 BR Template We discussed the scenario of achieving outrageous benefits, but violating the triple constraint. Let’s look at the other side of the coin… PM’s need to track internal organizational changes and external influences that may erode expected benefits. If benefits are diminishing, should the project be shutdown even if complying with triple constraint?
25 Process Groups and Benefit FeedbackImprove Benefit Forecasts Initiating Planning Monitoring and Controlling Executing Continuous improvement – difference between benefits projections and actual benefits realized to improve forecasting. Organizational Learning Closing Benefits Tracking
26 Q&A
27 Blasphemy Triple constraint is the holy grail of PMBlasphemy - Speaking sacrilegiously about sacred things; profane talk.
28 BR Resources – During ProjectBusiness Case CBA Change Request Benefit Tracking Template PPM Tool Time Tracking General Ledger Expense Tracking (HW, SW, Materials) The project has to make a return on the investment, so how are costs and benefits tracked and measured. Active projects and projects in queue. GL for completed projects. Ideal if benefits and expenses are tracked in GL according to a project code, fed from PPM tool Benefits and expenses may be incurred after the project is closed. PPM Tools – Clarizen, Planview, Redmine, MS Project, Primavera
29 Business Case Benefits: Should align with strategic initiativesWhat are the expected benefits? For example, increased market share, trained employees, reduced headcount, competitive advantage, regulatory compliance, etc. The benefits must be stated so they can be measured according to a realization schedule.
30 Change Request Benefit Explain how this change request augments, creates or destroys business value.
31 BR Resources – After ProjectTurnover to Independent Group PMO, Finance - ? General Ledger Benefits may be realized at the end of the project or awhile after the project is complete.