Project Portfolio Management | By Andy Murray | minute read
The 1990s saw a dramatic increase in the number of people with the job title project manager as organisations addressed the problem of an ever changing world through managing by projects. Many organisations adopted the PRINCE2™ method as a means to gain some consistency of project management approach across their now swelling ranks of project managers.
With both an increasing need for project managers and an increasing number of people claiming to be project managers, many organisations based their recruitment and development strategies on certification of project management competence. Having a PRINCE2™ Practitioner certificate became an indication of competence (even though it is only an indicator of knowledge).
Experience has shown that successful implementation of a project management method requires more than just training your project managers. A successful organisation requires processes, technology, policies and standards for project management - which also need to be integrated with other management systems for them to work effectively and efficiently.
In the absence of an organisation wide project infrastructure, project results depend entirely on the availability of certain high performing individuals. This does not necessarily provide the basis for long-term or consistent project performance.
However, such infrastructure doesn't establish itself overnight. It may take several years; it may take a programme of change to institutionalise. Therefore it is not surprising that the more advanced organisations are now asking themselves, "Where have we got to and what more do we need to do?"
This is where maturity modelling can help. Project and programme management maturity models describe the project and programme related activities within Key Process Areas (KPAs) that contribute to achieving successful outcomes.
A good model, such as the OGC's P3M3, recognises not only the project management activities being carried out at the individual project level, but also those activities within an organisation that build and maintain a programme and project infrastructure of effective project approaches and management practices.
By undertaking a maturity assessment against an industry standard model, such as P3M3, an organisation will be able to verify what they have achieved, where their strengths and weaknesses are, and then identify a prioritised action plan to take them to an improved level of capability.
What Are Maturity Models?
"A maturity model is a structured collection of elements that describe characteristics of effective processes. A maturity model provides:
- A place to start
- The benefit of a community's prior experiences
- A common language and a shared vision
- A framework for prioritising actions
- A way to define what improvement means for your organisation
A maturity model can be used as a benchmark for assessing different organisations for equivalent comparison." - Wikipedia
The Software Engineering Institute (SEI) developed the first Capability Maturity Model® (CMM®) back in the 1980s. This was a result of research that indicated the quality of software applications were directly related to the quality of the processes used to develop them.
CMM® was originally intended as a government tool to evaluate the ability of contractors to deliver a software project. Though it originates from the software development industry it is widely used as a general model of the maturity of processes (e.g. Project and Programme Management).
Maturity models have five levels:
- Initial (chaotic, ad hoc, heroic) - the starting point for use of a new process
- Repeatable (process discipline) - the process is used repeatedly
- Defined (institutionalised) - the process is defined/confirmed as a standard business process
- Managed (quantified) - process management and measurement takes place
- Optimising (process improvement) - deliberate process optimisation/improvement
Portfolio, Programme and Project Management Maturity Model (P3M3)
The Office of Government Commerce (OGC) is a department within the UK Government with a remit to help public sector organisations improve their efficiency, gain better value for money from procurements and deliver improved success from programmes and projects. They are the owners of PRINCE2™, Managing Successful Programmes (MSP), Management of Risk (M_o_R®) and the IT best practice framework, ITIL®.
In 2003 the OGC released their first draft of a Portfolio, Programme and Project Management Maturity Model (P3M3). The model was refined and formally published in February 2006 after incorporating latest maturity modelling practices and after consultation with interested consultants, practitioners and their accreditation partner APM Group.
The P3M3 describes the portfolio, programme and project-related activities within process areas that contribute to achieving a successful project outcome. The levels described within the P3M3 indicate how key process areas can be structured hierarchically to define a progression of capability which an organisation can use to set goals and plan their improvement journey.
The levels facilitate organisational transitions from an immature state to become a mature and capable organisation with an objective basis for judging quality and solving programme and project issues.
The distinct yet connected disciplines of portfolio, programme and project management are nested within the P3M3 model:
- Portfolio, Programme and Project Management Maturity (P3M3)
- Programme and Project Management Maturity (P2M3)
- Project Management Maturity (P1M3)
This means that organisations can use the model to evolve their maturity across all disciplines in an integrated approach or by addressing Project Management then Programme Management and then Portfolio Management in sequence.
Using Maturity Models for Performance Improvement
The beauty of maturity models is that they enable organisations to breakdown a broad process improvement goal into manageable tasks. The lower level KPAs need to be in place for the higher level KPAs to be effective. Therefore the lower level KPAs should be addressed first.
Step 1 - Where Are You Today?
In order to identify a prioritised roadmap for process improvement it is important to understand what KPAs you currently do well and what KPAs are causing you performance issues. Maturity modelling applies the concept that there's little point in fixing things that are not broken or that are not causing problems. Additionally, for large organisations it is likely that you have islands of good practice. What is it that department X does differently to department Y or Z? It may be that you have many of the KPAs covered but not universally across the organisation. Adopting good practice from within your own organisation can significantly accelerate adoption rates and hence performance improvement.
The best way to understand current capability is to conduct a baseline assessment against the maturity model through a process of inspection and structured interviews.
Step 2 - Where Do You Want To Be?
Not all organisations need to be at Level 5 maturity. The ideal maturity level for an organisation will depend on how important programmes and projects are to their overall performance.
If you are a R&D organisation, say developing aerospace technology for governments, then your organisation's performance is likely to be highly dependent on your programme and project management capability.
If you are a retailer by contrast then your organisation's overall performance is likely to be less dependent on programme and project management capability.
The output from Step 1 will help identify some realistic goals. For example, there are 13 KPAs that need to be addressed to get to level 2 maturity. If the initial assessment has shown that 8 of the 13 are ok then a realistic goal would be to change the 5 weak KPAs to strong KPAs within 6 months to consolidate at level 2 before addressing how to get to level 3.
With an estimated 90% of organisations operating at Level 1 or Level 2 maturity, setting targets by the quantity of strong KPAs is more inspiring than aiming to be level 2 of 5 in capability. For example "We will be in the top 10% of corporate organisations by achieving a strong capability in 25 Key Process Areas"
Step 3 - How Will You Get There
Experience has shown that it takes between 3 and 12 months to raise maturity by one level.
A recommended approach to improve process capability is to appoint process owners for the KPAs to be addressed. For example you could appoint one person to drive improvement for Business Case Development and Benefits Management KPAs and another person to drive improvement for Requirements Management and Configuration Management KPAs. An improvement roadmap should be produced showing the priority of the KPAs to be addressed and the set of initiatives which will improve them. The improvement roadmap should be used to drive and measure progress.
It is important to recognise that if you are changing processes, policies, standards, job descriptions or reporting structures then you will be changing how some people will work. Therefore, as with any initiative that affects people's current working practices, power or authority, it should be treated as a change initiative. If the change is likely to be significant, it is recommended to establish a change programme to help with the transition. Using change methods such as Six Sigma™ help to structure the roadmap and ensure that the solution sticks.
Step 4 - How Will You Know?
To increase capability organisations need to collect metrics in order to provide a platform for continuous improvement.
Therefore regardless of your baseline maturity it is recommended that the improvement roadmap identifies what metrics should be collected to demonstrate performance improvement.
The establishment of Key Performance Indicators (KPIs) will not only enable organisations to determine when they have achieved their goal but can also be used to prove the Business Case for the process improvement journey (i.e. what is your return on the capability investment?).
If your KPIs are showing that you have achieved your current maturity goal then you may wish to consider gaining accreditation for that level of maturity (for recognition or for marketing purposes) or wish to repeat the exercise to determine what is required to get to the next level of maturity.
Using P3M3 for Benchmarking
The first maturity model was developed as a means for the US Government to make better procurement decisions by comparing contractors' capabilities. P3M3 can be used in the same way. If you tender for government business then procurement professionals give more credence to an independently awarded certificate than a company's own claims of capability.
Procurement professionals also give more weight to an organisational certificate than they do an individual's certificate (currently organisations submit PRINCE2™ practitioner certificates with their proposal as an indicator of project management capability. With 200,000 PRINCE2™ practitioners worldwide it is difficult for buyers to differentiate between them).
Certification against P3M3 is now possible. The OGC's accreditation partner APM Group Ltd (APMG) have taken the OGC models and established an accreditation process for gauging the maturity level of organisations for their portfolio, programme and project management activities.
Depending on the scope of the assessment certificates can be awarded for:
- Project Management
- Programme and Project Management
- Portfolio, Programme and Project Management
Certificates are awarded for the maturity level obtained, although few if any organisations would want a certificate for level 1 maturity. The highest awarded certificate to date (April 2006) is for Level 3 in Project Management.
Using P3M3 for Skills Development
A recent web search revealed some 300+ separate training modules relating to portfolio, programme and project management. The UK's National Occupational Standards for Project Management shows some 51 separate competencies for project management.
A common dilemma which faces many HR professionals is deciding how to spread a finite training budget across a myriad of competencies. Which ones will yield the greatest impact on performance within this financial year?
As part of the accreditation assessment method, APMG mapped the levels of process maturity to levels of people maturity (i.e. the portfolio, programme and project management skills).
Using P3M3 and the APMG's competency map it is now possible to identify a roadmap of training modules that relate to your organisation's capability (e.g. there's little point in investing in training related to level 4 KPAs if your organisation is at level 2).
Today there are numerous skills assessment tools available for HR teams to benchmark the people in their organisation. A common feature across all such tools is the ability to structure the assessment around a competency framework.
Combining skills assessments with organisational assessment means that it is now possible to identify and sequence both the organisational changes and people changes as part of a coherent improvement plan.
Using P3M3 for Benefits Management
Since P3M3 describes a hierarchy of Key Process Areas (KPAs) that correlate to improved performance, it provides an excellent framework for assessing the impact of improvement projects. For example, if you are considering implementing an enterprise planning tool (such as Primavera) you can use the P3M3 model to assess how the tool contributes to the KPAs that are important to your organisation. Knowing what KPAs you need to target will help you scope which features to buy and/or implement. If you are introducing features that do not improve any of your target KPAs then it should prompt questions as to why those features are being introduced at all.
Understanding your current capability against the P3M3 model also enables you to do a "before" and "after" assessment to quantify the impact of introducing such tools.
P3M3 can also be used to address the impact of:
- Mergers & Acquisitions
- Organisation Re-structure
- Training & Development programmes
- Deployment of new technology
- Changes to Roles, Responsibilities, Objectives
- Implementing a governance framework
A maturity model such as P3M3 provides a framework for identifying and prioritising those changes which will yield the greatest impact on your organisation. It helps set expectations as to what is required in what sequence and in what timescale.
Benefits from using the P3M3 as a basis for process improvement are:
- Improved schedule and budget predictability
- Improved cycle time
- Increased productivity
- Improved quality (as measured by defects)
- Increased customer satisfaction
- Improved employee morale
- Increased return on investment
- Decreased cost of quality