Using project management to control business costs Richard Evans MPUG Puget Sound Chapter Meeting...
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Using project management to control business costs
Richard EvansMPUG Puget Sound Chapter Meeting April 21st 2009
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ChicagoAnn Arbor
London Cologne
Paris
New YorkWashington, DCLos Angeles
Seattle
San Francisco
Denver
Sydney
Toronto
Brisbane
Melbourne
Hong Kong
Canberra
Pcubed has been shaping the most critical programs and project portfolios since before it became a necessity. Pcubed’s customers constitute a quarter of the Fortune 500
•Specialists in strategy and execution of large program management and project portfolio management
•350 professionals globally, currently shaping and delivering over $40bn of client change portfolios
•Niche player, providing clients with small teams
•Investments in experience and tools
Pcubed
Organizations responding to cost pressures
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Summary
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2. ‘Lean’ program management to lower the cost and risk of major programs AND of operations
1. Changing investments – portfolio management for projects AND operations
Rational response to cost pressures
-Less headless
chicken behavior-
Opportunity for project
management skills in operations
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2. ‘Lean’ program management to lower the cost and risk of major projects and operations programs
1. Changing investments – portfolio management for projects AND operations
Rational response to cost pressures
-Less headless
chicken behavior-
Opportunity for project
management skills in operations
Reduced project portfolio by $400M in response to capital spending reductions while still protecting strategic initiatives
3 yr capital portfolio optimized on strategic impact & financial return View of strategic health of capital project pipeline Transparency of decision making
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Capital Management – Energy IndustryR
esul
ts
• Reviewed various methodologies for assessing the strategic value of proposed capital projects, settling on a solution that includes analytic hierarchy processing (AHP).
• Optimized the 3 year capital project portfolio for Global Refining.
• Drove for enhanced information on business case & benefits of all capital expenditure.
Portfolio Cost $
Stra
tegi
c Va
lue Move Up -Maximize
Value for same budget
Move Left –Reduce Costs & Maintain Value
Portfolio
• Challenged to find a rigorous and proven approach for selecting the optimal, billion dollar portfolio of capital expenditure in Global Refining, while still maximizing Return On Capital Employed
Saved $225M through performance optimization Technology services now contribute to strategic goals Clearer prioritization and overall operations management
“As a consequence of unsatisfactory results, U.K. Criminal Justice IT decided to overhaul its portfolio and performance management practices, which led to restoring funding confidence within the organization.” ~ Andrea Di Maio, Gartner
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Benefits Realization - GovernmentR
esul
ts
• Utilized benefits realization management approach to cover entire life cycle, from business case submission to actual benefit realization assessment
• Three distinct, tightly related phases: portfolio prioritization, active benefits management, performance management
• $3 billion program to join criminal justice (police, courts, jails, etc.) services• Late projects, over budget, no business cases, potential to lose funding
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2. ‘Lean’ program management to lower the cost and risk of major projects and operations programs
1. Changing investments – portfolio management for projects AND operations
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Rational response to cost pressures
-Less headless
chicken behavior-
Opportunity for project
management skills in operations
Thinking “Lean”
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Waste Duplication of Effort Inconsistency Muda…Muri…Mura
Unnecessary motion – people moving more than is required to perform the processing
Waiting – waiting for the next production step Overproduction – production ahead of demand Defects – the effort involved in inspecting for and fixing defects etc
1. economical and efficient2. not using any more resources than
are necessary- Encarta Dictionary
LeanAV
OID
Lean Program Management
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Delivering the Olympic Games
Olympic Games - London 2012“People will want to know there is transparency, we
are accountable, that costs don’t run out of control and we won’t leave white elephants behind.”
David Higgins CEO, Olympic Delivery Authority 2012
38 Programs,1200 projects, 5500 milestones, 1 unmovable deadline
Robust early definition to prevent downstream failure pay now or pay later
Early Confirmation of:Will project deliver?Is Business case valid?Are stakeholders on board?
• ‘Light’ but effective governance structures that allow best in class suppliers to do it their own way, while giving the needed visibility, insight and control
• World class issues management and progress tracking
Complex Program Challenges
Meeting paralysis, no time for “real work” ‘Hero’ dependency Getting to an agreed implementation approach and a
robust integrated plan Access to executive calendars become the default
program critical path Organizational “silos” block progress Poor confidence in delivery Lack of an unbiased view of status, especially with
suppliers or vendors Frustration with constant surprises (delays, cost
overruns, technical issues, unforeseen changes) Lack of clear responsibility / accountability results in
parallel and wasted effort Inability to identify critical program work and align
effort to it Inability to control change and prevent unwanted work
Organizing for lean PM
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Dire
ctio
n& D
ecisi
onMak
ing
Esca
latio
n& R
epor
ting
Team 1
Steering
Integration
ExternalVendors
Business Lines Departments
Team 2 Team 3
•Integrate cultural and organizational factors to achieve one team•Single point source for communications and data•Actively get people together to align teams and enable continuous improvement •Ensure efficient meetings to manage across geographies, organizations and functions•Drive effective collaboration by integrating the work of interdependent stakeholders through implementing team structures•Disciplined governance structures that effectively align executive and team behaviors to keep critical work moving•Timely, fact-based decisions and inputs of executive help/expertise•Specific tracked actions for resolution of key issues & risks•Effective change management•Quality reports and data to the right level of decision authority•Focus resource expertise on critical work
Reducing cost and risk with a framework
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Govern Transformation
Operate
Manage Services and Suppliers
Develop Benefits
Establish Program Manage Program Delivery & Benefits Realization
Transition
Manage Releases
Manage Projects
Develop Business Case
Develop Delivery Plan
Develop Blueprint
Manage Business Change
Build & Embed Transformation Capability
Identify
Develop Strategy & Vision
Define Deliver Close
Lean Operations
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The Toyota Way consists of 14 principles, not all are applicable to every industry
Select 2 or 3 as a proving ground for cultural change. Key principles include: Continuous improvement Building a culture of stopping to fix problems to get work right the first time Developing leadership that thoroughly understands the Lean philosophy Developing teams across processes
Development of metrics - five or six at most - of key performance indicators (KPIs) that enable the organization to gauge its progress.
Obstacles include getting leadership to take ownership of problems, especially in a matrix environment. In a culture where the lowest person can stop the entire production line if he or she sees a problem that needs fixing, the classic hierarchy thinking has to be diminished.
Executing lean…in strange places
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Summary
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2. ‘Lean’ program management to lower the cost and risk of major programs AND of operations
1. Changing investments – portfolio management for projects AND operations
-Opportunity for
project management skills
in operations
Items to research:• The Toyota Way• MSP – Managing Successful Programs