Using project management to control business costs

Richard EvansMPUG Puget Sound Chapter Meeting April 21st 2009

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Chicago

Ann ArborLondon

CologneParis

New York

Washington, 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

esu

lts

• 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 $

Str

ate

gic

Valu

e 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

esu

lts

• 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

Lean

AV

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

ecis

ionM

akin

g

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

richard.evans@pcubed.com

Items to research:• The Toyota Way• MSP – Managing Successful Programs