Project Management ROI E-Book

Jack J. Phillips

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 420

Veröffentlichungsjahr: 2011

Beschreibung

Business & Economics/Project Management An exclusive portal to the methods and tools the ROI Instituteuses to determine return on investment in project management To survive this modern age of financially skeptical "show me theROI" investors, it is a crucial step for companies to develop aneffective project management strategy in order to stay ahead of thecurve and achieve success. Project Management ROI takes theguesswork out of determining how to monetarily value projects byteaching the time-tested Return on Investment (ROI) methodology. Itpresents these results-based concepts in a methodical, reproduciblemanner that project managers, executives, and analysts can use as avalidated reference for future projects. This book focuses on anarray of measures to forecast project value and collect data duringand after implementation, including reaction, learning, applicationand implementation, impact, return on investment, and intangibles.Project Management ROI: * Is the first book from the renowned ROI Institute to focus onproject management ROI * Provides both the tools and methodology for measuring the ROI ofproject management investments * Will help project managers discover the value of specificproject management solutions to justify project expenditures

Leseprobe

Table of Contents

Title Page

Copyright

Preface

The Need for This Book

A Guide to Project ROI

Credibility Is Key

Audience

Target Areas for Projects

The Difference

Flow of the Book

Acknowledgments

About the Authors

Chapter 1: Project Management Issues and Challenges

What Is Project Management?

Why Projects Fail

Project Leadership: Getting Results

Project Management Issues

Final Thoughts

Chapter 2: The Project Management Lifecycle

The Project Management Steps

Project Management Solutions

Project Management Maturity Model

Final Thoughts

Chapter 3: ROI Methodology Basics

Types of Data

The Initial Analysis

The ROI Process Model

Operating Standards and Philosophy

Implementing and Sustaining the Process

Benefits of This Approach

Final Thoughts

Chapter 4: Achieving Business Alignment with the Project

Importance of Business Alignment

Determining the Potential Payoff

Determining Business Needs

Determining Performance Needs

Determining Learning Needs

Determining Preference Needs

Case Study: Southeast Corridor Bank

Developing Objectives for Projects

Final Thoughts

Chapter 5: Measuring Reaction and Learning

The Importance of Reaction

The Importance of Learning

Sources of Data

Topics for Reaction Measures

Topics for Learning Measures

Data Collection Timing

The Challenges and Benefits of Measuring Learning

Data Collection Methods

Data Use

Final Thoughts

Chapter 6: Measuring Application and Implementation

The Importance of Application and Implementation

Challenges

Measurement Issues

Data Collection Methods

Barriers to Application

Application Data Use

Final Thoughts

Chapter 7: Measuring Business Impact

Project versus Project Management

The Importance of Business Impact

Collecting Effective Impact Measures

Business Performance Data Monitoring

Data Collection Methods

Measuring the Hard to Measure

Final Thoughts

Chapter 8: Isolation of Project Impact

The Importance of This Issue

Preliminary Issues

Isolation Methods

Final Thoughts

Chapter 9: Converting Data to Money

The Importance of Converting Data to Money

Key Steps in Converting Data to Money

Standard Monetary Values

When Standard Values Are Not Available

Technique Selection and Finalizing Value

Final Thoughts

Chapter 10: Measuring the Intangibles

The Importance of Intangibles

Measuring and Analyzing Intangibles

Confronting Intangibles

Final Thoughts

Chapter 11: Monitoring Project Costs and Calculating ROI

The Importance of Costs and ROI

Fundamental Cost Issues

Specific Costs to Include

Cost Classifications

The ROI Calculation

Other ROI Measures

Final Thoughts

Chapter 12: Forecasting Value, Including ROI

The Importance of Forecasting

The Timing of Forecasting

Pre-Project ROI Forecasting

Forecasting with a Pilot Program

Forecasting ROI with Reaction Data

Forecasting ROI with Learning Data

Forecasting ROI with Application Data

Forecasting Guidelines

Final Thoughts

Chapter 13: Reporting Results

The Importance of Communicating Results

Principles of Communicating Results

The Process for Communicating Results

The Need for Communication

The Communication Plan

The Audience for Communications

Information Development: The Impact Study

Media Selection

Reactions to Communication

Final Thoughts

Chapter 14: Implementing and Sustaining ROI

The Importance of Sustaining the Use of ROI

Implementing the Process: Overcoming Resistance

Assessing the Climate

Developing Roles and Responsibilities

Establishing Goals and Plans

Revising or Developing Policies and Guidelines

Preparing the Project Team

Initiating ROI Studies

Preparing the Clients and Executives

Removing Obstacles

Monitoring Progress

Final Thoughts

Notes

Chapter 1

Chapter 2

Chapter 3

Chapter 5

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

Index

This book is printed on acid-free paper. infinity

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Published simultaneously in Canada

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Library of Congress Cataloging-in-Publication Data:

Phillips, Jack J., 1945-

Identifying the ROI of project management/Jack J. Phillips, Wayne Brantley, Patricia Pulliam Phillips.

p. cm.

Includes index.

ISBN 978-1-118-07277-6 (hardback); ISBN 978-1-118-12258-7 (ebk); ISBN 978-1-118-12259-4 (ebk); ISBN 978-1-118-12260-0 (ebk); ISBN 978-1-118-12261-7 (ebk); ISBN 978-1-118-12268-6 (ebk); ISBN 978-1-118-12269-3 (ebk)

1. Project management. 2. Project management–Evaluation. 3. Rate of return. 4. Human capital. I. Brantley, Wayne. II. Phillips, Patricia Pulliam. III. Title.

HD69.P75P4878 2011

658.15′2—dc23

2011024783

Preface

If you are reading this book, chances are you are interested in project management, or you currently have or offer project management services. Possibly your alma mater is Hard Knocks U and you already know everything, or you have grown tired of starting over and over from failed projects. Whether you are a beginner with project management or are a seasoned pro, you need to understand how to justify the value of projects to executives. This book will cover the basics of successful project management and will show how to evaluate projects and project management using the time-tested Return on Investment (ROI) methodology.

The Need for This Book

In recent years, we have witnessed change in organizational accountability, especially toward investment in projects and project management (PM). Project sponsors and those who have responsibility for project success have always been concerned about the value of their initiatives. Today this concern translates into financial impact—the actual monetary contribution from a project. Although monetary value is a critical concern, it is the comparison of this value with the project costs that captures stakeholders' attention—and translates into ROI.

“Show me the ROI” is the familiar response from individuals asked to invest (or continue to invest) in major projects. At times, this response is appropriate. At other times, it may be misguided; measures not subject to monetary conversion are also important, if not critical, to most projects. However, excluding the ROI from a success profile is unacceptable in this age of the “show me” generation. The ROI is often required before a project is approved. Sometimes, it is needed as the project is being designed and developed. Other times, it is needed after project implementation.

This issue is compounded by concern that most projects today fail to live up to expectations. A systematic process is needed that can identify barriers to and enablers of success and can drive organizational improvements.

The challenge lies in doing it—developing the measures of value, including monetary value, when they are needed and presenting them in a way so that stakeholders can use them

Before the project is initiatedDuring design and development, to plan for maximum valueDuring implementation, so that maximum value can be attainedDuring post-analysis, to assess the delivered value against the anticipated value

This book is a guide that addresses all four scenarios.

A Guide to Project ROI

This new book is a basic guide for anyone involved in implementing major projects—human capital programs, technology implementations, systems integration, new processes, Six Sigma, product design, new policies, and procedures, or any other type of project where significant expenditures of time and money are at stake. Strategies to assist in forecasting the value of the project in advance and in collecting data during and after project implementation are presented. This book uses a results-based approach to project evaluation, focusing on a variety of measures that are categorized into six data types:

1. Reaction and Perceived Value

2. Learning and Confidence

3. Application and Implementation

4. Impact and Consequences

5. Return on Investment

6. Intangibles

This book offers a step-by-step guide to identifying, collecting, analyzing, and reporting all six types of data in a consistent manner that leads to credible results.

In addition, the book shows how to measure the impact and ROI of a variety of project management tools, such as:

Project Management TrainingA Project Management MethodologySystems and SoftwareThe Project Management OfficeDedicated PM Resources

Credibility Is Key

This unique book focuses on building a credible process—one that will generate a balanced set of data that are believable, realistic, and accurate, particularly from the viewpoint of sponsors and key stakeholders. More specifically, the methodology presented in this book approaches credibility head-on through the use of:

Balanced categories of dataA logical, systematic processGuiding principles, a conservative set of standardsA proven methodology based on thousands of applicationsAn emphasis on implementing the methodology within an organization to ensure that the process is sustainedA procedure accepted by sponsors, clients, and others who fund projects

The book explores the challenges of measuring the hard to measure and placing monetary values on the hard to value. It is a reference that clarifies much of the mystery surrounding the allocation of monetary values. Building on a tremendous amount of experience, application, practice, and research, the book draws on the work of many individuals and organizations, particularly those who have attained the ultimate levels of accountability using the ROI methodology. Developed in an easy-to-read format and fortified with examples and tips, this is an indispensable guide for audiences who seek to understand more about bottom-line accountability.

Audience

The primary audience for this book is project managers concerned with the valuation of their projects. Project managers are strongly committed to their projects and must show value in terms that project sponsors need. This book will provide all the information to accomplish this.

A second audience is executives, administrators, and leaders who fund and support projects and project management. These executives need to see the value of projects and the value of project management. Impact and ROI are their two most important measures, and this book will show how to connect projects to them.

This book is also intended for professionals, analysts, and practitioners who are responsible for evaluating the success of a project. It shows how the various types of data are collected, processed, analyzed, and reported. This book serves as a guide to do this.

Finally, another audience includes consultants, researchers, and professors who are dedicated to unraveling the value mystery, trying to understand more about the difficult and demanding challenges of developing measures and values for a variety of target areas. This book will make an important contribution to the literature.

Target Areas for Projects

Project Management ROI: A Step-by-Step Guide for Measuring the Impact and ROI for Projects is geared toward a variety of functional areas in organizations where projects are managed. These areas include (but are not limited to) projects in:

Human resources, human capitalLearning and development, performance improvementTechnology, IT systemsMeetings, events, and conferencesSales, marketingPublic relations, community affairs, government relationsQuality, Six SigmaOperations, methods, engineeringResearch and development, innovationFinance, complianceLogistics, distribution, supply chainPublic policy projectsSocial projectsCharitable projectsProject management tools

The Difference

While other books may attempt to address the accountability of projects, this new book presents a methodical approach that can be replicated throughout an organization, enabling comparisons of results from one project to another. The process described in this book is the most documented method in the world, and its implementation has been phenomenal, with over 4,000 organizations currently using it to measure success routinely. Over 3,000 individuals have become a Certified ROI Professional (CRP) through the ROI Institute. While many books tackle accountability in a certain function or process, this book shows a method that works across all types of projects, ranging from leadership development to the implementation of new technology and from new educational programs to public policy initiatives.

Flow of the Book

Project Management ROI: A Step-by-Step Guide for Measuring the Impact and ROI for Projects presents a methodology for determining the ROI on a project, referred to as the ROI methodology. After identifying and exploring the factors that have created interest in this level of accountability, the book focuses on the process, showing how the ROI is developed, step-by-step, with each chapter devoted to each major element. In addition, two other chapters highlight matters that are critical to the overall process. One discusses the up-front analysis necessary to define the specific need for the project, and the other focuses on forecasting the value before the project is developed and implemented. The remainder of the book details the strategies and actions needed to sustain the methodology.

Acknowledgments

No book is the work of the authors alone. Many individuals, groups, and organizations shaped the development of this book. We owe particular thanks to the hundreds of clients with whom we have had the pleasure to work in the past two decades. They have helped to develop, mold, and refine this methodology. Their contributions are evident.

Thanks to John Wiley for their support of this book. Special thanks to Bob Argentieri, Executive Editor, for clearly seeing the need for this book in the project management community.

Many thanks go to Linda Arnall at the ROI Institute, who invariably came through when we needed her for this assignment. Linda approached this project with a vengeance, and this is a much better book with her input and effort.

We would also like to thank our families. In spite of our “absence,” you continued to cheer us on. We love you for that and much more!

About the Authors

Jack J. Phillips, Ph.D., a world-renowned expert on accountability, measurement, and evaluation, is chairman of the ROI Institute, a research, consulting, and workshop provider. He provides consulting services for Fortune 500 companies and organizations in forty countries. In addition, he conducts workshops for major conference providers throughout the world. Phillips is also the author or editor of more than forty books—fifteen about measurement and evaluation—and more than 150 articles.

Phillips has received several awards for his books and work. The Society for Human Resource Management presented him an award for one of his books and honored a Phillips ROI study with its highest award for creativity. The American Society for Training and Development gave him its highest award, Distinguished Contribution to Workplace Learning and Development for his work on ROI. On three occasions, Meeting News named him one of the 25 Most Influential People in the Meetings and Events Industry, based on his work on ROI. His work has been featured in the Wall Street Journal, BusinessWeek, and Fortune magazine. He has been interviewed by several television programs, including CNN.

His expertise in ROI measurement and evaluation is based on more than twenty-seven years of corporate experience in five industries (aerospace, textiles, metals, construction materials, and banking). Phillips has served as training and development manager at two Fortune 500 firms, senior HR officer for two firms, president of a regional federal savings bank, and management professor at a major state university.

Phillips and his wife, Dr. Patricia P. Phillips, recently served as authors and series editors for the Measurement and Evaluation Series published by Pfeiffer (2008), which includes a six-book series on the ROI Methodology and a companion book of 14 best-practice case studies. Other books recently authored by Phillips include ROI for Technology Projects: Measuring and Delivering Value (Butterworth-Heinemann, 2008); Return on Investment in Meetings and Events: Tools and Techniques to Measure the Success of all Types of Meetings and Events (Butterworth-Heinemann, 2008); Show Me the Money: How to Determine ROI in People, Projects, and Programs (Berrett-Koehler, 2007); The Value of Learning (Pfeiffer, 2007); How to Build a Successful Consulting Practice (McGraw-Hill, 2006); Investing in Your Company's Human Capital: Strategies to Avoid Spending Too Much or Too Little (Amacom, 2005); Proving the Value of HR: How and Why to Measure ROI (SHRM, 2005); The Leadership Scorecard (Elsevier Butterworth-Heinemann, 2004); Managing Talent Retention (Pfeiffer, 2009); Return on Investment in Training and Performance Improvement Programs, 2nd ed. (Elsevier Butterworth-Heinemann, 2003); The Project Management Scorecard, (Elsevier Butterworth-Heinemann, 2002); Beyond Learning Objectives (ASTD, 2008); The Human Resources Scorecard: Measuring the Return on Investment (Elsevier Butterworth-Heinemann, 2001); Measuring for Success (ASRD, 2010) and The Consultant's Scorecard (McGraw-Hill, 2000). Phillips served as series editor for ASTD's In Action casebook series, an ambitious publishing project featuring 30 titles. He currently serves as series editor for Elsevier Butterworth-Heinemann's Improving Human Performance series.

Phillips has won awards for his work, research, and publications from the Society for Human Resources Management, ASTD, and other organizations.

Patricia P. Phillips, Ph.D., is president and CEO of the ROI Institute, a leading source of ROI competency building, implementation support, networking, and research. She assists organizations with the implementation of the ROI methodology in countries around the world including South Africa, Singapore, Japan, New Zealand, Australia, Italy, Turkey, France, Germany, Canada, and the United States.

Phillips's academic accomplishments include a doctoral degree in international development and a master's degree of arts in public and private management. She is certified in ROI evaluation and has been awarded the Certified Performance Technologist designation by the International Society for Performance Improvement (ISPI).

Phillips's publications include The Bottomline on ROI, which won the 2003 ISPI Award of Excellence; The Human Resources Scorecard: Measuring Return on Investment; and several of ASTD's In Action casebooks, Measuring Return on Investment; Measuring ROI in the Public Sector, and Retaining Your Best Employees. She is published in a variety of journals, serves as Professor of Practice teaching evaluation, survey design, and qualitative research at The University of Southern Mississippi, and speaks on ROI at a variety of conferences.

Wayne Brantley, MS Ed, PMP, ITIL, CRP, CPLP is the Senior Director of Professional Education for Villanova University Online. Wayne has taught and consulted on the topics of project management, quality management, leadership, curriculum development, Internet course development, and return on investment to Fortune 500 companies around the world. With over twenty-five years of experience with the Air Force as a project manager for AF technology training and curriculum development programs, Wayne has developed numerous AF and corporate training, classroom, and multimedia programs.

Wayne has spoken at numerous conferences for organizations such as the Project Management Institute (PMI®), the International Society for Performance Improvement (ISPI), and the American Society of Training and Development (ASTD). Wayne is certified by the Project Management Institute as a Project Management Professional (PMP), by EXIN as Information Technology Infrastructure Library (ITIL) Foundation, by ASTD as a Certified Professional in Learning and Performance (CPLP), and by the ROI Institute as a Certified Return on Investment Professional (CRP).

Wayne is currently a continuing education faculty member for Villanova University Online and The Florida Institute of Technology.

Chapter 1

Project Management Issues and Challenges

Whether you are new to project management or a seasoned veteran, you will find this book to be helpful. It is designed to assist project managers who are struggling to show the value of their projects or the value of specific project management solutions. The process that you will learn is very credible and used by thousands of organizations around the world. It is the most-used evaluation system in the world to evaluate projects at the impact and ROI levels.

It is helpful to review some issues about project management. This first chapter highlights some of the basic issues about project management.

What Is Project Management?

Project management (PM) is not a new technology or philosophy. PM is as old as the pyramids. The pharaohs were building the magnificent pyramids in ancient Egypt using processes that remain mysterious today. By definition, any effort or work that requires the planning and coordination of resources is more than likely a project, and a project is usually managed using some form or tool of project management.

Considering the fact that PM has been around for so long, it is surprising that we still approach it like a new fad or invention. What has occurred over the last two decades is a maturity of the processes used in project management. There is now a standardized body of knowledge in place, thanks in large part to the Project Management Institute (PMI). This body of knowledge, known as the project management body of knowledge, identifies this profession's accepted standards for PM.1

Although PMI has an established body of knowledge, it can be argued that there is more than one way to “skin a cat” (apologies to pet lovers everywhere). Many parallels and similarities to the methodology used by the PMI are in existence. At the end of the day, these different methodologies all say the same thing, albeit in different ways.

The processes and issues shared in this book were not inspired by a climb up a Tibetan mountain in search of nirvana, or by a Harvard University dissertation. They came from one of the most recognizable learning institutions in the world—“The School of Hard Knocks.” This book is a tribute to the pain, agony, and turmoil that many project managers have experienced.

Many of you have assumed or been granted the title of “Accidental Project Manager.” As most work is accomplished incrementally through projects, every time an ad campaign is launched, a system implementation is planned, a quality initiative is implemented, or a new drug is developed, a project is completed. The eternal weekend “honey-do” agenda even qualifies as a project list. The argument can be made that most work is accomplished using the skill of project management.

Let's first understand the meaning of the term project. By definition, it is a temporary and unique effort. The alternative is operational management, which is comprised of the repetitive daily jobs that are not projects. Projects have a lifecycle that is identified by the PMI as shown in Table 1.1.

Table 1.1 Project Management Lifecycle

ProcessWhat OccursInitiationProject selection—go/no-go decisionPlanningIdentifying all the work that is to be done, scheduling, budgeting, and much moreExecutionDoing the work—building the productMonitoring and ControlEvaluating and reporting project statusClosingHandoff of project and wrap up

Project costs can range from a few dollars to several billion dollars. Project time can take several years in duration. Projects will require as few as one part-time person to thousands of project team members working together. Organizations perform projects ad hoc, while others have matured, defined processes in place. Some organizations see project managers as glorified administrative assistants, while others see them as omniscient wizards (it is possible that this is a view held singularly by the project manager).

As far as skill sets go, organizational development specialists consistently see project management as a top skill set required of employees. A quick review of professional and managerial job descriptions will reveal that project management is a much in-demand skill. Some organizations value the project management skill so much that they employ certified project managers, known as Project Management Professionals (PMPs). Some organizations have even made project management a career path. Certification Magazine, an IT magazine, has repeatedly rated the PMP as a top-ten certification.2 This is impressive when you consider that the PMP is not an IT-specific skill. Throughout industry and government, the PMP is an in-demand certification, and even the U.S. federal government has mandated that IT project managers be certified.

The interest in certification is based on its perceived value. In a recent conference about certification, the featured presenter made an intriguing declaration that today, certifications are more valuable than a degree. Taken at face value, what does this statement mean? Degrees are valuable, but can sometimes be too generic and not specific enough to a particular job or a position. With many certifications, a work experience component is almost always combined with a challenging examination based on a body of knowledge. Certification predicts with some level of certainty that someone can perform those duties associated with the performer's level of certification.

Becoming a successful project manager is easier with training and information available. PMI is the internationally recognized body of governance for project managers around the world. As of 2011, PMI has over 300,000 members, and there are over 400,000 certified PMPs. PMI maintains the standard for project management known as the Guide to the Project Management Body of Knowledge (PMBOK). The PMBOK identifies the processes, knowledge, and skills that a project manager should have. The PMBOK is a standard, not a textbook, and hence the reader will find it informative rather than instructional. This leaves many readers frustrated and in need of further guidance.

The PMBOK lists nine knowledge areas that a project manager should identify:

Integration Management—Ties all the other processes together. Includes the coordination, consolidation, and integrative processes necessary to successfully execute a project.Scope Management—Includes all the efforts to articulate and identify the features and functions of a product. Includes the identification of requirements, deliverables, tasks, and activities required to produce the product of the project.Time Management—Includes all the processes required to estimate effort duration and sequence in order to complete the project in a timely manner.Cost Management—All costs are planned for and estimated in this process. This process also includes project cost baselines and processes to control project budgets.Quality Management—Processes required to achieve project deliverables that meet quality objectives for an organization.Human Resource Management—Process required to organize the project team.Communications Management—The process of creating, collecting, and disseminating project information.Risk Management—Includes planning for how an organization will conduct risk management. This includes analyzing, prioritizing, and responding to risks.Procurement Management—The processes needed to either purchase or acquire the needed products or services from outside the project team.

The various skills and knowledge throughout these nine areas may require familiarity, while others demand mastery. It depends on your function in project management. Some of these skills are referred to as soft skills, while others are the hard or technical skills of project management.

Why Projects Fail

The first Chaos Report published by The Standish Group identified some sobering data on IT projects in the United States:3

Over $250 billion is spent annually in the United States on IT application development projectsThere are approximately 175,000 projects annually31.1 percent of projects are cancelled before completion52.7 percent of projects will cost over 189 percent of budget

What do these numbers mean and what can be done about them today? As reported by the Chaos Report, this means that there would be $81 billion in cancelled projects and a cost of an additional $59 billion over the original estimates. While the Standish Group has updated this report and has shown project performance improvements, organizations need to realize that similar results are occurring in their organization.

Unfortunately, too many projects fail. They fail for a variety of reasons, and understanding those reasons helps us to have success with our own projects. The methodology introduced in this book is a way to measure the success of a project throughout its lifecycle. When things are not working as well as they should, data are available to make necessary adjustments. In essence, this methodology focuses on results of the project, ensuring that the project delivers the appropriate value for the client. The methodology helps ensure that projects will not fail in the future. First, let's explore some of those reasons for failure.

The ROI Institute has been helping thousands of individuals show the value of their various projects. Many project failures can be found in the analysis of the results. A failure may mean that the project produced little or no results, delivering a negative ROI. Sometimes they produced less-than-desired results, disappointing the client. Perhaps the results were acceptable, but there was significant room for improvement. In any case, the project did not live up to its expectations. We have analyzed hundreds of projects and have listed the key reasons that projects fail.

Lack of Business Alignment

Unfortunately, too many projects are “fuzzy” when it comes to the alignment with specific business measures. This seems a little odd when we consider that most projects start with a business initiative. While that may be the case, the alignment is sometimes very nonspecific. Examples of projects might be the implementation of a business development conference, a new payroll system, or a launch of a “green” company. The specific business measures may not be clear in these situations, and without this clear connection to the business, their success in terms of driving business value may be limited or nonexistent. Therefore, one of the first steps is to ensure that the project is connected to the business, driving specific business measures.

Inappropriate Project Solution

Some projects are designed to implement a particular solution. It may involve the purchase of new software, the implementation of a new quality system, or processes taken from books, for example, The Open Book Company. These prepackaged solutions may not be the methods to address the target project. That is, the solution itself will not drive the business measures that are desired to change.

Project Participants Are Not Engaged

The project team must be fully engaged. The project team consists of the individuals who must make the project work. They must clearly understand the need and reason for the project. Lack of explanation or lack of persuasion can create an adverse reaction to the project, dooming it to failure. It is important to ensure that expectations are clearly outlined and engagement occurs early.

Lack of Focus on Business Results

Stakeholders sometimes lose sight of the ultimate objective. It is not clear as to why they are involved in the project as the project evolves. Business measures should be translated into impact objectives that are communicated to all stakeholders. Success should be routinely monitored against those objectives. This provides focus throughout the project, ensuring that business alignment is always achieved.

Failure to Prepare the Environment for the Project

Usually, projects are implemented in a work system. Implementation often involves change, and change must be accepted and supported in that work unit. An important part of a project is to understand the environment. Any impediments to the success of the project or barriers to project implementation must be addressed early and often. Ideally, part of project planning would be the identification of inhibiting factors to the success of the project, and tackling those issues before they become barriers to success.

Lack of Accountability within the Project

Too often, project participants and other stakeholders do not feel that success is their responsibility. If no one accepts accountability, then no one is accountable, and the project will fail as a consequence. Ideally, every person involved must understand his or her responsibility, clearly defined with expectations and very specific objectives. It should be apparent to the project manager and other stakeholders that the project team members are meeting their goals, standards, and expectations. Without that commitment, the project could easily drift and ultimately fail.

Problems with Data Collection

Some projects fail because the appropriate data could not be collected, was not available, or there was no specific responsibility to collect the data. Data collection will always be an issue. At the impact level, business data should be readily available in the system and records of an organization. Additional data collection is needed, some at the project level, and some at the department or work unit level where the project is being implemented. Data collection must be carefully planned. If a particular data set is not readily available, it should be developed from the specifications of those who must collect it and present it to the project management team.

Failure to Isolate the Effects of the Project

Often, there are factors apart from the project solution involved in driving the success of a project, whether it is new technology, a new ad campaign, or a quality initiative. The success of that technology, campaign, or initiative is a huge driver. There are also external factors that could influence success of the business measures linked to the project, apart from those internal to the project team itself. In addition, there is the effect of the project management solutions, such as project management training, project management tools, project management office, or other project management solutions. An important challenge is to be able to sort out what has caused the results, isolating the success to individual factors. This provides the sponsors who fund the project or provide project management solutions a clear understanding of the factors that caused the success. The good news is that this step can be achieved credibly in any project setting. The disappointing news is that this frequently is not tackled appropriately in most projects, and leaves the success of the project in doubt.

Lack of Involvement with Key Managers

Outside the project team, there are other managers who support the project and make it successful. Sometimes these are the managers of the participants involved in the project. At other times, they are the managers in the area where the project is being implemented. In either case, their support and reinforcement is essential for the project's success. These managers must be identified early, and steps must be taken to ensure that they live up to their roles and responsibilities, and provide the proper reinforcement and support needed to make the project successful. Otherwise, it could be a failure.

Project Leadership: Getting Results

What makes a project successful? When the areas described earlier are addressed throughout the lifecycle of the project, success is almost guaranteed. To achieve success is to avoid the pitfalls that cause failure, understanding those issues and making sure that they are working with the project instead of against it. In essence, the ROI Methodology drives these kinds of results, because it provides a process and collects data to ensure that failure is prevented.

Strong leadership is necessary for projects to work. Leaders must ensure that projects are designed to achieve results. Table 1.2 shows the twelve actions that must be taken to provide effective, results-based project management, which is critical to delivering results at the ultimate level, ROI. However, only one of the items involves data collection and evaluation (number 11). The remaining leadership areas represent steps and processes that must be addressed throughout a project's cycle. We developed these actions after observing, studying, conducting, and reviewing thousands of ROI studies. At the ROI Institute, we know what keeps projects working and what makes them successful. Following these twelve leadership roles can ensure project success.

Table 1.2 Project Leadership for Results

1.Allocate appropriate resources for projects.2.Assign responsibilities for projects.3.Link projects to specific business needs.4.Address performance issues involving the key stakeholders in the project identifying the behavior that must change.5.Understand what individuals must know how to make projects successful, addressing the specific learning needs.6.Develop objectives for the projects at multiple levels including reaction, learning, application, impact, and yes, ROI.7.Create expectations for success of the projects with all stakeholders involved, detailing what their role and responsibilities are for the project's success.8.Address the barriers to the successful project early in the project so that the barriers can be removed, minimized, or diminished.9.Establish the level of evaluation need for each project at the beginning so that participants will understand the focus.10.Develop partnerships with key administrators and managers who can make the project successful. For many, this is the manager or the person who is the principle participant in the project.11.Ensure that measures are taken and the evaluation is complete with collection and analysis of a variety of types of data.12.Communicate project results to the appropriate stakeholders as often as necessary to focus on process improvement.

Project Management Issues

Several issues need to be explored to understand the status and challenges of project management. These issues create opportunities for project managers to make their projects more successful and prevent future failures.

Identifying Detailed Requirements—Development of a Detailed Work Breakdown Structure

A famous adage goes “Garbage in equals garbage out.” Projects must have better-defined requirements in order to decrease the rate of project failure. The project manager must deal with and meet the issues at hand—the requirements already prepared to execute the project. These requirements are sometimes incomplete, if not altogether incoherent. A growing discipline that is used to complement the PM role is the Business Analyst (BA). This position is becoming necessary to develop requirements that meet the goals of the project and the company.

Equitable requirements for the project cannot be developed if the time is not devoted to good planning. “Scope creep,” defined as the exponential expansion of project features and functionality, can occur as the result of less-than-credible requirements. Without detailed requirements, there will be extra work, more resources used, and frustrations. This can also result in increased cost and time for the project. The upfront effort that must be spent in the planning stage is needed to identify and develop good requirements. Here are some steps to enhance the requirements-gathering process.

1. Assign the right people to gather the requirements.

2. Improve the continuity between project initiation and planning.

3. Draw a picture, if possible.

4. Continue through until a detailed Work Breakdown Structure (WBS) is developed.

5. Gain the approval of all stakeholders.

Requirements tell you what is being developed. If the project plan is the compass, requirements are the “true north.” Take the effort to master the skills to develop the requirements that will allow the development of a detailed WBS that can meet the schedule and allocated budget.

Project Planning

Projects are frequently poorly planned. Project managers overwhelmingly agree that their companies do not give due diligence to planning, the process that occurs after initiation. What often happens out of the purview of the project manager is a commitment to do something—develop a product, service, or process. While the high-level planning process may have been completed, this may have resulted in a false sense of confidence that a plan or approach is in place to execute the project. Just a “few minor details” are omitted that should only need a few hours to plan—and many somewhat naïve individuals (often executives) believe this to be true. The PMBOK identifies 20 processes that may be involved in the planning. They are listed in Table 1.3.

Table 1.3 PMBOK Processes

 Develop project management plan Collect requirements Define scope Create WBS Define activities Sequence activities Estimate activity resources Estimate activity durations Develop schedule Estimate costs Determine budgets Plan quality Develop human resource plan Plan communications Plan risk management Identify risks Perform qualitative risk analysis Perform quantitative risk analysis Plan risk responses Plan procurements

It seems simple—“Only a couple of hours, and all of this should be done and placed in a convenient Project Management Plan”—when perhaps several weeks would be a more appropriate timeframe. This may seem daunting and overly detailed, but remember that project managers get paid to manage the project management plan and know what is happening in each part of the plan. The plan is the compass and key to project success.

Exhaustive Risk Management

A risk is an uncertain event that can result in a positive or negative outcome. It is amazing how we know that things will go wrong on our projects, yet we often manage to the fact that we can handle these as they occur. The one member who you can count on being on your team is “Murphy,” whose law is: what can go wrong will go wrong.

As previously stated, poor planning will result in poor risk management. Think about how you have seen risk management performed in other organizations. This process is often not executed properly. Risk has a set of processes that must also be given its due respect.

Risk Management Planning—identifying how you should perform risk management at the organization and project level. Risk management is scalable to the project.Risk Identification—an exhaustive exploration of all the possible risks that you could have on a project. At this point, none are ruled out or ranked.Qualitative Risk Analysis—probability and impacts are determined to analyze the likelihood that the risk could occur.Quantitative Risk Analysis—a more mathematical approach to further analyzing risk probabilities and impacts.Risk Response Planning—this is when plans are developed to determine how the risks could be handled.Risk Monitoring and Control—the continued observance of risk management processes. Determine if contingency plans were effective and if the risks will reoccur.

These processes must be performed repetitively throughout the lifecycle of the project. Doing them once will result in limited risk identification. As the project plan is iteratively built, risk management should be iteratively performed. Risk management plans should be updated throughout the development of the project plan and the project. The processes are not difficult, but they are time consuming.

Development of the Project Team

Think about the evolution of becoming a project manager, from the first step of employment, to job knowledge, to job proficiency, then becoming expert enough to be assigned the title of Project Manager. This has occurred because the project manager became proficient at the work of the project. The previous role was rooted in the comfort zone; the new role removes us from that comfort zone. Project managers are notorious for having highly developed technical skills and a notable lack of interpersonal skills. This lack of interpersonal skills is sometimes the reason for many project failures. This can be changed with a career path for project managers where they can be developed instead of appointed.

With all that project managers need to learn, leadership skills may be the most difficult to understand. People are the most complex system in the world. When personalities, backgrounds, education, cultures, and gender are factored, this challenge should be expected. This all adds up to a very complicated formula that requires a comprehensive understanding of human motivation. In addition to understanding people as individuals, group dynamics must be used. Effort, skills, and patience are the best recommendations to create a cohesive, high-performing team from a group of individuals with diverse educational and interests backgrounds. The Tuckman model identifies team development as “forming, storming, norming, and performing.”4 This is a tidy model that identifies what can be expected as the team develops. It requires time to develop the skills to facilitate these issues and become a great leader.

An Organizational Culture for PM

A proper culture must be developed. Securing “C” level support for initiative project or project management is half of the battle. For example, the support of Jack Welch for Six Sigma was impressive. Through the Six Sigma approach, GE was able to identify billions of dollars of savings, and Welch has stated that “Six Sigma must be a part of the corporate DNA for GE.”5 This is a definitive example of taking a stand and providing support. The support of a C level officer will spur the momentum necessary to achieve success of the initiative.

After C level support, the other half of this battle is that the organization as a whole needs to embrace this philosophy or methodology. Implementing a string of bureaucratic processes and challenging tools will alienate the organization from embracing the concept. Start with communication and education about the implementation of the new processes and tools. Make it user-friendly and a part of the implementation plan. Show value and how it will make projects better.

Initiate a grassroots effort by training key personnel. Offer the appropriate amount of training that different segments of the workforce need. Begin with awareness training—maybe a four-hour overview of the concept to provide a 50,000 foot view. Then provide a basic level of training to establish a common language and understanding of processes, and make advanced training and tools training available to those who will take on larger roles. This training and implementation will prepare a workforce with a common goal and a common vision, creating a culture of project management.

Final Thoughts

This initial chapter reviews the fundamentals of project management and identifies project management issues. Understanding why projects fail and what makes a project successful are the first steps to understanding the ROI of projects and project management. Understanding what is expected from a project manager is also identified. The next chapter focuses on the project management lifecycle and project management solutions.

Chapter 2

The Project Management Lifecycle

This chapter identifies the project management solutions, starting with a detailed explanation of the project management lifecycle. This approach, developed by the Project Management Institute (PMI), is very thorough, complete, and comprehensive. Next, a variety of project management tools and solutions are offered to support the project manager. These become important enhancements to the value of a project. The chapter ends with a discussion of the PM maturity model.

The Project Management Steps

The PMI's definition of project management lifecycle consists of the five process groups identified in Table 1.1. These groups are not to be confused with project lifecycle phases; they are processes used to manage projects. Processes, tools, and level of application are determined by the PM and the project team, based on the significance of the project. The team's level of involvement varies based on the organization and the project.

Project Initiation

The first step in the project management process is initiation. This is where project selection takes place. Rarely is the project manager involved at this stage. Project selection is an upper-level business decision where high-level analysis determines a project's viability and its ties to the organization's overall strategy. The product description, justification, scope, deliverables, duration, resources, financials, and risks are identified at this level. The farther you move into the project planning process, the more detailed the effort becomes.

Project Planning

The planning phase begins after projects are initiated. In this phase, the project management plan is developed. The areas identified in initiation are built upon in the planning process. The project manager is paid to manage the project plan, an important component that serves as the roadmap for executing the project. Planning is an iterative process that is repeated as greater detail is provided throughout the life of the project. Planning should include input from all stakeholders to ensure that the project plan is comprehensive. The following are valuable tools used to plan projects:

Work Breakdown Structure

The work breakdown structure (WBS) is the cornerstone of an effective project management plan. It identifies all the tasks and activities that must be accomplished for a project to succeed. Essential to a good WBS are detailed requirements that identify the features and functionality of the product. The WBS can then be deconstructed, starting with the product and continuing to the subdeliverables and necessary tasks and activities.

Scheduling

Schedules provide the framework for accomplishing the tasks and activities of the WBS. While Gantt charts (bar charts that illustrate project schedules) are prevalent, there is tremendous value in the schedule or network diagram where the sequence of the tasks and activates are identified. Dependencies between the various tasks and activities must be understood to ensure the project tasks are accomplished at the appropriate time in order to complete the project.

Time Estimating

Time estimates need to be as realistic as possible, and should be approached as if submitting a bid on every project, external and internal. Time estimating is a best-guess using the available information, and establishing the right climate for estimates is essential to ensure accuracy. A culture should not be promoted where any estimate submitted will automatically be cut by 10 percent. The submitted estimates must be firm and monitored, and the project must be controlled to the baselines established by the estimates.

Sources of estimates are numerous. Start with those who are most familiar with the project: subject matter experts, technical experts, those who will actually perform the work, or their managers. The importance of having the most reliable source gather the estimates cannot be overemphasized.

A time estimation technique that is rarely used but deserves consideration is the Program Evaluation and Review Technique (PERT). This is a weighted mathematical estimating model that considers three duration variables; optimistic, most likely, and pessimistic.

Budgeting

Assigning a project budget is difficult and involves “best-guess” estimation methods. All costs need to be factored into the budget estimate, including direct and indirect costs. The budget will generate a cost-performance baseline called the performance measurement baseline. This baseline is often referred to as the S-curve because of the shape it assumes, and will vary depending on when the project budget is spent.

The project can be tracked to the performance measurement baseline as it progresses. The performance measurement baseline identifies what is “planned to be spent” at any point in the project; this is the planned value (PV). The “percentage of this planned work that you complete” is the earned value (EV). (Earned value is often used in government projects and is enjoying widespread adoption throughout the commercial sector as well.). The money that is “actually spent” on this work is the actual costs (AC). These three values will allow you to identify project progress and use these values to forecast project performance.