STRATEGIC PLANNING FOR PROJECT MANAGEMENT USING A PROJECT MANAGEMENT MATURITY MODEL 9755.Frontmatter 10/31/00 9:40 AM Page i This Page Intentionally Left Blank STRATEGIC PLANNING FOR PROJECT MANAGEMENT USING A PROJECT MANAGEMENT MATURITY MODEL HAROLD KERZNER, PhD Senior Executive Director for Project Management International Institute for Learning New York, New York John Wiley & Sons, Inc. New York ● Chichester ● Weinheim ● Brisbane ● Singapore ● Toronto 9755.Frontmatter 12/5/00 12:28 PM Page iii This book is printed on acid-free paper. Copyright © 2001 by John Wiley & Sons. All rights reserved. Published simultaneously in Canada. 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If professional advice or other expert assistance is required, the services of a competent professional person should be sought. Library of Congress Cataloging-in-Publication Data Kerzner, Harold. Strategic planning for project management using a project management maturity model / Harold Kerzner. p. cm. Includes index. ISBN 0-471-40039-4 (alk. paper) 1. Industrial project management. 2. Strategic planning. I. Title. HD69.P75K494 2001 00-043814 658-4Ј 04—dc21 Printed in the United States of America. 10987654321 ∞ 9755.Frontmatter 10/31/00 9:40 AM Page iv Contents Foreword ix Preface xi Introduction xiii 1 The Need for Strategic Planning for Project Management 1 Introduction 1 Misconceptions 1 Wall Street Benefits 3 Stakeholders 4 Gap Analysis 5 Concluding Remarks 9 2 Impact of Economic Conditions of Project Management 11 Introduction 11 Historical Basis 11 3 Principles of Strategic Planning 15 General Strategic Planning 15 What Is Strategic Planning for Project Management? 16 Executive Involvement 25 The General Environment 26 Critical Success Factors for Strategic Planning 28 Qualitative Factors 29 Organizational Factors 30 Quantitative Factors 32 v 9755.Frontmatter 10/31/00 9:40 AM Page v Identifying Strategic Resources 34 Why Does Strategic Planning for Project Management Sometimes Fail? 38 4 An Introduction to the Project Management Maturity Model (PMMM) 41 Introduciton 41 The Foundation for Excellence 42 Overlap of Levels 43 Risks 45 5 Level 1: Common Language 47 Introduction 47 Roadblocks 48 Advancement Criteria 49 Risk 50 Assessment Instrument for Level 1 50 Questions 51 6 Level 2: Common Processes 67 Introduction 67 Life Cycles for Level 2 68 Roadblocks 71 Advancement Criteria 72 Risk 72 Overlapping Levels 73 Assessment Instrument for Level 2 73 Questions 74 7 Level 3: Singular Methodology 77 Introduction 77 Integrated Processes 78 Culture 81 Management Support 81 Informal Project Management 82 Training and Education 82 Behavioral Excellence 84 Roadblocks 85 Advancement Criteria 85 Risk 86 Overlapping Levels 87 Assessment Instrument for Level 3 87 Questions 87 vi CONTENTS 9755.Frontmatter 10/31/00 9:40 AM Page vi 8 Level 4: Benchmarking 97 Introduction 97 Characteristics 98 The Project Office/Center of Excellence 99 Benchmarking Opportunities 101 Roadblocks 103 Advancement Criteria 103 Assessment Instrument for Level 4 104 Questions 104 9 Level 5: Continuous Improvement 109 Characteristics 109 Continuous Improvement Areas 110 The Never-Ending Cycle 112 Examples of Continuous Improvement 113 Developing Effective Procedural Documentation 114 Project Management Methodologies 120 Continuous Improvement 120 Capacity Planning 122 Competency Models 123 Managing Multiple Projects 125 End-of-Phase Review Meetings 127 Strategic Selection of Projects 128 Portfolio Selection of Projects 131 Horizontal Accounting 134 Organizational Restructuring 136 Career Planning 138 Assessment Instrument for Level 5 138 Questions 139 10 Sustainable Competitive Advantage 143 Introduction 143 Strategic Thrusts 144 The Need for Continuous Improvement 147 Project Management Competitiveness 148 11 Special Problems with Strategic Planning for Project Management 151 Introduction 151 The Many Faces of Success 152 The Many Faces of Failure 153 Training and Education 157 Change Management 158 Partnerships 162 Contents vii 9755.Frontmatter 10/31/00 9:40 AM Page vii The Impact of Risk Controls Measures 163 Dependencies between Risks 165 Selecting the Appropriate Response Mechanism 168 Conclusions 170 11 Case Studies 171 Case 1: Packer Telecom 171 Case 2: Luxor Technologies 173 Case 3: Altex Corporation 177 Case 4: Acme Corporation 180 Case 5: Quantum Telecom 182 Case 6: Lakes Automotive 184 Case 7: Ferris HealthCare, Inc. 185 Case 8: Clark Faucet Company 187 Case 9: Hyten Corporation 190 Case 10: Como Tool and Die (A) 200 Case 11: Como Tool and Die (B) 204 Case 12: Macon Inc. 207 Case 13: The Trophy Project 209 Case 14: The Blue Spider Project 212 Case 15: Corwin Corporation 225 Case 16: MIS Project Management at First National Bank 235 Index 247 viii CONTENTS 9755.Frontmatter 10/31/00 9:40 AM Page viii Foreword To win a decathlon requires the extreme best from the participant. It is a very gru- eling and demanding set of events. The decathlete is usually very good and in fact the best in one or two events and in good standing in the other eight or nine events. The objective is to be the overall best in all ten events. Decathletes like most athletes must complete in head to head events to know if they are able to win the overall decathlon. They must study their competitors in the greatest detail and know their strengths and weakness. They must learn from the other decathletes what allows them to put out that extra 5% that means the difference between win- ning and just participating. They must also compete in an environment where the performance standard required to win is always becoming higher. Being a project manager is similar to the decathlete and in the business of proj- ects, the field is very competitive. Similar to a decathlon there are events (nine knowledge areas) in the Project Management Body of Knowledge. The decathletes in project management are the companies that are controlling costs, schedule and quality on a project level. The project-driven companies must find ways to learn “best practices” in a competitive world and apply these lessons to their processes, systems, and tools. This method of continuous improvement through measuring and comparing is referred to as benchmarking as described by Dr. Kerzner. Nortel aspires to win the decathlon prize, but realizes it is not possible with- out both internal and external benchmarking measurements and continuous im- provements. The internal benchmarking is similar to intramural decathlons where learning comes from watching the friendly decathletes. A significant opportunity for learning and continuous improvement occurs when the “best in class” have entered the decathlon. Nortel has particapted in the Kerzner five-step Project Management Maturity Model survey for the last year and a half. The five steps measure the desired di- ix 9755.Frontmatter 10/31/00 9:40 AM Page ix [...]... project management The second part, Chapters 4 to 10, details the project management maturity model (PMMM), which will provide organizations with general guidance on how to perform strategic planning for project management The various levels, or stages of development, for achieving project management maturity, and the accompanying assessment instruments, can be used to validate how far along the maturity. .. Information Organizational Strengths and Weaknesses Firm’s Social Responsibility Evaluation of Information Managerial Values of Management Strategy Evaluation Strategy Selection Strategy Implementation FIGURE 2–1 Basic strategic planning Corporate Strategic Plan Strategic Market Plan SBU1 SBU2 Shared Resource Plans – R&D Corporate Development Plan SBU3 Project Plans Annual Marketing Plans Manufacturing... Historically, a great deal of emphasis had been placed on strategic formulation with little emphasis on strategic implementation Now companies were recognizing that the principles of project management could be used for the implementation of strategic plans, as well as operational plans Now, project management had the attention of senior management Another factor promoting project management was the acceptances... More and more organizations have embraced project management as a key strategy for remaining competitive in today’s highly competitive business environment Project management centers of excellence (e.g., project management offices), training programs, and organization change programs to improve project management practices are increasingly common parts of strategic plans to improve organizational effectiveness... company’s project management strategies This book is the result of studying project management efforts in hundreds of organizations The lessons learned have resulted in a roadmap A model that identifies the universal phases an organization goes through as project management matures and evolves The PM Maturity Model allows us to identify what steps must be taken, what deeds must be accomplished, and... what sequence to realize meaningful and measurable results Project management is no longer a program within the company It becomes a strategic part of the annual business plan xiii 9755.Frontmatter 10/31/00 9:40 AM Page xiv xiv INTRODUCTION Strategic Project Management Using a Project Management Maturity Model provides the reader with a step-by-step strategy for planning, designing, implementing, and... scheduling, and controlling Create project management career path Provide project managers with reward/penalty power Use nondedicated, crossfunctional teams Use estimating databases project management? In answering this question, it would be futile to expect managers to implement immediately all of the changes needed to set up modern project management in their companies What senior managers needed was a plan... STRATEGIC PLANNING the design of any type of project management methodology must be based heavily upon what the organization can do Internal strengths and weaknesses can be defined for each major functional area The design of a project management methodology can exploit the strengths in each functional area and minimize its weaknesses Not all functional areas will possess the same strengths and weaknesses... effectiveness Some organizations are just getting started with project management Others have reached a level of maturity whereby project management has become a way of life In the leading organizations, project management is aligned with and integrated into the company’s business goals and objectives No longer the sole responsibility of the project manager, top management is taking more responsibility... project Organizational charts showed project teams working horizontally across the corporation rather than vertically To address the far-reaching changes in the economic environment, senior managers began to ask a fundamental question: How do we plan for excellence in 9755.ch02 10/31/00 9:42 AM Page 13 13 Historical Basis External Analysis Internal Analysis Environmental Opportunities and Threats Gathering . project management. Others have reached a level of maturity whereby project management has become a way of life. In the leading organizations, project management is aligned with and in- tegrated. STRATEGIC PLANNING FOR PROJECT MANAGEMENT USING A PROJECT MANAGEMENT MATURITY MODEL 9755.Frontmatter 10/31/00 9:40 AM Page i This Page Intentionally Left Blank STRATEGIC PLANNING FOR PROJECT. in Project Management. Dr. Kerzner’s Project Management Maturity Model is on the internal web in Nortel and the results are automatically calculated to provide the participant with an immediate