We don’t like doing Project Risk Management

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We know we SHOULD do Risk Management

But many PMs don’t do it. (Based on paper from PMJ Sep 2009; and ad-hoc surveys during PMI 2010 Congress)

It isn’t because the complexity of the mechanics/process, which seems easy enough, well documented as a Knowledge Area in the PMBOK guide: You have a risk register or log, you identify risks, analyse them e.g. for probability and impact, look into responses, remediation or contingency measures, and keep revisiting and updating the register as project moves along…

As usual, the challenge is applying theory to practice.

You think you have done it right, and then some new Risk still hits you because of unknown unknowns (remember Rumsfeld talking of WMD in Irak?), Murphy’s law, “shit happens”, etc.  Sometimes your buffer time and budget will be enough to cover it, other times it won’t…

Examples: The winner of the PMI 2010 Project of the Year, the decade long building of the National Ignition Facility in California, explained during a Dublin PMI Congress presentation that their two main issues were risks they had not considered and were not in their register - The construction site got flooded because of El Niño storms. And sure they were not expecting to find mammoth bones when excavating… Both events consumed money and time, though the project recovered.

Other examples are the typical external (to the project) factors such as weather/Nature (Ash cloud closing Northern European air space; Hurricanes, earthquakes), political changes, economic crisis (Iceland, Greece, Ireland, Portugal), etc…

And this is clear when you realise that the Input to Risk Management Planning, according to PMBOK guide, are “internal” docs, such as Scope Plan, Cost Plan, Schedule Plan, and so on. We can plan for what we know, but isn’t Risk Management too ambitious when trying to control and have a response for the unknown?

Therefore, how much work do we need to put into identifying this very long list of things that may happen? The cost and time needed is a first negative factor. (Sponsors/customers want cheaper and faster)

Then you have the human element of having to talk about Risks…it is all negative and worse-case, it highlights the project or company gaps, our badly prepared areas, our legacy problems…and the PM is the messanger for all those bad news.

No wonder many PMs prefer not doing Risk or doing a “light version” / once off at start. First, as seen, many external factors will be missed -we can’t plan for everything-. Secondly, PMs rather avoid the confrontation with stakeholders and other managers to discuss “potential bad news”.

We need to re-think how we do Risk Management in practice. We need to support PMs to plan appropriately (How Much? 80/20 rule? Set a time and cost limit for Risk Management? Who decides?). Perhaps even a Risk Function should be the owner of this activity for all projects (Portfolio Risk Management – like a mini PMO focused on Risk), where this function has more size and power to get the appropriate cost and time to buffer the project(s).

PMO Outsourcing

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Options to improve project performance: 1) Develop internal PM competencies, or 2) Contract it to the experts. Contractors/consultants/Outsourcing. This is Knowledge Process Outsourcing (KPO) http://en.wikipedia.org/wiki/Kpo

Outsourcing Pros: No PMO setup time; Best in class tools/ dashboard/ templates; Quality PMs

Outsourcing Cons: Data confidentiality risks (pipeline projects and development plans); Tensions due to having a two tier project teams (external PMs with internal project members)

The key question is: what is it being oursourced/contracted? Is it tactical, methodology/project planning&execution processes,  and PM people (model already popular, loads of PM vendors); or Strategic PMO for Portfolio decision making? I haven’t seen data/examples of this latter case, as the risk of  lossing control of the Portfolio/Strategy seems a serious obstacle. Who is running the company? Portfolio management should always be a core competency of internal Management.

Small PMO steps for success

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Most PMOs either fail to be fully implemented or get reconfigured after 1 or 2 years (Hobbs PMO whitepaper). In a changing/dynamic environment, companies want to see results fast, and would not want to invest long terms in a new PMO unless value is clear.

If you are starting or reconfiguring a PMO, think small and focus on some real value deliverable. Ask PMs and senior managers what is their top issue. Is it a set of standard templates? Assistance with planning and scheduling? Need to have visibility of projects progress and deviations? Be clear and specific, agree deliverables with the PMs/management, and commit to deliver something specific (templates, training session, dashbaord tool, etc) in a short timeframe (3 to 6 months max)

Once people see the PMO actually addressing their needs and meeting their commitments, the PMO will be perceived as something of value and worth of further investment. Small incremental steps reduce the risk of failure when implementing PMOs.

PM Basics | Strategy Support

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In my previous post I explained a basic PMO model based on a central intranet site with info on the project methodology, templates for phase deliverables (Requirements doc, etc), and some templates for Risk&Issues, Status Report, Budget and Schedule.

In this post I look into a simple model of PMO to support senior management at the strategic level. Strategy support can be understood as the layer over individual projects, comprising the projects but importantly also the decision-making on what projects to start, continue or stop; and priorities. Strategic Project Management is Governance, Program Management, Portfolio Management.

The main PMO tool at this level is the Projects/Portfolio Dashboard. This is a high level view of projects focusing on the details and criteria that is relevant to answer questions such as do I get ROI from this project? or is it aligned to my strategic objectives?

The PMO can faciliate senior management in the translation of business strategic objectives into programs. Programs are a set of projects related in producing a particular outcome. If business strategy is to grow market share then a program may help sales team with faster customer data, quotes, etc. If business strategy is to lower costs, a program may try to simplify supplier chain, etc.

PMO attention is now on monitoring and controlling projects progress and deviations. Dashboards give this high level view grouping of projects in programs or portfolios. PMOs can also assist in project selection and prioritization using a set criteria depending on the strategic objectives (ROI, risk minimization, market share, etc) and the company capabilities (what we know and can do).  Normally we have a mix of projects that represent low risk and we know we can dof (low hanging fruit), plus projects that maximise return or chosen metric.

PM Basics | Projects Support

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I wanted to write two posts to explain two types of PMOs: 1) The start-up basic project support PMO, for when we’re starting to do project management and we don’t know how; And 2) the PMO focused at strategic level (portfolio, etc) -.

I think this is a nice simplification of what PMOs can do.

So, let’s see, we are starting to work on projects, or so we think as we have to do some work for customers, we have deadlines and money to spend, but haven’t done project management before… Typical things that we may need are:

  • Set up an intranet site or sharepoint site as the repository of PM docs and info
  • One page to explain the methodology: e.g. Waterfall model such as Requirements, Design, Build, Test, Release; and Gates Review with Signoff process.
  • Standard Templates to document phases’ deliverables (Requirements doc template, Design doc template, etc)
  • Standard Templates for Status Reports, Risks and Issues Log, Budget, Project schedule (standard set of milestones)

With all the above we have achieved that all projects will follow a similar plan and development path. Projects will be planned and thought before we start programming or building. The main PM artifacts (budget, schedule, risks&issues, status report) are a minimum that helps the project to be internally controlled, but also allows to compare vs other projects.

A Lite PMO would be responsible to create the site, the docs and templates, and support PMs in following the set methodology. The PMO could be just one experienced PM, not even necesarily at full time.

However, this is a very simple start. Good project management requires more than just templates. The PMO could also support in any other areas where gaps may exist: e.g. Defining project scope/requirements; Getting good estimates;  Ensuring good comms among team members and externally with stakeholders (meeting agendas and minutes), etc

Design PMO to meet real needs

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I suggest this 3 step approach when setting up a new PMO or developing an existing one:

  1. What is the starting point? Find out about the context, i.e. Organizational structure and culture; and PM maturity (use any maturity model)
  2. What are the expectations? Ask people (PMs, functional managers, execs, etc) what help they need, what are the challenges they face when running projects, what would they like to see changing/improving. Do interviews or surveys.
  3. Focus on real needs and balance. Create a plan to design a PMO that focuses on what is has been asked, not what books or theory say. Is it PM training? A resource management tool? Help facilitating risk management? Monitoring project progress? Ensure PMO responsibilities fit with the available tools, skillsets, processes and structure -or adjust for balance. Will the PMO role fit well in the org culture (the way we do things here) and structure (functional, matrix,centralized, decentralized)?

The major reason that PMOs are shortlived or fail is because they don’t fit in the organization’s context, are too ambitious, impose changes that not all people agree with and lack management support. It is key to start focusing on few but true needs -what people see of value to them, e.g some templates, tools, etc-, with realistic objectives and metrics, and show the delivered benefits asap, so  to position the PMO as delivering Value to the company.

What is PMO ?

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Different PMO books and web sites give different PMO definitions and responsibilities. Because there isn’t a universal PMO model.

People may talk about PMOs based on what they have seen at their company, or some best case example. But each organization is different, and one cannot always re-use the same model in a different environment and context.

But the basics are that organizations want to improve project performance (Truth is that projects generally underperform – late deliverables, cost overrun, don’t meet expectations). If projects by definition are bounded by their particular or unique objectives, scope, resources and timeframe, can they be run as isolated isles of effort, or should projects be coordinated amongst themselves within the same company? How does each project relate to the host organization? How do projects share the common and limited resources in the organization? How do projects and the organization manage conflicts or differences between the projects?

The need for a project management order and understanding, a coordination or standardization of the project management approach within the organization, is what defines the Project Management Office (PMO).

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