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Here’s why you need to setup a PM CoE

Here’s why you need to setup a PM CoE
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by Sanjeev Kapoor 24 Aug 2017

In a recent McKinsey & Co. survey among senior executives, 60% of the respondents identified the need for building stronger management discipline in their companies as one of their top three priorities. The main reason behind this prioritization lies in the fact that every organization’s efficiency depends on its ability to manage effectively different projects whilst achieving their business goals based on optimal allocation of resources. There are many examples of enterprises, which are proficient in creating visionary business agendas and creating strategic goals, yet they are unsuccessful at execution. Methodologies, tools and techniques for efficient project management come as a remedy to this problem.

Managing Projects: The Business Value

Project Management (PM) is a very pragmatic and tangible discipline, which can directly lead to business value. In particular, PM provides the means to control spending and improve business results, not at an abstract level, but rather based on measurable indicators. Effective project management reduces risks, cuts costs and improves the level of accomplishment of project goals. Moreover, when working with customers project management provides a means to track and meet customer expectations, which can make a business more customer-centric. This goes beyond meeting conventional KPI (Key Performance Indicators), as it increases customer satisfaction and sets a basis for a successful relationship.

The business value of project management is usually amplified when combined with other elements such as:

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  • Strategic management: It’s essential to put project management in the strategic context of a project, while managing stakeholders’ relationships in addition to budget and workplan. This is about avoiding micro-management and grasping the whole picture of the project.
  • Team building: Project management is more effective when talented teams are to be managed. Therefore, appropriate teams for carrying out the project must be built by involving skillful people and providing them with incentives that could optimize their performance. This is absolutely essential in the case of IT projects, where mastering technology can be the key to success.
  • Project management excellence: Project management effectiveness can vary. Successful businesses excel at core project-management practices, such as setting and tracking indicators, keeping delivery times short and employing international best practices and standards.

Project Management Best Practices

Employing proven PM best practices and integrating them across all levels of the organization is a key prerequisite for excellent project management. Some of the most common best practices include:

  • Return on Investment (ROI) Definition and Estimation: Most successful projects are associated with tangible business value, which are understood and known from the beginning of the project. In most cases, this business value must be quantifiable in terms of indicators such as ROI, Payback, IRR (Internal Rate of Return), Cost-Benefit ratios and more. These metrics are indicative of the project’s strategic value and should be estimated before the commencement of the project. In rare cases where projects without a proven ROI are implemented (e.g., infrastructure projects, sustainability projects, projects that associated with social values and quality of life), the rationale of their implementation should be fully justified.
  • Management of Indicators: You cannot really manage a project if you are not able to measure the output of what you manage. Most of the project management methodologies operate based on metrics and processes that are tied to business goals. As part of PM, these metrics must be collected and made available to key stakeholders. Metrics should be available and visible throughout the project implementation and project management process. Moreover, these metrics should be associated with the project’s timelines and risks, while at the same time being available to managers and C-level executives through ergonomic “at-a-glance” dashboards.
  • Stakeholders’ Engagement and Collaboration: A successful project is never a “few men” show. Rather it is a large scale collaborative endeavor, which extends not only to customers, but also to other stakeholders such as contractors, vendors, consultants and more. As a result, PM disciplines should engage all stakeholders and commit them to time, budget, quality, business value and other performance goals.
  • Common Project Vision: Beyond execution-level collaboration, stakeholders should also share and endorse a common strategic vision about the project. Unless there is a common understanding, collaboration cannot be effective and the project is likely to fail.
  • Adherence to standards: Organizations had better invest in and dispose with standard, proven project management methodologies such as PRINCE2 (Projects IN Controlled Environments) which emphasizes in dividing projects into manageable and controllable stages, and the methodologies of the US nonprofit Project Management Institute (PMI).

Project Management Center of Excellence

Acknowledging the importance of project management excellence, enterprises are increasingly centralizing the management and execution of their projects through Project Management Offices (PMOs) i.e. specialized departments or entire business units that focus on project management. PMOs apply the above-listed best practices and are typically proficient in applying standard project management methodologies, which enables them to confront the challenges of complex projects.

PMOs can also evolve to Project Management Center of Excellence (PM CoE), through adding capabilities for educating, coaching and engaging employees and other stakeholders on project management issues. The establishment of a PM CoE advances organizations through shifting their culture towards the more effective management of projects in-line with their business strategy. The idea of a PM CoE is extremely promising, yet challenging as it changes the entire organization. Therefore, we herewith provide a set of guidelines that could help organizations establish and successfully manage a PM CoE:

  • Establish a clear PM CoE Vision, fully aligned to the corporate strategy: Enterprises should position the PM CoE in their strategic vision to transform the organization. This requires an alignment of the PM CoE with the corporate strategy. Accordingly, organizations should set measurable goals for the operation of this CoE, such as, increases in the efficiency of the managed projects, higher throughput in the number of projects managed, cost-reduction indicators and more.
  • Careful selection of resources: It is important to staff the PM CoE with the proper people, notably people that are competent in delivering the services of the CoE, such as coaching, training, consulting and project management activities. The roles and responsibilities of key members of the PM CoE team should become known to all stakeholders that interact with it, both within and outside the organization.
  • Cultural Shift: A large number of enterprises lack the culture needed to manage projects consistently. Therefore, the establishment and operation of a PM CoE requires the implementation of a cultural shift in the management and decision-making structures of the organization.
  • Setting Quality Criteria: Ensuring the quality of the PM CoE’s operation is a key to maximizing its business value. To this end, it’s important to set quality criteria for processes, documents, deliverables and other outputs of the PM CoE. For setting quality criteria, organizations can consult the quality management processes of mainstream standards and methodologies such as the “ISO 10006:2003 – Guidelines for Quality Management in Projects” standard used in the scope of PMI methodology.

Overall, a PM CoE can have a profound impact on corporate processes and results. However, in order to do so, it is likely to disrupt many aspects of an organization including reporting processes, performance management systems, communication procedures, human resources, corporate politics and more. Organizations must therefore work hard in order to establish and operate a PM CoE, in a way that pays-off. The above-listed guidelines provide a sound basis that can help you get started.

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