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Managing PPM as a Change Project

The only constant in business today is continuous change. A META Group study showed that half of Global 2000 companies adopt some form of project portfolio management but less than 10% of these increased the portfolio value by 30% or more. Each of the other attempts became yet another failed project…

Our own experience has shown that all PPM projects have to be managed as change management initiatives. The leadership involvement and cultural change expected from stakeholders is essential for the successful completion of the project portfolio process.

Planning for change is important but only if it leads to valued organisation-enhancing outcomes. The project portfolio management team (PPMT)  must understand the desired outcomes from introducing a PPM process and must prepare a detailed communication plan in order to gain buy- in from stakeholders before the process is introduced.  During the execution stages of the plan the PPMT must ensure that managing change among stakeholders and users is paramount in the implementation strategy.

Fundamental to the success of a PPM project is the role of the portfolio sponsor who must act as a change leader.  This individual needs to understand the type of change and readiness of the organisation in order to understand how best to lead the process and to decide how much time to spend on deliverables and objectives of the process and on building a shared vision of the future. 

Building a Risk Management Framework

The ultimate success of your project will depend on resolving the issues and risks associated with implementing a PPM process and solution in your organisation as well as quantifying benefits and savings.  You need to be sure that the chosen solution is fit for purpose and will solve business issues - not add to your problems!  You need to ensure that the benefits and savings will work in various aspect before you procure and implement the system.

Typical areas to address include:
Technology
· Does the proposed system run fast enough?
· Will it require additional infrastructure?
· How easy will it be to transfer data?
· Does the software interface with existing systems?

Culture
· Will people find the new system easy to use?
· Does the system use familiar terminology?
· How does the system fit with existing or proposed procedures?
· Where does it fit within your project management maturity environment?

Answering these questions using traditional evaluation techniques can be difficult and proactive management of risk is vital.  Since PPM deployment is a change management project we recommend implementing a project based risk management framework.

Within the framework we establish possible events or circumstances that may have a negative effect on the project and put in place a contingency plan to reduce or eliminate the risk.

Some factors that need to be taken into consideration

· Description – the nature of the risk
· Precautions – consider what can be done to mitigate the risk
· Consequences – the possible effects if the risk occurred
· Identification – choosing unique identifiers for referring to the same risk in company or project documents
· Risk status – classification as new, ongoing or closed
· Risk escalation  - estimating the probability of the risk becoming a liability
· Schedule impact – estimating the consequences in terms of time/budget for the project

In order to manage project based risk it is essential that a risk management plan is drawn up for the project and that specific responsibilities are allocated for activities and tasks. Moreover the project risk database must be kept up to date and reviewed regularly to ensure that it takes account of any changes.

Kick Start the PPM Process Part 8 of 9

Establishing Proof of Benefit

What is Proof of Benefit?

A proof of benefit (PoB) is in effect a configurable test environment that enables the business to understand from a real-world perspective how PPM will be delivered to the business. The PoB brings together the software application and processes into one single environment. The software side of the PoB can be hosted as part of a SaaS offering which will obviate the need for an internal server installation and reduce costs and timescales.

The PoB exercise will involve:

Developing and agreeing PoB objectives and scope
Agreeing the issues concerning the existing status of the current processes such as:
time recording
milestone management
project management
resource management
management information production
scenario and project modelling
Agreeing the framework for delivery of the PoB around areas where the business can develop a PPM model and deliver it into the business
Assessing and testing the PPM model and delivering the results back to the business

A PoB Step Process

A PoB will typically involve the following key steps:
Step 1 Objectives and Goals
Step 2 Principles and Scope
Step 3 ‘Current State’ Assessment
Step 4 ‘Future State’ Assessment
Step 5 Gap Analysis Assessment
Step 6 Presenting the Results to the Business

Measuring ROI and ROO

ROI/ROO Analysis

The rationale behind any project carried out by a commercial organisation should be either to deliver cost savings, or an improvement in revenues, or both. However, it is only effectively managed projects that retain a link to strategic initiatives that can deliver on the above. Cost savings can either be delivered by a reduction in headcount, or savings gained through efficiency improvements can be used to enhance customer service, vendor management, or less tangible activities such as training, mentoring and the like.

This type of quantitative, financially based requirement for return is a very compelling driver for change, yet is only part of the overall picture when looking at both potential tangible and intangible benefits. Therefore return on opportunity (ROO) analysis helps organisations define and quantify potential top line benefits from deploying new business processes, including in respect of revenue, market capitalisation, an increased customer base and decreased attrition. ROO analysis is most effective when it crosses departmental boundaries, integrates disparate capabilities and provides capabilities that an organisation did not have or had not addressed before.

Using an ROI/ROO calculator model is an effective way of measuring the organisation’s key project and programme cost and time data to identify potential cost savings over five years.

Building an ROI/ROO model

Once the stakeholders have identified the common activity conducted within their control and understood the percentage split and breakdown of activity, time efficiency calculations can be made to identify the potential ROI and subsequently the ROO that are achievable. This is simply based on time savings against the ‘now status’ way of working and processes. These can be compared with representative savings once PPM has been implemented and adopted through an effective change programme.

Research has demonstrated that work practices without a PPM solution in place can incur a workplace productivity wastage of as much as £650 per person per month, which in turn could represent an annual wastage, within a department of 100 staff, of approximately £780,000. It is important to note that enterprises rarely cull people, but rather move savings into value creation activities such as a new or different corporate initative.

These are the steps that need to be followed:

1. Step 1: Work days and staff costs
2. Step 2: Project/programme related activity costs
3. Step 3: Calculating potential ROI
4. Calculating potential ROO

The Health Check

The health check is conducted in cojunction with the selected vendor, is the first step in assessing the needs and requirements of the business, and is designed to be a low risk engagement model. The health check allows the business to analyse key processes underpinning the delivery of projects within the organisation in order to make certain that the solution and process will deliver value.

A typical health check exercise includes:

• Review of a number of agreed key processes, typically including:
  - portfolio management
  - management reporting
  - project resourcing
  - milestone/delivery reporting
  - scenario modelling
  - project/programme management
  - time recording
• review of document processes, including inputs/oututs and data flows
• identification of timings for processes
• understanding and documentation of business issues and constraints