Business Performance Function Model

The introduction of project management as a component of business performance involves the integration of collaborative project management and business processes, the implementation of mechanisms and measures that facilitate business decisions, and the development of PMO capability for the attainment of strategic business objectives.

The prominent activities of the PMO's "business performance" function model are depicted in Figure 20.1. Each activity is described in the following subsections.

Figure 20.1: "Business Performance" Function Model

Develop Integrated Business Solutions

The PMO can contribute to business performance improvement in a variety of ways, but it can achieve more in a formal business role than it can through informal means. However, informal contributions to business performance may be the appropriate initial means to draw attention to the robust application of project management principles and practices within the business environment. The PMO needs to not only devise the integrated solution, but also to devise the approach that will enable that integrated solution to be accepted and implemented within the relevant organization and within the enterprise. This activity prescribes such an approach to demonstrate the business value of project management, boost executive awareness of PMO value, and present the benefits of aligning project management and business performance solutions.

The PMO can consider the three activities in the following subsections to promote and manage its prescriptions for business integration within the project management environment.

Demonstrate Project Management Business Value

It has been reiterated several times in this handbook that business value is recognized in three primary ways: achievement of revenue generation, achievement of operational efficiency, and achievement of customer satisfaction. To the extent that projects contribute to any of these factors, project management can be used and integrated with business practices to provide additional value to the business effort. Each of these three factors is considered in the following subsections.

Project Management and Revenue Generation

The achievement of revenue generation is a fundamental purpose for business existence. The concepts of business provide for creating the organization, infrastructure, and methods for selling and delivering products and services in the marketplace as a means to produce revenue.

There is distinct alignment between revenue generation and revenue management, i.e., achieving a profit after accounting for expenses associated with the cost of doing business. There is also a relationship between revenue generation and the capability to make critical and timely business decisions regarding the presentation of products and services in the marketplace — pricing, marketing and sales strategies, business partnerships and industry affiliations, etc.

The following list represents a few concepts and considerations for PMO review relative to identifying and demonstrating project management value in generating business revenue:

• Project planning: This project management activity represents the specification of what will be done, when it will be done, and the associated costs (including resource utilization costs). It will assist in determining both cash flow (project funding) and any other financial investments required for each project. As project planning becomes more accurate and reliable, per staff experience and the use of estimating tools and techniques, projects can be evaluated to forecast the revenue to be realized by each effort. In association with project planning, project costs are identified relative to the preferred technical or business solution to be delivered. This allows sales and business managers to construct pricing that will be a part of the offer submitted to customers — the initial business indicator for anticipated revenue.

• Project scope management: This project management activity ensures that resource efforts and project funding are maintained to achieve primary business objectives, as represented by the scope of the project. It allows project work to be monitored and ensures that only authorized scope changes are made following due consideration of impact and authorized adjustments for any additional costs or resources. With such oversight, project cost and resource utilization do not erode profit associated with anticipated revenue.

• Project risk management: This project management capability examines possible risk events that could impair project performance and impose a financial burden on the project if not contained or otherwise managed. The project can still be pursued under such risk conditions, but this activity normally provides sufficient insight to allow managers to make informed decisions. This includes the examination of business risks as well as technical risks.

• Project tracking and controlling: This project management effort provides for the timely collection of project status and progress information so that project and business decisions can be made. In particular, financial considerations are normally included in project reports to alert management to marginal or unacceptable conditions, thus enabling them to implement management actions that rectify the financial position of projects that could otherwise affect associated revenue.

• Project information management: This project management capacity allows project stakeholders at all levels, particularly executives and senior managers, to access the project knowledge management system to ascertain individual and collective status of project performance relative to business performance indicators, including contributions to revenue.

• Project portfolio management: This "project management methodology" function (see Chapter 1) introduces executive and senior management involvement in project oversight. If "casual" review of business indicators using the project knowledge management system is not regularly pursued, this aspect of project management is routinely conducted. It enables revenue options to be evaluated and business decisions to be made regarding revenue goals associated with project selection, project continuation, and project termination.

• Project contract administration: This project management process provides for oversight of contracts associated with projects, but it particularly addresses monitoring and management of contractual obligations. This has direct bearing on vendor/contractor invoice management (outgoing project expenses) and customer invoice management (incoming project revenue).

• Project close out activities: This project management feature facilitates project closure and associated financial account closure. It includes activities that verify payments for project expenses and receipt of payment for products or services rendered. Across a collection or portfolio of projects, project close out activities allows revenue to be recognized and management focus to be redirected to active revenue pursuits.

The business perspective of project management warrants that the PMO address these issues not only to show project management contributions to revenue generation, but also as information needed by project managers and project team members to enable them to manage business factors within the project management environment.

Project Management and Operational Efficiency

Business advantage is achieved when all business units within the relevant organization apply efficient processes and implement effective executive decisions regarding business strategy and direction. Project management practices generally impose process rigor and repeatability, both of which are attributes of project performance that inherently define efficiency. In addition, when properly constructed and deployed as a comprehensive methodology, those processes can be used across different business units. Thus, comprehensive project management processes can also be instrumental in addressing efficiency needs within the business environment.

Beyond individual decision-making skill, executive decisions are most likely to be effective when accurate and timely information is made available. Effectiveness is enhanced when decisions are conveyed to implementers in an accurate and timely manner. Formal and informal collaboration is needed so that managers at all levels have the opportunity to understand the prescribed strategy and the means to implement it in their business areas. Project management practices and PMO functionality can prescribe the necessary collaboration and monitor its effectiveness.

The following list represents a few concepts and considerations for PMO review relative to identifying and demonstrating project management value that contributes to operational efficiency within the enterprise:

• Communication and collaboration: This feature of project management ensures that project stakeholders are appropriately informed and that they apply skill and information toward achieving the same project objectives. This capability can be used by the PMO to communicate and collaborate across all projects in the relevant organization, and when elevated to the enterprise level, it becomes a business enabler. The communication and collaboration processes of effective project management offer efficiency for business interactions in the enterprise.

• Project knowledge management system: This feature represents the mechanism by which communication and collaboration can be expanded across the enterprise. To the extent that projects are the business of the relevant organization, this is the information and knowledge center for that business. The project knowledge management system of course contains the project management information system, but it also contains the data and information needed to manage business operations on a real-time basis. It can provide access to the standard processes for business, technical, and project management application. It can provide a project management library that inherently includes business as well as technical topics. It can provide electronic forums to facilitate business-group collaboration. It can provide an "executive dashboard" feature that summarizes project and business information for real-time use by senior managers and other business stakeholders. This feature offers efficiency in having one central business knowledge center that can be accessed by users who contribute real-time updates and use stored information to make real-time decisions to support the achievement of business interests and objectives. It is a feature that facilitates fast and accurate decision making.

• Common business approach: This feature represents the mechanism for integrating business and project management processes throughout the enterprise. Through the PMO's efforts, common practices and standards for business performance can be established for application in every business unit, thereby avoiding the replication of critical process development several times over and hoping that all business units are properly aligned. Efficiency is achieved when each business uses a common approach to business. Greater efficiency is achieved when all business units apply a common understanding of a common process.

• Training programs: This feature is used by the PMO to identify needs and to specify the training requirements within the project management environment. To the extent that modern project management concepts are applied within the relevant organization, it will be seen that many of the learning programs characterized as "project management" training actually include significant topics of business interest, particularly in organizations where a comprehensive project management curriculum is available. The PMO "training and education" function (see Chapter 10) also prescribes related technical training. As business and project management processes become integrated, the PMO can similarly address business training. Efficiency is achieved by having the training designated for the project managers and other project stakeholders become a component of the overall organizational training program. In an organization that has advanced project management maturity, nearly everyone in all business units are project stakeholders.

• Organizational structure and alignment: This feature addresses efficiency from the perspective of business unit relationships and associated resource alignment and utilization within the project management environment. The PMO can develop its "organization and structure" function (see Chapter 7) to include examination of efficiency at the enterprise level. It can evaluate how structure affects business unit and resource assignment efficiency. It can then make recommendations for organizational and structure design that facilitates timely interactions and decisions about business unit contributions to project efforts.

Project Management and Customer Satisfaction

Customers are the lifeblood of the enterprise. Business success is achieved when a sufficient number of customers are acquired and retained to generate the desired business revenue. Customer satisfaction is a business indicator that represents the ability to attract customers, expand the customer base, and achieve repeat customer business. As one of three primary factors associated with business value, customer satisfaction warrants attention and scrutiny.

Project management activities often are characterized as the business conducted with customers. To that end, project manager and project team member competencies are developed and honed to ensure achievement of customer satisfaction objectives. Similarly, project management practices can be used to incorporate processes for managing the customer business relationship.

Thus, customer business relationship management, the means to achieving customer satisfaction, is a process that is already in place in any relevant organization having a comprehensive project management capability. Furthermore, the project manager often serves as the key point of customer contact in many environments, along with business managers in some environments, and this prepositions the relevant organization toward achieving business results through implementation of the customer satisfaction functionality that is applied within the project management environment.

The following list represents a few concepts and considerations for PMO review relative to identifying and demonstrating project management value that contributes to customer satisfaction within the enterprise:

• Problem identification/issue resolution: Project management capability can include a defined process for handling problems and issues arising with the customer or having customer satisfaction implications. It addresses matters of technical performance, contractual obligations, and customer expectations for business value of project deliverables. This "front-line" process can be expanded to routinely inform executives and senior managers of customer relationship conditions and to elevate major customer problems and issues to allow them to make business decisions when higher level intervention is needed to ensure ongoing customer satisfaction.

• Coordination of customer participation: This activity is inherently a part of every project effort. Some customers desire more project involvement than others; some customers require more project management oversight than others. The project manager will be able to provide a flexible approach to accommodate the different participation needs of customers. Likewise, customer business activities can be naturally incorporated into each project effort according to the needs of the customer and the interests of the relevant organization.

• Specification of customer requirements: Project management is based upon the specification of requirements, which lead to a statement of project objectives and scope. This information has significant business value that is often bypassed in the rush to accomplish each project effort. The achievement of customer requirements defines the business of the relevant organization. Across multiple projects, it indicates the breadth of products and services being offered in the marketplace, the nature of professional and technical skill required within the project management environment, and the type of customers being attracted by the relevant organization. This is an aspect of customer satisfaction that indicates what types of customers achieve business fulfillment by what is delivered, and this warrants review at executive and senior levels within the relevant organization.

• Management of business obligations: Project management is widely accepted to represent a condition of contract or agreement between the customer and the relevant organization conducting the project. The project manager has responsibility for contract management and administration associated with the project effort and thus can contribute valuable insight to business aspects of the relationship. An unhappy customer inherently results from an unattended contract or agreement. The established approach to managing contracts that accomplish business obligations of both parties can be expanded to include direct and indirect involvement of business units to ensure that customer satisfaction is achieved relative to contract management and administration.

• Creation of customer partnerships: Project management practices can be adapted to facilitate business relationships with customers for mutual business advantage. The deliberation or requirements for these business relationships can be considered in the context of customer satisfaction points, and existing project management processes can facilitate their implementation. This aspect of customer satisfaction is one in which such a partnership accomplishes:

  • The preferred level of project oversight and control for the customer

  • A desired public demonstration of business affiliation between the customer and the relevant organization

  • The necessary involvement and participation of the customer in the project or business effort

  • The required business relationship for pursuit of mutually beneficial business opportunities

Generate Executive Value Awareness

Project management practices can inherently account for a large part of business performance. If projects are the means by which products and services are delivered, the contribution of project management to business performance is significantly increased. It would seem appropriate for executives and senior managers in the relevant organization to be well informed regarding project performance and associated project accomplishments, as that represents the pursuit of business for which they have responsibility.

Similarly, as projects enable the delivery of products and services, they present an approach to business that should be controlled at the highest management levels in the relevant organization. Executives have ultimate responsibility for the achievement of strategic business objectives and interests, and that suggests that they should have significant interest and participation in key project decisions — project selection, continuation, and termination — the primary activities of project portfolio management. To that end, executives and senior managers should have a demonstrated interest in project performance as a primary indicator of business performance. If they are interested in revenue, and projects are the means to revenue, then they should be "managing" projects from a strategic perspective.

The preceding consideration suggests a distinct link between project management practices and traditional business management practices that converge in the domain of business performance. Some organizations do not readily recognize the business performance capability that can be achieved through the implementation of comprehensive project management practices. In particular, it is the infrastructure established by the PMO to define the project management environment and implement PMO functionality that creates the capability to address business performance requirements. This is the perspective that needs to be conveyed to executives and senior managers who see project management as a lesser contributor to business performance.

The following are a few areas that the PMO can examine in creating heightened executive level awareness and support for project management and business process integration:

• Business decisions: Executives need access to fundamental project information in a timely manner in order to make accurate business decisions. This type of information is not generated solely from the advice and guidance of business managers. In some instances, that is just speculation and conjecture, and business units who are part-time or inactive project stakeholders cannot be expected to generate this information. Rather, this type of information is generated at the project team level, tracked at the project management level, compiled across all projects and analyzed at the PMO level, and then presented for executive review and deliberation. Project information used at the executive level is a business solution. Executives need to support, endorse, and fund the development and implementation of processes, procedures, and tools that provide this type of business solution.

• Strategy implementation: Executives need to convey business strategies and decisions to the project management environment for implementation. This is readily achieved when the PMO's role and responsibilities extend into the business environment, where strategy is initially communicated. In turn, the PMO can focus on the people and processes affected by executive direction, recognize the business performance impacts, and serve as a single strategy-implementation point rather than having the project management environment bombarded from all sides by business unit managers attempting to introduce executive direction from a variety of perspectives. Executives need to recognize not only the benefits of the PMO serving as a representative of the project management environment, but also as an entity serving as a business performance leader within the project management environment.

• Resource acquisition and allocation: Executives need to have an ongoing awareness of project resource requirements. Possibly the largest expense in the project management environment, project resources need to be managed at mid levels according to the direction provided by the executive level. Therefore, executives need to understand the implications of their resource allocation decisions — a function of business performance. Fundamentally, this means ensuring that necessary resources are available to conduct each project that is pursued in conjunction with the prescribed business strategy. It also means attending to peripheral considerations such as resource training, qualification, assignment selection, performance management, professional development, recognition, and termination. The processes created for resource management on projects can well serve the business needs of executives. The PMO, serving as a project resource clearinghouse, can compile resource information that is needed to make resource acquisition and allocation decisions at the executive level. It can identify current resource utilization and prepare resource requirement forecasts — information the executive needs to ensure that business pursuits are not impaired by gaps in resource availability or resource management issues. Executives need to use PMO expertise and established capability in the project management environment to examine resource requirements relative to business performance.

• Technical performance: Executives need to review and recognize the effectiveness and value associated with technical performance from a perspective of customer satisfaction and from a perspective of business advantage or industry competitiveness. The alignment of technical processes and project management practices can provide such business performance insight. The PMO can establish functionality to capture and analyze technical performance results across all projects internally and to compare them to industrywide results. This is business information that has its origins in the project management environment. Executives need to recognize that the PMO, at an interim management level, can establish functionality to evaluate technical performance conditions and provide routine and exception reports that will bring value to executive business deliberations and decision making. Analysis results can be conveyed to executives for examination relative to the following business interests:

  • State of core technical competencies

  • Perceived value of technical capability in the marketplace

  • Quality-cost comparisons of products and services

  • Technical resource competency

  • Technical management capability

  • Reliance on vendor/contractor technical resources

• Centralized oversight, control, and support: Executives need to understand the formal and informal boundaries of the project management environment and then maximize the effectiveness of that condition on business performance. The formal project management environment that conducts project management under PMO guidance is normally an efficient and effective means for conducting business. In contrast, the informal project management environment, usually represented by business unit intervention, is not always aligned with central PMO guidance or oversight. Therefore, such part-time interventions in project management could introduce different business perspectives and possibly different business objectives. In a sense, project management processes can be used to manage business performance, but business processes cannot necessarily be used to manage projects, particularly when there are variations for each business unit having influence. The PMO can be instrumental in coordinating a common approach to managing project contributions to business performance, integrating multiple business unit processes and procedures into a standard approach and leading collaboration among business unit participants in their ongoing contributions to the formal project management environment. Executives need to establish the PMO as a single point of reference that enables their decisions on oversight, control, and support to be implemented not only in the project management environment, but also across the relevant organization.

These are but a few of the concepts for the PMO to consider relative to achieving the desired level of executive awareness and support for project management and business integration. Each PMO should examine the pertinent issues in its relevant organization to formulate the ways in which (a) executive recognition of PMO capability to support business performance can be conveyed and (b) executive support for consolidation of many business performance activities can be achieved.

Align Business and Project Management Performance

Concepts and activities of this PMO "business performance" function presented to this point have described a significantly enlarged role for the PMO within the relevant organization, and it is one that is not readily found in many business environments. Therefore, it is important to understand that this PMO model is not prescribing PMO takeover of business-performance management! Instead, this PMO function model presents what is believed to be several compelling indications that the relevant organization could benefit from alignment of business and project management processes as well as from PMO participation in structuring and contributing to business performance management. The PMO does not create the critical business processes; it introduces, integrates, and implements them in the project management environment with consideration for project management efficiency and effectiveness, and toward maximizing project management contributions to business performance. This role warrants and possibly requires alignment of the PMO at the business unit level in order to conduct necessary cross-business unit collaboration and facilitate business unit discussions and deliberation relative to business performance management accomplished within the project management environment.

Now it is time to examine some of the specific areas of business and project management performance alignment. The following list is by no means exhaustive, but it does present some business-project management interface areas the PMO can consider for process or practice consolidation if PMO functionality is established:

• Customer account management:

  • Customer opportunity management

  • Customer information management

  • Customer relationship management

  • Customer contact and collaboration management

  • Customer contract administration

  • Customer evaluation management

• Project delivery management:

  • Project estimating: cost, schedule, and resource utilization

  • Project classification

  • Financial tracking and analysis

  • Change management

  • Project reporting

  • Administrative project close out

• Business management:

  • Strategic business interest evaluation

  • Business capability evaluation

  • Cost-benefit analysis

  • Business risk analysis

  • Product and service quality assurance

  • Proposal management

  • Contract negotiation management

  • Contract management

  • Customer invoice and payment management

• Project resource management:

  • Project resource recruiting, acquisition, and assignment

  • Project resource training program management

  • Project resource qualification and career development

  • Project resource performance management

• Vendor/contractor management:

  • Vendor/contractor identification, evaluation, and selection

  • Vendor/contractor contract management

  • Vendor/contractor performance management

  • Vendor/contractor invoice and payment management

• Senior management oversight

  • Project sponsorship (chartering) and funding authority

  • Project management governance and policy development

  • Executive control board participation

  • Project portfolio management

Each PMO will have a different consideration of the items on this list. In some business environments, many of these activities are already an inherent part of either project management activities or PMO responsibilities. In other business environments, this list presents some novel concepts. The PMO working within the cultural norms of the relevant organization will have to decide the appropriate fit of business processes and practices in the project management environment. Note, however, that these project management performance areas can be considered not only from a perspective of process integration and consolidation, but also from a perspective of reducing or eliminating redundancy, removing confusion, and implementing common, repeatable practices for more efficient business operations within the relevant organization.

Manage Business Collaboration

Business collaboration involves conveying business information and guidance for implementation and use within the project management environment, coordinating project participation and performance results across business units and business locations, and exchanging essential business information among all internal and external project stakeholders. The alignment of business and project management interests requires responsible organizations and individuals to collaborate in order to achieve timely and appropriate business performance decisions.

The PMO should facilitate business collaboration within the relevant organization among the resident business units and across regional and global business locations. It should also facilitate vertical collaboration in those entities, and particularly within the project management environment. Furthermore, business collaboration can be accomplished relative to three business levels: operational, tactical, and strategic.

The PMO can establish business collaboration practices using its own functionality, or it can facilitate collaboration as an inherent part of its business interactions across the relevant organization. The three business collaboration areas the PMO can address are discussed in the following subsections.

Conduct Operational Business Collaboration

Operational business collaboration conveys and relates to the exchange of business requirements, information, and guidance at the staff level. This business level can generally be associated with project team efforts, but it also includes comparable staff roles in business units as well as in customer and vendor/contractor environments. Staff members at this business level are responsible for preparing and executing plans and processes to achieve specified business objectives. In the project management environment, that includes the accomplishment of project deliverables. In other business environments, this could include the accomplishment of requisite activities and conveyance of information contributing to project performance, or it could include deriving project output and information for application to business operations.

The PMO will need to examine business information sharing and collaboration conducted by operational staff to determine specific interests or needs. The following list highlights a few of the operational collaboration areas affecting both project and business performance that the PMO can consider for inclusion in integrated processes and practices:

• Task performance guidance and supervision:

  • Staff receipt and acknowledgement of tasking and work assignments

  • Staff tasking and work assignment clarification and assistance requests

  • Interstaff/interlocation work effort coordination and collaboration

  • Staff task performance management

• Task performance capability:

  • Staff/team reliance on predecessor task completion

  • Staff/team reliance on collateral task input

  • Staff/team reliance on design, quality review, or funding decisions

• Business and project information management:

  • Information system data sources and data entry responsibility

  • Information system access, availability, and performance

  • Information database completeness, accuracy, and timeliness

• Material, supplies, and equipment transfer and delivery management:

  • Interoffice/cross-location materials transfer and delivery

  • Vendor/contractor materials transfer and delivery

  • Customer-contributed materials transfer and delivery

• Staff business interface activities:

  • Customer service activities

  • Vendor/contractor affiliation activities

  • Management interface activities

  • Issue and problem identification, resolution, and elevation

• Personnel actions:

  • Staff recruitment actions

  • Staff qualification actions

  • Staff assignment, transfer, and termination actions

  • Staff training actions

Operational collaboration activities provide for calibration within the project and business environments. Collaboration ensures that everyone is working toward the same business objectives, provides interim indicators of progress toward those objectives, and conveys notification of completed actions.

The PMO can implement processes and practices that facilitate direct interactions by staff members, or it can set up procedures for action, information, and knowledge capture through project managers, business unit managers, and the PMO. This activity can be achieved by extending the capability of the "project knowledge management" function (see Chapter 4) to introduce a focus on operational level business interests and information.

Conduct Tactical Business Collaboration

Tactical business collaboration conveys and relates to the exchange of business performance information and oversight activities at the business unit level. This business level can generally be associated with business unit manager efforts, including the PMO. Managers at this business level are responsible for developing and implementing the processes, practices, and procedures that achieve specified strategic business objectives. In the project management environment, this role is generally fulfilled by the PMO with responsibility for project management capability and its own functionality. In some cases, project managers may be considered as a part of this tactical business level as well. In other business environments, this will include business unit heads and their designees and delegates who have some affiliations with the project management environment relative to their own specific business-function responsibility.

The PMO will need to examine business information sharing and collaboration conducted by tactical managers to determine specific interests or needs. The following list highlights a few of the tactical collaboration areas affecting both project and business performance that the PMO can consider for inclusion in integrated practices and processes:

• Business performance oversight:

  • Business strategy implementation

  • Business process development, integration, and implementation

  • Business performance measurement

  • Business regulatory guidance implementation

  • Business analysis and report management

• Project performance oversight:

  • Resource management

  • Facilities management

  • Task management

  • Contract management

  • Methodology management

  • Capability and maturity management

• Technical performance oversight:

  • Specifications and standards utilization

  • Technical process development, integration, and implementation

  • Quality control and assurance

  • Technical competency development

• Staff performance oversight:

  • Professional staff development

  • Performance review management

  • Staff recognition and rewards management

  • Staff acquisition and assignment management

• Customer relationship oversight:

  • Customer acquisition and retention management

  • Customer satisfaction management

  • Customer partnering management

• Vendor/contractor relationship oversight:

  • Vendor/contractor selection management

  • Vendor/contractor contract management

  • Vendor/contractor performance management

  • Vendor/contractor partnering management

Tactical collaboration activities provide for business navigation within the project and business environments. This means that business strategy is translated into actions in the workplace to achieve business objectives.

The PMO can implement processes and practices that facilitate crossbusiness unit manager interactions. This activity can be achieved by extending the capability of the "project knowledge management" function (see Chapter 4) to introduce a focus on strategic level business interests and information.

Conduct Strategic Business Collaboration

Strategic business collaboration conveys and relates to the exchange of business policies and guidance within the relevant organization and across the enterprise. This business level can generally be associated with executives and senior managers formulating business strategy and setting the course for business pursuits. In the project management environment, this is represented by the PMO charter and subsequent development of PMO functionality to serve the business interests of the relevant organization. In other environments, it represents the approval and implementation of business unit operating and business plans.

The PMO will need to examine business information sharing and collaboration conducted by strategic managers to determine specific interests or needs. The following list highlights a few of the strategic collaboration areas affecting both project and business performance that the PMO can consider for inclusion in integrated practices and processes:

• Business strategy implementation and fulfillment:

  • Project portfolio management

  • Business performance management

• Financial analysis and management:

  • Financial performance indicators

  • Investment initiatives

  • Owner/stockholder reports

• Operational capability analysis and management:

  • Internal business process deployment

  • Productivity and efficiency measures

  • New technology initiatives

  • Core competency maintenance and expansion

  • Maturity and continuous-improvement initiatives

• Marketing and sales analysis and management:

  • Industry posture and alignment review

  • Competitive analysis

  • Product and service offerings review

  • Sales forecasts

  • Customer account analysis

Strategic collaboration activities provide for business consultation within the project and business environments. This means that business strategy implementation is monitored and managed to achieve business objectives.

The PMO can implement processes and practices that facilitate executive and senior management interactions. This activity can be achieved by extending the capability of the "project knowledge management" function (see Chapter 4) to introduce a focus on tactical level business interests and information.

Manage PMO Business Fulfillment

The PMO's role in business performance management is one that can expand based on its contributions to business growth in the areas of revenue generation, operational efficiency, and customer satisfaction. Such expansion rarely results merely from an executive mandate but, rather, from an evolving capability within the relevant organization to achieve business objectives.

This section examines points whereby the PMO can consider ways in which it can contribute to business performance management. This discussion begins with a review of the PMO functions that can be constructed to include business responsibilities. Then, the introduction of PMOs at various levels within the relevant organization and across the enterprise is presented. These PMO activities are described in the following two subsections.

Manage PMO Business Function Evolution

The preceding sections of this chapter presented a high level perspective of how the PMO can demonstrate that the relevant organization's capabilities in project management provide business value. This section prompts the PMO to conduct an internal examination of its PMO-function development plans to ascertain how it can build PMO capability that provides business value.

PMO business function evolution is considered from the perspective of the five PMO function categories that served as the framework for this book:

• Practice management

• Infrastructure management

• Resource integration

• Technical support

• Business alignment

Practice Management

The practice management functions — project methodology management (Chapter 1), project management tools (Chapter 2), standards and metrics (Chapter 3), and project knowledge management (Chapter 4) — enable the project manager and the project team to effectively manage and conduct the project. The content of practice management guidance is inherently representative of the technical nature of business of the relevant organization, but that usually happens as a matter of default, not by design.

The PMO can begin to examine business performance impacts during early project management capability implementation associated with process and methodology development. The project management methodology and aligned supporting functions should always be geared toward helping project managers to achieve project performance success. However, there are a few features that can be included in this functional area to help middle and senior managers achieve associated business performance success. Generally, that is a matter of collecting, analyzing, and reporting the project-related information that is needed to make business decisions. For the most part, standard project information handling will suffice. However, the PMO can add early business value by ensuring that work done by project managers and members of the project team addresses important aspects of business performance within the relevant organization.

The PMO can consider the following areas when integrating business performance features into its practice management functions (see Chapter 1 to Chapter 4):

• Ensure the collection of project management information to produce comprehensive status and progress reports that can be aggregated across projects, cross-referenced to business performance, and utilized to make business decisions.

• Incorporate appropriate senior management review and approval points in the project management methodology process to facilitate senior manager involvement and input to project direction associated with business performance.

• Acquire or develop and implement automated project management tools that provide project and cross-project critical information summaries for use by executives and senior managers, including the use of an "executive dashboard" for access to the project knowledge management system.

• Construct project knowledge management system features that present project business case information access for the project manager and project team members to enable them to gain additional insight about their project efforts. Include additional features that present general business news and information about their project, thus providing an external, industry perspective of their accomplishments.

• Specify standards and metrics that help to achieve business objectives. In particular, examine and incorporate technical and business standards in criteria for project management performance, and be sure to include any special business objectives aligned with achieving industry certifications or awards.

Infrastructure Management

The infrastructure management functions — project governance (Chapter 5), assessment (Chapter 6), organization and structure (Chapter 7), and facilities and equipment support (Chapter 8) — enable the PMO to provide cross-project oversight and support to projects. This functional capability is established so that (a) individual project managers are not burdened with infrastructure setup for every project effort encountered and (b) the relevant organization gains benefit from centralized deployment of project oversight activities that could otherwise be repeated with dissimilar approaches by each project manager.

The PMO can begin to examine business performance impacts as project management infrastructure planning is performed, primarily along the lines of business efficiency but also with attention to project management capability.

The PMO can consider the following areas when integrating business performance features into its infrastructure management function:

• Solicit senior management involvement and input to project governance activities — the primary means by which executives and senior managers directly influence the capability established in the project management environment — particularly including the specification of policy guidance to achieve business performance within the project management environment.

• Select and use project management capability and maturity assessments that include the examination of business practices and business contributions within the project management environment. This will enable project management capability improvements to likewise contribute to improved business performance.

• Cultivate and implement a structure within the relevant organization that enables project management to be an efficient contributor to the achievement of business interests and responsive to business requirements, i.e., project team alignment to facilitate speedy project initiation, project team assignment to optimize staff availability, and project team readiness to maximize project performance capability.

• Define and collaborate overall project management facility and equipment needs across business units to establish management efficiency and cost control as contributions to business performance.

Resource Integration

The resource integration functions — resource management (Chapter 9), training and education (Chapter 10), career development (Chapter 11), and team development (Chapter 12) — enable the PMO to identify requirements and establish capability for the deployment of staff competencies within the project management environment. This function allows the PMO to represent project staff interests within the relevant organization. It also allows the PMO to define and manage project staff needs within the project management environment. It normally will interface with the human resources (HR) department to acquire and assign resources, but that effort begins with facilitating deliberation with senior managers to obtain resource acquisition approval and allocation — a function of business performance.

The PMO can begin to examine business performance impacts through evaluation of the resource alignment and assignment processes and conditions. It will need to define the current state, develop the recommended state, and then demonstrate the increased business value to be achieved by the recommended state.

The PMO can consider the following areas when integrating business performance features into its resource integration function (see Chapter 9 to Chapter 12):

• Determine the current allocation and assignment of resources within the project management environment — define prominent roles and responsibilities, examine assignment coverage across projects, and ascertain the effectiveness of current staff strength. This fundamental analysis will support the resource planning needed to ensure that the business interests of the relevant organization are not adversely impacted by project resource availability relative to current and forecast resource utilization requirements.

• Examine ways to develop requisite skill and competency in project management for all project resources and active stakeholders within the project management environment. The greater the number of individuals who comprehend the concepts and practices of modern project management, regardless of their role, the more efficient and effective they will be in their participation on projects and in their contributions to business achievement.

• Qualify and certify project managers in the relevant organization as a means to achieve business advantage, including industry and customer recognition of professional competency; colleague recognition and associated project manager motivation to achieve business objectives; role and position clarification to expedite project management activities and conduct projects more efficiently; and increased project manager capabilities, based on qualification criteria, to achieve successful project and business performance.

• Develop capability to conduct team building for noncohesive project teams. Even fundamental, short-period work sessions can go a long way toward improving team performance and thereby business performance.

Technical Support

The technical support functions — mentoring (Chapter 13), planning support (Chapter 14), project auditing (Chapter 15), and project recovery (Chapter 16) — enable the PMO to help project managers bring in successful projects with forecasted reliability and regularity. This function provides focused support at the project level, but it does so in conjunction with distinct business interest. To the extent that projects represent the business of the relevant organization, technical support functions (see Chapter 13 to Chapter 16) ensure that business is accomplished in a timely and professional manner and in compliance with contractual and regulatory obligations.

The PMO can begin to examine business performance impacts first by developing a close professional relationship with project managers to identify general and specific support needs within the project management environment, and then by providing unencumbered project management support services. A large part of this PMO functional area will include (a) advising and making project managers aware of business impacts resulting from project performance and (b) working in collaboration with them to resolve or rectify conditions that present adverse business impacts.

The PMO can consider the following areas when integrating business performance features into its technical support functions (see Chapter 13 to Chapter 16):

• Identify where project managers most need assistance in managing project performance, and develop PMO support services in response to those needs. Use mentoring and project team facilitation to convey concepts and transfer project management skill and knowledge to the project manager and members of the project team.

• Introduce a fundamental project management auditing capability to enable examination of project impacts on business performance. Conduct routine project management reviews and audits across all projects to ascertain any trends or indications of project influence on business performance.

• Develop the capability to identify and rectify troubled projects as a business decision that usually comes from executive and senior managers because of the redirection of manager time and attention as well as the added cost and concentration of resources needed to conduct project recovery activities.

Business Alignment

The business alignment functions — portfolio management (Chapter 17), customer relationships (Chapter 18), vendor relationships (Chapter 19), and business performance (Chapter 20) — enable the PMO to receive business performance guidance and translate it for application within the project management environment. This function represents a range of PMO activities from the distinct alignment of business strategy with project performance to the sometimes more subtle direction and policy guidance that emanates from the executive board room.

The PMO can begin to examine business performance impacts by evaluating the current depth of business integration within the project management environment and contrasting that to the business advantages that could be gained with more-complete and comprehensive business process and practice integration. Early PMO involvement in defining the need for business alignment requirements and information is presented in the practice management functions (Chapter 1 to Chapter 4).

The PMO can consider the following areas when integrating business performance features into its business alignment functions:

• Determine the current depth of project and business strategy alignment processes and practices. Specify how project selection occurs; identify the project selection decision makers; ascertain whether they implement business strategies as a normal part of their role and responsibilities; and examine the extent to which they recognize project performance as a contributing factor to business performance. This effort will provide insight to the PMO in deliberating and positioning its recommendations for conducting and managing processes associated with project portfolio management.

• Examine how well business units within the relevant organization collaborate on efforts toward achieving strategic business objectives. Business operations, business culture, and business interests will determine how an effective, collaborated approach to customers, vendors and contractors, and marketplace influences can be introduced into the project management environment.

• Ascertain senior level interest in centralized project management oversight, control, and support as a prominent means of achieving improved business performance. Construct plans for PMO functional evolution according to direction and insights gained from executives and senior managers.

Develop PMO and Enterprise Business Alignment

The PMO works under the sponsorship and in support of the business purposes of a particular relevant organization. The relevant organization could be an entity that ranges in size from a small business unit tasked to provide project management oversight for a few projects to the enterprise, a global network of departments and divisions that represent a comprehensive business capacity to manage multinational projects.

In fact, there could be multiple relevant organizations within a business enterprise, each requiring its own level and depth of PMO support. To that end, there could be multiple levels of PMO activity within the enterprise, each with its own distinct purpose and particular business objectives associated with the sponsoring relevant organization. The consideration of multilayered PMO capability within the enterprise has been a recurring consideration briefly alluded to at junctures throughout this handbook. It is now time to consider multilayer PMO options and opportunities.

If there is going to be more than one PMO in the relevant organization, business needs will likely dictate their alignment. The following represents five very general PMO alignment models that establish multiple PMO presence and affiliations within the relevant organization. Variations on these models can be constructed to achieve a more accurate alignment of PMO functions with business organization needs and interests:

• Business unit affiliation: The PMO supports the business interests of an operating unit within the relevant organization. The business unit has a particular business purpose for which it conducts projects, and a PMO is established and aligned to help it achieve that purpose. The full range of PMO capability can be applied here because business units can range from specific operational entities to comprehensive business departments and divisions.

• Product/service affiliation: The PMO supports the design, manufacture, and delivery of products and services in the marketplace. It will have organizational alignment with a particular business unit, but its efforts will likely extend across business unit boundaries to support and manage project and business performance associated with a particular product/service development life cycle.

• Technical discipline affiliation: The PMO support services and activities focus on the technical performance aspects of project efforts. This often represents a special case of business unit affiliation, where the PMO is aligned with a department, division, or other entity that has a specific technical performance purpose. Generally, this PMO will provide oversight, guidance, and support to the management of technical processes and procedures, with some responsibility for incorporating effective project management practices but usually with limited responsibility for business process integration.

• Business region affiliation: The PMO has responsibility for project management oversight, control, and support in one or more designated geographical areas in which the relevant organization conducts business. This could be characterized by alignment with specific business unit activities across multiple regions, or it could represent direct alignment with all of the business operations of one or more regions. The PMO's purpose is focused on achieving effective project management capability in support of business objectives within the specified region.

• Enterprise affiliation: The enterprise level PMO normally has as much responsibility for business performance as it does for project management performance. It can be aligned within the enterprise that is itself the relevant organization, or it can be aligned with an enterprise that oversees multiple component organizations that have their own PMO capability. The enterprise PMO's focus is normally on establishing the project management capability and maturity for the entire enterprise. To that end, there will be a need for the PMO to understand the business interests of each component as well as the strategic direction of the enterprise.

Here is a final thought on the matter of PMO affiliation in a multiple-PMO business environment. Each PMO should have established working relationships with every other PMO in the enterprise. They can be designated as peers, subordinates, enterprise level PMOs, or some other preferred naming convention that fits best within the relevant organization. As well, each PMO that is not a peer should have specific and distinct roles and responsibilities that are not replicated at other PMO levels above or below it.