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Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
Using Project Management to Improve ROI  Day 1 Event
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Using Project Management to Improve ROI Day 1 Event

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Presented at the M&A Chicago Day 1 Event in Rosemont, IL, on November 6, 2012

Presented at the M&A Chicago Day 1 Event in Rosemont, IL, on November 6, 2012

Published in: Business, Technology
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  • 1. www.successfulprojectsforleaders.com 1 Using Project Management To Improve ROI Day One Event November 6, 2012
  • 2. www.successfulprojectsforleaders.com 2 Statistics • On the whole, acquirers have < 50% chance of being successful. • Just 23% of acquisitions earn their cost of capital • Synergies projected for M&A deals are not achieved within 70% of cases. • In the first 4-8 months following a deal, productivity may be reduced by up to 50%. • A number of factors give rise to these statistics: poor fit, incomplete due diligence, and ineffectively managed integration.
  • 3. www.successfulprojectsforleaders.com 3 Integrating one business into another is inherently difficult • Target companies are strategically sought but follow-up acts are poorly orchestrated. • The structuring, financing, and closing of a deal are only preliminary steps. The real work comes after the deal is signed. • Too many companies make the mistake of separating the major phases of a deal (i.e. due diligence, agreement, integration) • These phases themselves need to be integrated. • They need to be orchestrated under a single management structure. • This management structure needs to be in place early—at the time due diligence begins.
  • 4. www.successfulprojectsforleaders.com 4 Solution • Companies that have effective policies in place for managing the post-merger period can improve their odds of success by as much as 50%. • Companies that have strong integration plans, by contrast with those that have weak ones, have produced shareholder returns above industry average. • A faster integration process yields better results than a slower one, resulting in speed to market, technological process, employee commitment, stable focus on customers
  • 5. www.successfulprojectsforleaders.com 5 Integration Management Structure • Managing an acquisition, regardless of size, is distinctly different from managing an operation. • Initiating • Planning • Execution • Monitoring & Control • Close-Out • This requires more than a rudimentary integration plan, constant vigilance, regular governance, and clear communication, both horizontal as well as vertical • => If your leadership team is spending the necessary time to manage the integration, who’s managing the operations, • Which of these 2 are you willing to give up?
  • 6. www.successfulprojectsforleaders.com 6 Program Management of the PMI • The integration needs to be set up in a “projectized” organizational structure • A department-like structure that exists for the duration of the integration • Focusing purely on the integration • Directly reports to Senior Leadership (Governance Board)
  • 7. www.successfulprojectsforleaders.com 7 Program Management of the PMI • Treat the transition period like a special program comprised of a number of projects • Integration manager is the program manager • Ensures all work is “process-ized” • Monitors the “mini-integrations” • Ensures adherence to progress against the schedule and milestones • Ensures focus on value & priorities • Ensures proper risk management • Helps to preserve the potential of the deal
  • 8. www.successfulprojectsforleaders.com 8 Why is this necessary? • Program management provides a needed structure and discipline. • Integration (Program) manager 100% focused on integration • Ensures consistent progress • Ensures risk mitigation and management throughout • Keeps focus on the integration, schedule, costs, and ROI • Ensures that the integration remains a priority • Lets management concentrate on daily operations • Lack of adherence to this leads to schedule overruns, cost overruns, overabundance of issues, resource drains, loss of focus, erosion of ROI.
  • 9. www.successfulprojectsforleaders.com 9 Typical Program Structure Integration (Program) Manager Business Unit 1 Project Manager Business Unit 2 Project Manager Business Unit 3 Project Manager
  • 10. www.successfulprojectsforleaders.com 10 Integration Management as Change Agents • Integration management needs to consider the immense requirement for change management • Ensure that the WIIFM issues are addressed • Ensure that buy-in is achieved • Ensure that clearly-defined leadership roles exist • Ensure that extensive, ongoing communication exists • Ensure focus on the customers • Ensure that decisions are made, even the tough ones • Ensure that focused initiatives are created • Ensure that resistance at all levels is recognized and managed.
  • 11. www.successfulprojectsforleaders.com 11 Part II: Day One Plus One Using Project Management To Further Enhance ROI
  • 12. www.successfulprojectsforleaders.com 12 Post PMI Factors to Consider • Project Budgeting • Governance • Risk Tracking & Quality Management • Work Sold & Translation Into Actionable Items • Scope & Schedule Management
  • 13. www.successfulprojectsforleaders.com 13 Why a repeatable methodology is necessary • A project management methodology—something that is enforced from the top down and is used consistently throughout the organization—certainly will have some upfront costs associated with it. • When used correctly, however, it can save an organization up to hundreds of thousands of dollars a year in above the line costs.
  • 14. www.successfulprojectsforleaders.com 14 Project Budgeting • The profitability of the organization begins with the project budget estimates themselves. • If an organization has to make a choice to fund only one or two projects NPV, IRR, MIRR, etc will be used as a financial metric. • What does it mean if the project’s budget estimate was never estimated correctly?
  • 15. www.successfulprojectsforleaders.com 15 Poor Estimates Leads to Poor Project Selection • Lower estimate • Typical of projects where estimators pull numbers out of air, didn’t consider all tasks needed to be done, didn’t correctly estimate task durations • project investment will be artificially lower than the actual cost • project will have an artificially higher value for NPV, IRR, or MIRR • It can get selected over projects that actually give a better ROI. • Higher estimate • Typical of projects whose estimates are “padded”, (estimator arbitrarily adds money to the estimate “just in case”) • Required investment for the project will be higher • Financial metrics will be artificially lower • Different, less profitable project can get selected.
  • 16. www.successfulprojectsforleaders.com 16 Governance • Organizations need a connection between Operations and project groups • There needs to be structured, consistent and meaningful flow of information between these two groups. • Project health • Issues • Risks • Actuals vs. estimates • Business Priorities • Change management • Lack of proper governance leads to objectives not being communicated to the project groups or not being interpreted correctly by the project groups. As a result, measurements made by the project groups cannot be related to these objectives.
  • 17. www.successfulprojectsforleaders.com 17 Governance • Development of standards and practices • directed at the effective execution of projects and the attainment of schedule, cost, scope, and quality objectives, • Communication of enterprise-level objectives to the project teams • Communication of project information to management • Efforts are efficient and effective • Projects are still the best ones to support strategic objectives • Whether there are performance issues associated with meeting objectives.
  • 18. www.successfulprojectsforleaders.com 18 The Biggest Impact • The organization is highly fragmented and functional in nature, with difficulty coordinating all the team activities. • There is a lack of any connection between Management and project groups along with no structured, consistent and meaningful flow of information between these two groups. • Senior management is not able to properly prioritize the collective initiatives. • Historically, projects have not been aligned with strategic objectives to ensure that projects are contributing to growth, competitive advantage, revenue, cash flow, or other objectives of the organization • There is a lack of full-time oversight for and across all projects that includes monitoring against established criteria and advising Management of status and issues that would affect the planned benefits of projects.
  • 19. www.successfulprojectsforleaders.com 19 Biggest Impact, continued • There is a need to ensure that standards are established, communicated, and enforced on an enterprise-wide basis so that project governance can be conducted relative to strategic goals. • There has been a failure of management to establish cross-departmental coordination toward goals for products, services, and customers.
  • 20. www.successfulprojectsforleaders.com 20 Risk Management • No one can predict all of the negative events that might occur on a project • Project risk management brings the team as close to that as one can get. • Project team isn’t caught off-guard by threats that occur • Time and labor aren’t taken away from critical path activities. • If the team had to stop planned activities in order to put out fires all the time • the project schedule would slip • the budget would be overrun • quality could suffer • Financial benefits might not be realized • windows of opportunity might be missed • Profitability is effected
  • 21. www.successfulprojectsforleaders.com 21 Further Benefits of Risk Management • When one uses risk management the price for the project doesn’t have to be artificially inflated, or padded, to cover some unknown occurrence • Create a task-by-task contingency account to cover pre- determined “what-ifs” • Money released once threat is no longer valid • Manages Parkinson’s syndrome
  • 22. www.successfulprojectsforleaders.com 22 Translating Work Sold Into Actionable Items • Rework quickly erodes project profits • Rework results from a lack of managing quality into the end product (service) • Unrealistic commitments made by Sales • A lack on the project team’s part to completely identify the end-users’ requirements and needs • Misunderstanding between the end-users and your team of what the end users’ requirements are
  • 23. www.successfulprojectsforleaders.com 23 Scope Management • Not having a well-constructed scope sets projects up for failure before they begin • Scope is a delineation of both what is considered to be a part of the project and what is not considered to be part of the project • The more vague the scope is, the more rework will occur • The more vague the scope is, the more the work will grow without a proportional change in budget (Scope Creep, Goldplating) • Missed deadlines • Cost overages
  • 24. www.successfulprojectsforleaders.com 24 Schedule & Cost Management • Constant vigilance is required to keep the project on budget and on schedule. • Cost and time estimates must be broken on a task-by-task basis and a month-by-month basis • Guarantees efficient comparisons of estimated planned expenditures against actual expenditures. • Regular cost and schedule monitoring is espoused by project management governing organizations • Catch the project when it has varied slightly from cost and/or schedule targets. • This allows corrective action to be taken.
  • 25. www.successfulprojectsforleaders.com 25 Portfolio Management (PPM) • Identifying opportunities and needs • Selecting which projects are to be undertaken to best meet objectives and needs • Selecting which projects are to be terminated or deferred due to performance issues or non-compliance with objectives • Establishing project priorities • Projecting revenue and effect on cash flow • Resource Prioritization • Aligning projects with strategic objectives to ensure that projects are contributing to growth, competitive advantage, revenue, cash flow, or other objectives of the organization • Evaluating the value and benefits of projects to the organization • Evaluating project benefits vis-a-vis predicted risks • Ensuring balance among projects in the portfolio to provide the optimal mix to protect and enhance the organization’s future
  • 26. www.successfulprojectsforleaders.com 26 Change Control • Organizations need discipline to ensure that its teams implement only changes that are worth pursuing • Politics, pet ideas • This prevents unnecessary or overly costly changes from derailing projects. • A rigorous process needs to be established and managed to evaluate the impact of changes before implementing them. • Many changes that initially sound like good ideas will get thrown out once the true cost of the change is known. • The enterprise impact needs to be understood. A project change that might be beneficial to one SBU might be detrimental to another. • If the benefit of the change is worth the cost, the change is added to the scope. Otherwise, it’s deferred or rejected
  • 27. www.successfulprojectsforleaders.com 27 Summary • Research from Gartner, Inc. suggests that organizations who establish enterprise standards for project management, including a project office with suitable governance, will experience half as many major project cost overruns, delays and cancellations as those that fail to do so (M. Light, T. Berg, “The Project Office: Teams, Processes and Tools,” Gartner Strategic Analysis Report, 1 August 2000). • The only way to ensure that standards are established, communicated, and enforced on an enterprise-wide basis so that project governance can be conducted relative to strategic goals is to elevate project management to the strategic level. This also reduces the failure of management to establish cross departmental coordination toward goals for products, services and customers which appears to be the major hurdle with many organizations.
  • 28. www.successfulprojectsforleaders.com 28 Bottom Line • Projects should be profit generators and not financial burdens • Risks and quality should never be unknowns • Budgets and schedules shouldn’t be stabs in the dark, arbitrary, or general guidelines. • Running successful projects isn’t magic or luck. • SPFL sets up the right infrastructure and methodology to follow • Provide senior-level oversight and governance (VirtualPMOTM) • Linkage between LT and project teams • Ensure consistency, drive toward continuous improvement • Bottom line results

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