MAXIMIZINGTHE IMPACT
OFYOUR PROJECTS
Project Management Workshop
Brandon Olson, PhD
Purpose
•Defineprojects and project management
•Determine business value of projects
•Conceptualize projects as part of a ...
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
Definitions of Project Management
• "...a complex, non-routine, one-time effort limited by
time, budget, resources, and pe...
Project Characteristics
Kerzner, 2009
Specific Objective with
Defined Specifications
Defined Start
and End Dates
Funding L...
Purpose of Project Management
Project ManagementA B
Change
Project Sources
Increase Revenue
(expand services)
Reduce Expenses
Directive
New product/services
Market Expansion
Increas...
Why Projects?
Operational Islands
Project Management
Scope
TimeCost
Project
Manager
Project Success Rates
0%
10%
20%
30%
40%
50%
60%
Successful Challenged Failed
1994
1996
1998
2004
2009
2011
Gale, S. (2011...
Sources of Project Failures
1. Project Champion
2. Process Shortcuts
3. Expectations Management
4. Variable Lock-In
5. Est...
Project Success?
•How do you define project success?
Example – New Project
• Purpose: Deploy a new information system to manage product inventory
• Scope:
• Track product inve...
Project Charter
• Purpose: Deploy a new information system to manage product
inventory
• Goal: Reduce production time by 2...
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
ProjectValue
BusinessValue?
•What organizational benefits are created and realized
from the project?
•Operational
• New or improved fun...
Evaluating BusinessValue
• Return on Investment (ROI)
• Net PresentValue
• Payback Analysis
Return on Investment
Implementation Costs
Programmer $87,000.00 Return on Investment 10 yrs
Database Specialist $21,000.00...
Net PresentValue
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Total
Implementation -$219,000.00
Operations -$52,000.00 -$52,0...
PaybackAnalysis
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Implementation -$219,000.00
Operations -$52,000.00 -$52,000.00 -...
Evaluating BusinessValue
• Alignment with Business Strategy
Objective
Objective
Objective
Objective
BusinessValue
Benefits Alignment Value
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
Project
V
Project Selection:
Resource Limitations
Project
W
Project
N
Project
R Project
S
Project
Y
Productivity
Time
Fund...
Project Selection:
Common Practices
• Political Influence
• SqueakyWheel
• FIFO
• LIFO
• Financial Attributes
(ROI/NPV/Pay...
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
Challenging Project Environment
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
Portfolio Approach
Project Portfolio
Operational Scope Strategic Scope
Governance Governance
Schedule BusinessValue
Budget...
Project Portfolio Management
• Goal:
• Determine and deliver the mix of potential projects that will
result in the best ut...
Project B
Project Governance
Project I
Project M
Project R
Project X
ProjectT
Project L
Project Q
Project P
ProjectY
Proje...
Project Portfolio Governance
Executive Management
Portfolio
ProjectY Program
Project R
Project X
Project C
Project G
Portf...
2 Phases of PPM
Portfolio Selection
• Propose Projects
• Align Projects
• Evaluate Projects
• Identify Risks/Value
• Rank ...
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
PPM Process
Align Value Distribute Risk Select Monitor
StrategicAlignment
Organization Strategy and Objectives
Operations Planning Strategic Planning
Initiatives
Project Portfol...
What isValue?
• Return on Investment (ROI)
Estimated Lifetime Benefits – Estimated Lifetime Costs
Estimated Lifetime Costs...
Project Selection
Informational
Infrastructure
Transactional
Strategic
Common IT Portfolio
CostAgility
MIT Sloan Center, 2...
Risk Evaluation
Primary
Funding
Selective
Funding
Selective
Funding
Not
Funded
RISK
VALUE
Financial
Measure
Risk
Measure
A...
Quasi-Quantitative Risk Evaluation
Scale Value Probability Value Schedule Cost
Very High 1.0 90% - 100% > 10% > 10% > 10%
...
Project Selection
Primary
Funding
Selective
Funding
Selective
Funding
Not
Funded
RISK
VALUE
Align Value Distribute Risk Se...
Project Evaluation
• Alignment
• Value
• Distribution
• Risk Assessment
• Balance Resources ($ and people)
• Intangible Be...
Monitor Portfolio
Project
Project
Project
Project
Program
Program
Distribution Risk
Alignment Value
Align Value Distribute...
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
Steps to PPM
Define
Portfolio
Gather
Projects
Begin
Weeding
Begin
Evaluating
The PPM Starter Kit, ganntthead.com
Tips for PPM
1. Start at theTop
2. Avoid the Big Bang
3. Develop a Governance
Process
4. Use a Proven PPMTool
5. Forgive H...
Key Drivers of PPM
• 78% - Senior Management Receptivity
• 66% - Competent Portfolio Governance
• 62% - Standardized Metri...
Formalized PM & PPM Practices
• Organizations with stable PPM practices see 64% of projects meet targeted ROI
(17% more th...
Why PPM?
0% 10% 20% 30% 40% 50% 60% 70% 80%
Improved Prod. Dev. Costs
Improved ROI
RevenueGrowth
Cost Reduction
Customer S...
Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Proce...
What does this mean to me?
My
Project
Business Strategies
What does this mean to me?
My
Project
Project
J
Project
C
Project
Q
Project
X
Project
P
Project
N
My
Project
Project
G
Val...
EnsuringValue
•Develop a ProjectValue Chain
(Think Critical Path)
•IncludeValue in Risk Management Strategy
•EvaluateValue...
Suggested Readings
July, 2012
Volume 30
Issue 5
References
• Brewer, J. L., & Dittman, K. C. (2010). Methods of IT project management. Boston, MA: Prentice Hall.
• Gale, ...
Posted Presentations
• My Presentations
• http://faculty.css.edu/bolson1/presentations.html
• Topic 1: TheValue of Project...
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Maximizing the Impact of Your Projects

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  • Project management is used to bridge the gap between functional units and layers of management.
  • 1989 Construction begins1990 Feasibility study found the baggage handling system was not feasbible1991 United Airlines contracted with BAE Systems to construct automated system for their concourse1991 DIA requests for full system resulted in only three bids; all rejected1992 DIA recruited BAE to build complete system1992 Budget cuts, expanded system for larger luggage (skis), changes to scope, etc.1993 Target missed, again, again, etc.1994 DIA demo disaster with BAE approval (smashed totes, clothes torn out, etc)1995 Airport opened without complete automated systemFinding: don’t let the system become the critical path16 months late at $1.1M per day (maintenance and lost revenue)
  • Maximizing the Impact of Your Projects

    1. 1. MAXIMIZINGTHE IMPACT OFYOUR PROJECTS Project Management Workshop Brandon Olson, PhD
    2. 2. Purpose •Defineprojects and project management •Determine business value of projects •Conceptualize projects as part of a portfolio •Evaluate the portfolio approach to projects •Develop strategies to measure and assess project value
    3. 3. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    4. 4. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    5. 5. Definitions of Project Management • "...a complex, non-routine, one-time effort limited by time, budget, resources, and performance specifications designed to meet customer needs (Gray & Larson, 2008) • "...a temporary endeavor undertaken to create a unique product, service, or result.“ (PMI, 2008) One-Time
    6. 6. Project Characteristics Kerzner, 2009 Specific Objective with Defined Specifications Defined Start and End Dates Funding Limitations Consume Human and Nonhuman Resources Multiple Disciplines
    7. 7. Purpose of Project Management Project ManagementA B Change
    8. 8. Project Sources Increase Revenue (expand services) Reduce Expenses Directive New product/services Market Expansion Increased Scalability Process Improvement Decision Making Government Compliance Self-Imposed Competitive Standards
    9. 9. Why Projects? Operational Islands
    10. 10. Project Management Scope TimeCost Project Manager
    11. 11. Project Success Rates 0% 10% 20% 30% 40% 50% 60% Successful Challenged Failed 1994 1996 1998 2004 2009 2011 Gale, S. (2011). Failure rates finally drop. PM Network, 25(8), 10-11.
    12. 12. Sources of Project Failures 1. Project Champion 2. Process Shortcuts 3. Expectations Management 4. Variable Lock-In 5. EstimatingTechniques 6. Optimism 7. Resource Assumptions 8. People Management 9. Adapting to Change 10. Insufficient Resources Adapted fromWhitten & Bentley, 2007
    13. 13. Project Success? •How do you define project success?
    14. 14. Example – New Project • Purpose: Deploy a new information system to manage product inventory • Scope: • Track product inventory as it is used • Real-time inventory reporting • “Wouldn’t it be cool if we could also keep track of the different types of inventory we used” • Budget: • 1 pen/pencil, 1 sheet of paper, 1 developer • Schedule: • 45 seconds
    15. 15. Project Charter • Purpose: Deploy a new information system to manage product inventory • Goal: Reduce production time by 25%
    16. 16. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    17. 17. ProjectValue
    18. 18. BusinessValue? •What organizational benefits are created and realized from the project? •Operational • New or improved functionality •Strategic • Quantifiable organizational-level benefits
    19. 19. Evaluating BusinessValue • Return on Investment (ROI) • Net PresentValue • Payback Analysis
    20. 20. Return on Investment Implementation Costs Programmer $87,000.00 Return on Investment 10 yrs Database Specialist $21,000.00 Implementation Costs $219,000.00 System Architect $28,000.00 OperatingCosts (10yrs) $520,000.00 Database Server $15,000.00 TotalCosts $739,000.00 Application Server $12,000.00 Desktop Devices $25,000.00 Benefits (10 yrs) $1,955,500.00 Project Management $31,000.00 $219,000.00 Operating Costs ROI: (Total Benefits -TotalCosts) TechnicalSupport $25,000.00 TotalCosts Programmer $16,500.00 Client Licenses $6,000.00 ROI: 164.61% Training $4,500.00 $52,000.00 Annual Benefits Increased capacity $56,400.00 Increased satisfaction $63,550.00 Reduced costs $75,600.00 $195,550.00
    21. 21. Net PresentValue Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Total Implementation -$219,000.00 Operations -$52,000.00 -$52,000.00 -$52,000.00 -$52,000.00 -$52,000.00 Discout Factor (12%) 1.000 0.893 0.797 0.712 0.636 0.567 PresentValue -$219,000.00 -$46,428.57 -$41,454.08 -$37,012.57 -$33,046.94 -$29,506.20 5Year Costs -$406,448.36 Annual Benefits $195,550.00 $195,550.00 $195,550.00 $195,550.00 $195,550.00 $195,550.00 Discout Factor (12%) 1.000 0.893 0.797 0.712 0.636 0.567 PresentValue $195,550.00 $174,598.21 $155,891.26 $139,188.63 $124,275.56 $110,960.32 5Year Benefits $900,463.99 Net PresentValue $494,015.62 PVn = 1/(1+i)n PVn = 1/(1+.12)n 1 0.892857143 0.79719388 0.71178025 0.63551808 0.56742686
    22. 22. PaybackAnalysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Implementation -$219,000.00 Operations -$52,000.00 -$52,000.00 -$52,000.00 -$52,000.00 -$52,000.00 Discout Factor (12%) 1.000 0.893 0.797 0.712 0.636 0.567 PresentValue -$219,000.00 -$46,428.57 -$41,454.08 -$37,012.57 -$33,046.94 -$29,506.20 Cumuliative Costs -$219,000.00 -$265,428.57 -$306,882.65 -$343,895.23 -$376,942.17 -$406,448.36 Annual Benefits $195,550.00 $195,550.00 $195,550.00 $195,550.00 $195,550.00 $195,550.00 Discout Factor (12%) 1.000 0.893 0.797 0.712 0.636 0.567 PresentValue $195,550.00 $174,598.21 $155,891.26 $139,188.63 $124,275.56 $110,960.32 Cumulative Benefits $195,550.00 $370,148.21 $526,039.48 $665,228.10 $789,503.66 $900,463.99 0 1 2 3 4 5 Cumulative Profit -$23,450.00 $104,719.64 $219,156.82 $321,332.88 $412,561.50 $494,015.62 Net PresentValue PVn = 1/(1+.12)n 1 0.892857143 0.797193878 0.711780248 0.635518078 0.567426856 rise/run $103,493.12 m = $103,493.12 b = -23,450.00 Y = 0 Y = mX + b x 0.23years
    23. 23. Evaluating BusinessValue • Alignment with Business Strategy Objective Objective Objective Objective
    24. 24. BusinessValue Benefits Alignment Value
    25. 25. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    26. 26. Project V Project Selection: Resource Limitations Project W Project N Project R Project S Project Y Productivity Time Funds Personnel
    27. 27. Project Selection: Common Practices • Political Influence • SqueakyWheel • FIFO • LIFO • Financial Attributes (ROI/NPV/Payback)
    28. 28. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    29. 29. Challenging Project Environment PM PM PM PM PM PM PM PM PM PM PM PM PM PM PM PM
    30. 30. Portfolio Approach Project Portfolio Operational Scope Strategic Scope Governance Governance Schedule BusinessValue Budget Portfolio / Project Risk Functionality Schedule & Budget Project Risk Functionality Distributed Management Centralized Management
    31. 31. Project Portfolio Management • Goal: • Determine and deliver the mix of potential projects that will result in the best utilization of human and cash resources and maximize long-range growth and return on investment for the firm. Levine, 2005 A B Y S A H J W B Align = 9 Value = 8 Align = 3 Value = 10
    32. 32. Project B Project Governance Project I Project M Project R Project X ProjectT Project L Project Q Project P ProjectY Project D ProjectA Project N Project J PMO
    33. 33. Project Portfolio Governance Executive Management Portfolio ProjectY Program Project R Project X Project C Project G Portfolio Program ProjectA Project Q Project H Project J Program Project K Project B Project S
    34. 34. 2 Phases of PPM Portfolio Selection • Propose Projects • Align Projects • Evaluate Projects • Identify Risks/Value • Rank Projects • Select Projects Project Pipeline Portfolio Maintenance • Project Objectives • Portfolio Objectives • Forecast Impacts • Reevaluate Projects • Value • Performance • Determine Funding • Cancel • Continue
    35. 35. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    36. 36. PPM Process Align Value Distribute Risk Select Monitor
    37. 37. StrategicAlignment Organization Strategy and Objectives Operations Planning Strategic Planning Initiatives Project Portfolio Operational Resources PMI, 2008b Align Value Distribute Risk Select Monitor
    38. 38. What isValue? • Return on Investment (ROI) Estimated Lifetime Benefits – Estimated Lifetime Costs Estimated Lifetime Costs Example: $310,000 - $160,000 $160,000 = 0.94 = 94% Align Value Distribute Risk Select Monitor
    39. 39. Project Selection Informational Infrastructure Transactional Strategic Common IT Portfolio CostAgility MIT Sloan Center, 2007 InnovationIntegration Align Value Distribute Risk Select Monitor
    40. 40. Risk Evaluation Primary Funding Selective Funding Selective Funding Not Funded RISK VALUE Financial Measure Risk Measure Align Value Distribute Risk Select Monitor
    41. 41. Quasi-Quantitative Risk Evaluation Scale Value Probability Value Schedule Cost Very High 1.0 90% - 100% > 10% > 10% > 10% High 0.7 70% - 90% 5% - 10% 5% - 10% 5% - 10% Medium 0.5 50% - 70% 2% - 5% 2% - 5% 2% - 5% Low 0.3 30% - 50% 1% - 2% 1% - 2% 1% - 2% Very Low 0.1 10% - 30% 0% - 1% 0% - 1% 0% - 1% Risk Levels Very Low Low Medium High Very High Very Low .01 .03 .05 .07 .10 Low .03 .09 .15 .21 .30 Medium .05 .15 .25 .35 .50 High .07 .21 .35 .49 .70 Very High .10 .30 .50 .70 1.00 Probability Risk Impact Score = Average (Value, Schedule, Cost) Adapted from Brewer & Dittman, 2010 and Lovelady &Anderson, 2006 Probability Score = Probability Risk Score = Impact X Probability or color Align Value Distribute Risk Select Monitor
    42. 42. Project Selection Primary Funding Selective Funding Selective Funding Not Funded RISK VALUE Align Value Distribute Risk Select Monitor
    43. 43. Project Evaluation • Alignment • Value • Distribution • Risk Assessment • Balance Resources ($ and people) • Intangible Benefits Consistency Align Value Distribute Risk Select Monitor
    44. 44. Monitor Portfolio Project Project Project Project Program Program Distribution Risk Alignment Value Align Value Distribute Risk Select Monitor
    45. 45. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    46. 46. Steps to PPM Define Portfolio Gather Projects Begin Weeding Begin Evaluating The PPM Starter Kit, ganntthead.com
    47. 47. Tips for PPM 1. Start at theTop 2. Avoid the Big Bang 3. Develop a Governance Process 4. Use a Proven PPMTool 5. Forgive Human Errors but not Process Errors 6. Use theTool in your Operations Reviews 7. Use Executive Dashboards 8. Be Open to Project Failures 9. Anticipate Business Opportunities & Constraints 10. RememberWho the Boss is ganntthead.com
    48. 48. Key Drivers of PPM • 78% - Senior Management Receptivity • 66% - Competent Portfolio Governance • 62% - Standardized Metrics and Criteria • 59% - Consistency & Logic of Objectives • 58% - Mature Project Management Office PM Network Survey, 2012
    49. 49. Formalized PM & PPM Practices • Organizations with stable PPM practices see 64% of projects meet targeted ROI (17% more than highly variable PPM practices) • Formalization at both the project and portfolio levels results in higher performance than formalization at just one level • Formalization provides transparency that leads to improved allocation of resources and an overall cooperation between projects PM Network Survey, 2012 &Teller,Unger, Kock & Gemunden, 2012 64%
    50. 50. Why PPM? 0% 10% 20% 30% 40% 50% 60% 70% 80% Improved Prod. Dev. Costs Improved ROI RevenueGrowth Cost Reduction Customer Satisfaction 40% 45% 58% 59% 73% PM Network Survey, 2012
    51. 51. Agenda • Project Management Overview • Introduction to BusinessValue • Selecting Projects • Portfolio Approach • PPM Process • Migrating to PPM • Application to the PM
    52. 52. What does this mean to me? My Project Business Strategies
    53. 53. What does this mean to me? My Project Project J Project C Project Q Project X Project P Project N My Project Project G Value Functionality BudgetSchedule Business Strategies
    54. 54. EnsuringValue •Develop a ProjectValue Chain (Think Critical Path) •IncludeValue in Risk Management Strategy •EvaluateValue Performance Frequently •Target Metric for Change Management
    55. 55. Suggested Readings July, 2012 Volume 30 Issue 5
    56. 56. References • Brewer, J. L., & Dittman, K. C. (2010). Methods of IT project management. Boston, MA: Prentice Hall. • Gale, S. (2011). Failure rates finally drop. PM Network, 25(8), 10-11. • Gray, C.F., & Larson, E.W. (2008). Project management:The managerial process (4th ed.). Boston, MA: McGraw Hill. • Lovelady, R., & Anderson, A. (2006). Psst:Want to take a risk? In G. Richardson & C. Butler (Eds.), Readings in information technology project management (pp. 166-171). Boston, MA:Thomson/CourseTechnology. • Pearlson, K.E. & Saunders, C.S. (2010). Managing and using information systems:A strategic approach (4th ed.). Hoboken, NJ:Wiley. • Project Management Institute (2008). A guide to the project management body of knowledge (4th ed.). Newtown Square: PA: Author. • Project Management Institute (2012).The power of portfolio management. PM Network, 26(6), 14-15. • Teller, J., Unger, B.N., Kock, A., & Gemunden, H.G. (2012). Formalization of project portfolio management:The moderating role of project portfolio complexity.The International Journal of Project Management, 30(5), 596-607. doi:10.1016/j.ijproman.2012.01.020. • Whitten, J.L., & Bentley, L.D. (2007). Systems analysis and design methods (7th ed.). Boston, MA: McGrawHill /Irwin.
    57. 57. Posted Presentations • My Presentations • http://faculty.css.edu/bolson1/presentations.html • Topic 1: TheValue of Project Management • http://faculty.css.edu/bolson1/presentations/ValueofPM.pdf • Topic 2: 10 Ways to IncreaseYour Project’s Success • http://faculty.css.edu/bolson1/presentations/ProjectSuccess.pdf • http://faculty.css.edu/bolson1/presentations/ProjectSuccess2.pdf • Topic 3: Maximizing the Impact ofYour Projects • http://faculty.css.edu/bolson1/presentations/ProjectImpact.pdf
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