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Whats Different About PM in the Public Sector

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Whats Different About PM in the Public Sector

  1. 1. What’s Different Project Management in the Public Sector John Alley, Director PMO, McMaster Conference Board of Canada - January 2009
  2. 2. Key Learning Points <ul><li>what is different? </li></ul><ul><li>how do we manage? </li></ul><ul><ul><li>Resources </li></ul></ul><ul><ul><li>Estimating </li></ul></ul><ul><ul><li>Acquisitions </li></ul></ul><ul><ul><li>Governance </li></ul></ul>
  3. 3. What is the Public Sector? <ul><li>Public Sector </li></ul><ul><li>Private Sector </li></ul>An organization funded (mostly) by the public to provide service for the public. Governments Higher Education Health Care Profit Seeking Utilities Charities Crown Corporations
  4. 4. <ul><li>“a degree of unlikeness” </li></ul><ul><ul><li>Concise Oxford Dictionary, 1990 </li></ul></ul><ul><li>difference in kind </li></ul><ul><li>difference in degree </li></ul>Differences
  5. 5. Differences are important <ul><li>differences lead to different actions </li></ul><ul><li>what about PM maturity? </li></ul><ul><li>differences run deeper </li></ul>
  6. 6. What’s Different for Public Sector Projects <ul><li>Resourcing </li></ul>
  7. 7. What’s Different? <ul><li>sources of project financing </li></ul>Public Sector Private Sector Taxes, Grants Earned Revenue, Capital Markets
  8. 8. More on Financing <ul><li>Private Sector </li></ul><ul><li>profit seeking </li></ul><ul><li>grow or die </li></ul><ul><li>uses capital market </li></ul><ul><li>define a hurdle rate </li></ul><ul><li>can find funds for any project that benefits the bottom line </li></ul><ul><li>Public Sector </li></ul><ul><li>provide services the market can’t </li></ul><ul><li>resist growth </li></ul><ul><li>rarely use capital market </li></ul><ul><li>what’s a hurdle rate? </li></ul><ul><li>select the ‘best’ projects that fit the available funds </li></ul>
  9. 9. Constraints <ul><li>resources </li></ul><ul><ul><li>fixed pot for all projects </li></ul></ul><ul><ul><li>every project will have limited funds </li></ul></ul><ul><li>time </li></ul><ul><ul><li>legislated deadlines </li></ul></ul><ul><ul><li>political deadlines </li></ul></ul><ul><li>scope </li></ul><ul><ul><li>usually starts at the minimum </li></ul></ul>
  10. 10. Constraints <ul><li>many projects are triple constrained </li></ul><ul><li>contingency? </li></ul><ul><li>risks? </li></ul><ul><li>accuracy of estimates? </li></ul>
  11. 11. For Success on Projects … <ul><li>resist “On time, on scope, on budget” </li></ul><ul><li>address the triple constraint: </li></ul><ul><ul><li>charter identifies which can be adjusted </li></ul></ul><ul><ul><li>focus on risk analysis </li></ul></ul><ul><ul><li>make estimates realistic </li></ul></ul><ul><li>deliver portfolio on budget </li></ul>
  12. 12. For Success on Projects … <ul><li>understand the priority and strategic alignment of projects in the portfolio </li></ul><ul><li>know the business benefits and find ways to deliver benefits in stages </li></ul><ul><li>pooled contingencies, stretch objectives </li></ul>
  13. 13. What’s Different for Public Sector Projects <ul><li>Estimating </li></ul>
  14. 14. What’s Different? <ul><li>Size </li></ul><ul><li>Scope of activity (for a given size) </li></ul>Public Sector Private Sector Large Small Public Sector Private Sector Complex Simple
  15. 15. What’s Different - Complexity <ul><li>City of Hamilton </li></ul><ul><li>police </li></ul><ul><li>fire </li></ul><ul><li>bylaw enforcement </li></ul><ul><li>parks </li></ul><ul><li>recreation services </li></ul><ul><li>garbage collection </li></ul><ul><li>sewer services </li></ul><ul><li>roads </li></ul><ul><li>planning services </li></ul><ul><li>… and more </li></ul><ul><li>McMaster </li></ul><ul><li>25,000 student school </li></ul><ul><li>3400 bed residence </li></ul><ul><li>18 food outlets </li></ul><ul><li>athletic club </li></ul><ul><li>parking service </li></ul><ul><li>bookstore </li></ul><ul><li>library </li></ul><ul><li>computer labs </li></ul><ul><li>health clinic </li></ul><ul><li>print shop </li></ul><ul><li>and more …. </li></ul>
  16. 16. What’s Different – Estimating <ul><li>low estimates because: </li></ul><ul><ul><li>cost constraint </li></ul></ul><ul><ul><li>inexperienced estimators </li></ul></ul><ul><ul><li>resource expertise </li></ul></ul>Estimator Experience Resource Expertise Achievable Predictable Scope Clarity Speed of Delivery Cost Constraints Estimate
  17. 17. For Success on Projects … <ul><li>allow for costs of change management </li></ul><ul><li>use parametric tools </li></ul><ul><li>get an independent assessment </li></ul><ul><li>post-project reviews  better estimates </li></ul>
  18. 18. For Success on Projects … <ul><li>build standard estimates for key components </li></ul><ul><ul><li>internal approvals </li></ul></ul><ul><ul><li>acquisitions </li></ul></ul><ul><ul><li>security testing </li></ul></ul><ul><li>benchmark </li></ul><ul><li>build in gates for re-estimating </li></ul>
  19. 19. What’s Different for Public Sector Projects <ul><li>Acquisitions </li></ul>
  20. 20. What’s Different - Acquisitions <ul><li>Bellamy Inquiry </li></ul><ul><li>MFP Leasing </li></ul><ul><li>Toronto Tax System </li></ul>
  21. 21. What’s Different – Acquisitions <ul><li>purchasing policy </li></ul><ul><ul><li>open and accountable process </li></ul></ul><ul><ul><li>accessible to all vendors </li></ul></ul><ul><ul><li>issues of interprovincial trade </li></ul></ul><ul><ul><li>clear and open selection </li></ul></ul><ul><ul><li>get the best value for public funds </li></ul></ul>
  22. 22. What’s Different – Acquisitions <ul><li>limited exceptions for sole source </li></ul><ul><ul><li>defined criteria </li></ul></ul><ul><ul><li>get the best value </li></ul></ul><ul><li>approvals based on $ limits </li></ul><ul><ul><li>defines accountability </li></ul></ul><ul><ul><li>limits risk </li></ul></ul><ul><li>the process takes time </li></ul>
  23. 23. For Success on Projects … <ul><li>build the process into templates </li></ul><ul><li>know the rules - the $ limits and the process for each </li></ul><ul><li>define expectations for time/cost/effort to follow the process </li></ul><ul><li>training for PMs </li></ul><ul><ul><li>maintain meticulous records </li></ul></ul><ul><ul><li>the process protects them </li></ul></ul>
  24. 24. What’s Different for Public Sector Projects <ul><li>Governance </li></ul><ul><li>Strategic alignment </li></ul><ul><li>Stakeholders </li></ul><ul><li>Decision-making </li></ul><ul><li>Project Selection </li></ul>
  25. 25. What’s Different for Public Sector Projects <ul><li>Governance </li></ul><ul><li>Strategic alignment </li></ul><ul><li>Stakeholders </li></ul><ul><li>Decision-making </li></ul><ul><li>Project Selection </li></ul>
  26. 26. What’s Different – Strategic Alignment <ul><li>Top-Down </li></ul>Bubble Up Private Sector Public Sector Strategy Strategic Programs Projects
  27. 27. For Success on Projects … <ul><li>Emphasize strategic alignment </li></ul><ul><ul><li>(business case, charter and communications) </li></ul></ul><ul><li>Understand and document competing priorities </li></ul><ul><li>break projects into smaller components </li></ul><ul><ul><li>fit in as resources permit </li></ul></ul><ul><ul><li>allow for benefits even if terminated early </li></ul></ul>
  28. 28. What’s Different for Public Sector Projects <ul><li>Governance </li></ul><ul><li>Strategic alignment </li></ul><ul><li>Stakeholders </li></ul><ul><li>Decision-making </li></ul><ul><li>Project Selection </li></ul>
  29. 29. What’s Different - Stakeholders Public Sector Private Sector Internal Audit Internal Audit Internal customers Internal customers Employees Employees Management Management Team members Team members Sponsor Sponsor Finance Committee Finance Committee Board of Directors / Cabinet / Council / Governors / Senate Board of Directors The public Elected Officials as individuals Owners / Shareholders Internal Stakeholders
  30. 30. What’s Different - Stakeholders Customers Customers Public Sector Private Sector Bond rating service Stock analyst/Bond rating service Financial institutions Financial institutions Government – other levels/depts Government Taxpayers Taxpayers Special Interest Groups Special Interest Groups Consumer Groups Consumer Groups Consultants Consultants Suppliers Suppliers Labour Unions Labour Unions External Team Members External Team Members External Stakeholders
  31. 31. For Success on Projects … <ul><li>Understand the importance of </li></ul><ul><ul><li>taxpayers </li></ul></ul><ul><ul><li>other branches and levels of government </li></ul></ul><ul><ul><li>special interest groups </li></ul></ul><ul><li>stakeholder analysis templates </li></ul><ul><li>communication plan templates </li></ul><ul><li>peer reviews / steering committee review </li></ul>
  32. 32. What’s Different for Public Sector Projects <ul><li>Governance </li></ul><ul><li>Strategic alignment </li></ul><ul><li>Stakeholders </li></ul><ul><li>Decision-making </li></ul><ul><li>Project Selection </li></ul>
  33. 33. What’s Different – Decision Making <ul><li>Management </li></ul><ul><li>Edict </li></ul>Consensus Private Sector Public Sector
  34. 34. For Success on Projects … <ul><li>define who makes decisions and how </li></ul><ul><ul><li>train sponsors and PMs </li></ul></ul><ul><li>make decision points visible </li></ul><ul><li>facilitation / creative problem-solving </li></ul><ul><li>standard oversight structures </li></ul><ul><ul><li>Project Selection Board </li></ul></ul><ul><ul><li>Steering Committees </li></ul></ul>
  35. 35. What’s Different for Public Sector Projects <ul><li>Governance </li></ul><ul><li>Strategic alignment </li></ul><ul><li>Stakeholders </li></ul><ul><li>Decision-making </li></ul><ul><li>Project Selection </li></ul>
  36. 36. What’s Different – Project Selection <ul><li>Quantitative </li></ul><ul><li>Criteria </li></ul>Qualitative Criteria Private Sector Public Sector
  37. 37. What’s Different – Project Selection <ul><li>the public sector provides services the market can’t </li></ul><ul><ul><li>fire-fighting </li></ul></ul><ul><ul><li>roads </li></ul></ul><ul><ul><li>courts </li></ul></ul><ul><li>but what about private garbage collection, the 407, private prisons? </li></ul><ul><li>what is the ROI on these services? </li></ul>
  38. 38. What’s Different – Project Selection <ul><li>qualitative vs quantitative criteria </li></ul><ul><li>how do we compare services? </li></ul><ul><ul><li>eg: fire fighting vs seniors’ recreation </li></ul></ul><ul><li>how do we balance service improvements, cost savings and legislated requirements? </li></ul><ul><li>how do we align with strategy? </li></ul>
  39. 39. What’s Different – Project Selection <ul><li>How do we weigh the importance of each criterion? </li></ul>Strategy Cost Savings Cost Avoidance And many more … Security Service Capability Selection
  40. 40. For Success on Projects … <ul><li>standard project proposal format </li></ul><ul><ul><li>strategic fit built in </li></ul></ul><ul><ul><li>accountability built in </li></ul></ul><ul><li>standard valuation and metrics for </li></ul><ul><ul><li>customer service improvement </li></ul></ul><ul><ul><li>cost reduction / avoidance </li></ul></ul><ul><ul><li>qualitative benefits </li></ul></ul>
  41. 41. For Success on Projects … <ul><li>25% strategic fit </li></ul><ul><li>25% business case / service improvement </li></ul><ul><li>25% capacity, security, adherence to standards, project risk </li></ul><ul><li>25% corporate risk reduction </li></ul><ul><li>20% strategic fit </li></ul><ul><li>20% business case </li></ul><ul><li>20% value to external clients </li></ul><ul><li>20% sponsor commitment </li></ul><ul><li>20% project risk </li></ul>facilitate consensus on a selection model 2 examples:
  42. 42. What’s Different for Projects? <ul><li>Resources (Financing) – the triple constraint </li></ul><ul><li>Acquisition – policies / time </li></ul><ul><li>Estimating – second opinions </li></ul><ul><li>Governance </li></ul><ul><ul><li>Strategic alignment – metrics </li></ul></ul><ul><ul><li>Stakeholders – templates </li></ul></ul><ul><ul><li>Decision-making – define who and how </li></ul></ul><ul><ul><li>Project selection – define criteria / qualitative </li></ul></ul>
  43. 43. Questions? John Alley, Director PMO, McMaster alleyj@mcmaster.ca Conference Board of Canada - January 2009

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