In this article I present the investment landscape in some industries, the statistif of failures, the governance & management objectives: value maximization, risk & resource optimisation, the seven enabler of success, lets do the right things and do things right
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Project, Program & Portofolio Management Contribution, an Article from the PMI Indonesia Chapter Board for Excellentia Edition 37 by Rahmat Mulyana
1. To Fail or Not to Fail, That is the Questions: The Contribution of Project, Program & Portfolio Management by Rahmat Mulyana Page 1 of 5
To Fail or Not to Fail, That is the Question: The Contribution of Project, Program &
Portfolio Management
Investment Landscape in some Industries
As we all know that the world has experience the Great
Recession, the steep decline in economic activity during
2007-2009, which triggered by USA mortgage crisis. Many
investments were declining those years, but recovery has
been performed.
Table 1. Investment Landscape in some Industries
Nr Industry Description Source
1 ICT Global investment total USD
3,927 billion in 2008, with
CAGR 8,5%
OECD,
2010
2 Coal Global investment in energy
supply infrastructure 2011-
2035 total USD 1,164 billion
OECD,
2011
3 Oil USD 9,997 billion (Global)
4 Gas USD 9,497 billion (Global)
5 Power USD 16,883 billion (Global)
6 Biofuel USD 356 billion (Global)
7 Construction USA construction
investment total USD 850
billion in 2012 (Residential,
Non-Residential and Non-
Building)
FMI,
2013
Let’s see table 1, the global infrastructure investment in
Energy Industries (Coal, Oil, Gas, Power, Biofuel) according
to OECD has total investment USD 38 Trillion for 2011-
2035, while (USA only) construction industry investment
reached USD 850 bilion in 2012, while ICT (Information &
Communication Technology) industry investment reached
almost USD 4 Trillion in 2008, and still growing rapidly, not
to mention that there are other types of investment too.
The Statistics of Failures
So, we already know that there are a LOT of resources
involved in the form of projects for those investments
mentioned above. But the question is: Did we really get
the benefits from all of those investments?
According to McKinsey & Oxford Univ. study in 2012, that
from 5,400 large scale ICT projects (> $15 M), the well
known problems are still persisting, 17% of go so badly
which threaten the very existence of the company, on
average its run 45% over budget and 7% over time while
delivering 56% less value than proposed. We can still
remember the famous number from Standish Group Study
in 2006, that only 35% ICT projects succeeded while the
remainders are challenged or failed totally.
What about the Energy projects performance? Latest
research from Accenture in 2012 showed that only 30%
are on budget and 15% on time, as illustrated in Figure 1.
Figure 1. Project Performance in Energy Investments (Accenture)
Are construction projects better than the other two? The
answer is NOT really. According to the KPMG global
By: Rahmat Mulyana, MT,MBA,PMP,CISA,CISM,CGEIT,CRISC,ITILF
Bandung Branch Director of PMI Indonesia Chapter (rmulyana@pmi-indonesia.org)
Moel interest is to facilitate Business-Technology Alignment. He has broad range experience in delivering
Business-Technology Advisory Services and Professsional Education in Strategic Planning and Architecting,
Governance & Management, Assurance and Business Continuity & Disaster Recovery for various types of
client such as banking, insurance, telco, airport, seaport, plantation, forestry, energy, ministry, academics,
etc. He graduated from ITB School of Electronics and Informatics and School of Business and Management.
2. To Fail or Not to Fail, That is the Questions: The Contribution of Project, Program & Portfolio Management by Rahmat Mulyana Page 2 of 5
research in 2013, 77% of executives surveyed say that
their organisation is experiencing underperforming
projects. There are some main causes such as project
delays (51%), poor estimating practices (50%), failed risk
management processes (47%), poor subcontractor
performance (37%), design errors and omissions (36%),
lack of available resources (20%), change in project
management team (17%) and poor client relations (16%),
as illustrated in Figure 2.
Figure 2. Project Performance in Construction Investments (KPMG)
It’s all about Value, Risk & Resources
There is no silver bullet to solve all those underperforming
and failures. But the research in ICT field performed by
CISR MIT Sloan (2002), Harvard (2005), ITGI (2011), etc.
showed that better Governance & Management practices
are the answer for this problem. Its enhancement has
correlation impact with improving business
competitiveness until higher profits performance as
illustrated in Figure 3.
Figure 3. Correlation Between IT Score and Business Performance
Actually there are 3 main objectives regarding Governance
& Management practices which are: Benefit (Value)
Realisation and Risk & Resources Optimisation.
Figure 4. IT Governance & Management (ISO 38500)
RESOURCE OPTIMISATION is about how to make effective
and efficient use of the assets that we bought, created
and operated in the governance (evaluate, direct and
monitor), project management and operations practices
as illustrated in Figure 4, such as applications,
infrastructures, human resources and data & information.
RISK OPTIMISATION is about how to best mitigate the
impact of uncertainty in achieving our objectives. Our task
is not to eliminate risk (remember that risk is comparable
with returns) but maintaining it optimally under our risk
appetite so when the worst case happened we can still
tolerate its impact.
The hardest part is BENEFIT REALISATION since this is the
most neglected part of the objective. Project management
is exist to deliver unique deliverables which created from
initialisation until closing, and these are the common
practices. But what happened when it is delivered, going
live and giving back to the investors? This is actually the
beginning of benefit realisation until the assets are
diminished by depreciation and amortisation. The survey
conducted by CIO Magazine showed that only a few who
performed it consistently. The key point here is benefit
must be realised and overcoming the total cost of
ownership.
3. To Fail or Not to Fail, That is the Questions: The Contribution of Project, Program & Portfolio Management by Rahmat Mulyana Page 3 of 5
The Seven Enabler of Success
In order to achieve the three objectives of Governance &
Management mentioned above, there are seven enabler
that should be addressed as illustrated in Figure 5.
Figure 5. The Seven Enabler of Governance & Management (COBIT 5)
The first enabler is Principles, Policies and Framework.
Regarding this enabler, PMI has released many best
practices framework to its constituents such as the
famous PMBOK 5 (2013), the Standard of Program
Management Third Ed (2013), the Standard of Portfolio
Management Thied Ed (2013) and Organisational PM
Maturity Model (OPM3) Third Ed (2013), as illustrated in
Figure 6. This framework should be addressed in the
Enterprise principles which usually placed in Strategic Plan
and the Enterprise Policies.
Figure 6. Best Practice Framework from PMI
The second enabler is Processes. The portfolio, program
and project management processes and also the
monitoring & evaluation processes from OPM3 should be
derived from the Policies and the Frameworks in the form
of Guidance, SOP (Standards & Procedures) and Working
Instruction which is suitable for our organisation.
The third enabler is Organisational Structures. Again,
please do remember, there are no structures that fit for
all, but there are some generic guidance available, such as
not creating superman which has too much power
(remember power tend to corrupt), use SOD-based ARCI
chart (Accountable, Responsible, Consulted, Informed),
use dual control, use compensating control if SOD is
violated, etc.
There are some structure good practices such as the
implementation of PMO (Program and Project
Management Office), Program & Project Steering
Committee, Risk Management and Compliance Division,
Internal Audit Division (remember Three Lines of Defense
and Internal Consulting, not WATCHDOG), External Audit,
etc.
The forth enabler is Culture, Ethics and Behaviour. Good
practice for creating, encouraging and maintaining desired
behaviour throghout the enterprise include
communication of the underlying corporate values,
awareness which strengthened by the example behaviour
exercised by senior management/champions. Incentives
to encourage and deterrents to enforce, clear link
between behaviour and reward scheme, etc.
The fifth enabler is Information, which usually way be
more effective and efficient if delivered and supported by
the sixth enabler which is Services, Application and
Infrastructure represented by the adequate Enterprise
Architecture and Information System used by the
Enterprise, in this case Portfolio and Program & Project
Management tools.
Figure 7. Portfolio and Program & Project Management (Forrester)
4. To Fail or Not to Fail, That is the Questions: The Contribution of Project, Program & Portfolio Management by Rahmat Mulyana Page 4 of 5
There are so many tools which could be used to support
Portfolio and Program & Project Management but usually
organizations rarely use a single tool for both purposes as
illustrated in Figure 7.
Lets do the Right Things: Portfolio
Management
According to ISO 21500:2012, a portfolio is a collection of
projects and programmes and other work that are
grouped together to facilitate the effective management
of that work to meet strategic goals.
Portfolio management is about DOING THE RIGHT THINGS.
It should be cascaded from the Enterprise Strategy, and
then becoming direction for program and project
execution, until the deliverables are operated as
illustrated in Figure 8.
Figure 8. Cascading from Strategy into Operation (OPM3)
There are some tools which can help us implementing the
Portfolio Management good practices. Latest research
from Forrester in 2012 in the form of the famous Forrester
Wave showed that the leaders are CA, Planview, HP and
Daptiv, while the others are strong performers such as
Planisware, Microsoft, Clarizen, AtTask, Rally as illustrated
in Figure 9.
Figure 9. Portfolio Management Tools (Forrester)
By performing portfolio management then we will have an
evaluated and prioritized list regarding the program &
project based on matrix of urgency and importance as
illustrated in Figure 10.
Figure 10. Portfolio of Program & Project Bubble Board (KPMG)
Lets do Things Right: Program & Project
Management
After we have selected and prioritized the strategic
initiatives of program and project in the form of portfolio,
then the next job is DOING THINGS RIGHT.
The more complex the project, the more important the
right tool. There are so many tools available, according to
Forrester Wave illustrated in Figure 11, the leaders are
Planview, HP, CA, Microsoft, Rally, Daptiv and the strong
performers are AtTask, Clarizen and Planisware.
5. To Fail or Not to Fail, That is the Questions: The Contribution of Project, Program & Portfolio Management by Rahmat Mulyana Page 5 of 5
Figure 11. Program & Project Management Tools (Forrester)
The system should provide adequate control of project
management practice such as WBS, Gantt Chart,
Resource, Sharing, Document/ Storage, Communication,
Discussion, Alert, Reporting as illustrated in Figure 12.
Figure 12. Project Management Tools Example
The Opportunity Lies A”head”
Last but not least, the seventh enabler is People, Skills
and Competency. Located in the last does not mean that
it is less important, instead it is the key to operate all of
the enablers mentioned before, it is the BRAINWARE that
make all of them are possible to be performed.
Regarding the competency, it is divided into two
categories which are soft competence and hard
competence.
Spencer defines 20 soft competency compiled in 6
category such as Achievement & Action, Helping & Human
Service, Impact & Influence, Managerial, Cognitive and
Personal Effectiveness.
While for hard competence it is depend on the related-
field of project management. In IT field could use SFIA
(Skill Framework of Information Age), European e-
Competency Framework (ECF), NWCET Skill Standards for
IT, IPA Japan IT Skill Standards, as illustrated in Figure 13.
Figure 13. Project & Portfolio Management Competency (ECF)
The skills should be standardized by related-certification
such as CAPM, PMP, PgMP, PMI-RMP, PMI-SP and PMI-
ACP from Project Management Institute.
Please do remember that all of these enablers are controls
which should be implemented adequately to mitigate our
risk based on our appetite. Too much controls will slow us
down (overkilling), but too less will make us vulnerable,
for example to fraud, underperformance, failures, etc.
That’s it for now, hopefully this article will serve you right
=RM=