Article - Global Project Management
- 1. 8 s Contract Management / April 2004 This article is an extract from Managing Complex Outsource Projects by Gregory A. Garrett, published by CCH Inc., Chicago 2004. As more and more companies and organizations conduct work on a multi- national or global basis, the need to define project management (PM) “best practices” and leverage project man- agement expertise globally becomes greater. What organizations want is to develop PM methodologies, based upon proven processes to ensure repeatable and measurable results, which meet or exceed their customers demanding expectations. Many companies or organizations have developed internal PM expertise, typically within their professional services department or supply chain management organizations. Likewise, many companies have taken the time to develop PM best practices databases to facilitate knowledge transfer within their organizations. Most companies hope to repeat project best practices, if they were proven successful some- where else in the organization. According to the Center for Business Practices (CBP), the research arm of PM Solutions and a U.S.-based project management firm, consistency and resource problems top the list of con- cerns facing project managers. These results come from CBP’s 2003 survey of 1,000 project professionals and senior-level executives from such industries as manufacturing, health care, and information technology. CBP’s survey found the largest project man- agement challenge was developing a consistent approach to managing pro- jects (23.9 percent of the respondents). Following close behind was the concern over resource allocation (19.7 percent) and managing too many projects or the wrong projects (16.9 percent). GREGORY A. GARRETT, CPCM, PMP, is vice president and general manager, U.S. federal government programs for Lucent Technologies in Herndon, Virginia. He is a member of NCMA’s Washington, D.C., Chapter and received the Project Management Excellence Award from the Project Management Institute. Send comments on this article to cm@ncmahq.org. A b o u t t h e A u t h o r As projects are becoming increasingly complex, professional project management is vital to achieving successful results in both the public and private business sectors. BY GREGORY A. GARRETT Global Project Management: Best Practices Global Project Management: Best Practices
- 2. April 2004 / Contract Management s 9 The CBP survey also found that companies implementing PM improve- ments spent an average of $712,000 on them annually, with most commonly implemented improvements including: s Software tools (77.9 percent), s Methodology development (69.1 percent), and s Staff training (69.1 percent). The survey also included other insights in the area of project types, project activities, and other areas, such as s Project complexity—51.7 percent of the projects surveyed were con- sidered complex or highly complex. s Project management office (PMO)— 44.6 percent of the companies surveyed had established a PMO or PM Center of Excellence. s Project portfolio management (PPM)—Most companies surveyed still had a low level of project portfolio management maturity. s Project performance measurements— The metrics most commonly used by the companies surveyed to assess value are measured by improvements in delivery dates (78.9 percent), bottom- line economics (65.8 percent), and product or service quality (57.9 percent).1 PM Methodology and Structure The following best practices have all been proven effective by numerous organizations involved in managing projects on a multi-national and/or global business scale. Methodology Many large multi-national organizations and companies have created a network of project managers geographically distributed in numerous countries worldwide. The goal of most large multi-national organizations and companies is to meet or exceed their customer’s business needs through
- 3. successful project results. Many com- panies, including ABB, AT&T, Bechtel, EDS, Hewlett-Packard, IBM, Lucent Technologies, NCR, Sun Microsystems, USAA, and others; have developed or have had outside consultants help them create a high-level project management methodology. Such PM methodologies are usually composed of standardized project management processes, based upon industry best practices and specific and tailored processes proven successful for the respective company. A global project management methodology should be a dynamic set of processes that evolve as the industry and company change to meet or exceed its customers’ needs. Unfortunately, some companies develop or purchase a global PM methodology, but do not take the time and effort to keep it current and accurate. As a result, some companies invest a lot of money in the one-time development of such methodologies, but do not truly reap the long-term benefits. It is important to remember that project management methodologies, processes, best prac- tices, and numerous tools and techniques exist only as a means to an end—meeting or exceeding a customer’s needs, while achieving desired company or organization performance targets. For a global project management methodology to be truly successful it must be (1) widely distributed throughout the organization, typically through multi-media (Web- based, CD-ROM, and paper copies, etc.), (2) widely acknowledged at all levels of the organization, and (3) routinely practiced by the project management community within the respective organization. The International Standards Organization (ISO) Standards for Project Management 10006 provides a good standardized outline of what process- es and practices should be included within global PM methodology. Support Structure In order to truly make project man- agement globally successful within an organization, there must be an appropriate support structure. Clearly, the level of support varies, based upon numerous factors including the level of PM maturity, project complexity, degree of outsourcing, geographic distribution, and project importance, etc. The following items are usually vital to ensure an appropriate project management support structure exists to successfully manage complex outsourced projects worldwide. s Executive sponsorship—A knowl- edgeable, experienced, certified project management executive, who serves as a champion of the project management discipline within the company and externally. s Global project management office (GPMO)—A small but effective team of highly experienced, trained, and certified project management professionals, who ensure the pro- ject managers in the field have all the resources, tools, training, and support they need to get the job done, including a global project management methodology. s Regional and/or local country project management office (PMO)— In addition, to the GPMO, there should be a small but highly respon- sive regional and/or local country PMO to help support the local pro- ject managers with more local- and country-specific project needs, local laws and regulations, customs, and team mobilization support. s Web-based PM best practices (knowledge management)—As much as possible, the best practices from projects worldwide should be documented and made easily avail- able and key-word searchable to all organization project managers. s Project management networking— Every available means should be used to facilitate the networking of project managers to share expertise, including teleconferences, video conferences, net-meetings, shared electronic databases, Web portals, and appropriate face-to- face meetings. 10 s Contract Management / April 2004 G L O B A L P R O J E C T M A N A G E M E N T : B E S T P R A C T I C E S Project Name Project 1 Project 2 Project 3 Project Manager Status (Green, Yellow, Red) Project Net Present Value (Revenue) Project Margin Customer Name Project Resource (Hdct) Customer Strategic Objective Comments/ Key Notes Key Projects Portfolio Table 1.
- 4. s Accurate and real-time project-level data—The organization should offer an enterprisewide, globally accessi- ble (24/7/365) information system, which provides real-time status on the placement of orders, for pur- chasing products and services, and the status of engineering, construc- tion, manufacturing, shipping installation, and testing. Case Study #1 With more than 35,000 employees in 100 countries, Sun Microsystems (Sun) is performing project manage- ment on a truly global scale. Within Sun’s Services organization, Sun Professional Services has the responsi- bility for developing internal project management expertise. Sun Professional Services has a network of about 500 project management professionals. Project management expertise with Sun Professional Services is organized around its primary competencies—the Project Management Performance Model, project quality activities, Customer Loyalty Index (CLI), and the Quality Feedback Loop. All of Sun’s specific project management methodologies, processes, and tools are driven by three principles: (1) customer busi- ness case, (2) quality, and (3) risk management.2 Global Project Portfolio Management In today’s business environment, most companies manage numerous projects. When multiple projects are related to one another by customers, technology, products, services, and/or location, they are usually referred to as programs. While all programs and their related projects are important, to some extent, some are clearly more important than others. Thus, it is incumbent upon each organization to understand which of their numerous programs and related projects are of the highest priority, to ensure the top talent of the organization and the nec- essary support is provided to those key projects. Unfortunately, many organizations do not do a very good job of effective- ly managing their respective project portfolio. Common project portfolio management problems may include: s Allowing lower priority projects to acquire vital materials, products, or services needed by the higher priority projects; s Allowing the internal “who-you-know” network approach to circumvent a priority resource allocation program; s Not placing the best talent on the highest priority projects, typically just getting the available talent; s Failing to rack and stack your organization’s projects to determine which are the most important projects by country, region, or global basis; s Not properly or frequently obtaining status on the organiza- tion’s key projects; s Failing to use appropriate perfor- mance metrics to evaluate cost control, profitability, on-time deliv- ery, product and service quality, and customer satisfaction on the key projects; and s Not terminating failing projects. Table 1 (on page 10) provides a simple means of helping organizations prioritize their projects and summa- rize the key aspects of their portfolio of projects. Multi-cultural Awareness Training As project managers are increasingly asked by their employers to relocate to other countries or remotely support customer’s projects globally, the need for multi-cultural awareness training has grown. Likewise, as more organi- zations outsource supplies on a multi-national or global basis, the need for multi-cultural awareness training continues to grow. Clearly, both buyers or customers and sellers 12 s Contract Management / April 2004 G L O B A L P R O J E C T M A N A G E M E N T : B E S T P R A C T I C E S Individual Global Business Competencies Table 2. Vision Global Attitude • A global mindset • Ability to work with a highly diverse team • A long-term orienta- tion Strategy Leadership • Motivates employees to excellence • Facilitates organiza- tional change • Sets high expectations • Leads by example Competencies required to make it work! Demonstrated abilities/actions Structure Discipline • Focuses on process improvement • Serves as a team or force multiplier • Holds employees accountable Implementation Execution • Leverages supply-chain partners • Skillfully executes the deployment cycle • Plans and tracks performance with appropriate metrics i Adapted from The Global Challenge, by Moran & Riesenberger, New York, McGraw-Hill, 1994.
- 5. or suppliers of products and services projects are expanding the need for personnel to receive multi-cultural awareness training, especially to reflect the diversity of the business partners engaged in the outsourcing management environment. Increasingly companies and other multi-national organizations are estab- lishing local country offices staffed with local country nationals. Yet, many organizations still require a few key foreign country nationals to support their projects. As a result, the foreign country nationals often require training in a variety of aspects in order to be able to successfully conduct business. Training in often needed in the areas of s Language development, s Local culture and customs, s Support of local country advisors to understand local business processes and/or practices, s Support of interpreters, and s Document transcription. Individual Global Business Competencies Some people believe that conducting business on a global basis is an attitude, not knowledge or information. Stephen Rhinesmith, author and international business expert, has stated that a glob- al mindset is a requirement of a global business manager who will guide institutions and organizations into the future. He defines a mindset as A predisposition to see the world in a particular way that sets boundaries and provides explanations for why things are they way they are, while at the same time establishing guidance for ways in which we should behave. In other words, a mind- set is a filter through which we look at the world. Rhinesmith explains that people with global mindsets approach the world in a number of specifics ways. These individuals (1) Look for the big picture and multiple possibilities; (2) Understand the world is very com- plex and business is interdependent; (3) Are process-oriented, understand- ing that all business follows a process of inputs, tools and tech- niques, and outputs; April 2004 / Contract Management s 13 G L O B A L P R O J E C T M A N A G E M E N T : B E S T P R A C T I C E S Organizational Global Business Competencies Table 3. Core Competencies 1. Global Vision—Where the corporation intends to go, emphasis is on acceptance 2. Strategic Focus—Competitive advantages of the organization 3. Control—Flow of strategic direction from headquarters 4. Local Autonomy—Degree of freedom allocated to the subsidiary to change/modify products or services 5. Coordination—Degree of teamwork between subsidiary, headquarters and third parties 6. Domestic/Subsidiary Relationship—Flow of information-sharing 7. Corporate Culture—Characteristics that unite people in an organization 8. Management Selection—Strong leadership trait, team-builder, and results-oriented 9. Employee Selection—Combine country of origin and corporate management staff 10. Decision Processes—Control and flow of decision-making 11. Information Processes—Control and flow of information and knowledge 12. Performance-Oriented—Results focused management and employees Worldwide Organizational Solutions Unified, understood, and accepted by all employees Growth through coordinated centralization and local adaptability High High High High, shared, and interdependent Central and unified Flexibility, best candidate available from any country Best available candidate Shared and complex emphasis on the customer and empowering employees Shared and complex, real-time data, and accurate information Shared and understood performance goals and metrics, with pay tied to performance i Adapted from The Global Challenge, by Moran and Riesenberger, New York, McGraw-Hill, 1994
- 6. (4) Consider diversity in people as a real asset and valued resource, know how to work effectively in multicultural teams; (5) Are comfortable with change and ambiguity; and (6) Are open to new experiences, and enjoy a challenge. While a global mindset or attitude is vital to successfully manage out- sourced projects worldwide, there are several additional factors or compe- tencies that are essential for success. Table 2 (on page 12) illustrates the global business essentials and individ- ual key competencies of a successful global business manager/executive. Organizational Global Business Competencies In addition to the individual compe- tencies required for successful global business, there are numerous core organizational competencies required for a company to successfully manage complex outsourced projects world- wide. Table 3 (on page 13) lists the core organizational competencies necessary for global business success. Benchmarking Project Management Maturity The challenge facing today’s project- performing organizations is that each of the ingredients it takes to deliver projects successfully requires a sub- stantial commitment of time and resources. Given the many initiatives required to achieve consistent project success, which initiatives should an organization undertake first? Project management maturity models are designed to provide the framework that an organization needs to purpose- fully and progressively develop its capabilities to consistently deliver successful projects. Numerous project management maturity models have emerged since the mid ‘90s. A recent estimate suggests there are more than 30 models currently serving the mar- ket. Most of the models are based on the Capability Maturity Model devel- oped by the Software Engineering Institute at Carnegie Mellon. In a study first reported in 1998, William C. Ibbs and Young-Hoon Kwak, from the University of California, developed a benchmark for project management maturity, as part of a broader study to determine the financial and organizational impacts of project management. This study employed the Berkeley PM Process Maturity Model. The sample included 38 companies representing four targeted industries: engineering and construction, telecommunications, information systems, and hi-tech manufacturing. Each of the participat- ing companies completed a survey assessment tool. The researchers determined that the overall project management maturity of the 38 com- panies studied was 3.26 on a 5-point scale. Ibbs and Kwak also compared maturity among industries. Using the average maturity level of all compa- nies in each of the four industries, the researchers reported that engineering and construction (3.36), hi-tech manufacturing (3.34) and telecommu- nications (3.30) demonstrated relatively high project management maturity compared to information systems (3.06). The PM Solution’s Project Management Maturity Model The PM Solutions’ Project Management Maturity Model, devel- oped by its CEO, Kent Crawford, is an excellent benchmarking tool. This model is based on a two-dimensional framework. The first dimension reflects the level of maturity. It is based on the structure of the Software Engineering Institute’s (SEI) Capability Maturity Model (CMM). The SEI-CMM has received wide- spread acceptance as a standard for process modeling and assessment of organizational maturity in several process areas. The second dimension depicts the key areas of project man- agement addressed. This dimension adopts the structure of the Project Management Institute’s nine knowl- edge areas. All of the nine knowledge areas are further decomposed yielding a total of 42 key components that enable a more rigorous and specific determination of project management maturity. The structure of this two- dimensional framework is presented in Figure 1 (on page 16). Benchmarking Study Results Using the Project Management Maturity Model as a tool, James Pennypacker (director of Center for Business Practices) and Dr. Kevin Grant (assistant professor, University of Texas San Antonio) conducted a survey of 123 firms. The survey results determined that nearly 67 percent of the organizations, compa- nies with revenues ranging from below $100 million to more than $3 billion, were currently operating at an overall project maturity level of 2 (out of 5) or below. Further, the research conducted concludes the level of project management maturity is statistically consistent among industries and companies of varying size.3 14 s Contract Management / April 2004 G L O B A L P R O J E C T M A N A G E M E N T : B E S T P R A C T I C E S Project Management Organization Benchmarking Study Table 4. Revenue to Hdct. $M (U.S.) $10M $15M $16M $18M $20+M Expense/Revenue % 1.5% 1.0% 0.93% 0.83% 0.75% Industry Assessment Below average Average Above average Best-in-class World-class
- 7. 16 s Contract Management / April 2004 PM Expense-to-Revenue Benchmarking Study The Center for Project Studies (CPS), a part of Garrett Consulting Services—a Virginia-based interna- tional business consulting practice, conducted a survey of more than 75 companies during 2002. Each compa- ny surveyed had more than $5 billion in annual revenue during 2001, managing numerous large complex outsourced projects. Based upon a response rate of more than 32 per- cent, the following information was gathered from multi-national compa- nies in the following industries: aerospace, defense, engineering, information technology, construction, and telecommunications. Given: A company of more than $5 billion in annual revenue with outsourced projects greater than $50 million. Given: A project management organization performs the following functions on large complex out- sourced projects: (1) project management s project leadership, s project planning, s project scheduling, s project status, s project control, and s project correcting; (2) Product/service demand planning; (3) Order management; (4) Material management; (5) Supply chain interface; and (6) Contract administration. Given: An average employee total (wrap-rate) expense equals $150,000 USD per year. Table 4 (on page 14) provides a roughly-right guideline for staffing large complex outsourced pro- ject within large companies worldwide. Recommendations Based upon research, experience, and recent discussion with several of the leading project management con- sultants who have helped numerous organizations worldwide improve pro- ject performance, the following major actions are suggested. (1) Ensure top PM talent—Obtain highly skilled, experienced, trained, and certified project management professionals at all levels of the organization. (2) Improve information systems— Provide accurate, real-time, order-level data by customer including: plans vs. actual perfor- mance for cost and schedule/ delivery. (3) Streamline staff—Reduce support staffs at all levels by automating reports, standardizing processes, driving down decision-making authority, and outsourcing support functions. G L O B A L P R O J E C T M A N A G E M E N T : B E S T P R A C T I C E S Figure 1. Level 1 Initial Process Level 2 Structured Process and Standards Level 3 Organizational Standards and Institutionalized Process Level 4 Managed Process Level 5 Optimizing Process SEI Maturity Levels PMI Knowledge Areas Each knowledge area is broken down into specific components. Specific components are used to measure maturity and develop action plans. The number of components associated with each knowledge area is presented parenthetically following the title of each model. PM Solutions Project Management Maturity Model Project Integration Management (5) Scope Management (6) Time Management (5) Cost Management (5) Quality Management (4) Project Human Resource Management (4) Communications Management (4) Risk Management (5) Procurement Management (4)
- 8. April 2004 / Contract Management s 17 (4) Build high-performance teams— Motivate leaders to create high performance teams using the PM discipline to consistently achieve customer needs and goals. (5) Recognize and reward outstanding performance—Ensure business leaders actively recognize and reward project teams when they achieve excellent results for their customers and their organization. (6) Develop project leadership succession plans—Take the time to develop project leaders at every level of the organization. Prepare appropriate professional develop plans for all top rated project managers. Summary In today’s world of increased outsourcing and customers’ high expections, there is a great need to develop global project management best practices. This article provides a brief summary of many of the proven effective tools, techniques, and prac- tices to help projects meet or exceed both the customers’ and suppliers’ requirements. As projects are becoming increasingly complex, with the inte- gration of multiple-parties involving hardware, software, and professional services all linked together—profes- sional project management is vital to achieving successful results in both the public and private business sectors. CM s CMBOK 1.4.6 Endnotes 1. James S. Pennypacker, Center for Business Practices Survey Results, PM Network Magazine, (Project Management Institute, May 2003), 6–7. 2. Marissa Peterson, “Sun Microsystems— Best Practices,” PM Network Magazine, (Project Management Institute, January 2003), 24. 3. James S. Pennypacker and Kevin P. Grant, “Project Management Maturity: An Industry Benchmark,” Project Management Journal (Project Management Institute, March 2003), 4–11. G L O B A L P R O J E C T M A N A G E M E N T : B E S T P R A C T I C E S It is often said “experience is the best teacher,” and that people learn more from their mistakes than their successes. This checklist should help you avoid some of the most common problems that often result in the failure of complex outsourced projects. u Who needs roles and responsibilities? u Begin work without a contract. u Forget about project progress reports. u Who needs acceptance criteria? u Change team members frequently. u Keep changing requirements. u Don’t document anything. u Hire the cheapest subcontractors. u Select project team leader from whoever is available. u Who needs a project plan—Just do it! u Who needs executive support? u Who cares about a supplier’s past performance? u Who needs a business case? u Promise the customer whatever he or she wants. u Agree to whatever delivery schedule the customer wants. u Forget about a project kick-off meeting. u Agree to unlimited liquidated damages. u Who needs performance-based requirements? u Forget about earned value. u Play the lie-and-blame game. What Not to Do