Presentation from workshop titled Maximizing the Impact of Your Projects

1. MAXIMIZINGTHE IMPACT
OFYOUR PROJECTS
Project Management Workshop
Brandon Olson, PhD

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. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

4. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

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. Project Characteristics
Kerzner, 2009
Specific Objective with
Defined Specifications
Defined Start
and End Dates
Funding Limitations
Consume Human and
Nonhuman Resources
Multiple Disciplines

7. Purpose of Project Management
Project ManagementA B
Change

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. Why Projects?
Operational Islands

10. Project Management
Scope
TimeCost
Project
Manager

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. 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. Project Success?
•How do you define project success?

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. Project Charter
• Purpose: Deploy a new information system to manage product
inventory
• Goal: Reduce production time by 25%

16. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

17. ProjectValue

18. BusinessValue?
•What organizational benefits are created and realized
from the project?
•Operational
• New or improved functionality
•Strategic
• Quantifiable organizational-level benefits

19. Evaluating BusinessValue
• Return on Investment (ROI)
• Net PresentValue
• Payback Analysis

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. 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. 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. Evaluating BusinessValue
• Alignment with Business Strategy
Objective
Objective
Objective
Objective

24. BusinessValue
Benefits Alignment Value

25. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

26. Project
V
Project Selection:
Resource Limitations
Project
W
Project
N
Project
R Project
S
Project
Y
Productivity
Time
Funds
Personnel

27. Project Selection:
Common Practices
• Political Influence
• SqueakyWheel
• FIFO
• LIFO
• Financial Attributes
(ROI/NPV/Payback)

28. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

29. Challenging Project Environment
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM
PM

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. 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. 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. 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. 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. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

36. PPM Process
Align Value Distribute Risk Select Monitor

37. StrategicAlignment
Organization Strategy and Objectives
Operations Planning Strategic Planning
Initiatives
Project Portfolio
Operational Resources
PMI, 2008b
Align Value Distribute Risk Select Monitor

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. Project Selection
Informational
Infrastructure
Transactional
Strategic
Common IT Portfolio
CostAgility
MIT Sloan Center, 2007
InnovationIntegration
Align Value Distribute Risk Select Monitor

40. Risk Evaluation
Primary
Funding
Selective
Funding
Selective
Funding
Not
Funded
RISK
VALUE
Financial
Measure
Risk
Measure
Align Value Distribute Risk Select Monitor

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. Project Selection
Primary
Funding
Selective
Funding
Selective
Funding
Not
Funded
RISK
VALUE
Align Value Distribute Risk Select Monitor

43. Project Evaluation
• Alignment
• Value
• Distribution
• Risk Assessment
• Balance Resources ($ and people)
• Intangible Benefits
Consistency
Align Value Distribute Risk Select Monitor

44. Monitor Portfolio
Project
Project
Project
Project
Program
Program
Distribution Risk
Alignment Value
Align Value Distribute Risk Select Monitor

45. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

46. Steps to PPM
Define
Portfolio
Gather
Projects
Begin
Weeding
Begin
Evaluating
The PPM Starter Kit, ganntthead.com

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. 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. 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. 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. Agenda
• Project Management Overview
• Introduction to BusinessValue
• Selecting Projects
• Portfolio Approach
• PPM Process
• Migrating to PPM
• Application to the PM

52. What does this mean to me?
My
Project
Business Strategies

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. EnsuringValue
•Develop a ProjectValue Chain
(Think Critical Path)
•IncludeValue in Risk Management Strategy
•EvaluateValue Performance Frequently
•Target Metric for Change Management

55. Suggested Readings
July, 2012
Volume 30
Issue 5

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. 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