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A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

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The Austerity Debate: What’s the cost of project management?

The cost of project managementAndy Murray, Director of Outperform, and lead author of PRINCE2:2009, spoke at the Austerity Debate at Lloyd’s Register in London recently about the role project management plays in this difficult economy.

When times are tough, senior management look to reduce costs and that sometimes means cutting projects and project management.  So how much does project management cost?  Murray explained that there several ways to look at this question.

The cost of managing a project

Each project has an overhead, including the cost of the project manager, the sponsor, a risk budget, the project board and any project support services.

The cost of failure

What does it cost if you don’t do projects well?  There’s rework, the cost of overruns, poor outputs, under-delivery, consequential loss, and benefits that remain unrealised.

The cost of managing projects

This is the infrastructure related to managing projects and includes any Centre of Excellence overheads, the PMO, support, monitoring, tools, evaluation, assurance, the Portfolio Office and audits.

Reducing these costs is possible, Murray explained.  He presented several options that senior managers could consider:

  • Reducing the number of projects
  • Reducing the cost of managing a project – giving each project manager more projects to run, for example
  • Reducing the cost of managing projects but minimising the central overheads
  • Reducing the cost of failure
  • Improving performance with better targets and delivering more benefits.

Andy's slideMurray said that the contribution project management offers is a mix of the value of increased performance, plus a reduced cost of failure and a lower cost projects, less the cost of project management itself.  I’ve represented this as a sum in the picture here.

In the last decade the focus has been on methods, training and techniques, Murray said.  There’s been no focus on behaviour, although he admitted that things have been looking up over the past three years.  There’s been a bit of development in the organisational space around P3O and strategic planning, but he believes we can do better.

What do you think?

Posted on: December 07, 2010 01:04 PM | Permalink | Comments (2)

Live from PMI Global Congress North America: How to Become a Program Manager

Categories: events, pmi, program, salaries

Convention CentrePedro Serrador presented yesterday at PMI Global Congress North America on how to become a program manager.  There are many career advantages to program management – not least that program managers tend to earn more than project managers.  So if you want to move into program management, here are Pedro’s tips.

“A program manager adds more value than just project managers,” said Pedro.  He said there are eight principles to being a successful program manager, and shared these from Vincent J. Bilardo, Jr.:

  • Establish a clear, compelling vision
  • Secure sustained support from the top
  • Exercise strong management and leadership
  • Facilitate open communication
  • Develop a strong organisation
  • Manage risk
  • Implement effective integration
  • Create your own success

Moving to a program manager role requires you to deliver the goods, he said.  There might also be a case for upgrading your education, and learning from others.  Pedro also said that prospective program managers should put themselves in a position where they can lead and mentor others, and especially learn to delegate appropriately.  “Show that you are a leader, not just one of ten project managers in the group,” he added.  Look for the opportunities that arrive and take them.  Finally, act the role, he explained.  “If you want to become a program manager, act like a program manager. Start to structure things like programs.”  If you act like a program manager, your manager will see that you are capable of operating at that level.

“Often it is beneficial to move around,” he said, when he spoke about how to land that new program management job.  That could mean moving to a new initiative or to a new company.  He explained that outside CEO’s earn an average of 13% more than internal candidates.  However, they fail 34% of the time, compared with only 24% of internal candidates, so there is something to be said for sticking with what you know.  “Moving is riskier,” Pedro said.

Pedro had some tips for what to do when you get that first program, or you choose to structure your existing work as a program (even if you don’t yet have the title):

  • Structure sub-projects properly
  • Make your project managers run things how you would run them
  • Don’t micro-manage
  • Get strong business and executive level focus

Pedro also said that senior managers spend more time planning their own time.  “You help the projects managers get on the right track and then go on to something else,” he said.  Factor that into your daily schedule and take the time to plan your day (and your schedule in general).  It might seem like it takes a long time but it will be effective.

“A big part of your role is to let the stakeholders know the importance of your program and you need to be able to push to have obstacles removed,” he said.  His final piece of advice was to have a 30 second status summary in meetings in case the executive you are presenting to gets called away.  “Know to stop at yes,” he added.

Posted on: October 11, 2010 04:05 PM | Permalink | Comments (4)

Launching EVM

Categories: earned value, events

“It was two years of effort and two years of struggle,” said Steve Wake, describing the work to bring the Earned Value Management certification to fruition yesterday.  Wake, the chief examiner for the EVM qualification, was speaking at Project Challenge.

“The best thing that a project manager can do for us is this – it’s status,” he said.  “It’s where we are and what we’ve done.  To ask a project manager to do more than that is quite a lot.”

Earned Value does ask us to do more than that.  Wake explained it as “a disciplined framework for managing work.”  His definition is:

“A project control procedure based on a structured approach to planning, cost collection and performance management. It facilitates the integration of project scope, time and cost objectives and the establishment of a baseline plan for performance measurement.”

Got it?

If not, never fear.  There is a new exam you can take to prove you understand the concepts of EVM.  “It keeps you out of harms way,” Wake said of the new qualification.  “You’ll understand the language and vernacular and when asked to do something you’ll have a grasp of the process.”  If that sounds basic, it’s because it is.  There is no Practitioner EVM qualification yet, but there is one in the works.

The Foundation exam, like the others from the APMG stable, is a multiple choice, entry level paper.  It’s 40 questions, 30 of which are knowing/comprehending questions and 10 of which are applying/analysing questions.  Questions are based on the EVM – APM Guidelines.  Candidates have one hour to sit the closed book exam and the pass mark is 65% - or 75% if you want to be an assessor.  Wake explained that when the pilot group took the exam all but one passed.  This has given them confidence that they have set the difficulty levels appropriately. 

There is a course that accompanies the exam, although it is not compulsory and you can enter yourself directly for the qualification itself.  The course objectives are:

  • Define EV concepts
  • Select and deploy EV formulae
  • Describe EV processes
  • Explain different levels of system review
  • And of course, take and pass the exam.

“We have a problem with Earned Value in the UK,” Wake said.  “We all use it, those who say they do, but there’s no way to put a stamp on it.”  He hopes that this qualification is the stamp, and that it will help avoid differing understandings and applications of EV.  However, he was pragmatic about how much a qualification can really increase the abilities of project managers.  “If you are confident that the thing is working correctly it frees you from chasing data,” he said.  “Exams are good because they determine a standard and also because with this method they give you the chance to manage.  With a good method you make good people very good.  It won’t make bad people good, though.”

The EV qualification has been put together by APM’s Earned Value SIG, and they are now working on a paper to discussed EV and PRINCE2 alignment.  “They are a good overlay to each other,” Wake explained.  “There’s limited detail in PRINCE2 about how you measure progress.”  This paper will be presented to the Best Practice User Group mid-November and made available after that – watch this space for more on how the two fit together. 

Posted on: October 04, 2010 05:42 PM | Permalink | Comments (0)

Save money: work virtually!

Woman on phoneDo you need to work effectively when you're not face to face?  Project teams are often made up of people who don’t work in the same office.  Travelling around for meetings is expensive, so project managers can cut costs by working virtually – for example, using conference calls and online meeting tools to make the most of virtual meetings.

You can learn how to do this better (and save your project budget) by joining The Virtual Working Summit, which runs from 28 June through to 9 July 2010.  

Managing a virtual team is a key challenge for many project managers these days so I'm delighted to join a group of experts in the first ever Virtual Working Summit. It consists of short, practical interviews over ten days this summer and is hosted by Dr Penny Pullan. You can join wherever you are, by phone or web.

Here are some of the topics that the Summit will cover:
•    Building Trust Remotely
•    Navigating Across Cross-Cultural Tripwires
•    Tools for Successful Virtual Working
•    Communication on global projects
•    Sustainability and Virtual Working
•    Negotiating Internationally
•    Social Media and Virtual Teams (this one is my presentation)
•    Conference Calls Made Easy

The Summit is free, and the first of its kind.  It will give you access to leading thinkers and practical tips to make you even more effective at working virtually – which has to be useful for project and program managers looking to be more efficient.

You can register online any time from now.  If you can’t make it to any or all of the presentations, Penny is recording the proceedings and they’ll be available to buy on CD, so you can listen to what you missed at your leisure.

Posted on: June 12, 2010 04:21 AM | Permalink | Comments (0)

Efficient teams with social media

Categories: events, social media

One of the questions I am sometimes asked is "How can I make my team more efficient?"  Technology isn't the answer to every problem, but it can often help streamline certain tasks or processes, and that can make your team more efficient and therefore more cost-effective to run. 

I'll be presenting to the APM's Women in Project Management SIG on 10 June 2010, and you are invited.

We'll be talking about how project managers can use social media.  I'll be presenting this:

There's a revolution happening in project management: social media tools are finding their way from branding and marketing to the hub of companies and project teams that are making new things happen. The old project management methodologies are being challenged by the fact that those working on projects are using social media tools to communicate and collaborate, and the ways in which we work with colleagues and virtual teams have changed forever. Not everyone agrees with that, though, and convincing management that you want to adopt social media tools for productivity gains can be difficult.

This session will look at the theory and practice of using social media tools to get things done in business. Is it hype or do these tools actually work? And how do you get started with a project-based social media initiative in your own company?

It doesn't matter where you are, this is a virtual event (and it's free) so you can come along if you want to.  Find out more and book for the event here.

Posted on: May 30, 2010 11:48 AM | Permalink | Comments (0)

"Ninety percent of the politicians give the other ten percent a bad reputation."

- Henry Kissinger