Voices on Project Management

By Conrado Morlan

I once led a program to implement a new regional billing system. But to my surprise, the key performance indicators (KPIs) did not show the improvement we had expected.

Four of the program’s KPIs were low: quality of invoices, number of credit notes, internal cost per invoice and days of outstanding debt. Only one KPI showed improvement: duration of the monthly and annual billing closing processing time.

One stakeholder commented that the only “benefit” of the new billing system was to produce worthless invoices faster and reduce customer satisfaction quickly.

I needed to demonstrate the benefits, value and importance of the new billing system and improve the KPIs. So I used this SIPOC (supplier, input, process, output and customer) tool to help me focus on KPIs that were low: 

Exhibit 1

First, I identified the suppliers and input affecting the quality of invoices: The sales department provided the customer data, billing address and financial information. The contracts department provided the type of contract, contract terms, rates and volume discounts. Operations provided the manual orders and confirmation of order delivery.

This led me to discover the most common invoice errors: incorrect billing addresses, incorrect financial information and rates, invalid account numbers and missing discounts. All of these errors meant someone had to manually create credit notes, which increased the cost per invoice dramatically as well as adding to costs like postage and overtime.

I met with sales, contracts and operations to identify their data sources and the state of them. Sales used a customer relationship management (CRM) application to manage clients, but we discovered that its data was often incorrect, incomplete or missing entirely. Next we discovered that many contracts had expired, and rates and volume discounts needed to be updated.

The operations department electronically sent online and manual orders to the billing system several times a day. I discovered that the online orders had the fewest errors. But the manual orders, despite having great KPI scores, were filled with errors.

With these findings in hand, I recommended a joint effort to solve the billing problems. The goal was to show improvements in the three months. The following action items were established and assigned to the different areas:

• Sales—Cleanse CRM data and update customer master file
• Sales and contracts—Notify customers of contract expirations and submit contract renewals including new rates and volume discounts
• Change management—Create and deliver mandatory training to sales, contracts, operations and finance to explain the consequences of supplying bad data
• Finance—Establish monthly workshops with stakeholders to review the progress, record results and review improvements
• Billing center—Suggest changes to technology and processes that would improve operation and effectiveness
• Sales, contracts, finance, billing center, project management and change management—Produce/update lessons learned binder
• All areas—Update KPIs to be more meaningful

After the first three months, we started to see improvement in the quality of invoices. Customers also noted it; the customer satisfaction level increased progressively quarter after quarter.

In addition, the company’s cash flow improved with the better quality of invoices. Customers received the correct invoice the first time and so were able to pay on time. Fewer credit notes meant less rework, which helped the billing center focus on its core functions.

At the end of all this, I was able to report a successful program. And  stakeholders learned that KPIs results are in the eye of the beholder.

How are project problems tackled at your organization? Do you find your KPIs are accurate reflections of the truth?

By Kevin Korterud

My last posthttp://www.projectmanagement.com/blog/Voices-on-Project-Management/20344/ offered two tips for project managers who want to develop a big-project mindset while executing small projects: leverage support resources and implement quality assurance practices. But why stop there? Here are two more.

1. Understand Change Management     

It’s easy to think small projects don’t require many business change management activities. But even a project that has a modest projected budget could face unforeseen change management activities.

For example, I worked on a project several years back that was straightforward to implement but required specialized support for remote locations. The original project budget estimate had not considered this.

Even for projects of modest size, project managers should examine the need for business change management activities such as business process transitions, different types and levels of training materials, and measuring the timely adoption of the functionality the project creates.

2. Validate the Project’s Complexity and Forecasting    

Project managers running small projects are often handed a budget and schedule that allow for neither timely nor successful implementation. This usually comes about from poor estimation processes that don’t take into consideration the necessary complexity analysis typically found on big projects.

This in turn can create budget and schedule errors of a much larger percentage than the small project can absorb. In addition, small project schedules can be affected by adjustments of large projects if they share a project or technical dependency, which creates unanticipated impacts to schedule and budget.  

Project managers can save themselves a lot of future pain by initially confirming the complexity assumptions for the project before proceeding. In addition, project managers running small projects still need to undertake the same level of forecasting rigor found on large projects: resource availability, work planning, milestone progress, cross-project and technical dependencies, business outage windows and other considerations that can more greatly impact a small project.    

When project managers “think big” on small projects, it allows them to be successful no matter the size of the project. Do you have any advice for project managers running small projects on how to think big?

By Kevin Korterud

It’s typical for new project managers to be assigned to a small project to build their skills. Why? Small projects have a limited value at risk, a modest budget, a shorter schedule and a smaller team. But project managers early in their career who have successfully led small projects often ask me how they can move on to leading big projects.

Small projects, to some degree, can be more difficult to lead than larger ones. You are given much less in the way of reserve budget, schedule and resources. However, big projects are not just smaller projects with larger budgets and longer schedules. They have inherent complexities relative to stakeholders, scheduling, resources and deliverables not found on small projects.

My recommendation to project managers wanting to move to larger projects is to “think big” while running smaller projects. Thinking big involves adopting, where possible, practices required for large projects.

Here are two ways project managers can think big on projects. My next post will offer two more tips.

1. Leverage Support Resources  

Many times, project managers running small projects attempt to perform all of the project operations activities themselves. This can include creating new work plans, calculating progress metrics, scheduling status meetings, and performing a host of supporting activities for the project.

While it may be a source of great pride to a project manager to perform these activities, they represent an opportunity cost. In other words, the project manager could instead be working on higher-value activities like stakeholder management or risk management.

Employing support resources even on small projects can save valuable time and costs. It also means the project manager doesn’t have to spend time becoming an expert in the tools and internal project operations processes. By having other people assist with the mechanics of building project plans and producing metrics, the project manager will have additional capacity for running the project.

2. Implement Quality Assurance Processes   

Project managers on small projects tend to become immersed in a level of detail not possible on large projects. The small project also allows for deep interaction with team members that may not be effective on large projects.

In addition, a project manager on a small project may be tempted to start serving in roles akin to a business analyst or technology designer. This can distract the project manager from actually running the project.

To keep focused on project management activities, quality assurance processes should be implemented. Phase gate reviews, deliverable peer reviews, change control processes, quality performance metrics and the definition of project acceptance criteria are all good examples of quality processes. With the implementation of these processes, project managers can focus on deliverables and outcomes without getting too deeply immersed in the details of the project.

Check back for my next post on more ways project managers can develop a big-project mindset while executing small projects.

By Jen Skrabak, PMP, PfMP

In the first part of this series, I introduced PMI’s new governance practice guide and reviewed basic differences between organizational (corporate) governance, portfolio management governance and portfolio governance.

With that foundation, I’ll now discuss the four basic governance functions, which together can ensure alignment to strategy. Since portfolios include programs and projects by definition, those are not called out separately.

• Oversight. Provide guidance, direction and leadership for portfolios
• Control. How to monitor, measure and report on portfolio status
• Integration. Provide strategic alignment and integration for the portfolio
• Decision-making. Provide decision-making structure, thresholds and membership, including delegation of authority for portfolios

In addition, there are four basic governance domains:

• Alignment. Creating an integrated governance framework, and defining the governance relationships and hierarchy between portfolio governing bodies and other governing bodies (enterprise, functional, program and project-specific)
• Risk. Identifying and resolving threats and opportunities proactively to ensure the balance of risk and reward for the portfolio
• Communications. Disseminating information, engaging stakeholders and ensuring organizational change is carried out effectively
• Performance. Measuring and evaluating KPIs to ensure portfolio value

For some portfolio managers, there may be confusion over governance activities versus portfolio management activities. Portfolio managers may play a governance role on certain programs and projects and provide oversight and decision-making. However, day-to-day portfolio management is distinct from governance, as shown in the diagram below:

Look for part three of this series—which will be focused on key success factors—in the coming weeks! And comment below to share your reactions.

By Conrado Morlan

The number of credentials offered by professional associations, hardware and software vendors and other organizations has grown sharply in the last decade. So have the number of credential holders.

There’s much to be said for certifications. Many companies require a certification to advance along their career path. In addition, salary surveys show that, overall, credential holders earn more.

On the other hand, some professionals and employers are not fans of certifications. They argue that many people have forged a career and reputation without them, that accelerated changes in science, technology and government regulations makes certifications hard to maintain, and that the cost and time of pursuing credentials are too high.

I see the value of certifications from two perspectives: the value given by the credential itself, and the value of my contributions to the credential.

The value given by the certification is the importance of the knowledge gained through earning it, the reputation of the institution or professional association that awards it, and the certification’s years on the market.

The value of my contributions to the credential has to do with how it engages me to actively research trends within my profession. This process can help experienced practitioners turn into thought leaders who share their experiences leading and managing projects across the globe. In other words, the value of a certification can cascade beyond the credential holder. Knowledge is shared with other practitioners, helping them to advance in the profession.

Yes, it’s true that some credential holders fall behind and don’t keep up with the latest knowledge and/or renew their credential. Other credential holders don’t follow the established code of ethics, which harms the reputation and value of the credential. But such misbehavior or lack of up-to-date knowledge isn’t the fault of the credential or the credential-awarding organization.

PMI, for example, has a strict renewal process for the Project Management Professional (PMP) certification that requires certification holders to earn a specific number of credits per cycle to keep the credential current.  And over the 30+ years since the PMP was created, those requirements have been updated to cover market and industry demands.

You may be wondering why I didn’t mention the cost of certifications, and whether they’re worth paying. To me, it’s a no-brainer. I take my professional development personally and always recall former Harvard University President Derek Bok’s quote, “If you think education is expensive, try ignorance.”

If you’re a certification holder, how do you measure its value?