Delivering Positive Results by Following
Best Practices in Project Management
Kathy Schwalbe, Ph.D., PMP
April 29, 2009
schwalbe@augsburg.edu
www.kathyschwalbe.com
1
Presentation Background
• Most of the information
in this presentation is
based on reviewing the
literature for examples
for my latest books
– IT Project Management,
Sixth Edition (out in April
2009)
– Introduction to Project
Management, Second
Edition (Jan 2008)
2
Outline
• What is project management (PM)?
• What’s so hard about PM and using
best practices?
• Measuring the value of PM
• Best practices for industries,
organizations, and individuals
• Questions/Comments
3
What Is Project Management?
• Project management is “the
application of knowledge, skills,
tools, and techniques to project
activities to meet the project
requirements” (PMI, PMBOK® Guide,
2008, p. 6)
• In addition to meeting project
requirements, it’s also important to
satisfy key stakeholders and make sure
the results of the project benefit the
organization
4
Project Management Framework*
*From Schwalbe’s texts
5
Project Management Tools and
Techniques
• Project management tools and techniques assist
project managers and their teams in various
aspects of project management
• Some specific ones include
– Project charter, scope statement, and WBS (scope)
– Gantt charts, network diagrams, critical path analysis,
critical chain scheduling (time)
– Cost estimates and earned value management (cost)
– See next two slides for more
6
Common PM Tools and Techniques by
Knowledge Area*
*Schwalbe texts
7
Common PM Tools and Techniques by
Knowledge Area (Cont’d)*
*
*
*Schwalbe texts
8
Super Tools*
• Tools already extensively used that have been
found to improve project performance include:
–
–
–
–
Progress reports
Kick-off meetings
Gantt charts
Change requests
• “Super tools” are those tools that have high
use and high potential for improving project
success, such as:
– Software for task scheduling (such as project management
software)
– Scope statements
– Requirements analyses
– Lessons-learned reports
*Claude Besner and Brian Hobbs, “The Perceived Value and Potential Contribution of Project
9 Research Conference Proceedings (July 2006).
Management Practices to Project Success,” PMI
What’s So Hard About PM and Using
Best Practices?
• Because every project is unique, project
managers and their teams must have a good
understanding of what tools and techniques are
available before they can make the more
difficult decisions...
• ...of which ones to use on their projects and
how to implement them
Building Bridges-Good Procurement Management
• On August 1, 2007, tragedy struck Minneapolis,
Minnesota, when a bridge on I-35W collapsed,
killing 13 motorists, injuring 150 people, and
leaving a mass of concrete and steel in the river
and on its banks*
Dick Rohland, “I-35W Bridge Completion Brings Closure to Minneapolis,”
ConstructionEquipmentGuide.com (October 4, 2008).
11
Continued
• Peter Sanderson, PM for the joint
venture of Flatiron-Manson, led his
team in completing the project
• The contractors earned $25 million in
incentive fees on top of their $234
million contract for completing the
bridge three months ahead of
schedule
• MnDOT justified the incentive
payment by saying that each day the
bridge was closed it cost road users
more than $400,000
12
Winning Elections-Good Cost
and Communications Management*
• The Obama campaign used 16 different
social platforms, including Facebook,
LinkedIn, MySpace , YouTube, Fickr,
Digg, Twitter, etc. to interact with people
from various backgrounds
• Sources say 80 percent of all contributions
originated from these social networks, and
some say 90 percent of all contributions (which
totaled over $600 million) were less than $100
*David Krejci, “Message received,” StarTribune, Minneapolis, MN
(November 5, 2008).
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Measuring the Value of Project
Management
• Several studies have been done on this
topic (some results follow)
• Bottom line: Most people agree PM has
value, but it is difficult to measure
quantitatively, and what works in one
organizations may not work in another!
• It does help to review best practices
and get ideas from others
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Recent PMI Research Publications
15
Ways to Measure the Value of PM
•
•
•
•
Agreement on general benefits
Improved project performance/results
ROI of project management
PM maturity levels
“Price is what you pay. Value is what you get.”
Warren Buffet
General Benefits of Project Management
• Better control of financial, physical, and
human resources
• Improved customer relations
• Shorter development times
• Lower costs
• Higher quality and increased reliability
• Improved productivity
• Better internal coordination
• Higher worker morale (less stress)
2008 Research Study on the Value of PM*
• Over 400-page document, free to PMI members
• Most organizations (65 total in study) did see
value in PM, but did not quantify it: measuring
ROI “proved extremely elusive” (p. 246)
• Value focused on measuring PM and
–
–
–
–
satisfaction
alignment
process outcomes
business outcomes
*Janice Thomas and Mark Mullaly, “Researching the Value of Project Management,”
PMI, (2008).
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Conclusions of Study
• “We are extremely comfortable stating
unequivocally that project management
delivers value to organizations” (p. 349)
• PM value “appears to increase in
proportion to the maturity of the PM
implementation that is encountered...
greater levels of intangible value were
reported in organizations that have a
higher level of maturity” (p. 352)
19
Improved Project Performance
• Project success is often based on meeting
project scope, time, and cost goals
• The Standish Group’s CHAOS studies are
well known for documenting IT project
success rates and cost of failures*
Measure
Successful projects
Failed projects
Money wasted on failed
and challenged projects
1994 Data
16%
31%
$140 billion
2002 Data
34%
15%
$55 billion
2006 Data
35%
19%
$53 billion
*The Standish Group International, “CHAOS Activity News,” 2(1), (2007).
Why the Improvements?
"The reasons for the increase in successful
projects vary. First, the average cost of a
project has been more than cut in half. Better
tools have been created to monitor and
control progress and better skilled project
managers with better management
processes are being used. The fact that
there are processes is significant in
itself.”*
*The Standish Group, "CHAOS 2001: A Recipe for Success"
(2001)
“What the Winners Do”*
• Recent research findings show that
companies that excel in project
delivery capability:
– Build an integrated project management toolbox (use
standard/advanced PM tools, lots of templates)
– Grow competent project leaders, emphasizing
business and soft skills
– Develop streamlined, consistent project delivery
processes
– Install a sound but comprehensive set of project
performance metrics
*Dragan Milosevic, Portland State University, “Delivering Projects:
What the Winners Do,” PMI Conference Proceedings ( November 2001).
Findings From 5-Year Study on
Quantifying the Value of PM*
•
•
•
Companies with more mature project
management practices have better project
performance (on time and budget vs. 40%
over time and 20% over cost targets)
Project management maturity is strongly
correlated with more predictable project
schedule and cost performance (i.e. .08
schedule performance index variation vs. .16)
Good project management companies have
lower direct costs than poor project
management companies (6-7% vs. 11-20%)
*William Ibbs and Justin Reginato, Quantifying the Value of Project
Management (2002)
Project Management ROI*
• Over 94% of senior project management
professionals say that implementing PM
added value to their organizations
• Formula to predict increased company ROI
based on increased PMM level
– Determine cost to improve PMM level,
improvement in cost performance index (CPI),
then calculate PM ROI using profit margins and
projected annual revenues
*William Ibbs, “The $$$ Value of Project Management: Continuing the Search for PM’s
ROI,” PDS ’02 Conference Proceedings, PMI-ISSIG (2002).
PM ROI Example*
• Company initially has PMM of 2.3, CPI of .71,
profit margin of 5% , $10 M projected annual
revenues
• Company improves PMM to 3.1, CPI to .94, profit
margin to 6.6% at a cost of $400,000
• PM ROI = (6.6%-5.0%)X$10,000,000 = 40%
$400,000
*William Ibbs, “Managing Chaotic Projects: Improving your PM/ROI,” (Feb. 2001).
PMI’s Definition of Best Practice
• A best practice is “an optimal way
recognized by industry to achieve a
stated goal or objective” (PMI, 2003, p.
13)
• Question: Does that mean there is only
one “optimum way” and that it works all
the time in that industry?
26
Webster’s Definition of Best Practice
• “A practice which is most appropriate
under the circumstances, esp. as
considered acceptable or regulated in
business; a technique or methodology
that, through experience and research,
has reliably led to a desired or optimum
result” (Webster's New Millennium™
Dictionary of English, 2007)
27
Wikipedia Definition
• A best practice is “the most efficient (least
amount of effort) and effective (best
results) way of accomplishing a task,
based on repeatable procedures that have
proven themselves over time for large
numbers of people...The idea is that with
proper processes, checks, and testing, a
desired outcome can be delivered with
fewer problems and unforeseen
complications” (Wikipedia, 2008)
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Project Management Maturity Models
• Similar to maturity models for improving
software like the Capability Maturity Model
(CMM)
• Several PM firms have their own maturity
models, most using levels 1-5
– The International Institute for Learning, Inc. calls
the five levels common language, common
processes, singular methodology, benchmarking,
and continuous improvement
– ESI’s five levels are called ad hoc, consistent,
integrated, comprehensive, and optimizing
– PMI’s Organizational Project Management Maturity
Model (OPM3) released their model in 2004
PriceWaterhouseCoopers Study
• Surveyed 200 companies from 30 different
countries about their project management
maturity and found that
– Over half of all projects fail
– Only 2.5% of corporations consistently meet their
targets for scope, time, and cost goals for all types
of projects
• The survey’s main objective, however, was to
investigate whether a higher maturity level
would provide higher project performance
PriceWaterhouseCoopers, “Boosting Business Performance through
Programme and Project Management,” (June 2004).
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More PWC Study Results
• A higher maturity level for an organization enhances
overall project performance, not in just one project, but
in the overall portfolio of projects
• Most organizations are not satisfied with their current
maturity level. The total average for survey participants
was 2.5 on a 5.0 scale
• Project failures are often a consequence of
organizational aspects over which project managers
have little influence
• Organizational structure has a big impact on overall
project performance. The higher the alignment between
structure and business requirements, the higher the
overall project performance
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More PWC Study Results - Best Practices
• Staff development and professional certification enhance
overall project performance. However, more than 60%
of the companies surveyed do not regularly offer a
development program to their project managers
• A systematic approach to change management is
fundamental for superior project performance
• Staffing projects with a majority of internal resources as
opposed to external resources is a better guarantee of
success. The highest performance was achieved by
using 25% external resources and 75% internal
• The extent to which project management software is
used is correlated to maturity levels. The lower the
maturity level, the more difficulties the organization will
have in implementing software
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Another Best Practice Example
Comparison of companies that
performed best and worst in new
product development*
Best Practice
Best
Align projects with business strategy
65.5%
Align resource breakdown with strategy
65.5%
Get customer input in defining new products 69%
Have an identifiable project manager
80%
Worst
46%
8%
15%
50%
*Robert G. Cooper, “Winning at New Products: Pathways to Profitable
Intervention,” PMI Research Conference Proceedings (July 2006).
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Best Practices of Individual Project
Managers
• Andy Crowe, founder and CEO of
Velociteach, wrote a book in 2006 called
“Alpha Project Managers: What the Top
2% Know That Everyone Else Does Not”
• As the title suggests, an alpha project
manager is defined as one who falls in
the top two percent of project managers
in terms of performance, as rated by
their customers, senior managers, and
team members
34
Alpha Project Managers Study Background
• Crowe surveyed 860 project managers who
had all been clients/students at Velociteach.
• Although this was not a scientific study, the
aggregate results provide interesting
information that can help define best
practices for project managers
• The general format of the survey questions
was as follows:
– Mark the degree with which you agree with the
following statement: Strongly disagree (0%),
Somewhat disagree (20%), Neutral (50%),
Somewhat agree (75%), Strongly agree (100%)
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How the 18 Alpha PMs Differed Most
• They enjoy their work more
• They believe they have more authority
• They believe they can have a personal
impact on project success
• They think it is important for the project
manager to be a hands-on manager
and a domain expert
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Alpha PMs Spend Almost Twice as
Much Time Planning
• In fact, they spend more time in every
process group than their counterparts
except for execution, as follows:
– Initiating: 2% vs. 1%
– Planning: 21% vs. 11%
– Executing: 69% vs. 82%
– Controlling: 5% vs. 4%
– Closing: 3% vs. 2%
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Alpha PMs are More Efficient and
Effective Communicators
• When asked to rank responsiveness,
the alphas’ stakeholders’ average
response was 88% while the non-alpha
average was only 49%
• Alpha project managers send fewer emails per day and spend less time in
meetings than the non-alphas
• They know how to prioritize work and
focus on what is most important
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Don’t Forget This Best Practice: Take Time
to Enjoy Life!
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Questions/Comments?
schwalbe@augsburg.edu
www.kathyschwalbe.com
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