Turnover of key personnel

Having analyzed what we can do, we must now look at past performance to see if there are any applicable lessons learned files that could impact the current project or selection of projects. Analysis of past performance, as shown in Figure 3-2, is usually the best guide for the specifications of the present project.

The final box in Figure 3-2 is the decision on whether or not to undertake the project. This type of decision-making process is critical if we are to improve our chances of success. Historically, less than 10 percent of R&D projects ever make it through full commercialization where all costs are recovered. Part of that problem has been the lack of a structured approach for decision-making, project approval, and project execution. All this can be satisfied with a sound project management methodology.

In the absence of an explicit project management methodology, decisions are made incrementally. A response to the crisis of the moment may result in a choice that is unrelated to, and perhaps inconsistent with, the choice made in the previous moment of crisis. Discontinuous choices serve to keep the organization from moving forward. Contradictory choices are a disservice to the organization and may well be the cause of its demise. Such discontinuous and contradictory choices occur when decisions are made independently to achieve different objectives, even though everyone is supposedly working on the same project. When the implementation process is made explicit, however, objectives, missions, and policies become visible guidelines that produce logically consistent decisions.

Small companies usually have an easier time in performing strategic planning for project management excellence. Large companies with highly diversified product lines and multiple management styles find that institutionalizing changes in the way projects are managed can be very complex. Innovation and creativity in project management can be a daunting, but not impossible, task.

Effective strategic planning for project management is a never-ending effort, requiring continuous support. The two most common continuous supporting strategies are the integration opportunities strategy, outlined in Figure 3-3, and the performance improvement strategy, shown in Figure 3-4.

Figure 3-3 outlines the opportunities that exist to integrate or combine an existing methodology with other types of management approaches that may be currently in use within the company. Such other methodologies available for integration include concurrent engineering, total quality management (TQM), scope change management, and risk management. Integrated strategies provide a syn-ergistic effect. Typical synergies include:

Project Management Process

• Tighter cost control: This results from a uniform cost reporting system in which variance reporting can be tightened and lessons learned files are maintained and updated.

Integration Opportunities

Upgrade Methodology

Project Management

Concurrent Engineering

Total Quality Management

Scope Change Management

Risk Management

Tighter Cost Control Corporate Resource Models Efficiency/Effectiveness

Parts Scheduling Risk Identification Resource Constraint Analysis Supplier Involvement

Lower Cost of Quality Customer Involvement Supplier Involvement

Impact Analysis Customer Management Enhancement Projects

' WBS Analysis Technical Risk Analysis Customer Involvement

FIGURE 3-3. Integration opportunities between process strategies.

Corporate resource models: Companies are now able to develop total company resource models and capacity planning models to determine how efficiently the existing resources are being utilized and how much new business can be undertaken.

Efficiency/effectiveness: A good methodology allows for the capturing and comparison of metrics to show that the organization is performing

—Increase Usage/Loyalty of Existing Users Attract New Internal Users I—Discourage T Show Benefits; DCTdopmsrt Present and Future of Parallel

Methodologies • Show Cost of

Parallelization

FIGURE 3-4. Qualitative process improvement opportunities.

Corporate Acceptance more work in less time and with fewer resources. Such data verifies the existence of economies of scale.

Concurrent Engineering Process

• Parts scheduling: Improvement can be made in the way that parts are ordered and tracked. As an organization overlaps activities to compress the schedule, timely delivery of materials is crucial.

• Risk identification: Overlapping activities increase the risks on a project. Better risk management practices are essential.

• Resource constraint analysis: Overlapping activities during concurrent engineering require that sufficient resources be available. Models are available to define the resource constraints and recommend ways to deal with limited availability of resources.

• Supplier involvement: Overlapping activities not only increase your risks but can also increase the risks for your supplier. A good methodology allows for better customer interfacing.

Total Quality Management (TQM)

• Lower cost of quality: Many of the basic principles of project management are also the basic principles of TQM. A good project management methodology will allow for the maximization of benefits for both.

• Customer involvement: A good methodology allows you to get closer to your customers. This could easily result in customer involvement in ways to improve quality for both products and services.

• Supplier involvement: A good methodology allows you to get closer to your supplier base. Suppliers will often come up with ideas to improve quality, thus solidifying your relationship with them. They also may have information from other companies they supply, possibly even your competitors, and may be willing to release this information.

Scope Change Management

• Impact analysis: A good methodology allows for checklists and forms for accurately determining the time, cost, and quality impact resulting from scope changes. It also puts in place a regimented process for scope change management.

• Customer management: Customers want to believe that all changes are no-cost changes (to the customer), and that the changes can be made at any time and in any life cycle phase. A good methodology that completely outlines the change management process allows for better customer management.

• Enhancement projects: A good project management methodology allows for a clear distinction as to whether the change should be made now or possibly later as an enhancement project. It addresses the question of how imperative the change actually is.

Risk Management

• WBS analysis: A good methodology provides guidelines on how deep into the WBS risk analysis should be performed.

• Technical risk analysis: Risk analysis is reasonably well defined for schedule and cost risks. Very little is known about technical risk management. A good methodology may provide templates on how to perform technical risk management.

• Customer involvement: Your firm's perception of risks, specifically which risks are worth taking and which are not, may be significantly different than your customer's perceptions. Customer involvement in risk analysis is essential.

The qualitative process improvement strategy shown in Figure 3-4 is designed to improve the efficiency of the existing methodology and to find new applications for it. The integrated process strategies of Figure 3-3 are one part of these process improvement strategies, as shown. Process improvement is discussed further in Chapter 9.

FIGURE 3-5. The macroenvironment of business. Note: Stakeholders are identified in the

"immediate environment" circle. Source: From The Changing Environment of Business A Managerial Approach, 4th Edition, by G. Starling © 1995. Reprinted with permission of South-Western College Publishing, a division of Thomson Learning. Fax 800 730-2215.

FIGURE 3-5. The macroenvironment of business. Note: Stakeholders are identified in the

"immediate environment" circle. Source: From The Changing Environment of Business A Managerial Approach, 4th Edition, by G. Starling © 1995. Reprinted with permission of South-Western College Publishing, a division of Thomson Learning. Fax 800 730-2215.

The goal of most organizations is to be more profitable than their competitors. Project management methodologies contribute to profitability through more efficient execution of the project and implementation of the methodology. This is another valid reason mandating continuous strategic planning.

A good project management methodology will be responsive to all environmental factors and will serve all of its stakeholders. Stakeholders are people who have a vested interest in the company's performance and who have claims on its performance. Figure 3-5 shows, as part of the immediate environment, six commonly used categories of stakeholder: suppliers, customers, employees, creditors, shareholders, and even competitors. Some organizations would also identify government officials and society at large as being among their multiple stakeholders. One part of strategic planning for project management may include prioritizing the order in which stakeholders will be satisfied if and when a problem exists. A good project management methodology may also include a "standard practices" section, which will discuss moral and ethical considerations involved in dealing with stakeholders.

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