FIGURE 9-2. Factors to consider for continuous improvement.

Existing Process Improvements

• Frequency of use: Has prolonged use of the methodology made it apparent that changes can be made?

• Access to customers: Can we improve the methodology to get closer to our customers?

• Substitute products: Are there new products (i.e., software) in the marketplace that can replace and improve part of our methodology?

• Better working conditions: Can changes in the working conditions cause us to eliminate parts of the methodology (i.e., paperwork requirements)?

• Better use of software: Will new or better use of the software allow us to eliminate some of our documentation and reports?

Integrated Process Improvements

• Speed of integration: Are there ways to change the methodology to increase the speed of integrating activities?

• Training requirements: Have changes in our training requirements mandated changes in our methodology?

• Corporate-wide acceptance: Should the methodology change in order to obtain corporate-wide acceptance?

Behavioral Issues

• Changes in organizational behavior: Have changes in behavior mandated methodology changes?

• Cultural changes: Has our culture changed (i.e., to a cooperative culture) such that the methodology can be enhanced?

• Management support: Has management support improved to a point where fewer gate reviews are required?

• Impact on informal project management: Is there enough of a cooperative culture such that informal project management can be used to execute the methodology?

• Shifts in power and authority: Do authority and power changes mandate a looser or a more rigid methodology?

• Safety considerations: Have safety or environmental changes occurred that will impact the methodology?

• Overtime requirements: Do new overtime requirements mandate an updating of forms, policies, or procedures?


• Creation of a project management COE: Do we now have a "core" group responsible for benchmarking?

• Cultural benchmarking: Do other organizations have better cultures than we do in project management execution?

• Process benchmarking: What new processes are other companies integrating into their methodology?

Managerial Issues

• Customer communications: Have there been changes in the way we communicate with our customers?

• Resource capability versus needs: If our needs have changed, what has happened to the capabilities of our resources?

• Restructuring requirements: Has restructuring caused us to change our sign-off requirements?

• Growing pains: Does the methodology have to be updated to include our present growth in business (i.e., tighter or looser controls)?

The five factors considered above provide a company with a good framework for continuous improvement. The benefits of continuous improvement include:

• Better competitive positioning

• Corporate unity

• Improved cost analysis

• Customer value added

• Better management of customer expectations

• Ease of implementation


Given the fact that maturity in project management is a never-ending journey, we can define excellence in project management as a never-ending cycle of bench-

FIGURE 9-3. The five levels of maturity.

marking-continuous improvement-singular methodology enhancement, as shown in Figure 9-3. This implies that Levels 3, 4, and 5 of the PMMM are repeated over and over again. This also justifies our statement of the need for overlapping levels.



As more and more industries accept project management as a way of life, the continuous improvement opportunities in project management practices have arisen at an astounding rate. What is even more important is the fact that companies are sharing their accomplishments with other companies during benchmarking activities.

Ten recent interest areas are included in this chapter:

• Developing effective procedural documentation

• Project management methodologies

• Continuous improvement

• Capacity planning

• Competency models

• Managing multiple projects

• End-of-phase review meetings

• Strategic selection of projects

• Portfolio selection of projects

• Horizontal accounting

These ten topics appear to be the quickest to change as we enter the twenty-first century.



Previously, we showed the necessity to develop processes and ultimately a singular methodology for project management. Project management methodologies require a project management information system (PMIS), which is based upon procedural documentation. The procedural documentation can be in the form of policies, procedures, guidelines, forms, and checklists, or even a combination of these. Good procedural documentation will accelerate the project management maturity process, foster support at all levels of management, and greatly improve project communications. The type of procedural documentation selected can change over the years and is heavily biased on whether we wish to manage more formally or informally. In any event, procedural documentation supports effective communications, which in turn, provides for better interpersonal skills.

An important facet of any project management methodology is to provide the people in the organization with procedural documentation on how to conduct project-oriented activities and how to communicate in such a multidimensional environment. The project management policies, procedures, forms, and guidelines can provide some of these tools for delineating the process, as well as a format for collecting, processing, and communicating project-related data in an orderly, standardized format. Project planning and tracking, however, involve more than just the generation of paperwork. They require the participation of the entire project team, including support departments, subcontractors, and top management. This involvement of the entire team fosters a unifying team environment. This unity, in turn, helps the team focus on the project goals and, ultimately, fosters each team member's personal commitment to accomplishing the various tasks within time and budget constraints. The specific benefits of procedural documents, including forms and checklists, are that they help to:

• Provide guidelines and uniformity

• Encourage useful, but minimum, documentation

• Communicate clearly and effectively

• Standardize data formats

• Unify project teams

• Provide a basis for analysis

• Document agreements for future reference

• Refuel commitments

• Minimize paperwork

• Minimize conflict and confusion

• Delineate work packages

• Bring new team members onboard

• Build an experience track and method for future projects

Done properly, the process of project planning must involve both the performing and the customer organizations. This involvement creates a new insight into the intricacies of a project and its management methods. It also leads to visibility of the project at various organizational levels, management involvement, and support. It is this involvement at all organizational levels that stimulates interest in the project and the desire for success, and fosters a pervasive reach for excellence that unifies the project team. It leads to commitment toward establishing and reaching the desired project objectives and to a self-forcing management system where people want to work toward these established objectives.

The Challenges

Despite all these benefits, management is often reluctant to implement or fully support a formal project management system. Management concerns often center around four issues: overhead burden, start-up delays, stifled creativity, and reduced self-forcing control. First, the introduction of more organizational formality via policies, procedures, and forms might cost some money, plus additional funding will be needed to support and maintain the system. Second, the system is seen, especially by action-oriented managers, as causing undesirable start-up delays by requiring the putting of certain stakes into the ground, in terms of project definition, feasibility, and organization, before the detailed implementation can start. Third and fourth, the system is often perceived as stifling creativity and shifting project control from the responsible individual to an impersonal process that enforces the execution of a predefined number of procedural steps and forms without paying attention to the complexities and dynamics of the individual project and its possibly changing objectives.

The comment of one project manager may be typical for many situations: "My support personnel feels that we spend too much time planning a project up front; it creates a very rigid environment that stifles innovation. The only purpose seems to be establishing a basis for controls against outdated measures and for punishment rather than help in case of a contingency." This comment is echoed by many project managers. It's not a groundless attitude either, for it also illustrates a potential misuse of formal project management systems, establishment of unrealistic controls and penalties for deviations from the program plan rather than help in finding solutions. Whether these fears are real or imaginary within a particular organization does not change the situation. It is the perceived coercion that leads to the rejection of the project management system. An additional concern is the lack of management involvement and funding to implement the project management system. Often the customer or sponsor organization must also be involved and agree with the process for planning and controlling the project.

How to Make It Work

Few companies have introduced project management procedures with ease. Most have experienced problems ranging from skepticism to sabotage of the procedural system. Realistically, however, program managers do not have much of a choice, especially for larger, more complex programs. Every project manager who believes in project management has his or her own success story. It is interesting to note, however, that many have had to use incremental approaches to develop and implement their project management methodology.

Developing and implementing such a methodology incrementally is a multi-faceted challenge to management. The problem is seldom one of understanding the techniques involved, such as budgeting and scheduling, but rather one of involving the project team in the process, getting their input, support, and commitment, and establishing a supportive environment. Furthermore, project personnel must have the feeling that the policies and procedures of the project management system facilitate communication, are flexible and adaptive to the changing environment, and provide an early warning system through which project personnel can obtain assistance rather than punishment in case of a contingency.

The procedural guidelines and forms of an established project management methodology can be especially useful during the project planning/definition phase. Not only do they help to delineate and communicate the four major sets of variables for organizing and managing the project—(1) tasks, (2) timing, (3) resources, and (4) responsibilities—they also help to define measurable milestones, as well as report and review requirements. This in turn makes it possible to measure project status and performance and supplies the crucial inputs for controlling the project toward the desired results.

Developing an effective project management methodology takes more than just a set of policies and procedures. It requires the integration of these guidelines and standards into the culture and value system of the organization. Management must lead the overall efforts and foster an environment conducive to teamwork. The greater the team spirit, trust, commitment and quality of information exchange among team members, the more likely it is that the team will develop effective decision-making processes, make individual and group commitments, focus on problem-solving, and operate in a self-forcing, self-correcting control mode. These are the characteristics that will support and pervade the formal project management system and make it work for you. When understood and accepted by the team members, such a system provides the formal standards, guidelines, and measures needed to direct a project toward specific results within the given time and resource constraints.

Established Practices

Although project managers may have the right to establish their own policies and procedures, many companies have taken the route of designing project control forms that can be used uniformly on all projects to assist in the communications process. Project control forms serve two vital purposes by establishing a common framework from which:

• The project manager will communicate with executives, functional managers, functional employees, and clients

• Executives and the project manager can make meaningful decisions concerning the allocation of resources.

Success or failure of a project depends upon the ability of key personnel to have sufficient data for decision-making. Project management is often considered to be both an art and a science. It is an art because of the strong need for interpersonal skills, and the project planning and control forms attempt to convert part of the "art" into a science.

Many companies tend not to realize until too late the necessity of good planning and control forms. Today, some of the larger companies with mature project management structures maintain a separate functional unit for forms control. This is quite common in aerospace and defense, but is also becoming common practice in other industries. Yet, some executives still believe that forms are needed only when the company grows to a point where a continuous stream of unique projects necessitates some sort of uniform control mechanism.

In some small or non-project-driven organizations, each project can have its own forms. But for most other organizations, uniformity is a must. Quite often, the actual design and selection of the forms is made by individuals other than the users. This can easily lead to disaster.

Large companies with a multitude of different projects do not have the luxury of controlling projects with three or four forms. There are different forms for planning, scheduling, controlling, authorizing work, and so on. It is not uncommon for companies to have 20 to 30 different forms, each dependent upon the type of project, length of project, dollar value, type of customer reporting, and other such factors.

In project management, the project manager is often afforded the luxury of being able to set up his or her own administration for the project, a fact that could lead to irrevocable long-term damage if each project manager were permitted to design his or her own forms for project control. Many times this problem remains unchecked, and the number of forms grows exponentially with each project.

Executives can overcome this problem either by limiting the number of forms necessary for planning, scheduling, and controlling projects, or by establishing a separate department to develop the needed forms. Neither of these approaches is really practical or cost-effective. The best method appears to be the task force concept, where both managers and doers will have the opportunity to interact and provide input. In the short run, this may appear to be ineffective and a waste of time and money. However, in the long run there should be large benefits.

To be effective, the following ground rules can be used:

• Task forces should include managers as well as doers.

• Task force members must be willing to accept criticism from other peers, superiors, and especially subordinates who must "live" with these forms.

• Upper level management should maintain a rather passive (or monitoring) involvement.

• A minimum of signature approvals should be required for each form.

• Forms should be designed so that they can be updated periodically.

• Functional managers and project managers must be dedicated and committed to the use of the forms.

Categorizing the Broad Spectrum of Documents

The dynamic nature of project management and its multifunctional involvement create a need for a multitude of procedural documents to guide a project through the various phases and stages of integration. Especially for larger organizations, the challenge is not only to provide management guidelines for each project activity, but also to provide a coherent procedural framework within which project leaders from all disciplines can work and communicate with each other. Specifically, each policy or procedure must be consistent with and accommodating to the various other functions that interface with the project over its life cycle. This complexity of intricate relations is illustrated in Figure 9-4.

FIGURE 9-4. Interrelationship of project activities with various functional/organizational levels and project management levels. Source: Reprinted from H. Kerzner and H. J. Thamhain, Project Management Operating Guidelines. New York: Van Nostrand Reinhold, 1985.

One simple and effective way of categorizing the broad spectrum of procedural documents is by utilizing the work breakdown concept, as shown in Figure 9-5. This concept organizes the principal procedural categories along the lines of the principal project life cycle phases. Each category is then subdivided into (1) general management guidelines, (2) policies, (3) procedures, (4) forms, and (5) checklists. If necessary, the concept can be extended an additional step to develop policies, procedures, forms, and checklists for the various project and functional sublevels of operation. Although this level of formality might be needed for very large programs, an effort should be made to minimize "layering" of policies and procedures as the additional bureaucracy can cause new interface problems and additional overhead costs. For most projects, a single document covers all levels of project operations.

As companies become more mature in executing the project management methodology, project management policies and procedures are discarded and replaced with guidelines, forms, and checklists. More flexibility is thus provided the project manager. Unfortunately, reaching this stage takes time, because executives need to develop confidence in the ability of the project management methodology to work without the rigid controls provided by policies and procedures. All companies seem to go through the evolutionary stage of relying on policies and procedures before they advance to guidelines, forms, and checklists.



.02 Policies .03 Charters












Policies Procedures Forms Checklists





- Procedures

- Procedures






Policies Procedures Forms Checklists







- Procedures










- Procedures









- Procedures

- Procedures





FIGURE 9-5. Categorizing procedural documents within a work breakdown structure. Source: Reprinted from H. Kerner and H. J. Thamhain, Project Management Operating Guidelines. New York: Van Nostrand Reinhold, 1985.



The ultimate purpose of any project management system is to drastically increase the likelihood that your organization will have a continuous stream of successfully managed projects. The best way to achieve this goal is with the development of a project management methodology. Good project management methodologies are based upon guidelines and forms rather than policies and procedures. Methodologies must have enough flexibility such that they can be adapted easily to each and every project. There are consulting companies out there who have created their own methodologies and who will try to convince you that the solution to most of your project management problems can be resolved with the purchase of their (often expensive) methodology. The primary goal of these consulting companies is turning problems into gold: your problems into their gold!

One major hurdle that any company must overcome when developing or purchasing a project management methodology is the fact that a methodology is nothing more than a sheet of paper with instructions. To convert this sheet of paper into a successful methodology, the company must accept, support, and execute the methodology. If this is going to happen, the methodology should be designed to support the corporate culture, not vice versa. It is a fatal mistake to purchase a canned methodology package that mandates that you change your corporate culture to support it. If the methodology does not support the culture, the result will be a lack of acceptance of the methodology, sporadic use at best, inconsistent application of the methodology, poor morale, and perhaps even diminishing support for project management. What converts any methodology into a world-class methodology is its adaptability to the corporate culture.

There is no reason why organizations cannot develop their own methodologies. Companies such as Compaq Services, Ericsson, Nortel Networks, Johnson Controls, and Motorola are regarded as having world-class methodologies for project management and, in each case, the methodology was developed internally. The amount of time and effort needed to develop a methodology will vary from company to company, based upon such factors as the size and nature of the projects, the number of functional boundaries to be crossed, whether the organization is project-driven or non-project-driven, and competitive pressures.


All too often complacency directs the decision-making process. This is particularly true of organizations that have reached some degree of excellence in project management and become self-satisfied. They often realize only too late that they have lost their competitive advantage. This occurs when organizations fail to recognize the importance of continuous improvement.

Figure 9-6 illustrates the need for continuous improvement. As companies

FIGURE 9-6. The need for continuous improvement.


FIGURE 9-6. The need for continuous improvement.

begin to mature in project management and reach some degree of excellence, they achieve a sustained competitive advantage. Achieving this edge might very well be the single most important strategic objective of the firm. Once the firm has this sustained competitive advantage, it will then begin to exploit it.

Unfortunately, the competition will not be sitting by idly watching you exploit your sustained competitive advantage; they will begin to counterattack. When they do, you may lose a large portion, if not all, of your sustained competitive advantage. To remain effective and competitive, your organization must recognize the need for continuous improvement, as shown in Figure 9-7. Continuous improvement allows a firm to maintain its competitive advantage even when its competitors counterattack.

Sustained Competitive Position


Sustained Competitive Position


FIGURE 9-7. The need for continuous improvement.


FIGURE 9-7. The need for continuous improvement.


As companies become excellent in project management, the benefits of performing more work in less time and with fewer resources become readily apparent. The question, of course, is how much more work can the organization take on? Companies are now struggling to develop capacity planning models to see how much new work can be undertaken within the existing human and nonhuman constraints.

Figure 9-8 illustrates the classical way that companies perform capacity planning. The approach shown holds true for both project- and non-project-driven organizations. The "planning horizon" line indicates the point in time for capacity planning. The "proposals" line indicates the manpower needed for approved internal projects or a percentage (perhaps as much as 100 percent) for all work expected through competitive bidding. The combination of this line and the "manpower requirements" line, when compared against the current staffing, provides an indication of capacity. This planning technique can be effective if performed early enough such that training time is allowed for future manpower shortages.

There is an important limitation to the above process for capacity planning, however: only human resources are considered. A more realistic method would be to use the strategy shown in Figure 9-9, which can also be applied to both project-driven and non-project-driven organizations. Using the approach shown in Figure 9-9, projects are selected based upon such factors as strategic fit, profitability, consideration of who the customer is, and corporate benefits. The objectives for the projects selected are then defined in both business and technical terms, because there can be both business and technical capacity constraints.


Current Staff

Planning Horizon


FIGURE 9-8. Capacity planning.

FIGURE 9-8. Capacity planning.

Selection of Projects

• Strategic Fit

• Profitability

Selection of Projects

• Strategic Fit

• Profitability


Projects —

Planning —>



• Technical

• Least Cost

• Business

• Least Time

• Least Risk

Capacity Planning Models

• Facilities

• Technology

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