Project Risk Management

Transcription

1 Risk Advisory Services Project Risk Management James O Callaghan October 2006 RISK ADVISORY SERVICES (year) KPMG (member firm name if applicable), the (jurisdiction) member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in (country). (Insert document code) 0

2 QUESTION?? How committed is your organisation to project management??? Increasing project commitments being made.driven by compliance and performance Commitments are up, with increases in: 81% projects 88% project complexity 79% total project budget Key drivers for the increase: 74% by new products/services and business process improvements 48% by technology refreshes 24% by governance and regulatory..but do these stats mean that businesses are more committed to project management? 1

3 Introduction James O Callaghan KPMG Hong Kong Risk Advisory Services IT Advisory Services Project Risk Management 2

4 Key Points Projects are increasingly seen as the strategic enabler for an organization As project management evolves as a preferred management approach within an organization, the complexity of the associated project risk management increases significantly There are ample methodologies around, but application is the key A comprehensive risk solution framework is required high, wide and independent. Integrating people, process and technology Too much focus on the project manager, and not enough on the whole project team Portfolio management offers the opportunity to do more with less 3

5 Agenda for this presentation 1 Introduction some definitions the traditional project dynamics business versus technology projects 2 Projects the past the many reasons why they fail the simple reason 3 Project Management accidental or professional methodology application projectisation project manager involvement and optimism 4 Organizational Implementation from PMO to epmo maturity development project to enterprise risk management 5 KPMG Project Management Survey why punish your bottom line? 4

6 1. Introduction some definitions the traditional project dynamics business versus technology projects 5

7 What is a Project? Some Example Definitions: managing a collection of related tasks and activities which are undertaken within a specific timeframe to achieve a specific goal the adoption or recognition by an organization that projects are the enabler for strategy execution the investment in management techniques to effectively and efficiently achieve the desired outcomes 6

8 The Traditional Dynamics of Project Management The traditional focus of project risk management is on the dimensions of: Scope Cost Time Quality Sounds simple? Balancing the constant tension between these dimensions is anything but simple and its getting harder 7

9 Convergence Business and IT Projects Important to accept the integrated relationship between business and IT Pure IT projects maybe a technology refresh or upgrade. Pure business projects maybe a market analysis Projects that enable enterprise strategy are BOTH business and IT. You can not divorce: People from process; and Process from technology. 8

10 2. Projects the past the many reasons why they fail the simple reason 9

11 The Past 50% of IT projects deemed failures (Meta Group) 28% of IT projects are cancelled/ not implemented (Standish Group) 75% exceeded time deadlines and more than 50% substantially exceeded budget (KPMG) Only 33% of outcomes were viewed as positive (Boston Consulting Group) or it is the present? 10

12 The many reasons why projects fail The financial loss is large and often unrecoverable! Source: Survey of 256 UK companies 11

13 The many reasons why projects fail Silo vision on IT projects No standard vision / communication on the IT project progress Poorly defined project scope Poor project management Incomplete requirements/specifications Poor project quality control Conflicts between IT projects Organisational politics Lack of proper project resources Lack of proper project change management standards & procedures No study for (technical) feasibility Scheduling pressures Unresolved frictions when treating project interdependencies Usage of immature / poor technology infrastructure Inadequate testing procedures/controls Problems are hidden for management - "shoot the messenger" syndrome Resource draining - hardest shouting man syndrome IT Project crisis management instead of IT project risk management Hidden costs Unrealistic expectations and the list goes on 12

14 The simple reason People.who make up the organisation.however, we re only human! 13

15 3. Project Management accidental or professional methodology application projectisation project manager involvement and optimi 14

16 Whilst Project Management is about common sense Common sense is often a casualty when: Egos; Internal Politics; Inexperience; Pushy vendors; Cost constraints; and Time pressures.. Get in the way I don t know why they call it common sense when it isn t all that common! Manager 15

17 Project management is an art form an not a science For example A good project manager will: Fully understand the subject matter Be able to work with all types of people Be able to deal with ever changing environment and situations Be able to manage up down and sideways Apply a project methodology and make it work for them A good project manager will not: Start a project unprepared Seek political alliances and alienate groups or individuals Blindly apply a proven methodology without full understanding how to make it work for them Shy away from making difficult decisions 16

18 Project Manager Professional or accidental Is it common sense to get onto a plane when you know the pilot has received little or no training? The accidental project manager in wrong place, wrong time The professional project manager training, certification, continuous development Project Management Profession very low barriers to entry, but is evolving rapidly. Project managers require a broad balance of skills Increasing specialised roles Capability versus experience versus time.which one are you? 17

19 Project Management Methodologies which one? A number of methodologies or knowledge banks have emerged. Which one to use? Project Management Institute s (PMI) Project Management Body of Knowledge (PMBOK); Office of Government Commerce s (OGC) Prince 2; Consulting organisations; Vendor-based methodologies; and/or One of many hybrids. Ultimately, is the methodology: Established Communicated and trained; and Consistently applied? 18

20 Traditional focus and adoption of methodologies Most methodologies focus on the project lifecycle, not business lifecycle. Project risk processes traditionally focus on Project (not programme) Risk Management. having a methodology doesn t necessarily equate to project success 19

21 Methodology investment in the project manager over the project team Methodology investment appears to be on: The project manager as the single person who will make it happen ; and Enterprise tools and technology to aid deployment. Insufficient investment appears to be on: Whole project team training; and Whole of enterprise awareness Is this under investment in the project team hindering the application of methodologies? 20

22 Project managers and the trend towards increased projectisation We have observed the increased projectisation of organizations Drivers include: Greater volume of knowledge/information based work; Need for real time reaction to market conditions; and Greater number of networked, but often smaller, business initiatives. Organizations are increasingly adopting a stronger matrix form of structure (refer PMBOK) Promotion of project skills as core or common 21

23 Project managers Are they involved? Often the person who needs to carry out the project is left out when all the important decisions are made accountability versus authority The project manager s role is pivotal in project governance Project complexity assessment Need to involve project manager to balance: Phasing design (workstream to portfolio); Resource capabilities (project team to enterprise resources); and External / market capabilities (current suppliers to market). 22

24 Project managers The eternal optimists? Project managers are often optimistic. They need to lead a group of people to achieve what often appears impossible. However, sometimes it is. How many projects have you been on that were terminated? How many projects have you been on that were reborn in another form? Why does this happen? Seeing the data, but not believing the data, is unfortunately too common. Optimism has a good side, but also a bad side Project managers can become too focused on outputs, not outcomes 23

25 4. Organisational Implementation of Project Management from PMO to epmo maturity development project to enterprise risk management 24

26 Implementation Summary The implementation of project management within an organization is commonly associated with: Enterprise Project Management Offices; Capability development against maturity levels; Portfolio management; and Enterprise risk management. 25

27 The PMO Administrative or Strategic With increased projectisation, the role of the Programme Management Office (PMO) has, or needs to, evolve: The P can represent project or programme; and Should now also be an E for Enterprise PMO. Not a new concept, the strategic positioning and breadth of responsibilities is gaining momentum 26

28 Project Management Maturity Within Project Management there are typically five levels of maturity. Below are the various components of the Berkley model. More popular alternatives include Project Management Solution's (PMI) Project Management Maturity Model (PMMM) and Software Engineering Institute s (SEI) Capability Maturity Model (CMM) Some organizations have developed a hybrid 27

29 Maturity and relative positioning Evolution should be the capability development focus Relative, not absolute, assessments are preferred Establish progressive targets for year 1, 2, 3, etc Recommend external assistance to provide creditable benchmark. Best practice versus your practice 28

30 5. KPMG Survey why punish your bottom line?

31 KPMG Thought Leadership KPMG is an industry thought leader; KPMG conducts research activities in many disciplines; Our research is frequently referred to by many other authors and the media; 2005 Global IT Project Management Survey 30

32 Survey Summary The Asia-Pacific region is lagging behind our international counterparts in embracing Programme Management: Higher incidence of project failure in the past 12 months across the majority of industry groups; and A lower percentage adoption of Programme Management Office (PMO) across all industry categories and fewer years in operation Why keep punishing your bottom line? 31

33 Summary A Board Level Issue Projects are an integral part of business and are a key vehicle to realising business strategy Average failure is over USD$10M: What Board can easily accept an unplanned write-off of this magnitude? Stakeholders are even more unforgiving when it comes to failed projects and the resultant impacts on the bottom line Failed projects are now becoming subject to more and more litigation 32

34 Summary Investment for the Future Projects are the conduit for change in an organization Organizations need to invest in their programme and project infrastructure The day of the bottomless project cost centre (i.e. the black hole ) is over 33

35 Evolution of the PMO Many survey participants defined the PMO as follows: A function supporting a number of projects with prime responsibility for tracking and reporting on progress In essence = an administrative function KPMG s definition of a PMO for today and the future is: A strategic function responsible for co-ordinating, prioritising, overseeing and monitoring an organization s projects to achieve business strategy and benefits In essence = an strategic function 34

36 So why are projects still failing? The reasons The major reasons for failure were described as: Unclear / changing scope requirements; Poor project management; Poor resource management; and Poor cost management It is alarming to note that poor project management is still given as a reason for project failure Project management is no longer a nice to have, it must be a core competency of an organisation 35

37 So why are projects still failing? It s time for clarity Today s leading Project Managers and Programme Managers, have vastly differing, and sometimes rather subjective measures 36

38 Average PMO maturity and project performance Asia-Pacific is behind the Rest of the World in terms of the average number of years the PMO has been in operation PMO maturity is an important factor in project success; The number of years a PMO has been in operation is not, by itself, a valid measure of PMO maturity; and The most important elements of PMO maturity: Executive sponsorship; PMO buy-in / acceptance; and An established programme governance framework 37

39 PMO Maturity and Project Performance 38

40 KPMG Golden Rules We have found that applying these Golden Rules as key project principles will increase any project s chance of success Govern to achieve Establish an end-to-end integrated governance framework Prioritise to realise Align and adjust Safeguard value Hold to account Invest in people and process Establish an enterprise-wide prioritisation processes to get more from less Ensure all initiatives are clearly aligned with business strategy and maintain alignment Control benefits leakage by clearly defining what, how and when you will receive value and regularly reassess Clearly define individual accountability for realising benefits, and integrate into operational plans Recognise project disciplines and develop capability, capacity and risk models to suit your organisational maturity and culture 39

41 7. Summary 40

42 Key Points Projects are increasingly seen as the strategic enabler for an organization As project management evolves as a preferred management approach within an organization, the complexity of the associated project risk management increases significantly There are ample methodologies around, but application is the key A comprehensive risk solution framework is required high, wide and independent. Integrating people, process and technology Too much focus on the project manager, and not enough on the whole project team Portfolio management offers the opportunity to do more with less 41

43 Contact Details Presenter s contact details James O Callaghan KPMG james.ocallaghan@kpmg.com.hk 42