Managing Projects and Portfolios in the Enterprise with Oracle Primavera. Key prerequisites for a successful approach.

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1 An ASG Group White Paper April 2012 Managing Projects and Portfolios in the Enterprise with Oracle Primavera. Key prerequisites for a successful approach.

2 EXECUTIVE OVERVIEW The management of projects and project portfolios in the enterprise is an area that holds considerable potential for the organisation to make informed decisions at every stage of the project/portfolio cycle. Taking a project portfolio management approach enables organisations to make more informed choices as to which projects to undertake, in what order, which resources to deploy, how to best adhere to an acceptable risk profile and outcome certainty, both in terms of time and cost. This paper examines some of the key prerequisites for a successful enterprise approach, highlighting the areas that organisations will need to address to achieve success. PREREQUISITES FOR AN ENTERPRISE APPROACH The Oracle Primavera suite of products provides a framework for visibility and management of projects and portfolios across the enterprise. To take advantage of this framework, organisations must ensure that a number of prerequisites are in place. These include: Data standards that data is not duplicated, that it has consistent meaning, is updated on a consistent basis, and is secured and protected; Process standards that the various processes, e.g. baselines, cost updates, time updates, project and activity creation, changes to data and more are all subject to known and adhered to standards; Organisational maturity this will determine and assist in the degree of sophistication that can be achieved. The required outcomes should match the level of organisational maturity in the project space; Comprehensive use - As more projects and portfolios are populated and used, the greater the potential benefit. The proviso is that users must be aware of the information and how to use it. DATA The Oracle Primavera suite of products have been used successfully by a wide range of organisations over many years. One characteristic of this usage is that it has typically been project based, where the project manager is responsible for how the system is used for this project, what processes and standards are used, what data is collected and calculated. Further, the project manager has been able to decide the usage and meaning of project codes, activity codes, and resource codes, user defined fields, baseline processes and more. The objective is to deliver the project on time and on budget or better. The same basic objectives apply for the enterprise, however to achieve them requires that project level control is now elevated to an enterprise level. Failure to address this requirement makes it very difficult and costly to achieve a meaningful enterprise picture. CONTINUOUS EVALUATION Oracle Primavera has been utilised as a project management system by many organisations where decisions tend to be made within the project. By broadening this to a portfolio approach it is possible to move the analysis, evaluation and decision making to an enterprise level. This allows the organisation to make informed decisions regarding the deployment of resources and capital that impact the wider organisation beyond the scope of the specific project. Enterprise wide best outcomes is the goal.

3 While organisations typically look at decisions regarding the current portfolio of projects being delivered, it is also important to bring prospective projects into the evaluation. These prospective projects also have requirements for resources, capital and the capacity to deliver benefits. Any analysis and decision making around projects/portfolios should also take into account the possibilities offered by prospective projects. For example, a better use of resources, delivering a better outcome may involve halting a current project to allocate resources to a prospective project with a better/faster payback. RISK PROFILES, OPPORTUNITIES AND CONTINGENCY An enterprise approach to risk, opportunities and contingency provides several outstanding benefits. If risk is managed within a project then the degree of acceptable risk may be consistent within that project. However, when risk profiles of different projects and prospective projects are compared, often a level of risk is accepted on one project, but rejected on a project with a similar or lower level of risk. An enterprise approach allows for objectivity and consistency in acceptance or rejection of project risk. Similarly with opportunities. An opportunity may be present in one project but it is rejected, while another project will pursue an opportunity with less benefit. In both the risk and opportunity assessment it is important that a consistent evaluation is carried out across the portfolio of projects. The aim is to pursue opportunities offering the best payback. Contingency is often a standard amount (10%, or 20%) that is added to a project and held in reserve, to fund any overruns, underestimates etc. In some cases, a more sophisticated approach is taken and contingency is calculated out of a detailed risk assessment. Taking a holistic portfolio view rather than a project specific view helps this more sophisticated approach, minimising arbitrary allocation. Oracle Primavera includes the ability to attach risk not only to particular projects but also to specific activities within the project. This means that the probability and quantum (time/cost) of all known risks can be incorporated into the timeline of the project. With this information, a total contingency over the life of the project can be calculated. More importantly, as contingency is attached to specific risks occurring at specific times, once these contingent events have passed, the time/cost contingency that was attached to them can be released. This will minimise the experience of major budget variances occurring towards the end of the project as well as providing the ability to actively manage contingency across the portfolio as individual projects are delivered. REPORTING Many reports are project specific and while they may present an accurate picture of that particular project, may not provide a consistent view of multiple projects. The reasons may be related to the differences in the underlying data, timing of updates, different standards, and different processes etc. There is an increasing array of other consumers of reports regarding projects/portfolios, ranging from C level executives, project/portfolio sponsors through to partners, suppliers and other stakeholders. In all cases, it is important that the production of any project/portfolio reports that are aimed at the enterprise consumers are prepared according to consistent standards, using consistent data, consistent timings and consistent processes. This consistency will assist all users to better understand the data being presented and will provide consistent tools for decision making. Oracle Primavera and the surrounding technologies, e.g. BI Publisher and P6 Analytics provide the tools to analyse and present the information.

4 COSTS AND INTEGRATION It is common to calculate costs as the project is delivered. This may be by a combination of timesheet entry, regular uploading of materials utilised and other resource utilisation. Personnel will typically calculate and record these costs, leaving the process open to human inaccuracies. The costs that are calculated within a project may not be consistent across multiple projects and may not synchronise with the costs recorded in the organisations finance systems, leading to considerable confusion as to the true picture. Other systems within the organisation hold details of resources, budgets, costs incurred, variations. The project management system may hold details of estimates to completion. There are considerable financial and data accuracy benefits to be achieved by integrating these. For example, instead of having separate cost engineers calculating costs within the Primavera systems, these same costs can be calculated within the ERP and updated automatically into Primavera. Similarly with budgets. Meanwhile, forecast cost to completion can be managed within Primavera and any changes updated back into the ERP. This level of integration will lessen the manpower required overall, providing a greater degree of timeliness in costs and forecasts and ensuring that the figures in Primavera always match those in the ERP. EARNED VALUE ACROSS THE ENTERPISE Earned value is an accepted measurement and forecasting tool which can provide evidence of value for money. It is a key indicator of future delivery time/cost and a good measure of the overall health of a project. In concept Earned Value is straightforward and is based on key data comparisons over time. The basic elements of earned value are a baseline of a complete schedule, updated time/costs and forecasts to completion. However each of these elements needs to be applied consistently across the organisation. For example, there needs to be a rigorous baseline/re-baseline process, similar to budgeting/variations in the financial world. If this is not controlled then the very basis of measurement is compromised. If costs, times, budgets and forecasts are not updated consistently then it is not possible to produce a meaningful enterprise result. Managed properly, Earned Value can provide a very good set of tools for predicting project outcomes even when as little as 20% of the project has been undertaken. These early predictive metrics can provide the organisation with a prompt to alter their course of when it is still possible to affect the outcome. CONCLUSION In a world of increasing risk and uncertainty, with competing demands for resources and capital it is very prudent for the organisation to have comprehensive, accurate and timely information for decision making. The Primavera suite of products can assist with providing the tools to gather and present this information. It is no longer sufficient to manage each project in isolation; the organisation must consider the portfolio of projects, both those already underway and those potential projects awaiting approval. There are a number of challenges in moving to a portfolio approach. However if these challenges are successfully met then the organisation is in a much better position to deliver the right project outcomes.

5 ASG GROUP LIMITED ASG is a leading IT business solutions provider in Australia customer focused and responsive. We match our genuine people with proven solutions, partnering closely with our clients to help them achieve their goals. While our clients needs continually change and evolve, our focus remains constant to continuously adapt and provide the best outcomes for our clients. ASG has built up a wealth of knowledge in the IT services industry covering Consulting, Professional and Managed services, Hosted and Cloud services. These services are used to deliver solutions across a wide range of technologies including Business Intelligence, Core Business Applications, Middleware and Technical and Hardware infrastructure. Committed to delivering tangible business outcomes for our customers, ASG s approach is one of inherent flexibility. This coupled with our can do attitude consistently delivers real results. ASG s breadth of delivery capability is underpinned by a number strategic partnerships including one of Australia s largest Oracle Platinum Partnerships. ASG is also an Oracle Primavera reseller. The ASG services portfolio is end to end, covering everything from strategy and business process design to performance and service level management, customer management, supply chain, enterprise solutions, knowledge management, governance structuring, IT architecture, information security, organisational change and business continuity. ASG is proudly an Australian Company that has a national reach through offices in all major capital cities and over 800 dedicated staff. We pride ourselves on the size and reach of our local footprint and its ability to deliver robust, flexible, customer decision driven outcomes in the Australian market. W T E info@asggroup.com.au Copyright ASG Group Limited All rights reserved.