Grant Avery, MBA, PMP Outcome Insights PMO15WS3

Grant Avery, MBA, PMP Outcome Insights PMO15WS3

Attendees backgrounds? IT/Telco Civil Eng Govt Healthcare Defence Energy Business change Deliverers o (Project/Program Managers/Directors) Framework managers/advisors o (PMO/consulting) Investors o (CEOs, CFOs, others?)

Introduction

Background/research P3M3 portfolio practices maturity reviewer, and co-author Best practices reviewer, researcher and author (MSP, PDDZ)

What s broken?

Overview 1. Important portfolio prioritisation principles - getting to no 2. The three-stage business case process 3. Assessing and stopping business cases

Investment Logic Map Indicative case Business Case Tender/Contract Build/Go-live Benefits Realisation Gate Review

Who has lists of all projects? What percentage of attendees have a project prioritisation process in place? What percentage don t? What are people using?

Funnels not Tunnels 10 ideas 10 projects 10 ideas 5 projects

You want the highest value, not size Project Value (cash + intangibles, risk-adjusted) Cost The slope indicates the priority i.e increasing the Value, or decreasing the Cost, increases the priority.

Assess projects using risk-adjusted, cost-adjusted value High priorities for investment (based on slope) P-1 V V P-2 P-3 P-4 V P-5 V (Low cost but higher-return projects can also be priorities) $ $ $ $ $ Low priorities for investment (based on slope) V P-6 P-7 $ $ $ V P-8 V (High cost does not equate to high priority) Scores are a basis for Discussion, not Decision!

Assessing strategic alignment Project X15 Strategic Criterion 1 Strategic Criterion 2 Strategic Criterion 3 Strategic Criterion 4 Aligns? Strategic contribution! Project X15 Aligns % Contribn V/$ Strategic Criterion 1 20% Strategic Criterion 2 3% Strategic Criterion 3 Strategic Criterion 4

Scores are a basis for Discussion, not Decision PRIORITIES Totally In Discuss Totally Out Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project 7 Project 8 Project 9 Project 10 Funded Unfunded

Quick Prioritization Project Cost Scores Sum (score x weight) Benefit/Cost PLACE Column1 $K Criterion A Criterion B Criterion C Column2 Column3 Project 1 50 4 0 1 90 1.8 1 Project 2 100 2 2 1 150 1.5 3 Project 3 200 0 3 3 270 1.35 2 Weights 10% 40% 50% 100% - Weights should total 100% of strategy (across row) - The project criterion score should be the percentage of the strategy (/10) that the project delivers (score 10 = 100%) i.e. strategic contribution, not strategic alignment - Criterion scores may total more than 100% (e.g. if an infrastructure refresh also delivers improved customer services - Criterion scores should be adjusted for outcome risk

Example Criteria Positive Net Present Value (i.e. cash returning) Reduction in organisational risk (e.g. ICT upgrades) New or improved customer services Legislative/regulatory compliance Brand promotion

Take care with scales!

What percentage are using a standardised gated project lifecycle?

Key Go/No-Go Gates 1. The investment logic ( Starting-Gate ) - problem definition, benefits, costs, strategic options 2. The indicative business case - Long/short list options, recs for the preferred way forward 3. The detailed business case - Short list comparisons, Detailed Costs, Benefits, Risks - The recommended assets/capabilities for tender 4. The recommended contract decision 5. Ready to go live 6. Benefits realisation, Post-Implementation Review (PIR 9/9/2010 18

The 3-Stage Business Case Process Stage-0 Business Case Investment Logic Map (ILM) (seeks approval to do a Stage-1 Business Case) Business case on a page Stage-1 The Indicative Business Case (seeks approval to do a Stage-2 Business Case (plus funds), maybe an RFI) Indicative cost, benefits, risks Options scope breadth/depth, solutions The strategic need Long-list of options culls to short list Stage-2 The Detailed Business Case (seeks approval to do a Stage-2 Business Case (plus funds), & to proceed to RFP) CBA/MCA scoring; Detailed Costs, Benefits, Risks; QRA & SA Procurement strategy; Costing model; Management strategy

Ranges are important Probability Initiation How estimates should narrow with project delivery Planning Execution Delivery a b Cost Probability Initiation How estimates usually narrow with project delivery Planning Execution Delivery a b Cost

At each of the 3 stages 1. Assess for strategic contribution (Is it still contributing as proposed?) 2. Assess for resource requirements (does the organization have enough?) 3. Assess for business case quality (the standard used) 4. Assess for quality of the management approach (at present time, and as proposed if approved)

What s broken? Stage-0 Investment Logic Mapping Where s the evidence? Do we care? What are the benefits if we fix it? The hard business benefits Can we measure them? What are our strategic alternatives? Strategic Not the things to buy www.dtf.vic.gov.au

Improving access to health services in rural Victoria (fictional Department of Health ILM) The Department of Treasury and Finance, Victoria, Australia, www.dtf.vic.gov.au

Consolidated Reporting and Portfolio Management PROBLEM BENEFITS STRATEGIC INTERVENTIONS Changes SOLUTION Assets needed No systemic approach to project prioritisation which links to strategy, so we don t know if the right projects are going first 40% Lack of consolidated reporting on projects leads to poor resourcing and assurance decisions Lack of information about future projects means we are unable to manage our resources going forwards 25% Improved delivery of organisational strategy 55% Better management of projects and project resources 45% Improve ability to prioritise investment choices against organisational strategy 35% Improve project status reporting & decision analysis capabilities 25% Enable consolidated 35% tracking and linking of PPM Tool projects from conception to Benefits Realisation Provide visibility of future projects & improve resource management 40% Improve coordination and management of the projects portfolio at the organisational strategy level Improve quality and visibility of project information Enable what-if analysis for project and programme combinations Key Performance Indicators Benefit 1 Improved delivery of organisational strategy 55% KPI 1: All projects show contribution to organisational strategy KPI 2: Improved delivery of high priority projects Benefit 2 Better management of projects and project resources 45% KPI 1: Improved delivery of project benefits KPI 2: Increased efficiency of project resources (uncharged hours reduce) Improve integration of formal project management with operational enhancement activities

ILM application tips Strictly two hour workshops Sponsor must attend (the most important person in the room) The facilitator is: content-free a mediator a story-teller not an Analyst Allow brain-storming for first 20minutes Emphasize three possible outcomes

Assessing business case quality

16 Questions The Investment Decision-makers Checklist! The Department of Treasury and Finance, Victoria, Australia, www.dtf.vic.gov.au grantavery@kpmg.co.nz

Focus up front Heavy Light

Rank the ILMs (stage-0) Assess its contribution to the organisation s strategic goals (score 1-10) Assess the quality of its thinking (the 16 Question Check-list) Assess potential resourcing impacts

Rank the Indicative Cases (stage-1) Re-assess its contribution to the organisation s strategic goals (score 1-10) Assess the quality of its arguments (the 16 Question Check-list) Focus on o quality of long-list options o quality of final short-list options o ranges of indicative costs, benefits, risks o provision for optimism bias o potential resourcing impacts

Rank the Detailed Cases (stage-2) Re-assess its contribution to the organisation s strategic goals (score 1-10) Assess the quality of its arguments (the 16 Question Check-list) Focus on o quality of short-list analysis o Quality of market engagement processes o ranges of detailed costs, benefits, risks o provision for optimism bias o potential resourcing impacts

QA Tips Is there a QA Plan? (including for the review of business cases) Which reviews, when, by whom? Assess quality at ALL gates Are assessments scaled for project size and risk? Beware conflicts of interest QA of primary decision gates in major projects should not be owned by the PM or the Sponsor the risk is to the higher-level organisation Using external QA reviewers? - Brains not Brand

Successful Pf Management 1. Are you stopping projects? (do you have a funnel or a tunnel?) 2. Do you know the maturity of your project management capabilities against international norms? 3. Do you know the maturity of your portfolio management capabilities against international norms? 4. Is portfolio capability improvement being managed as a project in its own right? 5. Is your President, Group Manager, or other Portfolio Owner chairing the Portfolio investment committee? 6. Does the investment committee comprise all tier-2 business unit leaders?

Don t forget the 6 key PMO (and PfMO!) success factors 1. You are not the process police 2. You have experts on your team 3. You have senior leadership support 4. You have a supportive organizational culture 5. Your PMO constantly adds value 6. Do you need to be called a PMO?

Your mission, returning to your organisations Ensure you have a Pf prioritization process Obtain sponsor for change if you don t Pf capability improvement should be managed as a project Introduce-multi stage business cases ( lite is fine key is the review points) Review and cull them at each stage Report KPI changes o Projects with business cases o Projects being stopped or returned for further work (by number and by cost) o Funds freed-up and returned for higher-priority projects

Remember Funnels not Tunnels 10 ideas 10 projects 10 ideas 5 projects

References Avery, Grant, (2015). Project Management, Denial and the Death Zone lessons from Everest and Antarctica. JRoss Inc Department of Treasury and Finance, Victoria Australia. Investment Logic Mapping, www.dtf.vic.gov.au Department of Treasury and Finance, Victoria Australia. The 16 question Checklist, www.dtf.vic.gov.au The Treasury, New Zealand, Better Business Cases, www.treasury.govt.nz/statesector/investmentmanagement/plan/bbc

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Thank you! Name: Grant Avery Web: www.outcomeinsights.com Email: grant.avery@outcomeinsights.com LinkedIn: Grant Avery Phone: ++64-21 466 730