whats different about pm in the public sector

What’s Different

Project Management

in the Public Sector

John Alley, Director PMO, McMaster Conference Board of Canada - January 2009

Key Learning Points

• what is different?

• how do we manage?– Resources

– Estimating

– Acquisitions

– Governance

What is the Public Sector?

Public Sector Private Sector

An organization funded (mostly) by the public to provide service for the public.

Gover

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Higher

Edu

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Health

Car

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Profit

Seekin

g

Utilitie

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Charit

ies

Crown

Corpo

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ns

“a degree of unlikeness” Concise Oxford Dictionary, 1990

• difference in kind

• difference in degree

Differences

Differences are important

• differences lead to different actions

• what about PM maturity?

• differences run deeper

What’s Different for Public Sector Projects

Resourcing

What’s Different?

• sources of project financing

Public Sector

Private SectorTaxes, Grants

Earned Revenue,

Capital Markets

More on Financing

Private Sector • profit seeking• grow or die• uses capital market• define a hurdle rate• can find funds for

any project that benefits the bottom line

Public Sector• provide services the

market can’t• resist growth• rarely use capital

market• what’s a hurdle rate?• select the ‘best’

projects that fit the available funds

Constraints

• resources– fixed pot for all projects– every project will have limited funds

• time– legislated deadlines– political deadlines

• scope– usually starts at the minimum

Constraints

• many projects are triple constrained

• contingency?

• risks?

• accuracy of estimates?

For Success on Projects …

• resist “On time, on scope, on budget”• address the triple constraint:

– charter identifies which can be adjusted

– focus on risk analysis– make estimates realistic

• deliver portfolio on budget

For Success on Projects …

• understand the priority and strategic alignment of projects in the portfolio

• know the business benefits and find ways to deliver benefits in stages

• pooled contingencies, stretch objectives

What’s Different for Public Sector Projects

Estimating

What’s Different?

• Size

• Scope of activity (for a given size)

Public Sector

Private Sector

Large Small

Public Sector

Private Sector

Complex Simple

What’s Different - Complexity

City of Hamilton• police• fire• bylaw enforcement• parks• recreation services• garbage collection• sewer services• roads• planning services• … and more

McMaster• 25,000 student

school• 3400 bed residence• 18 food outlets• athletic club• parking service• bookstore• library• computer labs• health clinic• print shop • and more ….

What’s Different – Estimating

• low estimates because:– cost constraint– inexperienced

estimators– resource

expertise

Estimator

ExperienceResource

Expertise

Achievable

PredictableScope

Clarity

Speed of

Delivery

Cost

Constraints

Estimate

For Success on Projects …

• allow for costs of change management

• use parametric tools

• get an independent assessment

• post-project reviews better estimates

For Success on Projects …

• build standard estimates for key components– internal approvals– acquisitions– security testing

• benchmark

• build in gates for re-estimating

What’s Different for Public Sector Projects

Acquisitions

What’s Different - Acquisitions

Bellamy Inquiry

MFP Leasing

Toronto Tax System

What’s Different – Acquisitions

• purchasing policy

– open and accountable process– accessible to all vendors– issues of interprovincial trade– clear and open selection– get the best value for public funds

What’s Different – Acquisitions

• limited exceptions for sole source– defined criteria– get the best value

• approvals based on $ limits– defines accountability– limits risk

• the process takes time

For Success on Projects …

• build the process into templates

• know the rules - the $ limits and the process for each

• define expectations for time/cost/effort to follow the process

• training for PMs– maintain meticulous records– the process protects them

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different – Strategic Alignment

Strategy

Strategic

Programs

Projects

Top-Down Bubble UpPrivate Sector

Public Sector

For Success on Projects …

• Emphasize strategic alignment (business case, charter and communications)

• Understand and document competing priorities

• break projects into smaller components – fit in as resources permit

– allow for benefits even if terminated early

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different - Stakeholders

Private Sector Public Sector

Internal Stakeholders

Owners / Shareholders The public Elected Officials as individuals

Board of Directors Board of Directors / Cabinet / Council / Governors / Senate

Finance Committee Finance Committee

Sponsor SponsorTeam members Team members

Management Management

Employees Employees

Internal customers Internal customers

Internal Audit Internal Audit

What’s Different - Stakeholders

Private Sector Public SectorExternal Stakeholders

Customers CustomersExternal Team Members External Team Members

Labour Unions Labour Unions

Suppliers Suppliers

Consultants Consultants

Consumer Groups Consumer Groups

Special Interest Groups Special Interest GroupsTaxpayers Taxpayers

Government Government – other levels/depts

Financial institutions Financial institutions

Stock analyst/Bond rating service

Bond rating service

For Success on Projects …

• Understand the importance of – taxpayers– other branches and levels of government – special interest groups

• stakeholder analysis templates

• communication plan templates

• peer reviews / steering committee review

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different – Decision Making

ManagementEdict

ConsensusPrivate Sector

Public Sector

For Success on Projects …

• define who makes decisions and how– train sponsors and PMs

• make decision points visible • facilitation / creative problem-solving• standard oversight structures

– Project Selection Board– Steering Committees

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different – Project Selection

QuantitativeCriteria

Qualitative CriteriaPrivate Sector

Public Sector

What’s Different – Project Selection

• the public sector provides services the market can’t– fire-fighting– roads– courts

• but what about private garbage collection, the 407, private prisons?

• what is the ROI on these services?

What’s Different – Project Selection• qualitative vs quantitative criteria

• how do we compare services?– eg: fire fighting vs seniors’ recreation

• how do we balance service improvements, cost savings and legislated requirements?

• how do we align with strategy?

What’s Different – Project Selection

• How do we weigh the importance of each criterion?

Strategy

Cost

Savings

Cost

Avoidance

And

many

more …

Security

Service

Capability

Selection

For Success on Projects …

• standard project proposal format– strategic fit built in– accountability built in

• standard valuation and metrics for– customer service improvement– cost reduction / avoidance– qualitative benefits

For Success on Projects …

25% strategic fit

25% business case / service improvement

25% capacity, security, adherence to standards, project risk

25% corporate risk reduction

20% strategic fit

20% business case

20% value to external clients

20% sponsor commitment

20% project risk

facilitate consensus on a selection model

2 examples:

What’s Different for Projects?• Resources (Financing) – the triple

constraint• Acquisition – policies / time• Estimating – second opinions• Governance

– Strategic alignment – metrics – Stakeholders – templates – Decision-making – define who and how– Project selection – define criteria / qualitative

Questions?

John Alley, Director PMO, McMasteralleyj@mcmaster.ca Conference Board of Canada - January 2009