strategic project management maturity model (spm3) - gary heerkens

Introducing…

The Revolutionary

Strategic Project Management

Maturity Model

(SPM3)™

PRESENTED BY:

Gary R. Heerkens, PMP, CPM, CBM, CIPA, PE, MBAPresident, Management Solutions Group, Inc.

*This presentation was selected for an encore performance at the 2007 PMI Global Congress

Making a Difference,Transforming, Leading,

Adding Value

When this session is completed, you will be able to:

Define SPM (strategic project management) and

its key components

Evaluate how well your company practices SPM

Describe how improving SPM methods can help

your company and develop a preliminary

implementation action plan

Evaluate whether you’d like to test drive the SPM3™

Presentation Objectives

So...What is“Strategic Project Management”?

The alignment of projects to strategy

Project portfolio management

Program management

Business results of projects

SPM takes project management to “the next level”

It is comprised of four critical, high-level issues related to project management today:

Strategic planning / long range goal ID?

Program management?

Portfolio management?

Project ranking / project prioritization?

Project selection and/or approvals?

Preparing project business cases?

Audience Profile…

Are you involved in some way with:

What Motivated Me to Develop the SPM3™?

PM3s abound─the project management maturity concept now needs to address a higher purpose

The strategic end of the project life cycle is where the BIG money is to be made (or lost)

Many companies do a poor job of connecting project management with strategic management

Existing SPM models are too large and complex

The desire to grow our profession by providing a model which prescribes a critical role for project management practitioners in running the business

The Proposed Process Behind the SPM3™ Model

Define

Strategic

Intent

Study and

Evaluate

Projects

Define Long

Range

Goals

Define Targeted

Business Needs (Short-Term Goals)

Identify

Solutions

(Projects)

Select the Optimum

Mix of Projects

Manage the

Entire Portfolio

(ALL Projects)

Apply Business-Based Project Management Processes and Methods

Apply Appropriate Business Management Methods

Compare Projects Within

Portfolios

Within the Domain of Organizational

Managers / Executives

Within the Domain of the Project Management

Community

Applying an SPM3™ Approach:Principles of Excellence

Project identification should be based on a top-down, gap analysis of approach

Strategic planners should NOT try to specify project solutions (project teams should)

SPM3 is a scalable methodology

Every business need has at least two solutions

With few exceptions, projects that don't generate a positive financial return should not be pursued

PM practitioners should be permitted to play a more expanded role in the process of SPM

The effects of projects on strategy and goals should be tracked and measured

Every type of project (R&D, new products, etc.) must be represented (portfolio must be balanced)

The total volume of project work must be controlled!

Applying an SPM3™ Approach:Principles of Excellence (cont’d)

The Strategic Project Management Maturity Model (SPM3)

© 2008 by Management Solutions Group, Inc.

1 2 3 4 5

Usefulness as a Tool for

Project Identification

non-specific statements of mission,

vision, and values are in place

organization has a clear business

plan, but it is not explicitly tied to

projects

structure used includes all aspects of

the organization's business; project

links are possible

connections between strategic intent

and projects are clearly established

organization uses strategic intent as a

core approach in project identification

Verification that Projects

are Advancing Strategy

organization doesn't explicitly connect

project results to strategic intent

some cause-effect ties between

strategy and projects could be

randomly explained

the effects of projects on satisfaction

of strategic intent is regularly

evaluated

Communication/Education

Across Organizationno communication; no education minimal communication; no education

some communication; minimal

education

good communication; moderate

amount of education

excellent communication; good

education


Project Identification

long range goals are vague, non-

specific, or non-existent

long range goals are identified, but are

constantly changing

long range goals are identified and are

reasonably stablelong range goals are prioritized

long range goals clearly support

business plan

Verification that Projects

are Addressing LR Goals

organization doesn't explicitly connect

project results to long range goals

cause-effect between long range

goals and projects could be explained

the effects of projects on satisfying

long range goals is regularly

evaluated

Communication/Education

Across Organizationno communication; no education minimal communication; no education

some communication; minimal

educationgood communication; some education

excellent communication; good

education


Project Investigation

identified from bottom-up; expressed

as deliverables or solutions

generally focus on outcomes rather

than outputs

stated as business outcomes, not as

product or technology terms

expressed as quantified business

objectives, NOT solutions

address the entire organization, and

are balanced across organizations

Feasibility Potentiala lot of blue-skying: not realistic or

achievable in both scope and volume

can be marginally realistic and

achievable if managed properly

realistic and achievable; reasonably

balanced across resource groups

Development Methodology PM personnel involved in processcross-functional effects are

considered

clear, verifiable ties exist between

long range goals and strategic intent

Breadth and Balanceprojects are not even thought of in

terms of "investment types"projects segmented by department

different project types are included

(product, process, infrastructure), but

no attempts to balance

incorporates all possible types of

project investments; budgets are well-

balanced across overall portfolio

Usefulness as a Tool in

Project Classification

projects just happen; there is no

attempt to list or categorize them

organization has one large list of

projects

overall list of projects is subdivided

by organizational unit

projects are categorized using a

business segmentation approach

Level of Process Definition

& Compliance

process does not exist; no real

attempt to establish priority

process exists, but routinely violated

or overruledprocess exists, but not data-driven

good process exists, but not always

followed

rational, data-based process is

defined and followed

Application of Financial

Evaluation Methods

proposals are given their priority

"unofficially", often via power, politics,

or personal agendas

some financial standards are used to

prioritize the overall list

financial standards are used to

evaluate proposals within each

portfolio category

post-project life cycle impacts are

thoroughly examined

Proposals are analyzed and prioritized

within each portfolio category using

rigorous financial criteria.

Application of a Business

Case Approachbusiness cases are not used

simple business cases (<4 pages) are

used

business cases are prepared for large

projects only

business cases are prepared for all

projects

one responsible party is assigned for

each business case


and Compliance

no process defined for how to analyze

alternative solutionsminimal process documentation exists

good process exists, but not routinely

followed due to time pressure, etc.

good process exists, and is generally

followed

process is robust and comprehensive,

and well-followed

Level of Analytical Rigor

Designed Into Process"solution-jumping" is the norm

a few sentences, and the project is

"off and running"several alternatives are identified

alternatives are analyzed according to

established criteria

stakeholders fully understand what the

proposed project will deliver for the

organization

Amount of Cross-Functional

Involvement

someone within the originating

organization identifies "the obvious

solution"

1-2 people from both the originating

organization and a functional unit

consider a couple of options

small team studies a few alternative

solutions

many stakeholders input into a good

analysis of alternative solutions

all affected stakeholders are involved

in a thorough investigation and

analysis of potential solutions

Level of Analytical Rigor

Designed Into Process

projects are selected based on "gut

feel" and "intuition"

basic financial criteria-unevenly

applied

project selection is accomplished by

identifying an optimal "set" of

projects


and Compliance

there is no defined process for

selecting, approving, or launching

projects

there is a process for approving

projects, but selection and launch has

no formal process defined

selection and and approval processes

are defined, but process compliance is

still sporadic

good process for approval and

selection, but project launches have

no defined process

Approach to the Formal

Justification of Projects

projects are not justified formally; any

"good idea" is accepted as a project

and added to the list

subjective arguments (vs. the use of

economic criteria) is used to support

project selection

limited application of financial criteria;

justification methods are good, but

focus on strategic factors

a good combination of fininacial and

strategic factors are used to formally

justify projects

high quality financial and strategic

inputs are rigorously examined to

establish justification

Attention to Resource

Constraint Issues

resource availability not considered

when selecting and launching

projects; resources extremely

overloaded

resources very overloaded; minmal

consideration is given before selecting

new projects

resource overloading exists, but the

introduction of new projects slows

when resources are stretched thin

resources generally match demand,

but critical projects still get launched, if

deemed "critical"

projects that cannot be supported by

resources are not launched; may

even be headroom

Resource Capacity

Management

there is no real attempt to manage or

control resouce utilization

a work request management system

is in place, but control is still

lacking

a system to track resource utilization

is in place, but is not well-managed

resource supply vs. demand is

monitored and managed

reasonably well

project resourcing is carefully

regulated through periodic review of

the entire portfolio

Management of Project

Interactions

all projects being worked on "in

parallel" (no analysis of interactions)

a listing of all projects exists; some

people have a sense of

interdependencies and conflicts

high awareness of active projects

across organization; resource conflicts

addressed on ad hoc basis

project interactions are given some

consideration as part of the project

launch process

project interactions are examined and

addressed in advance (as part

of portfolio development)

Project Budgeting and

Funding Practices

all "good ideas" get funded; capability

to compare budgets vs. actuals not in

place or ignored

projects without valid project

management data are not funded

budgets can accommodate new

opportunities; project costs vs.

budgets is tracked

projects w/o valid financial analysis

(ROI) are not funded; budgets and

project actuals are reconciled

Approach to Project

Benefits Management

the benefits generated by individual

projects are vaguely understood, but

not quantified

benefits are generally understood and

characterized; they may or may not

be quantified

project benefits clearly understood

and quantified; accountability for

benefits achievement well-defined

integrity of benefits stream is

periodically examined during project

execution

the actual realization of benefits is

measured after project completion;

data triggers process changes

Approach to Asset

Management

costs are not tracked at all; asset

values are simply a guess

costs tracked at the project level, but

internal labor is not included

project costs tracked at task level, but

internal labor not included (and

therefore not in asset value)

project costs include internal labor,

but categorization of "capital vs.

expense" is not done

internal labor included; asset values

are accurate and correctly categorized

(capital vs. expense)

Structuring of the Project

Management Function

no dedicated project managers; all

project managers "wear two hats"

a "center of excellence" exists, but in

an advisory capacity only

some dedicated project managers

exist; project management is

centralized at a departmental level

an organization- or company-wide

PMO exists, but functions primarily

in a supporting role

a strong, widely centralized project

management organization exists,

performing broad functions

Business Knowledge of

Project Personnel

very little project management

ecuation of any kind

some education provided, focused

mostly on "project management

fundamentals" (PM 101)

some education beyond "PM 101";

interested PMs are permitted to

pursue some business education

project managers given moderate

amount of business training

extensive business education and

competency development for all

project personnel

Scope of the Project

Manager's Role

project managers only expected to

carry out predetermined solutions

according to strict procedure

PMs have regular interaction with

project owners and sponsors

regarding project decisions

PMs have job duties beyond basic

management of projects (e.g.,

business case prep)

the project management function

(PMO, senior PMs, etc.)

participates in strategic planning

PMs are permitted to make decisions

that optimize ROI

Management Involvement in

Project "Business"

management not fully aware of the

business impact of projects that

are underway

managers react when serious

problems occur that affect the

business impact of projects

managers review business cases

throughout the project life

sponsors provide guidance when

asked, based on good

business judgment

executives engaged so as to provide

guidance and direction if

business climate changes

Orientation to Project

Decisioning

project decisions are driven primarily

by technology considerations

project decisions are generally driven

by technology and functional

considerations


by functional and operational

considerations


by operational and business

considerations

project decisions are driven primarily

by excellent business judgment

Support of Project Management as

a Business Process the

extent to which organizational behaviors and

practices demonstrate an appreciation of the

relationship between business and project

management

Portfolio Management Methodology identification and use of an all-inclusive, logical,

project investment categorization scheme

Project Prioritization Methodology techniques for assessing the relative attractiveness of

proposed project initiatives; includes use of absolute

(financial) and evaluative (non-financial) criteria

Project Investigation Methodogy the response to targeted business needs; a

rigorous assessment of alternative solutions and

execution approaches, leading to project scope

definition

Project Selection, Approval, and

Launch Methodologies rational approaches for determining which specific

projects will be executed, how those projects will be

initiated, and when they will be launched

Coordination Across Project

Portfolios managing the

interrelationships between all active projects,

with specific emphasis on resource

management

Financial Management Methods extent to

which the organization follows a sound, business-based

approach to critical aspects of "project

economics"

STRATEGIC DIMENSIONDIMENSION

PINPOINT

MATURITY CHARACTERISTICS

Connection Between Strategic Intent

and Projects organizing organizational strategy using

a framework (such as Balanced Scorecard), in a way

that facilitates connections between organizational

strategy and projects

Development and Communication of

Long Range Strategic Goals specific performance targets the company hopes to

achieve, normally within a 3-5 year horizon

Identification of Targeted

Business Needs specific, quantified, a time-bound business objectives,

often developed as part of an annual planning

cycle

What the SPM3™ Model Looks Like

How the SPM3™ Model is Structured

STRATEGIC DIMENSION

DIMENSIONPINPOINT

MATURITY CHARACTERISTICS

1 2 3 4 5

basic elements that define the practice of SPM

a kind of “organizational competency”

observable organizational practices

Introducing…The 10 Strategic Dimensions

Connection Between Strategic Intent and Projects

Development and Communication of Long Range Strategic Goals

Identification of Targeted Business Needs

Portfolio Management Methodology

Project Prioritization Methodology

1

2

3

4

5

Project Investigation Methodology

Project Selection, Approval, and Launch Methodologies

Coordination Across Project Portfolios

Financial Management Methods

Support of Project Management as a Business Process

Introducing…The 10 Strategic Dimensions

6

7

8

9

10

the configuration of organizational strategy (using a framework like Balanced Scorecard) in a way that facilitates connections between organizational strategy and projects

1. Connection Between Strategic Intent

and Projects

PINPOINTS

DESCRIPTION

Introducing… the Strategic Dimensions

Usefulness as a Tool for Project Identification

Verification that Projects are Advancing Strategy

Communication/Education Across Organization

Balanced Scorecard Model Financial

Customer

Internal Business Process

Employee Learning and Growth

Frameworks for Structuring

Strategic Intent

Strategic Buckets Model

Cost Reduction

Quality Management

Competitive Advantage

Supply Chain Management

Cycle Time Reduction

Six Sigma

Stated Goals Model

Increase Customer Loyalty

Reduce the Asset Base

Expand Market Penetration

Optimize Process Excellence

Product Line Growth

Customer Service Excellence

ISO (or other) certification

2. Development and Communication

of Long Range Strategic Goals

identification of specific performance targets that the organization plans to achieve, normally within a 3-5 year time horizon

PINPOINTS

DESCRIPTION


Verification that Projects are Advancing

Long Range Goals

Communication/Education Across Organization


Examples of Long Range

Organizational Goals

• Gross margin = 11%

• 20% new products come from existing

• 70% of product launches on time

• growth in existing sales volume of 10%

• revenue from new customers > 6%

• 20% market share for product ABC

• Process cycle time = 5.5 days

• 94% manufacturing yield─Department Y

• Maintenance costs = 8% of mfg costs

• Average days in inventory < 1.4

• Annual waste product line A = $130,000

• Inventory turnover ratio = 12

Long Range Strategic

Goals

Long Range Operational

Goals

PINPOINTS

DESCRIPTION

3. Identification of Targeted

Business Needs

identifying specific, quantified, time-bound business objectives, normally developed conjunction with an annual planning cycle

Usefulness as a Tool for Project Investigation

Feasibility Potential

Development Methodology


• Increase gross margin on sales of householdproducts at least 2% by 3rd Qtr, 20XX

• Reduce average customer return rate on amateur digital cameras to 8% by YE 20XX

• Reduce average age of receivables to Tier 1 suppliers to 24 days by mid-20XX

• Establish a 20% share of the home office scanner market next year

• Reduce cost of equipment maintenance to 9% of asset value by YE 20XX

• Reduce average response time in the blood testing lab to 5.5 days next year

• Reduce the average age of stored perishable goods by 4 hours next year

• 10% of the warehouse staff will be capable of performing two functions by 2nd Qtr, 20XX

Targeted Strategic

Needs

TargetedOperational

Needs

Examples of Targeted Business Needs

PINPOINTS

DESCRIPTION

4. Portfolio Management Methodology

the configuration and ongoing utilization of an all-inclusive, logical, business-based project categorization scheme

Breadth and Balance

Usefulness as a Tool for Project Classification


PINPOINTS

DESCRIPTION

5. Project Prioritization Methodology

techniques for assessing the relative attractiveness of proposed project initiatives; includes use of absolute (financial) and evaluative (non-financial) criteria

Level of Process Definition and Compliance

Application of Financial Evaluation Methods

Application of a Business Case Approach


EXAMPLE: Weighted Factor

Scoring Matrix

Portfolio: New Product Development

Attributes (Relative Weight)

Net Present Value(0.60)

Potential for Growth

(0.30)

# of Users Affected

(0.10)

TOTAL

SCORE

3 4 31.95 1.00 0.30

3.25

3.55

4.00

3.70

4 3 22.60 0.75 0.20

4 4 42.60 1.00 0.40

3 5 51.95 1.25 0.50

Project

Alpha

Beta

Omega

Theta

RANK

4

3

1

2

PINPOINTS

DESCRIPTION

6. Project Investigation Methodology

the response to targeted business needs; a rigorous assessment of some alternative solutions and execution approaches, leading to thorough project scope definition

Level Process Definition and Compliance

Level of Analytical Rigor Designed Into Process

Amount of Cross-Functional Involvement


Preparing a Project Business Case© 2008 by Management Solutions Group, Inc.

1.0 Front MatterSection 1 is the so-called “boilerplate”. It includes administrative information

relating to the business case document.

1.1 Cover SheetAs the name suggests, this is the front page of the business case. It should

include basic identifying information, such as title, author(s), date, etc.

1.1.1 Title

Summarize the proposed action and the nature of the business case analysis.

For example, “Proposed Software Upgrade: Return on Investment Study”. If

possible, the title should be stated in terms of a problem rather than a solution.

1.1.2 Author and Organization

Identify the person who wrote and/or coordinated the preparation of the business

case document.

1.1.3 Contributor(s) and Organization(s)

Identify anyone who had significant input or involvement in the preparation of the

business case document. Within reason, identifying the existence of several

contributors can often serve to enhance the credibility of the business case.

1.1.4 Current Date

Record the date associated with whatever version of the business case you are

now releasing. This will become particularly useful if multiple versions of the

business case document are needed.

1.2 Document ControlServes as an audit trail in cases were multiple versions of the business case

document exist.

1.2.1 Version Number

Identify the current version of the business case document is being published.

Use a traditional version numbering scheme, such as 2.1, 3.0, etc.

1.2.2 Version History

Identify the release date of all previous versions of the business case document.

1.3 Review/Approval Table

Lists who has reviewed the business case and whose formal approval to proceed

is being sought. (Before releasing the business case, you should identify two

basic groups: those whom you would like to review the document,

PINPOINTS

DESCRIPTION

7. Project Selection, Approval, and

Launch Methodologies

rational approaches for determining which specific projects will be executed, how those projects will be initiated, and when they will be launched

Level of Analytical Rigor Designed Into Process

Level of Process Definition and Compliance

Approach to the Formal Justification of Projects

Attention to Resource Constraint Issues


ROI

ProjectExpenditure

ROI

ProjectExpenditure

A Not-So-GoodProject

A GoodProject

Optimizing the Project MixUsing the “Efficient Frontier” Method

Cumulative Return on

investment

Cumulative Project Expenditure

BudgetLimit

OptimalROI

Optimizing the Project MixUsing the “Efficient Frontier” Method

PINPOINTS

DESCRIPTION

8. Coordination Across Project

Portfolios

managing the interrelationships between all active projects, with specific emphasis on resource management

Resource Capacity Management

Management of Project Interactions


PINPOINTS

DESCRIPTION

9. Financial Management Methods

the extent to which the organization follows a sound, business-based approach to critical aspects of "project economics"

Project Budgeting and Funding Practices

Approach to Project Benefits Management

Approach to Asset Management


PINPOINTS

DESCRIPTION

10. Support of Project Management

as a Business Process

the extent to which organizational behaviors and practices demonstrate an appreciation of the ties between business and project management

Structuring of the Project Mgmt. Function

Business Knowledge of Project Personnel

Scope of the Project Manager's Role

Management Involvement in Project “Business”

Orientation to Project Decisioning


Connection Between Strategic Intent and Projects


A Sampling of Maturity Characteristics…

STRATEGICDIMENSION

DIMENSIONPINPOINT

non-specific statements of mission, vision, and values are in place

organization has a clear business plan, but it is not explicitly tied to projects

structure used includes all aspects of organization's business; project links are possible

connections between strategic intent and projects are clearly established

organization uses strategic intent as a core approach in project identification

1 2 3 4 5

MATURITY CHARACTERISTICS:

STRATEGICDIMENSION

DIMENSIONPINPOINT

Coordination Across Project Portfolios

Resource Capacity Management

1 2 3 4 5

there is no real attempt to manage or control resource utilization

a work request management system is in place, but control is still lacking

a system to track resource utilization is in place, but not well-managed

resource supply vs. demand is monitored and managed reasonably well

project resourcing is well-regulated via periodic review of the entire portfolio

A Sampling of Maturity Characteristics…

MATURITY CHARACTERISTICS:

SPM3™ Application #1:You Can Conduct a High-Level Diagnosis

…is your organization:

…mature? …immature?…taking a

“shotgun approach”?

Examine all individual pinpoints and every set of maturity characteristics. Now consider…

SPM3™ Application #2:You Can Perform a Detailed Assessment

Which ones does your organization do well?

• What are some of the critical success factors?

Which ones are not done very well?

• Why is this?

• What can be done to improve?

SPM3™ Application #3:You Can “Score” Your Organization

(if you MUST!)

For each dimension, scores could be:

an average score

a total dimension score

individual pinpoint scores

Closing Thoughts on…

The Pathway to Higher Levels of SPM Maturity for Your Organization

The Pathway to Career Growth and Personal Development for You

The Pathway to a Better SPM Model

BIZ

CARD

SPM3

MODEL

BEGETS

If You Wish To Contact Me…

Gary R. Heerkens, PMP, CPM, CBM, CIPA, PE, MBA

President, Management Solutions Group, Inc.

(585) 820-3660

[email protected]

What Questions Do You Have?What Questions Do You Have?

strategic project management maturity model (spm3) - gary heerkens

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