APM 2010 – 2011 Study

1. APM 2010 – 2011 Study Directing of Project Portfolios: Good Governance of Change initiatives Carried out by: GovernanceSpecific Interest Group

2. Structure of the presentation • Background and Purpose • The study: Scope and Sample • Excerpts from interview notes • Key findings and conclusions • The practical conceptual structure • The team

3. Background and Purpose • Foundation: Governance of Project Management SIG guidelines (Directing Change) • Why: Study to improve insight in reality of governance in relation to project management • What: Define a practical conceptual structure to help discuss governance issues 3 GovSIG

4. Scope and Sample • Interviews with Directors in 5 large and professionally managed corporations in UK and Norway

5. The sample and context Mix of stable and dynamic context. (the sample of corporations are not representative for any of the countries). All are large corporations in terms of economy and no of employees. Dominated by private sector. Dominantly market driven. Mix of national and international corporations. Heavily divisionalised organisations. Risks seem to be potentially very large but few in number and well controlled. Large number of projects, but normally small in size.

6. Portfolio structure The theoretical concepts of portfolio, programme and project seem more well known/widely used in the UK. Norwegian corp. seems to indicate recent changes in the way portfolio is structured – a recent awakening? This has given more sophisticated governance structures in the Norwegian corp. Board responsible for risk exposure, not for the details. Still they need visibility of single key projects.

7. Alignment between strategy and projects They are all confident that portfolio is aligned with strategy. Projects are closely related to /connected to/ integrated in business development. Uses different tools/documents/criteria

8. Application of financial controls They claim the answer is yes, but they argue from single projects and avoid the question about the whole. There is reporting from single project level to aggregated level, and there seems to be budgeting and considerations on aggregated level, but not a clear link.

9. Maintaining the portfolio Are they really so good at keeping their portfolio’s updated? We have a feeling they tell us what they want us to hear, not necessarily the whole picture here. On the other hand: The answers are consistent with the answers to about alignment with strategy. The mechanism varies depending on the corporate criteria for projects. There is no evidence of pruning in any of the UK organisations. There was probably an element of pruning in the recent portfolio reorganizations in NOR1 and NOR2.

10. Projects and business as usual The question is not well answered in explicit terms, but it seems like they are aware.

11. Risk assessments They are obviously well aware of the issue. We wonder if their portfolio also has the “right” overall risk profile. Do they really have hands-on insight and understanding, or is this the official text-book answers?This seems all perfectly taken care of, but we have not seen evidence to fully support that .

12. Portfolio and capacity They all indicate resources as a key limitation and that they do take measures to keep the portfolio consistent with available capacity. Staff/expertise seems more limiting than finances. The limiting resource seems to be project management staff rather than financial or technical. No conversion rate answers.

13. Engaging with stakeholders There seems to be some sort of engagement – but no evidence of trying to reach a “shared understanding of risks and rewards” to optimize the portfolio.

14. Impact on ongoing operations (This question focuses whether project operations obstruct ongoing internal operations. There is a similar question about whether the project delivery obstructs the customer’s operations. The latter is not covered here.) All are confident but for different reasons. We believe these answers are a bit too positive, because most of the problems are sorted out and the noise filtered away before it reaches the high level of our interviewees.

15. Motivation of Directors Theoretically the directors are motivated by translating the objectives and pursuing them. In practice the motivation of the board is the sum of motivation of each member and the influence between them. Reluctance to discuss motivation of directors. The answers indicate top-down thinking on motivation (similar to top-down thinking about projects and implementation).

16. Omitted issues They omit talking about culture. Is it not important? Is it not OK to talk about? We believe this is a main issue – and of course hidden under many of the other issues raised in the interviews, but the observation is that it is not explicitly addressed. Do directors have a blind spot here? Neither is success and satisfaction levels talked about. This may be because it is difficult to measure, or maybe the results are less impressive in this perspective than they would have liked to report?

17. Key findings (1): Strong points • Project management systems, including controls and reporting, terminology, roles and responsibilities are defined and in place • Ability to stop non-viable projects claimed to be high • Well aware of challenges in discriminating between business as usual and projects. The challenges of project operations obstructing ongoing operations is claimed to be well taken care of. • Risks seem to be potentially very large, but few in numbers and well controlled. The use of decision gates and verification of decision making documents seem well established.

18. Key findings (2): Blind spots • Heavy divisionalisation, to a degree where we question the top level Board overview • Although aware of risk and uncertainty, discussions fail to cover the whole portfolio and risk across portfolios, focus single dominant risks • Motivation of those making decisions and optimizing the portfolio of change initiatives seems a non-recognised issue • No mentioning of culture issues or levels of success and satisfaction • No learning process connected to projects or portfolios is described

19. Key findings (3): The portfolio of change initiatives • Awareness of Boards’ and Directors’ responsibility in terms of total risk exposure in portfolios, programmes and projects • Business Plans and Business Cases actively used. The degree of alignment between strategy and projects is claimed to be very high. • Active engagement with suppliers, customers and other stakeholders to maintain business relations, but not to support the optimization of project portfolio

20. Conclusions to interviews • These corporations and interviewees are obviously professional and well managed, the findings indicate a high level of performance not representative of any industry in general • Still there are indications of some weak spots that should be improved. Governance of project management is still not perfect, and the portfolios and programme concepts are still not mature • To support a systematic discussion on these issues, there is a need for a tool; a practical conceptual structure

21. Governance of Project Management Three Main Pillars Purpose Stakeholders Influences Restrictions CONTEXT Strategy/Policy Culture Individual System Plan (of Actions) Motivation (of Directors) Behaviour (of People) Delegation (Divisionalisation) Society Nature BAU (Business as usual) Portfolio A Portfolio B Portfolio C Project Programme WORK 21 GovSIG

22. The Board on Governance of Project Management Purpose Stakeholders Influences Restrictions CONTEXT What they want to do What they think can be done Strategy/Policy Culture Individual System How they think projects work How they think people work Plan (of Actions) Motivation (of Directors) Behaviour (of People) Delegation (Divisionalisation) Example of use How they think responsibilities should be defined and risks allocated Society Nature BAU (Business as usual) Portfolio A Portfolio B Portfolio C Project Programme WORK 22 GovSIG

23. Further work • A wider study to cover these aspects in other settings (different cultures). The situational dimension and contextual dependency of these issues is not clarified yet. • A second round to the corporations in this study to check how the governance of project management is viewed by the members of project teams and project management. • Share findings with other APM SIG’s to get each SIG contribute to further development. • APM should run a workshop for its corporate members and for its Higher Education Institutions based on this study.

24. The study-tour team Left to right: Suzanne Davison John Caton Hartley Millar Ole Jonny Klakegg David Shannon