STRATEGIC PLANNING FOR PROJECT MANAGEMENT USING a PROJECT MANAGEMENT

TEAMFLY

Team-Fly®

STRATEGIC

PLANNING FOR

PROJECT

MANAGEMENT USING

A PROJECT

MANAGEMENT

MATURITY MODEL

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This Page Intentionally Left Blank

STRATEGIC

PLANNING FOR

PROJECT

MANAGEMENT USING

A PROJECT

MANAGEMENT

MATURITY MODEL

H A R O L D K E R Z N E R , PhD

Senior Executive Director for Project Management

International Institute for Learning

New York, New York

John Wiley & Sons, Inc.

New York ● Chichester ●Weinheim ● Brisbane ● Singapore ● Toronto

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This book is printed on acid-free paper.

Copyright © 2001 by John Wiley & Sons. All rights reserved.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise,

except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without

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01923, (978) 750-8400, fax (978) 750-4744. Requests to the Publisher for permission should be

addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York,

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This publication is designed to provide accurate and authoritative information in regard to the

subject matter covered. It is sold with the understanding that the publisher is not engaged in

rendering professional services. If professional advice or other expert assistance is required, the

services of a competent professional person should be sought.

Library of Congress Cataloging-in-Publication Data

Kerzner, Harold.

Strategic planning for project management using a project management maturity model /

Harold Kerzner.

p. cm.

Includes index.

ISBN 0-471-40039-4 (alk. paper)

1. Industrial project management. 2. Strategic planning. I. Title.

HD69.P75K494 2001 00-043814

658-4 04—dc21

Printed in the United States of America.

10 9 8 7 6 5 4 3 2 1

∞

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Contents

Foreword ix

Preface xi

Introduction xiii

1 The Need for Strategic Planning for Project Management 1

Introduction 1

Misconceptions 1

Wall Street Benefits 3

Stakeholders 4

Gap Analysis 5

Concluding Remarks 9

2 Impact of Economic Conditions of Project Management 11

Introduction 11

Historical Basis 11

3 Principles of Strategic Planning 15

General Strategic Planning 15

What Is Strategic Planning for Project Management? 16

Executive Involvement 25

The General Environment 26

Critical Success Factors for Strategic Planning 28

Qualitative Factors 29

Organizational Factors 30

Quantitative Factors 32

v

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Identifying Strategic Resources 34

Why Does Strategic Planning for Project Management

Sometimes Fail? 38

4 An Introduction to the Project Management Maturity Model

(PMMM) 41

Introduciton 41

The Foundation for Excellence 42

Overlap of Levels 43

Risks 45

5 Level 1: Common Language 47

Introduction 47

Roadblocks 48

Advancement Criteria 49

Risk 50

Assessment Instrument for Level 1 50

Questions 51

6 Level 2: Common Processes 67

Introduction 67

Life Cycles for Level 2 68

Roadblocks 71

Advancement Criteria 72

Risk 72

Overlapping Levels 73

Assessment Instrument for Level 2 73

Questions 74

7 Level 3: Singular Methodology 77

Introduction 77

Integrated Processes 78

Culture 81

Management Support 81

Informal Project Management 82

Training and Education 82

Behavioral Excellence 84

Roadblocks 85

Advancement Criteria 85

Risk 86

Overlapping Levels 87

Assessment Instrument for Level 3 87

Questions 87

vi CONTENTS

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8 Level 4: Benchmarking 97

Introduction 97

Characteristics 98

The Project Office/Center of Excellence 99

Benchmarking Opportunities 101

Roadblocks 103

Advancement Criteria 103

Assessment Instrument for Level 4 104

Questions 104

9 Level 5: Continuous Improvement 109

Characteristics 109

Continuous Improvement Areas 110

The Never-Ending Cycle 112

Examples of Continuous Improvement 113

Developing Effective Procedural Documentation 114

Project Management Methodologies 120

Continuous Improvement 120

Capacity Planning 122

Competency Models 123

Managing Multiple Projects 125

End-of-Phase Review Meetings 127

Strategic Selection of Projects 128

Portfolio Selection of Projects 131

Horizontal Accounting 134

Organizational Restructuring 136

Career Planning 138

Assessment Instrument for Level 5 138

Questions 139

10 Sustainable Competitive Advantage 143

Introduction 143

Strategic Thrusts 144

The Need for Continuous Improvement 147

Project Management Competitiveness 148

11 Special Problems with Strategic Planning for Project

Management 151

Introduction 151

The Many Faces of Success 152

The Many Faces of Failure 153

Training and Education 157

Change Management 158

Partnerships 162

Contents vii

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The Impact of Risk Controls Measures 163

Dependencies between Risks 165

Selecting the Appropriate Response Mechanism 168

Conclusions 170

11 Case Studies 171

Case 1: Packer Telecom 171

Case 2: Luxor Technologies 173

Case 3: Altex Corporation 177

Case 4: Acme Corporation 180

Case 5: Quantum Telecom 182

Case 6: Lakes Automotive 184

Case 7: Ferris HealthCare, Inc. 185

Case 8: Clark Faucet Company 187

Case 9: Hyten Corporation 190

Case 10: Como Tool and Die (A) 200

Case 11: Como Tool and Die (B) 204

Case 12: Macon Inc. 207

Case 13: The Trophy Project 209

Case 14: The Blue Spider Project 212

Case 15: Corwin Corporation 225

Case 16: MIS Project Management at First National Bank 235

Index 247

viii CONTENTS

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Foreword

To win a decathlon requires the extreme best from the participant. It is a very gru￾eling and demanding set of events. The decathlete is usually very good and in fact

the best in one or two events and in good standing in the other eight or nine

events. The objective is to be the overall best in all ten events. Decathletes like

most athletes must complete in head to head events to know if they are able to win

the overall decathlon. They must study their competitors in the greatest detail and

know their strengths and weakness. They must learn from the other decathletes

what allows them to put out that extra 5% that means the difference between win￾ning and just participating. They must also compete in an environment where the

performance standard required to win is always becoming higher.

Being a project manager is similar to the decathlete and in the business of proj￾ects, the field is very competitive. Similar to a decathlon there are events (nine

knowledge areas) in the Project Management Body of Knowledge. The decathletes

in project management are the companies that are controlling costs, schedule and

quality on a project level. The project-driven companies must find ways to learn

“best practices” in a competitive world and apply these lessons to their processes,

systems, and tools. This method of continuous improvement through measuring

and comparing is referred to as benchmarking as described by Dr. Kerzner.

Nortel aspires to win the decathlon prize, but realizes it is not possible with￾out both internal and external benchmarking measurements and continuous im￾provements. The internal benchmarking is similar to intramural decathlons where

learning comes from watching the friendly decathletes. A significant opportunity

for learning and continuous improvement occurs when the “best in class” have

entered the decathlon.

Nortel has particapted in the Kerzner five-step Project Management Maturity

Model survey for the last year and a half. The five steps measure the desired di￾ix

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rection of Nortel in reaching the point of external benchmarking and continuous

improvement. Over 400 Nortel Project Managers globally have participated in

step one. Step one determines if a common language is being used. Nortel is us￾ing this initial assessment as a baseline for improvements. In the fall of 2000

Nortel will confirm the improvements in step one and move to measure step 2,

“common process,” and step 3 “common methodology.”

Dr. Kerzner has provided the measuring devices for the project management

decathlon in the Maturity Model. By placing the sense of urgency around the im￾provement programs and remeasuring against the initial baseline, Nortel has a

tangible measure of improvement and is encouraged to go on and participate in

the external benchmarking order to become the best in Project Management.

Dr. Kerzner’s Project Management Maturity Model is on the internal web in

Nortel and the results are automatically calculated to provide the participant with

an immediate score. The aggregate scores of each business unit are published

monthly as a visible proof that Nortel is focused on the ideals of the five-step

model (common language, process, methodology, benchmarking and continuous

improvement). The model leads to a strong foundation for a world-class, project￾driven company to mature and evolve.

If has often been said “that to improve, one must be prepared to measure the

improvement” and “one must inspect what one expects.” The Kerzner Project

Management Maturity Model has provided this tangible measure of maturity. The

rest is up to the company to set the expectations and to inspect the results.

Bill Marshall

Nortel Global Project Process Standards

x FOREWORD

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TEAMFLY

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Preface

Excellence in project management cannot occur, at least not within a reasonable

time frame, without some form of strategic planning for project management.

Although the principles of strategic planning have been known for several

decades, an understanding of their applicability to project management is rela￾tively new. Today, as more companies recognize the benefits that project man￾agement can provide to their “bottom line,” the need for strategic planning for

project management has been identified as a high priority.

This book is broken down into two major parts. The first part, Chapters 1 to

3, discusses the principles of strategic planning and how it relates to project man￾agement. The second part, Chapters 4 to 10, details the project management ma￾turity model (PMMM), which will provide organizations with general guidance

on how to perform strategic planning for project management. The various levels,

or stages of development, for achieving project management maturity, and the ac￾companying assessment instruments, can be used to validate how far along the

maturity curve the organization has progressed. The PMMM has been industry

validated. One large company requires that, each month, managers and executives

take the assessment instrument exams and then verify that progress toward matu￾rity is taking place from reporting period to reporting period.

Perhaps the major benefit of the PMMM is that the assessment instruments

for each level of maturity can be customized for individual companies. This cus￾tomization opportunity makes Strategic Planning for Project Management Using

a Project Management Maturity Model highly desirable as a required or refer￾ence text for college and university courses that require the students to perform

an individual or group research project. The book should also be useful as a re￾quired text for graduate courses on research methods in project management. In

addition, the book can be used as an introduction to research methods for project

xi

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management benchmarking and continuous improvement, as well as providing a

brief overview of how to design a project management methodology.

Seminars on strategic planning for project management using this book, as

well as other training programs on various project management subjects, are

available by contacting Lori Milhaven, Vice President, at the International

Institute for Learning, (212) 758-0177, extension 5121. Contact can also be made

through the Web site, Iil.com.

Harold Kerzner

International Institute for Learning

110 East 59th Street

New York, NY 10022-1380

xii PREFACE

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Introduction

Projects are critical to the success of any organization. They are the activities that

result in new or changed products, services, environments, processes and organi￾zations. Projects increase sales, reduce costs, improve quality and customer sat￾isfaction, enhance the work environment, and result in many other benefits.

As organizations have recognized the criticality of projects to their success,

project management has become a focal point of improvement efforts. More and

more organizations have embraced project management as a key strategy for re￾maining competitive in today’s highly competitive business environment. Project

management centers of excellence (e.g., project management offices), training

programs, and organization change programs to improve project management

practices are increasingly common parts of strategic plans to improve organiza￾tional effectiveness.

Some organizations are just getting started with project management. Others

have reached a level of maturity whereby project management has become a way

of life. In the leading organizations, project management is aligned with and in￾tegrated into the company’s business goals and objectives. No longer the sole re￾sponsibility of the project manager, top management is taking more responsibil￾ity for driving the company’s project management strategies.

This book is the result of studying project management efforts in hundreds

of organizations. The lessons learned have resulted in a roadmap. A model that

identifies the universal phases an organization goes through as project manage￾ment matures and evolves. The PM Maturity Model allows us to identify what

steps must be taken, what deeds must be accomplished, and in what sequence to

realize meaningful and measurable results. Project management is no longer a

program within the company. It becomes a strategic part of the annual business

plan.

xiii

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Strategic Project Management Using a Project Management Maturity Model

provides the reader with a step-by-step strategy for planning, designing, imple￾menting, and improving project management. In addition, the assessment tools

that are a part of this book help the reader evaluate where within this maturity

model their organization actually fits.

Online Assessment Tool

As a companion to this book, International Institute for Learning, Inc. has estab￾lished an interactive, self-scoring PM Maturity Model Assessment Tool on our se￾cure website. We would like to invite you to take this online assessment. Your in￾formation will be kept strictly confidential. Evaluate the maturity of your

organization’s project management initiative. See whether or not your implemen￾tation of project management is successful. Are the expected benefits being real￾ized? Your results will be instantaneously and automatically scored. And there’s

a powerful added value to this online tool. It will also allow you to compare your

results with others who have taken the assessment. Compare your results with

everyone who has taken the assessment, or with other companies of your size, or

within your industry. Get a better understanding of how your approach to project

management measures up to others. Based on your assessment results, our online

PM Maturity Model Assessment Tool will suggest what are the specific actions

that must be taken to advance your organization to the next levels of project man￾agement maturity.

To participate in this online PM Maturity Model Assessment, please visit our

website at: www.iil.com

G. Howland Blackiston

Executive Vice President

International Institute for Learning

xiv INTRODUCTION

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