RISK ADVISORY SERVICES
Risk Advisory Services
Project Risk Management James O’Callaghan
Increasing project commitments being made
Commitments are up, with increases in:
•
81% projects•
88% project complexity•
79% total project budget….driven by compliance and performance
Key drivers for the increase:
•
74% by new products/services and business process improvements•
48% by technology refreshes•
24% by governance and regulatoryQUESTION??
How committed is your organisation to project management???
Introduction
James O’Callaghan
KPMG Hong Kong
Risk Advisory Services
IT Advisory Services
Key Points
Projects are increasingly seen as the strategic enabler for an organization
As project management evolves as a preferred management approach within an organization, the complexity of the associated project risk management increases significantly
There are ample methodologies around, but application is the key
A comprehensive risk solution framework is required – high, wide and independent. Integrating people, process and technology
Too much focus on the project manager, and not enough on the whole project “team”
Agenda for this presentation
1 Introduction
• some definitions
• the traditional project dynamics • business versus technology projects
2 Projects
• the past
• the many reasons why they fail • the simple reason
3 Project Management
• accidental or professional • methodology application • projectisation
• project manager involvement and optimism 4 Organizational Implementation
• from PMO to ePMO • maturity development
• project to enterprise risk management 5 KPMG Project Management Survey
1. Introduction
• some definitions
• the traditional project dynamics • business versus technology projects
What is a Project?
“…managing a collection of related tasks and activities which are
undertaken within a specific timeframe to achieve a specific goal…”
“…the adoption or recognition by an organization that projects are
the enabler for strategy execution …”
“…the investment in management techniques to effectively and
efficiently achieve the desired outcomes …”
The traditional focus of project risk management is on the dimensions of: Scope Cost Time Quality Sounds simple ?
Balancing the constant tension between these dimensions is anything but simple…and its getting harder
Important to accept the integrated
relationship between business and IT
Pure IT projects maybe a technology refresh or upgrade. Pure business projects maybe a market analysis
Projects that enable enterprise
strategy are BOTH business and IT. You can not divorce:
Convergence – Business and IT Projects
People from process; and
2. Projects
• the past
• the many reasons why they fail • the simple reason
The Past
50% of IT projects deemed failures (Meta Group)
28% of IT projects are cancelled/ not implemented (Standish Group)
75% exceeded time deadlines and more than 50% substantially exceeded budget (KPMG)
Only 33% of outcomes were viewed as positive (Boston Consulting Group)
The many reasons why projects fail
The financial loss is large and often unrecoverable!
The many reasons why projects fail
“Silo vision”on IT projects
No standard vision / communication on the IT project progress Poorly defined project scope
Poor project management
Incomplete requirements/specifications Poor project quality control
Conflicts between IT projects Organisational politics
Lack of proper project resources
Lack of proper project change management standards & procedures
No study for (technical) feasibility Scheduling pressures
Unresolved frictions when treating project interdependencies Usage of immature / poor technology infrastructure
Inadequate testing procedures/controls
Problems are hidden for management - "shoot the messenger" syndrome Resource draining - “hardest shouting man” syndrome
IT Project crisis management instead of IT project risk management Hidden costs
The simple reason
People ….who make up the organisation
3. Project Management
• accidental or professional • methodology application • projectisation
Whilst Project Management is about common sense
Common sense is often a ‘casualty’ when:
Egos;
Internal Politics;
Inexperience;
Pushy vendors;
Cost constraints; and
Time pressures
…..“Get in the way”
Project management is an art form an not a science
A good project manager will:
•
Fully understand the subject matter•
Be able to work with all types of people•
Be able to deal with ever changing environment and situations•
Be able to manage up down and sideways•
Apply a project methodology and make it work for themA good project manager will not:
•
Start a project unprepared•
Seek political alliances and alienate groups or individuals•
Blindly apply a proven methodology without full understanding how to make it work for them•
Shy away from making difficult decisionsProject Manager – Professional or accidental
Is it common sense to get onto a plane when you know the pilot has received little or no training ?
The “accidental” project manager – in wrong place, wrong time
The “professional” project manager – training, certification, continuous development
Project Management “Profession” – very low barriers to entry, but is evolving rapidly.
Project managers require a broad balance of skills
Increasing specialised roles
Capability versus experience versus time
Project Management Methodologies – which one?
A number of methodologies or knowledge banks have emerged. Which one to use?
Project Management Institute’s (PMI) Project Management Body of Knowledge (PMBOK);
Office of Government Commerce’s (OGC) Prince 2;
Consulting organisations;
Vendor-based methodologies; and/or
One of many hybrids.
Ultimately, is the methodology:
Established
Communicated and trained; and
Traditional focus and adoption of methodologies
Most methodologies focus on the project lifecycle, not business lifecycle.
Project risk processes traditionally focus on Project (not programme) Risk Management.
Methodology investment in the project manager over the project team
Methodology investment appears to be on:
The project manager as the single person who will “make it happen”; and
Enterprise tools and technology to aid deployment.
Insufficient investment appears to be on:
Whole project team training; and
Whole of enterprise awareness
Project managers and the trend towards increased “projectisation”
We have observed the increased “projectisation” of organizations Drivers include:
Greater volume of knowledge/information based work;
Need for real time reaction to market conditions; and
Greater number of networked, but often smaller, business initiatives.
Organizations are increasingly adopting a “stronger” matrix form of structure (refer PMBOK)
Project managers – Are they involved ?
Often the person who needs to carry out the project is left out when all the important decisions are made – accountability versus authority
The project manager’s role is pivotal in project governance
Project complexity assessment –Need to involve project manager to balance:
Phasing design (workstream to portfolio);
Resource capabilities (project team to enterprise resources); and
Project managers – The eternal optimists?
Project managers are often optimistic. They need to lead a group of people to achieve what often appears impossible. However, sometimes it is.
How many projects have you been on that were terminated ?
How many projects have you been on that were reborn in another form ?
Why does this happen?
Seeing the data, but not believing the data, is unfortunately too common.
Optimism has a good side, but also a bad side
4. Organisational Implementation of Project Management
• from PMO to ePMO • maturity development
Implementation Summary
The implementation of project management within an organization is commonly associated with:
Enterprise Project Management Offices;
Capability development against maturity levels;
Portfolio management; and
The PMO – Administrative or Strategic
With increased “projectisation”, the role of the Programme
Management Office (PMO) has, or needs to, evolve:
The “P” can represent project or programme; and
Should now also be an “E”for Enterprise PMO.
Not a new concept, the strategic positioning and breadth of
responsibilities is gaining momentum
Project Management Maturity
Within Project Management there are typically five levels of maturity. Below are the various components of the Berkley model.
More popular alternatives include Project Management Solution's (PMI) Project Management Maturity Model (PMMM) and Software Engineering Institute’s (SEI) Capability Maturity Model (CMM)
Maturity and relative positioning
Evolution should be the capability development focus
Relative, not absolute, assessments are preferred
Establish progressive targets for year 1, 2, 3, etc
Recommend external assistance to provide creditable “benchmark”. Best practice versus your practice
5. KPMG Survey
KPMG Thought Leadership
KPMG is an industry thought leader;
KPMG conducts research activities in many disciplines;
Our research is frequently referred to by many other authors and the media;
Survey Summary
The Asia-Pacific region is lagging behind our international counterparts in embracing Programme Management:
Higher incidence of project failure in the past 12 months across the majority of industry groups; and
A lower percentage adoption of Programme Management Office (PMO) across all industry categories and fewer years in operation
Summary – A Board Level Issue
Projects are an integral part of business and are a key vehicle to realising business strategy
Average failure is over USD$10M:
What Board can easily accept an unplanned write-off of this magnitude?
Stakeholders are even more unforgiving when it comes to failed projects and the resultant impacts on the bottom line
Summary – Investment for the Future
Projects are the conduit for change in an organization
Organizations need to invest in their programme and project infrastructure
Many survey participants defined the PMO as follows:
In essence = an administrative function
KPMG’s definition of a PMO for today and the future is:
In essence = an strategic function
Evolution of the PMO
“A function supporting a number of projects with prime
responsibility for tracking and reporting on progress”
“A strategic function responsible for co-ordinating, prioritising, overseeing and monitoring an organization’s projects to achieve business strategy and benefits”
The major reasons for failure were described as:
Unclear / changing scope requirements;
Poor project management;
Poor resource management; and
Poor cost management
It is alarming to note that “poor project management” is still given as a reason for project failure
So why are projects still failing? – The reasons
Project management is no longer a “nice to have”, it must be a core competency of an organisation
So why are projects still failing? – It’s time for clarity
Today’s leading Project Managers and Programme Managers, have vastly differing, and sometimes rather subjective measures
Average PMO maturity and project performance
Asia-Pacific is behind the Rest of the World in terms of the average number of years the PMO has been in operation
PMO maturity is an important factor in project success;
The number of years a PMO has been in operation is not, by itself, a valid measure of PMO maturity; and
The most important elements of PMO maturity:
Executive sponsorship;
PMO buy-in / acceptance; and
An established programme governance framework
Govern to achieve Establish an end-to-end integrated governance framework
Prioritise to realise Establish an enterprise-wide prioritisation processes to get more from less
Align and adjust Ensure all initiatives are clearly aligned with business strategy and maintain alignment
Safeguard value Control benefits leakage by clearly defining what, how and when you will receive value – and regularly reassess
Hold to account Clearly define individual accountability for realising benefits, and integrate into operational plans
Invest in people and process
Recognise project disciplines and develop capability, capacity and risk models to suit your organisational maturity and culture
We have found that applying these Golden Rules as key project principles will increase any project’s chance of success…
Key Points
Projects are increasingly seen as the strategic enabler for an organization
As project management evolves as a preferred management approach within an organization, the complexity of the associated project risk management increases significantly
There are ample methodologies around, but application is the key
A comprehensive risk solution framework is required – high, wide and independent. Integrating people, process and technology
Too much focus on the project manager, and not enough on the whole project “team”
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