Table of Contents

Title Page

Copyright Page

Dedication

Preface

INTERNATIONAL INSTITUTE FOR LEARNING, INC. (IIL)

Chapter 1 - Understanding Best Practices

1.0 INTRODUCTION

1.1 PROJECT MANAGEMENT BEST PRACTICES: 1945-1960

1.2 PROJECT MANAGEMENT BEST PRACTICES: 1960-1985

1.3 PROJECT MANAGEMENT BEST PRACTICES: 1985-2010

1.4 AN EXECUTIVE’S VIEW OF PROJECT MANAGEMENT

1.5 BEST PRACTICES PROCESS

1.6 STEP 1: DEFINITION OF A BEST PRACTICE

1.7 STEP 2: SEEKING OUT BEST PRACTICES

1.8 DASHBOARDS AND SCORECARDS

1.9 KEY PERFORMANCE INDICATORS

1.10 STEP 3: VALIDATING THE BEST PRACTICE

1.11 STEP 4: LEVELS OF BEST PRACTICES

1.12 STEP 5: MANAGEMENT OF BEST PRACTICES

1.13 STEP 6: REVALIDATING BEST PRACTICES

1.14 STEP 7: WHAT TO DO WITH A BEST PRACTICE

1.15 STEP 8: COMMUNICATING BEST PRACTICES ACROSS THE COMPANY

1.16 STEP 9: ENSURING USAGE OF THE BEST PRACTICES

1.17 COMMON BELIEFS

1.18 BEST PRACTICES LIBRARY

1.19 DTE ENERGY

1.20 A CONSULTANT’S VIEW OF PROJECT MANAGEMENT AND BEST PRACTICES

Chapter 2 - From Best Practice to Migraine Headache

2.0 INTRODUCTION

2.1 GOOD INTENTIONS BECOMING MIGRAINES

2.2 ENTERPRISE PROJECT MANAGEMENT METHODOLOGY MIGRAINE

2.3 CUSTOMER SATISFACTION MIGRAINE

2.4 MIGRAINE RESULTING FROM RESPONDING TO CHANGING CUSTOMER REQUIREMENTS

2.5 REPORTING LEVEL OF PMO MIGRAINE

2.6 CASH FLOW DILEMMA MIGRAINE

2.7 SCOPE CHANGE DILEMMA MIGRAINE

2.8 OUTSOURCE OR NOT MIGRAINE

2.9 MIGRAINE OF DETERMINING WHEN TO CANCEL A PROJECT

2.10 MIGRAINE OF PROVIDING PROJECT AWARDS

2.11 MIGRAINE FROM HAVING WRONG CULTURE IN PLACE

2.12 SOURCES OF SMALLER MIGRAINES

2.13 TEN UGLIES OF PROJECTS

Chapter 3 - Journey to Excellence

3.0 INTRODUCTION

3.1 THE LIGHT AT THE END OF THE TUNNEL

3.2 MANAGING ASSUMPTIONS

3.3 MANAGING ASSUMPTIONS IN CONSERVATION PROJECTS—WWF INTERNATIONAL

3.4 PROJECT GOVERNANCE

3.5 SEVEN FALLACIES THAT DELAY PROJECT MANAGEMENT MATURITY

3.6 MOTOROLA

3.7 TEXAS INSTRUMENTS

3.8 EDS

3.9 EXEL CORPORATION

3.10 HEWLETT-PACKARD

3.11 DTE ENERGY

3.12 COMAU

3.13 VISTEON

3.14 CONVERGENT COMPUTING

3.15 AVALON POWER AND LIGHT

3.16 ROADWAY

3.17 DEFCON CORPORATION

3.18 KOMBS ENGINEERING

3.19 WILLIAMS MACHINE TOOL COMPANY

Chapter 4 - Project Management Methodologies

4.0 INTRODUCTION

4.1 EXCELLENCE DEFINED

4.2 RECOGNIZING THE NEED FOR METHODOLOGY DEVELOPMENT

4.3 ENTERPRISE PROJECT MANAGEMENT METHODOLOGIES

4.4 BENEFITS OF A STANDARD METHODOLOGY

4.5 CRITICAL COMPONENTS

4.6 FROM MYTH TO REALITY

4.7 PROJECT MANAGEMENT FUNCTIONS

4.8 REPLACING METHODOLOGIES WITH FRAMEWORKS

4.9 LIFE-CYCLE PHASES

4.10 AT&T

4.11 CHURCHILL DOWNS, INCORPORATED

4.12 INDRA

4.13 IMPLEMENTING METHODOLOGY

4.14 IMPLEMENTATION BLUNDERS

4.15 OVERCOMING DEVELOPMENT AND IMPLEMENTATION BARRIERS

4.16 PROJECT MANAGEMENT TOOLS

4.17 SATYAM: PROJECT PROCESS MONITORING

4.18 SATYAM: CUSTOMER DELIGHT INDEX FOR PROJECTS

4.19 GENERAL MOTORS POWERTRAIN GROUP

4.20 ERICSSON TELECOM AB

4.21 ROCKWELL AUTOMATION: QUEST FOR A COMMON PROCESS

4.22 SHERWIN-WILLIAMS

4.23 PEROT SYSTEMS: MATURING YOUR METHODOLOGY

4.24 ANTARES MANAGEMENT SOLUTIONS

4.25 HOLCIM

4.26 WESTFIELD GROUP

4.27 EXEL

4.28 CONVERGENT COMPUTING

4.29 EDS

4.30 DTE ENERGY

Chapter 5 - Integrated Processes

5.0 INTRODUCTION

5.1 UNDERSTANDING INTEGRATED MANAGEMENT PROCESSES

5.2 EVOLUTION OF COMPLEMENTARY PROJECT MANAGEMENT PROCESSES

5.3 ZURICH AMERICA INSURANCE COMPANY

5.4 CONVERGENT COMPUTING

5.5 TOTAL QUALITY MANAGEMENT

5.6 CONCURRENT ENGINEERING

5.7 RISK MANAGEMENT

5.8 EFFECTIVE RISK MANAGEMENT AT JEFFERSON COUNTY, COLORADO

5.9 FAILURE OF RISK MANAGEMENT

5.10 DEFINING MATURITY USING RISK MANAGEMENT

5.11 BOEING AIRCRAFT COMPANY

5.12 CHANGE MANAGEMENT

5.13 OTHER MANAGEMENT PROCESSES

5.14 EDS

5.15 EARNED-VALUE MEASUREMENT

5.16 DTE ENERGY

Chapter 6 - Culture

6.0 INTRODUCTION

6.1 CREATION OF A CORPORATE CULTURE

6.2 CORPORATE VALUES

6.3 TYPES OF CULTURES

6.4 CORPORATE CULTURES AT WORK

6.5 SENTEL CORPORATION

6.6 VITALIZE CONSULTING SOLUTIONS, INC.

6.7 DFCU FINANCIAL

6.8 ILLUMINAT (TRINIDAD & TOBAGO) LIMITED

6.9 MCELROY TRANSLATION

6.10 DTE ENERGY

6.11 EDS

6.12 CONVERGENT COMPUTING

6.13 BARRIERS TO IMPLEMENTING PROJECT MANAGEMENT IN EMERGING MARKETS

Chapter 7 - Management Support

7.0 INTRODUCTION

7.1 VISIBLE SUPPORT FROM SENIOR MANAGERS

7.2 PROJECT SPONSORSHIP

7.3 EXCELLENCE IN PROJECT SPONSORSHIP

7.4 EMPOWERMENT OF PROJECT MANAGERS

7.5 MANAGEMENT SUPPORT AT WORK

7.6 GETTING LINE MANAGEMENT SUPPORT

7.7 DTE ENERGY

7.8 INITIATION CHAMPIONS AND EXIT CHAMPIONS

Chapter 8 - Training and Education

8.0 INTRODUCTION

8.1 TRAINING FOR MODERN PROJECT MANAGEMENT

8.2 NEED FOR BUSINESS EDUCATION

8.3 INTERNATIONAL INSTITUTE FOR LEARNING

8.4 IDENTIFYING THE NEED FOR TRAINING

8.5 SELECTING STUDENTS

8.6 FUNDAMENTALS OF PROJECT MANAGEMENT EDUCATION

8.7 DESIGNING COURSES AND CONDUCTING TRAINING

8.8 MEASURING RETURN ON INVESTMENT

8.9 PROJECT MANAGEMENT IS NOW A PROFESSION

8.10 COMPETENCY MODELS

8.11 HARRIS CORPORATION

8.12 ALCATEL-LUCENT: RECOGNIZING THE VALUE OF A PMP

8.13 INTEGRATED PROJECT MANAGEMENT AT SATYAM

8.14 HEWLETT-PACKARD

8.15 EXEL

Chapter 9 - Informal Project Management

9.0 INTRODUCTION

9.1 INFORMAL VERSUS FORMAL PROJECT MANAGEMENT

9.2 TRUST

9.3 COMMUNICATION

9.4 COOPERATION

9.5 TEAMWORK

9.6 COLOR-CODED STATUS REPORTING

9.7 INFORMAL PROJECT MANAGEMENT AT WORK

Chapter 10 - Behavioral Excellence

10.0 INTRODUCTION

10.1 SITUATIONAL LEADERSHIP

10.2 CONFLICT RESOLUTION

10.3 STAFFING FOR EXCELLENCE

10.4 VIRTUAL PROJECT TEAMS

10.5 REWARDING PROJECT TEAMS

10.6 KEYS TO BEHAVIORAL EXCELLENCE

10.7 CONVERGENT COMPUTING

10.8 EDS

10.9 PROACTIVE VERSUS REACTIVE MANAGEMENT

Chapter 11 - Measuring Return on Investment on Project Management Training Dollars

11.0 INTRODUCTION

11.1 PROJECT MANAGEMENT BENEFITS

11.2 GROWTH OF ROI MODELING

11.3 THE ROI MODEL

11.4 PLANNING LIFE-CYCLE PHASE

11.5 DATA COLLECTION LIFE-CYCLE PHASE

11.6 DATA ANALYSIS LIFE-CYCLE PHASE

11.7 REPORTING LIFE-CYCLE PHASE

11.8 CONCLUSIONS

Chapter 12 - The Project Office

12.0 INTRODUCTION

12.1 SYPRIS ELECTRONICS

12.2 VITALIZE CONSULTING SOLUTIONS (VCS), INC.

12.3 CHURCHILL DOWNS INCORPORATED (CDI): ESTABLISHING A PMO

12.4 CHURCHILL DOWNS INCORPORATED (CDI): MANAGING SCOPE CHANGES

12.5 TYPES OF PROJECT OFFICES

12.6 STARTING UP A PMO AND CONSIDERATIONS

12.7 COMPUTER SCIENCES CORPORATION (CSC)

12.8 UNDERSTANDING THE NATURE OF A PMO

12.9 DTE ENERGY

12.10 EXEL

12.11 HEWLET T-PACKARD

12.12 EDS

12.13 STAR ALLIANCE

12.14 IMPORTANCE OF A PMO IN LOCAL GOVERNMENT

12.15 PROJECT AUDITS AND THE PMO

12.16 PROJECT HEALTH CHECKS

12.17 CRITICAL RATIO AS AN INDICATOR OF THE HEALTH OF A PROJECT

12.18 PMO OF THE YEAR AWARD

Chapter 13 - Six Sigma and the Project Management Office

13.0 INTRODUCTION

13.1 PROJECT MANAGEMENT—SIX SIGMA RELATIONSHIP

13.2 INVOLVING THE PMO

13.3 TRADITIONAL VERSUS NONTRADITIONAL SIX SIGMA

13.4 UNDERSTANDING SIX SIGMA

13.5 SIX SIGMA MYTHS

13.6 USE OF ASSESSMENTS

13.7 PROJECT SELECTION

13.8 TYPICAL PMO SIX SIGMA PROJECTS

Chapter 14 - Project Portfolio Management

14.0 INTRODUCTION

14.1 WHY USE PORTFOLIO MANAGEMENT?

14.2 INVOLVEMENT OF SENIOR MANAGEMENT, STAKEHOLDERS, AND THE PMO

14.3 PROJECT SELECTION OBSTACLES

14.4 IDENTIFICATION OF PROJECTS

14.5 PRELIMINARY EVALUATION

14.6 STRATEGIC SELECTION OF PROJECTS

14.7 STRATEGIC TIMING

14.8 ANALYZING THE PORTFOLIO

14.9 PROBLEMS WITH MEETING EXPECTATIONS

14.10 PORTFOLIO MANAGEMENT AT ROCKWELL AUTOMATION

14.11 SYNOVUS FINANCIAL PROJECT PORTFOLIO IMPACT ASSESSMENT

Chapter 15 - Global Project Management Excellence

15.0 INTRODUCTION

15.1 IBM

15.2 COMPUTER ASSOCIATES (CA) SERVICES: SUCCESSFUL PROJECT DELIVERY AND MANAGEMENT

15.3 MICROSOFT CORPORATION

15.4 DELOITTE: ENTERPRISE PROGRAM MANAGEMENT

15.5 LESSONS LEARNED FROM JOHNSON CONTROLS AUTOMOTIVE EXPERIENCE’S GLOBAL PROJECTS

15.6 SIEMENS PLM SOFTWARE: DEVELOPING A GLOBAL PROJECT METHODOLOGY

Chapter 16 - Value-Driven Project Management

16.0 UNDERSTANDING VALUE

16.1 VALUE OVER THE YEARS

16.2 VALUES AND LEADERSHIP

Chapter 17 - Effect of Mergers and Effect of Mergers and Acquisitions on ...

17.0 INTRODUCTION

17.1 PLANNING FOR GROWTH

17.2 PROJECT MANAGEMENT VALUE-ADDED CHAIN

17.3 PREACQUISITION DECISION-MAKING

17.4 LANDLORDS AND TENANTS

17.5 BEST PRACTICES: CASE STUDY ON JOHNSON CONTROLS, INC.

17.6 INTEGRATION RESULTS

17.7 VALUE CHAIN STRATEGIES

17.8 FAILURE AND RETRUCTURING

APPENDIX A

Index

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Copyright © 2010 by International Institute for Learning, Inc., New York, New York. All rights reserved.

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Library of Congress Cataloging-in-Publication Data:

Kerzner, Harold.

p. cm.

Includes bibliographical references and index.

ISBN 978-0-470-52829-7 (cloth : alk. paper) 1. Project management—Case studies. I. Title.

HD69.P75K472 2010

658.4’04—dc22

2009042592

To
my wife, Jo Ellyn,
who showed me that excellence
can be achieved in
marriage, family, and life
as well as at work

Preface

For almost 40 years, project management was viewed as a process that might be nice to have but not one that was necessary for the survival of the firm. Companies reluctantly invested in some training courses simply to provide their personnel with basic knowledge on planning and scheduling. Project management was viewed as a threat to established lines of authority, and in many companies only partial project management was used. This half-hearted implementation occurred simply to placate lower- and middle-level personnel as well as selected customers.

During this 40-year period, we did everything possible to prevent excellence in project management from occurring. We provided only lip service to empowerment, teamwork, and trust. We hoarded information because the control of information was viewed as power. We placed personal and functional interests ahead of the best interest of the company in the hierarchy of priorities. And we maintained the faulty belief that time was a luxury rather than a constraint.

By the mid-1990s, this mentality began to subside, largely due to two recessions. Companies were under severe competitive pressure to create quality products in a shorter period of time. The importance of developing a long-term trusting relationship with the customers had come to the forefront. Businesses were being forced by the stakeholders to change for the better. The survival of the firm was now at stake.

Today, businesses have changed for the better. Trust between the customer and contractor is at an all-time high. New products are being developed at a faster rate than ever before. Project management has become a competitive weapon during competitive bidding. Some companies are receiving sole-source contracts because of the faith that the customer has in the contractor’s ability to deliver a continuous stream of successful projects using a project management methodology. All of these factors have allowed a multitude of companies to achieve some degree of excellence in project management. Business decisions are now being emphasized ahead of personal decisions.

Words that were commonplace six years ago have taken on new meanings today. Change is no longer being viewed as being entirely bad. Today, change implies continuous improvement. Conflicts are no longer seen as detrimental. Conflicts managed well can be beneficial. Project management is no longer viewed as a system entirely internal to the organization. It is now a competitive weapon that brings higher levels of quality and increased value-added opportunities for the customer.

Companies that were considered excellent in management in the past may no longer be regarded as excellent today, especially with regard to project management. Consider the book entitled In Search of Excellence, written by Tom Peters and Robert Waterman in 1982 (published by Harper & Row, New York). How many of those companies identified in their book are still considered excellent today? How many of those companies have won the prestigious Malcolm Baldrige Award? How many of those companies that have won the award are excellent in project management today? Excellence in project management is a never-ending journey. Companies that are reluctant to invest in continuous improvements in project management soon find themselves with low customer satisfaction ratings.

The differentiation between the first 40 years of project management and the last 10 years is in the implementation of project management on a companywide basis. For more than three decades, we emphasized the quantitative and behavioral tools of project management. Basic knowledge and primary skills were emphasized, and education on project management was provided only to a relatively small group of people. However, within the past 10 years, emphasis has been on implementation across the entire company. What was now strategically important was how to put 30 years of basic project management theory in the hands of a few into practice. Today it is the implementation of companywide project management applications that constitutes advanced project management. Subjects such as earned-value analysis, situational leadership, and cost and change control are part of basic project management courses today whereas 15 years ago they were considered advanced topics in project management. So, what constitutes applied project management today? Topics related to project management implementation, enterprise project management methodologies, project management offices, and working with stakeholders are advanced project management concepts.

This book covers the advanced project management topics necessary for implementation of and excellence in project management. The book contains numerous quotes from people in the field who have benchmarked best practices in project management and are currently implementing these processes within their own firms. Quotes in this book were provided by 10 CEOs, 5 Presidents, several COOs, CIOs, CFOs, senior VPs, VPs, global VPs, general managers, PMO directors, and others. The quotes are invaluable because they show the thought process of these leaders and the direction in which their firms are heading. These companies have obtained some degree of excellence in project management, and what is truly remarkable is the fact that this happened in less than five or six years. Best practices in implementation will be the future of project management well into the twenty-first century. Companies have created best practices libraries for project management. Many of the libraries are used during competitive bidding for differentiation from other competitors. Best practices in project management are now viewed as intellectual property.

Companies that are discussed in this book include:

ABB
Alcatel-Lucent
American Greetings
McElroy Translation
Microsoft
Motorola
Antares
AT&T
Boeing
Computer Associates
Convergent Computing
Churchill Downs, Inc.
Comau
Computer Sciences Corp.
Deloitte
Department of Defense
DFCU
Diebold
DTE Energy
EDS
Enakta
Ericsson
EXEL
General Motors
Harris
Holcim
Hewlett-Packard
IBM
Indra
ITC
Johnson Controls
Jefferson County
Lilly
NASA
Nortel
NXP
Perot Systems
Roadway Express
Rockwell Automation
Satyam
SENTEL
Sherwin-Williams
Siemens
Slalom
Star Alliance
Synovus
Sypris Electronics
Teradyne
Texas Instruments
Tyco
Visteon
Vitalize Consulting
Westfield
WWF
Zurich America Insurance Co.

Seminars and webinar courses on project management principles and best practices in project management are available using this text and my text Project Management: A Systems Approach to Planning, Scheduling, and Controlling, 10th edition (Wiley, Hoboken, New Jersey, 2009). Seminars on advanced project management are also available using this text. Information on these courses, E-learning courses, and in-house and public seminars can be obtained by contacting:

Lori Milhaven, Executive Vice President, IIL:

Phone: 800-325-1533 or 212-515-5121
Fax: 212-755-0777
E-mail: lori.milhaven@iil.com

Harold Kerzner
International Institute for Learning, Inc.
2010

INTERNATIONAL INSTITUTE FOR LEARNING, INC. (IIL)

International Institute for Learning, Inc. (IIL) specializes in professional training and comprehensive consulting services that improve the effectiveness and productivity of individuals and organizations.

As a recognized global leader, IIL offers comprehensive learning solutions in hard and soft skills for individuals, as well as training in enterprise-wide Project, Program, and Portfolio Management.

PRINCE2™,¹ Lean Six Sigma; Microsoft® Office Project and Project Server,² and Business Analysis.

After you have completed Project Management Best Practices: Achieving Global Excellence, Second Edition, IIL invites you to explore our supplementary course offerings. Through an interactive, instructor-led environment, these virtual courses will provide you with even more tools and skills for delivering the value that your customers and stakeholders have come to expect.

For more information, visit http://www.iil.com or call +1-212-758-0177.

1

Understanding Best Practices

1.0 INTRODUCTION

Project management has evolved from a set of processes that were once considered “nice” to have to a structured methodology that is considered mandatory for the survival of the firm. Companies are now realizing that their entire business, including most of the routine activities, can be regarded as a series of projects. Simply stated, we are managing our business by projects.

Project management is now regarded as both a project management process and a business process. As such, project managers are expected to make business decisions as well as project decisions. The necessity for achieving project management excellence is now readily apparent to almost all businesses. Steven Deffley, Project Management Professional (PMP), Global Product Manager at Tyco Electronics, believes that:

Achieving Project Management Excellence addresses how Project Management has evolved into a business process, providing concepts that can be employed to improve the effectiveness and financial contribution of an organization. Excellence is driven by a focus on critical success factors and key performance indicators as it relates to a project. Excellence in Project Management illustrates how the intellectual value of lessons learned can lead to a proprietary competitive advantage. Achieving Project Management Excellence demonstrates how Project Management has matured in encouraging and supporting an organization to perform at a higher level.

As the relative importance of project management permeates each facet of the business, knowledge is captured on best practices in project management. Some companies view this knowledge as intellectual property to be closely guarded in the vaults of the company. Others share this knowledge in hope of discovering other best practices. Companies are now performing strategic planning for project management.

One of the benefits of performing strategic planning for project management is that it usually identifies the need for capturing and retaining best practices. Unfortunately this is easier said than done. One of the reasons for this difficulty, as will be seen later in the chapter, is that companies today are not in agreement on the definition of a best practice, nor do they understand that best practices lead to continuous improvement, which in turn leads to the capturing of more best practices.

1.1 PROJECT MANAGEMENT BEST PRACTICES: 1945-1960

During the 1940s, line managers functioned as project managers and used the concept of over-the-fence management to manage projects. Each line manager, wearing the hat of a project manager, would perform the work necessitated by his or her line organization and, when completed, would throw the “ball” over the fence in hopes that someone would catch it. Once the ball was thrown over the fence, the line managers would wash their hands of any responsibility for the project because the ball was no longer in their yard. If a project failed, blame was placed on whichever line manager had the ball at that time.

The problem with over-the-fence management was that the customer had no single contact point for questions. The filtering of information wasted precious time for both the customer and the contractor. Customers who wanted first-hand information had to seek out the manager in possession of the ball. For small projects, this was easy. But as projects grew in size and complexity, this became more difficult.

During this time period, very few best practices were identified. If there were best practices, then they would stay within a given functional area never to be shared with the remainder of the company. Suboptimal project management decision making was the norm.

Following Word War II, the United States entered into the Cold War. To win a Cold War, one must compete in the arms race and rapidly build weapons of mass destruction. The victor in a Cold War is the one who can retaliate with such force as to obliterate the enemy. Development of weapons of mass destruction was comprised of very large projects involving potentially thousands of contractors.

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