Increasing Capital Efficiency through…
Project Management
Performance Improvement
Project Management Performance Improvement (PMPI) is here to help companies get more “bang for the buck” in capital deployment projects. These days, companies need every advantage they can get, and increasing the performance of your project management discipline, and your project management team, translates into big efficiency and big bucks!
Why Holland & Davis?
If you're in the energy business, you know that capital deployment is an absolute requirement for growth...and that efficiency of capital deployment has become a key competitive differentiator. H&D has spent years in several unique industries helping organizations move their project management effectiveness - and capital efficiency - to the next level of performance. In other words, we help our clients ensure that their projects come in on target, on time and on budget.
Our PMPI team "has been there and done that"... and done it well. If you want to work with folks who can offer a road-tested, systematic framework for improving your company’s project management process, then Holland & Davis can help!
What is the Problem?
Although energy industry companies have been managing capital projects for years and years, independent analysis has shown that the rate of learning is very low. In other words, organizations are not managing projects any more successfully than they have been in the past. In fact, less than 5% of projects actually meet project managers’ main objectives of delivering a successful outcome within budget and on time.
Critical Success Factors for Increasing Capital Efficiency
Our experience has shown that there are 3 critical success factors that are hallmarks of successful capital deployment project management.
- Managing Project Resources as an extended enterprise that takes all capabilities and motivations into account
- Employing Robust Program/Project Management that fully comprehends both the opportunity as well as the problems to be solved for success
- Viewing Project Management as a critical work process to be subjected to rigorous enhancement and continuous improvement
The Project Management Capability-Maturity Model
Our approach to improving the performance of the Project Management process is based on the concept of capability and maturity. Our Project Management Capability-Maturity model (CMM) is an organized, systematic way of thinking about an organization’s level of capability in Project Management (PM). Holland & Davis has compiled what we have studied and tested the potential of Project Management and what it takes for value realization in the real world. Using this real-world data, we help guide our clients’ internal dialog and action planning about Project Management and its value.
Composition of the Model
The Capability Maturity Model shows “Means” and “Results” for five levels of PM maturity
- The Means
- Process Performance
- Technology Support that enables the Process
- The Results (Process X Tech Support = Results)
- Expected level of Results
- Expected Value received
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MEANS |
RESULTS |
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Maturity Levels
(I-V) |
Process Performance |
Technology Support |
Quality/Predictability of Results |
Value Determination |
Comments |
V) Fully Optimized
Project success rate is close to highest success rate |
Stable PM Process are best in class |
Processes automated and supported by expert systems |
Almost complete certainty of results is achieved |
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There may be no commercial market for this level of performance |
IV) Predictable Risk
Ability to routinely reduce uncertainty and project-related risk |
Statistically stable processes routinely measured against industry standard performance metrics |
Automation and background performance of processes/
tasks; automated decision support services |
Reliability and predictability of results is significantly improved |
Lower ROI on investments in data management accepted in exchange for reduced risks |
This level may offer diminishing returns on investments; for many, it might be more cost effective to accept somewhat uncertain results and execute |
III) Corporate Competency
Capabilities are institutionalized within company; enabled by mature technology |
Standard, consistent, statistically capable, measurable processes; standardized process performance metrics begin to evolve |
Integrated technology designed to enable emerging best practice processes; technology suppliers are partners in defining how technology accomplishes best results |
Good quality results within specified tolerances most of the time; poorest individual performers improve towards best performers; more leverage achieved on best performers |
Measurable; able to recognize costs and benefits, perform cost-benefit analyses, maximize ROI; more good results faster and with fewer people |
Evidence of co-evolution of best practice processes and advanced technology; deployment of standardized processes and technology across multiple locations to leverage investments (economies of scale) |
II) Managed
Standardized tasks and roles; introduction of advanced technology begins |
Individuals develop and follow processes that work for them; processes not common among individuals or across locations |
Un-integrated point solutions designed for specific tasks; individuals’ primary responsibility is to figure out how to integrate and use technology to accomplish results |
Variable quality with some predictability; best individual performers put on business critical projects to reduce risk and improve results |
Anecdotal; based on individual performers' capabilities and specific memorable events |
Individuals' performance varies, but some may be highly effective. This level is effective with a small number of people in single location, managing small-moderate projects |
I) Base
Capable people and heroic efforts |
No defined processes; individual performers may follow a different process each time |
General purpose tools (i.e. Excel, Access) or none at all; data management is mainly personal function - not corporate |
Corporation depends entirely on individuals; little or no corporate visibility into project management cost or performance; variable quality, low results predictability and repeatability |
Subjective; gut feel for performance, costs and value received |
Craftsman level of performance - prior to specialized technology and known best practices, only way to accomplish task |
Focus Areas for the Improvement of Project Management
Obviously, the goal of most organizations is to move upward in Project Management Capability in order to realize the benefits of improved Capital Efficiency (see Figure 1 below). To achieve this goal, organizations should focus on:
- Defining, refining, and standardizing Project Management work processes and skills
- Implementing the level of technological solution that matches the PM work process level
- Ensuring that process and technology support stay balanced
How to Improve Project Management
In order to improve the performance of your project management process and organization, you follow the steps below, while at the same time ensuring that you are building the competencies required for more efficient Project Management.
The steps include:
Step 1: Improve process design
- Documenting the actual PM process
- Redlining - documenting the evolution of actual process
- Blueprinting - redesigning PM process from a blank page
Step 2: Enabling with better technology
- Ensuring the match between Process and Technology
- Completing implementation and integration of Technology
Step 3: Achieving full PM Utilization
- Setting clear expectations for PM utilization
- Training to needed competence
- Compensating to match PM performance
The competencies required for efficient Capital Project Management include:
- Program and Project Management - As developed and optimized in defense and construction industries
- Contractor Management - As develop and optimized in aerospace
- Process Improvement - As developed in over a decade of Reengineering, continuous improvement and Change Management
- Information Technology Deployment - As developed in over a decade of big systems implementations across major industry groups
Our Project Management Improvement Services Include:
Diagnostic Services
- Determine PM CMM position
- Identify target end state
- Develop business case to move to target
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Design Services
- Project Management Process design
- Technology strategy development and selection
- Identification of needed competencies
- Development of master implementation plan to reach end state
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Execution Services
- Complete Program/Project Management to end state
- New process and technology deployment
- Operations Integration (expectations, training, roles, contracting)
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If you would like ideas about improving the efficiency of you project management procress, please contact Mike Campbell or Gary Skarke at: 713-800-3663
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Mike Campbell, PMP
Author of The Complete Idiot's Guide to Project Management |
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Gary Skarke, MBA
Author of The Change Management Toolkit |
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