This Guest paper was submitted for publication 4/5/16. It is part of Mosaic's Project Knowledge Index
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This paper is copyright to Patrick Weaver 2016 and is licensed under a Creative Commons Attribution 3.0 Unported License.
Published here July 2016

PART 1 | Introduction to Part 2 | The Four Layers of PDC
 Developing Strategic Project Management Maturity | Summary

Developing Strategic Project Management Maturity

Developing an effective PDC will enable organizations to improve the way they manage the "doing of their projects" and as a consequence increase the success rate resulting in increased value for their stakeholders. The ROI from improving an organization's PDC should be significant!

The value proposition for developing an effective PDC (itself a business change program) is compelling. Worldwide research undertaken by Jed Simms at the Boston Consulting Group in the 1990s defined five levels of PDC maturity, and found that the return on investment (ROI) from projects increased substantially at each level.[34]

While the PDC itself has four management layers, five levels of maturity can be described as follows:

  • Level 1 capability is represented by executive complacency, project teams doing their own thing, no benefits management, and on average projects typically show a small negative ROI but results are wildly variable with some successes (which are always highlighted).
  • Level 2 capability sees the imposition of processes focused on measuring activity rather than outcomes. The business imposes forms, requirements and checklists; "methodology police" enforce a one-size-fits-all policy. The process of developing "approvable" businesses cases and standardized project reporting creates more uniform outcomes but there's little understanding of risk -v- reward and virtually no follow through to implementation and benefits realization. As a consequence there is typically a neutral ROI - despite the glowing promises in the business case, the value actually created eventually covers the costs.
  • Level 3 capability sees the organization gaining sufficient experience and confidence to allow measured flexibility into its processes for managing projects. The basic disciplines are retained, but the way they are implemented is adjusted to suit the needs of the project. The executive view moves from imposing "controls" towards an outcome focus using elements of portfolio management.

    However, project success still tends to be measured in terms of time, cost and scope at the end of the project rather than the benefits gained by the organization. That is, an output focus rather than an outcome focus. Organizations at this Level generate a reasonable ROI measured at the project Level but largely miss the potential for substantially enhanced business outcomes. The majority of "maturity models" such as OPM3 and P3M3 primarily focus on achieving this Level of capability.
  • Level 4 capability[35] introduces a paradigm shift in executive thinking. Rather than focusing on project outputs, the work of the project is seen as a key enabler needed to achieve valuable business outcomes - the project is merely a means to achieving a more important "end state". This requires an integrated process flow from the identification of a need or opportunity within the business through to implementing the changes required to delivery of the expected business outcomes to meet the need or exploit the opportunity.

    Ownership of this value chain is vested in the business; the role of projects and project management is to support this overall effort by delivering the outputs best suited to achieving the business objective. The model defined in PDC (Project Delivery Capability) represents the framework needed to support this level. Simms's research suggests there is an increase in ROI of 2 to 3 times that achieved at Level 3 once the focus of the organization's executive's shift to achieving business related outcomes and the value achieved.

    This paradigm shift is supported by assigning executive responsibility for, and then measuring, the benefits actually realized by the organization.
  • Level 5 capability expands on Level 4 with the whole PDC system focused on efficiently supporting the strategic objectives of the business. Effective strategic alignment linked to pragmatic risk management, supported by simple but effective processes, is the key to generating another significant increase in ROI!

Based on observation rather then measurement, it seems the majority of organizations in both the public and private sectors are currently operating at Level 2, typically with the PMO fulfilling the role of "methodology policeman", a few more mature organizations, mainly private sector, are achieving Level 3 maturity whilst many public and private sector organizations remain at Level 1.

Very few have taken the step to Level 4 where the executive hold their business managers accountable for achieving the outcomes defined in the business case and invest in the PDC capability needed to properly support their business's program and project managers.

The Four Layers of PDC  The Four Layers of PDC

34. Source, Project Delivery Capability — the next competitive battleground, Jed Simms, TOP — Totally Optimized Projects Pty Ltd:
35. Project Business Management is a concept that looks towards an Enterprise-Wide project management function that recognizes portfolio, program, and project management as business functions. That is, a core enterprise-wide competency within the enterprise (organization), potentially supported by a Project Business Management Office (PBMO). This recognition is the key change between Levels 3 and 4.
The PBMO is an executive Level management business function organization that addresses setting policy and establishing charters. The PMBO develops an organizational model for the business management of portfolios, programs, and projects and oversees the establishment of portfolio, program, and project management offices (PMOs).
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