Introducing…
The Revolutionary
Strategic Project Management
Maturity Model
(SPM3)™
PRESENTED BY:
Gary R. Heerkens, PMP, CPM, CBM, CIPA, PE, MBAPresident, Management Solutions Group, Inc.
*This presentation was selected for an encore performance at the 2007 PMI Global Congress
Making a Difference,Transforming, Leading,
Adding Value
When this session is completed, you will be able to:
Define SPM (strategic project management) and
its key components
Evaluate how well your company practices SPM
Describe how improving SPM methods can help
your company and develop a preliminary
implementation action plan
Evaluate whether you’d like to test drive the SPM3™
Presentation Objectives
So...What is“Strategic Project Management”?
The alignment of projects to strategy
Project portfolio management
Program management
Business results of projects
SPM takes project management to “the next level”
It is comprised of four critical, high-level issues related to project management today:
Strategic planning / long range goal ID?
Program management?
Portfolio management?
Project ranking / project prioritization?
Project selection and/or approvals?
Preparing project business cases?
Audience Profile…
Are you involved in some way with:
What Motivated Me to Develop the SPM3™?
PM3s abound─the project management maturity concept now needs to address a higher purpose
The strategic end of the project life cycle is where the BIG money is to be made (or lost)
Many companies do a poor job of connecting project management with strategic management
Existing SPM models are too large and complex
The desire to grow our profession by providing a model which prescribes a critical role for project management practitioners in running the business
The Proposed Process Behind the SPM3™ Model
Define
Strategic
Intent
Study and
Evaluate
Projects
Define Long
Range
Goals
Define Targeted
Business Needs (Short-Term Goals)
Identify
Solutions
(Projects)
Select the Optimum
Mix of Projects
Manage the
Entire Portfolio
(ALL Projects)
Apply Business-Based Project Management Processes and Methods
Apply Appropriate Business Management Methods
Compare Projects Within
Portfolios
Within the Domain of Organizational
Managers / Executives
Within the Domain of the Project Management
Community
Applying an SPM3™ Approach:Principles of Excellence
Project identification should be based on a top-down, gap analysis of approach
Strategic planners should NOT try to specify project solutions (project teams should)
SPM3 is a scalable methodology
Every business need has at least two solutions
With few exceptions, projects that don't generate a positive financial return should not be pursued
PM practitioners should be permitted to play a more expanded role in the process of SPM
The effects of projects on strategy and goals should be tracked and measured
Every type of project (R&D, new products, etc.) must be represented (portfolio must be balanced)
The total volume of project work must be controlled!
Applying an SPM3™ Approach:Principles of Excellence (cont’d)
The Strategic Project Management Maturity Model (SPM3)
© 2008 by Management Solutions Group, Inc.
1 2 3 4 5
Usefulness as a Tool for
Project Identification
non-specific statements of mission,
vision, and values are in place
organization has a clear business
plan, but it is not explicitly tied to
projects
structure used includes all aspects of
the organization's business; project
links are possible
connections between strategic intent
and projects are clearly established
organization uses strategic intent as a
core approach in project identification
Verification that Projects
are Advancing Strategy
organization doesn't explicitly connect
project results to strategic intent
some cause-effect ties between
strategy and projects could be
randomly explained
the effects of projects on satisfaction
of strategic intent is regularly
evaluated
Communication/Education
Across Organizationno communication; no education minimal communication; no education
some communication; minimal
education
good communication; moderate
amount of education
excellent communication; good
education
Usefulness as a Tool for
Project Identification
long range goals are vague, non-
specific, or non-existent
long range goals are identified, but are
constantly changing
long range goals are identified and are
reasonably stablelong range goals are prioritized
long range goals clearly support
business plan
Verification that Projects
are Addressing LR Goals
organization doesn't explicitly connect
project results to long range goals
cause-effect between long range
goals and projects could be explained
the effects of projects on satisfying
long range goals is regularly
evaluated
Communication/Education
Across Organizationno communication; no education minimal communication; no education
some communication; minimal
educationgood communication; some education
excellent communication; good
education
Usefulness as a Tool for
Project Investigation
identified from bottom-up; expressed
as deliverables or solutions
generally focus on outcomes rather
than outputs
stated as business outcomes, not as
product or technology terms
expressed as quantified business
objectives, NOT solutions
address the entire organization, and
are balanced across organizations
Feasibility Potentiala lot of blue-skying: not realistic or
achievable in both scope and volume
can be marginally realistic and
achievable if managed properly
realistic and achievable; reasonably
balanced across resource groups
Development Methodology PM personnel involved in processcross-functional effects are
considered
clear, verifiable ties exist between
long range goals and strategic intent
Breadth and Balanceprojects are not even thought of in
terms of "investment types"projects segmented by department
different project types are included
(product, process, infrastructure), but
no attempts to balance
incorporates all possible types of
project investments; budgets are well-
balanced across overall portfolio
Usefulness as a Tool in
Project Classification
projects just happen; there is no
attempt to list or categorize them
organization has one large list of
projects
overall list of projects is subdivided
by organizational unit
projects are categorized using a
business segmentation approach
Level of Process Definition
& Compliance
process does not exist; no real
attempt to establish priority
process exists, but routinely violated
or overruledprocess exists, but not data-driven
good process exists, but not always
followed
rational, data-based process is
defined and followed
Application of Financial
Evaluation Methods
proposals are given their priority
"unofficially", often via power, politics,
or personal agendas
some financial standards are used to
prioritize the overall list
financial standards are used to
evaluate proposals within each
portfolio category
post-project life cycle impacts are
thoroughly examined
Proposals are analyzed and prioritized
within each portfolio category using
rigorous financial criteria.
Application of a Business
Case Approachbusiness cases are not used
simple business cases (<4 pages) are
used
business cases are prepared for large
projects only
business cases are prepared for all
projects
one responsible party is assigned for
each business case
Level of Process Definition
and Compliance
no process defined for how to analyze
alternative solutionsminimal process documentation exists
good process exists, but not routinely
followed due to time pressure, etc.
good process exists, and is generally
followed
process is robust and comprehensive,
and well-followed
Level of Analytical Rigor
Designed Into Process"solution-jumping" is the norm
a few sentences, and the project is
"off and running"several alternatives are identified
alternatives are analyzed according to
established criteria
stakeholders fully understand what the
proposed project will deliver for the
organization
Amount of Cross-Functional
Involvement
someone within the originating
organization identifies "the obvious
solution"
1-2 people from both the originating
organization and a functional unit
consider a couple of options
small team studies a few alternative
solutions
many stakeholders input into a good
analysis of alternative solutions
all affected stakeholders are involved
in a thorough investigation and
analysis of potential solutions
Level of Analytical Rigor
Designed Into Process
projects are selected based on "gut
feel" and "intuition"
basic financial criteria-unevenly
applied
project selection is accomplished by
identifying an optimal "set" of
projects
Level of Process Definition
and Compliance
there is no defined process for
selecting, approving, or launching
projects
there is a process for approving
projects, but selection and launch has
no formal process defined
selection and and approval processes
are defined, but process compliance is
still sporadic
good process for approval and
selection, but project launches have
no defined process
Approach to the Formal
Justification of Projects
projects are not justified formally; any
"good idea" is accepted as a project
and added to the list
subjective arguments (vs. the use of
economic criteria) is used to support
project selection
limited application of financial criteria;
justification methods are good, but
focus on strategic factors
a good combination of fininacial and
strategic factors are used to formally
justify projects
high quality financial and strategic
inputs are rigorously examined to
establish justification
Attention to Resource
Constraint Issues
resource availability not considered
when selecting and launching
projects; resources extremely
overloaded
resources very overloaded; minmal
consideration is given before selecting
new projects
resource overloading exists, but the
introduction of new projects slows
when resources are stretched thin
resources generally match demand,
but critical projects still get launched, if
deemed "critical"
projects that cannot be supported by
resources are not launched; may
even be headroom
Resource Capacity
Management
there is no real attempt to manage or
control resouce utilization
a work request management system
is in place, but control is still
lacking
a system to track resource utilization
is in place, but is not well-managed
resource supply vs. demand is
monitored and managed
reasonably well
project resourcing is carefully
regulated through periodic review of
the entire portfolio
Management of Project
Interactions
all projects being worked on "in
parallel" (no analysis of interactions)
a listing of all projects exists; some
people have a sense of
interdependencies and conflicts
high awareness of active projects
across organization; resource conflicts
addressed on ad hoc basis
project interactions are given some
consideration as part of the project
launch process
project interactions are examined and
addressed in advance (as part
of portfolio development)
Project Budgeting and
Funding Practices
all "good ideas" get funded; capability
to compare budgets vs. actuals not in
place or ignored
projects without valid project
management data are not funded
budgets can accommodate new
opportunities; project costs vs.
budgets is tracked
projects w/o valid financial analysis
(ROI) are not funded; budgets and
project actuals are reconciled
Approach to Project
Benefits Management
the benefits generated by individual
projects are vaguely understood, but
not quantified
benefits are generally understood and
characterized; they may or may not
be quantified
project benefits clearly understood
and quantified; accountability for
benefits achievement well-defined
integrity of benefits stream is
periodically examined during project
execution
the actual realization of benefits is
measured after project completion;
data triggers process changes
Approach to Asset
Management
costs are not tracked at all; asset
values are simply a guess
costs tracked at the project level, but
internal labor is not included
project costs tracked at task level, but
internal labor not included (and
therefore not in asset value)
project costs include internal labor,
but categorization of "capital vs.
expense" is not done
internal labor included; asset values
are accurate and correctly categorized
(capital vs. expense)
Structuring of the Project
Management Function
no dedicated project managers; all
project managers "wear two hats"
a "center of excellence" exists, but in
an advisory capacity only
some dedicated project managers
exist; project management is
centralized at a departmental level
an organization- or company-wide
PMO exists, but functions primarily
in a supporting role
a strong, widely centralized project
management organization exists,
performing broad functions
Business Knowledge of
Project Personnel
very little project management
ecuation of any kind
some education provided, focused
mostly on "project management
fundamentals" (PM 101)
some education beyond "PM 101";
interested PMs are permitted to
pursue some business education
project managers given moderate
amount of business training
extensive business education and
competency development for all
project personnel
Scope of the Project
Manager's Role
project managers only expected to
carry out predetermined solutions
according to strict procedure
PMs have regular interaction with
project owners and sponsors
regarding project decisions
PMs have job duties beyond basic
management of projects (e.g.,
business case prep)
the project management function
(PMO, senior PMs, etc.)
participates in strategic planning
PMs are permitted to make decisions
that optimize ROI
Management Involvement in
Project "Business"
management not fully aware of the
business impact of projects that
are underway
managers react when serious
problems occur that affect the
business impact of projects
managers review business cases
throughout the project life
sponsors provide guidance when
asked, based on good
business judgment
executives engaged so as to provide
guidance and direction if
business climate changes
Orientation to Project
Decisioning
project decisions are driven primarily
by technology considerations
project decisions are generally driven
by technology and functional
considerations
project decisions are generally driven
by functional and operational
considerations
project decisions are generally driven
by operational and business
considerations
project decisions are driven primarily
by excellent business judgment
Support of Project Management as
a Business Process the
extent to which organizational behaviors and
practices demonstrate an appreciation of the
relationship between business and project
management
Portfolio Management Methodology identification and use of an all-inclusive, logical,
project investment categorization scheme
Project Prioritization Methodology techniques for assessing the relative attractiveness of
proposed project initiatives; includes use of absolute
(financial) and evaluative (non-financial) criteria
Project Investigation Methodogy the response to targeted business needs; a
rigorous assessment of alternative solutions and
execution approaches, leading to project scope
definition
Project Selection, Approval, and
Launch Methodologies rational approaches for determining which specific
projects will be executed, how those projects will be
initiated, and when they will be launched
Coordination Across Project
Portfolios managing the
interrelationships between all active projects,
with specific emphasis on resource
management
Financial Management Methods extent to
which the organization follows a sound, business-based
approach to critical aspects of "project
economics"
STRATEGIC DIMENSIONDIMENSION
PINPOINT
MATURITY CHARACTERISTICS
Connection Between Strategic Intent
and Projects organizing organizational strategy using
a framework (such as Balanced Scorecard), in a way
that facilitates connections between organizational
strategy and projects
Development and Communication of
Long Range Strategic Goals specific performance targets the company hopes to
achieve, normally within a 3-5 year horizon
Identification of Targeted
Business Needs specific, quantified, a time-bound business objectives,
often developed as part of an annual planning
cycle
What the SPM3™ Model Looks Like
How the SPM3™ Model is Structured
STRATEGIC DIMENSION
DIMENSIONPINPOINT
MATURITY CHARACTERISTICS
1 2 3 4 5
basic elements that define the practice of SPM
a kind of “organizational competency”
observable organizational practices
Introducing…The 10 Strategic Dimensions
Connection Between Strategic Intent and Projects
Development and Communication of Long Range Strategic Goals
Identification of Targeted Business Needs
Portfolio Management Methodology
Project Prioritization Methodology
1
2
3
4
5
Project Investigation Methodology
Project Selection, Approval, and Launch Methodologies
Coordination Across Project Portfolios
Financial Management Methods
Support of Project Management as a Business Process
Introducing…The 10 Strategic Dimensions
6
7
8
9
10
the configuration of organizational strategy (using a framework like Balanced Scorecard) in a way that facilitates connections between organizational strategy and projects
1. Connection Between Strategic Intent
and Projects
PINPOINTS
DESCRIPTION
Introducing… the Strategic Dimensions
Usefulness as a Tool for Project Identification
Verification that Projects are Advancing Strategy
Communication/Education Across Organization
Balanced Scorecard Model Financial
Customer
Internal Business Process
Employee Learning and Growth
Frameworks for Structuring
Strategic Intent
Strategic Buckets Model
Cost Reduction
Quality Management
Competitive Advantage
Supply Chain Management
Cycle Time Reduction
Six Sigma
Stated Goals Model
Increase Customer Loyalty
Reduce the Asset Base
Expand Market Penetration
Optimize Process Excellence
Product Line Growth
Customer Service Excellence
ISO (or other) certification
2. Development and Communication
of Long Range Strategic Goals
identification of specific performance targets that the organization plans to achieve, normally within a 3-5 year time horizon
PINPOINTS
DESCRIPTION
Usefulness as a Tool for Project Identification
Verification that Projects are Advancing
Long Range Goals
Communication/Education Across Organization
Introducing… the Strategic Dimensions
Examples of Long Range
Organizational Goals
• Gross margin = 11%
• 20% new products come from existing
• 70% of product launches on time
• growth in existing sales volume of 10%
• revenue from new customers > 6%
• 20% market share for product ABC
• Process cycle time = 5.5 days
• 94% manufacturing yield─Department Y
• Maintenance costs = 8% of mfg costs
• Average days in inventory < 1.4
• Annual waste product line A = $130,000
• Inventory turnover ratio = 12
Long Range Strategic
Goals
Long Range Operational
Goals
PINPOINTS
DESCRIPTION
3. Identification of Targeted
Business Needs
identifying specific, quantified, time-bound business objectives, normally developed conjunction with an annual planning cycle
Usefulness as a Tool for Project Investigation
Feasibility Potential
Development Methodology
Introducing… the Strategic Dimensions
• Increase gross margin on sales of householdproducts at least 2% by 3rd Qtr, 20XX
• Reduce average customer return rate on amateur digital cameras to 8% by YE 20XX
• Reduce average age of receivables to Tier 1 suppliers to 24 days by mid-20XX
• Establish a 20% share of the home office scanner market next year
• Reduce cost of equipment maintenance to 9% of asset value by YE 20XX
• Reduce average response time in the blood testing lab to 5.5 days next year
• Reduce the average age of stored perishable goods by 4 hours next year
• 10% of the warehouse staff will be capable of performing two functions by 2nd Qtr, 20XX
Targeted Strategic
Needs
TargetedOperational
Needs
Examples of Targeted Business Needs
PINPOINTS
DESCRIPTION
4. Portfolio Management Methodology
the configuration and ongoing utilization of an all-inclusive, logical, business-based project categorization scheme
Breadth and Balance
Usefulness as a Tool for Project Classification
Introducing… the Strategic Dimensions
PINPOINTS
DESCRIPTION
5. Project Prioritization Methodology
techniques for assessing the relative attractiveness of proposed project initiatives; includes use of absolute (financial) and evaluative (non-financial) criteria
Level of Process Definition and Compliance
Application of Financial Evaluation Methods
Application of a Business Case Approach
Introducing… the Strategic Dimensions
EXAMPLE: Weighted Factor
Scoring Matrix
Portfolio: New Product Development
Attributes (Relative Weight)
Net Present Value(0.60)
Potential for Growth
(0.30)
# of Users Affected
(0.10)
TOTAL
SCORE
3 4 31.95 1.00 0.30
3.25
3.55
4.00
3.70
4 3 22.60 0.75 0.20
4 4 42.60 1.00 0.40
3 5 51.95 1.25 0.50
Project
Alpha
Beta
Omega
Theta
RANK
4
3
1
2
PINPOINTS
DESCRIPTION
6. Project Investigation Methodology
the response to targeted business needs; a rigorous assessment of some alternative solutions and execution approaches, leading to thorough project scope definition
Level Process Definition and Compliance
Level of Analytical Rigor Designed Into Process
Amount of Cross-Functional Involvement
Introducing… the Strategic Dimensions
Preparing a Project Business Case© 2008 by Management Solutions Group, Inc.
1.0 Front MatterSection 1 is the so-called “boilerplate”. It includes administrative information
relating to the business case document.
1.1 Cover SheetAs the name suggests, this is the front page of the business case. It should
include basic identifying information, such as title, author(s), date, etc.
1.1.1 Title
Summarize the proposed action and the nature of the business case analysis.
For example, “Proposed Software Upgrade: Return on Investment Study”. If
possible, the title should be stated in terms of a problem rather than a solution.
1.1.2 Author and Organization
Identify the person who wrote and/or coordinated the preparation of the business
case document.
1.1.3 Contributor(s) and Organization(s)
Identify anyone who had significant input or involvement in the preparation of the
business case document. Within reason, identifying the existence of several
contributors can often serve to enhance the credibility of the business case.
1.1.4 Current Date
Record the date associated with whatever version of the business case you are
now releasing. This will become particularly useful if multiple versions of the
business case document are needed.
1.2 Document ControlServes as an audit trail in cases were multiple versions of the business case
document exist.
1.2.1 Version Number
Identify the current version of the business case document is being published.
Use a traditional version numbering scheme, such as 2.1, 3.0, etc.
1.2.2 Version History
Identify the release date of all previous versions of the business case document.
1.3 Review/Approval Table
Lists who has reviewed the business case and whose formal approval to proceed
is being sought. (Before releasing the business case, you should identify two
basic groups: those whom you would like to review the document,
PINPOINTS
DESCRIPTION
7. Project Selection, Approval, and
Launch Methodologies
rational approaches for determining which specific projects will be executed, how those projects will be initiated, and when they will be launched
Level of Analytical Rigor Designed Into Process
Level of Process Definition and Compliance
Approach to the Formal Justification of Projects
Attention to Resource Constraint Issues
Introducing… the Strategic Dimensions
ROI
ProjectExpenditure
ROI
ProjectExpenditure
A Not-So-GoodProject
A GoodProject
Optimizing the Project MixUsing the “Efficient Frontier” Method
Cumulative Return on
investment
Cumulative Project Expenditure
BudgetLimit
OptimalROI
Optimizing the Project MixUsing the “Efficient Frontier” Method
PINPOINTS
DESCRIPTION
8. Coordination Across Project
Portfolios
managing the interrelationships between all active projects, with specific emphasis on resource management
Resource Capacity Management
Management of Project Interactions
Introducing… the Strategic Dimensions
PINPOINTS
DESCRIPTION
9. Financial Management Methods
the extent to which the organization follows a sound, business-based approach to critical aspects of "project economics"
Project Budgeting and Funding Practices
Approach to Project Benefits Management
Approach to Asset Management
Introducing… the Strategic Dimensions
PINPOINTS
DESCRIPTION
10. Support of Project Management
as a Business Process
the extent to which organizational behaviors and practices demonstrate an appreciation of the ties between business and project management
Structuring of the Project Mgmt. Function
Business Knowledge of Project Personnel
Scope of the Project Manager's Role
Management Involvement in Project “Business”
Orientation to Project Decisioning
Introducing… the Strategic Dimensions
Connection Between Strategic Intent and Projects
Usefulness as a Tool for Project Identification
A Sampling of Maturity Characteristics…
STRATEGICDIMENSION
DIMENSIONPINPOINT
non-specific statements of mission, vision, and values are in place
organization has a clear business plan, but it is not explicitly tied to projects
structure used includes all aspects of organization's business; project links are possible
connections between strategic intent and projects are clearly established
organization uses strategic intent as a core approach in project identification
1 2 3 4 5
MATURITY CHARACTERISTICS:
STRATEGICDIMENSION
DIMENSIONPINPOINT
Coordination Across Project Portfolios
Resource Capacity Management
1 2 3 4 5
there is no real attempt to manage or control resource utilization
a work request management system is in place, but control is still lacking
a system to track resource utilization is in place, but not well-managed
resource supply vs. demand is monitored and managed reasonably well
project resourcing is well-regulated via periodic review of the entire portfolio
A Sampling of Maturity Characteristics…
MATURITY CHARACTERISTICS:
SPM3™ Application #1:You Can Conduct a High-Level Diagnosis
…is your organization:
…mature? …immature?…taking a
“shotgun approach”?
Examine all individual pinpoints and every set of maturity characteristics. Now consider…
SPM3™ Application #2:You Can Perform a Detailed Assessment
Which ones does your organization do well?
• What are some of the critical success factors?
Which ones are not done very well?
• Why is this?
• What can be done to improve?
SPM3™ Application #3:You Can “Score” Your Organization
(if you MUST!)
For each dimension, scores could be:
an average score
a total dimension score
individual pinpoint scores
Closing Thoughts on…
The Pathway to Higher Levels of SPM Maturity for Your Organization
The Pathway to Career Growth and Personal Development for You
The Pathway to a Better SPM Model
BIZ
CARD
SPM3
MODEL
BEGETS
If You Wish To Contact Me…
Gary R. Heerkens, PMP, CPM, CBM, CIPA, PE, MBA
President, Management Solutions Group, Inc.
(585) 820-3660
What Questions Do You Have?What Questions Do You Have?