Introducing…

The Revolutionary
Strategic Project Management
Maturity Model
(SPM3)™

PRESENTED BY:

Gary R. Heerkens, PMP, CPM, CBM, CIPA, PE, MBA

President, 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
 Presentation Objectives
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™

 So...What is
“Strategic Project Management”?
SPM takes project management to “the next level”
It is comprised of four critical, high-level issues
related to project management today:

 The alignment of projects to strategy

 Project portfolio management

 Program management

 Business results of projects

 Audience Profile…
Are you involved in some way with:
 Strategic planning / long range goal ID?
 Program management?
 Portfolio management?
 Project ranking / project prioritization?
 Project selection and/or approvals?
 Preparing project business cases?
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

Apply Appropriate Business Management Methods

Apply Business-Based Project

Management Processes and Methods

Define Define Long Define Targeted Identify Study and Compare Select the Manage the
Projects Optimum
Strategic Range Business Needs Solutions Evaluate Within Mix of Entire Portfolio
Intent Goals (Short-Term Goals) (Projects) Projects Portfolios Projects (ALL Projects)

Within the Domain of Within the Domain of the

Organizational Project Management
Managers / Executives Community
Applying an SPM3™ Approach:
Principles of Excellence

SPM3 is a scalable methodology

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)

Every business need has at least two solutions

With few exceptions, projects that don't generate

a positive financial return should not be pursued
Applying an SPM3™ Approach:
Principles of Excellence (cont’d)

Every type of project (R&D, new products, etc.)

must be represented (portfolio must be balanced)

The effects of projects on strategy and goals

should be tracked and measured

The total volume of project work must be

controlled!

PM practitioners should be permitted to play a

more expanded role in the process of SPM
 What the SPM3™ Model Looks Like
The Strategic Project Management Maturity Model (SPM3)
© 2008 by Management Solutions Group, Inc.

DIMENSION MATURITY CHARACTERISTICS

STRATEGIC DIMENSION
Connection Between Strategic
and Projects
organizing organizational strategy using
a framework (such as Balanced Scorecard),
that facilitates connections between
strategy and projects
PINPOINT
Usefulness as a Tool for
Project Identification
Intent
Verification that Projects
in a way are Advancing Strategy
organizational
Communication/Education
Across Organization
1 2
non-specific statements of mission,
vision, and values are in place
organization doesn't explicitly connect
project results to strategic intent
no communication; no education
organization has a clear business
plan, but it is not explicitly tied to
projects
minimal communication; no education
3 4 5
structure used includes all aspects of
connections between strategic intent organization uses strategic intent as a
the organization's business; project
and projects are clearly established core approach in project identification
links are possible
some cause-effect ties between the effects of projects on satisfaction
strategy and projects could be of strategic intent is regularly
randomly explained evaluated
some communication; minimal good communication; moderate excellent communication; good
education amount of education education

Usefulness as a Tool for
Project Identification
Development and Communication of
Long Range Strategic Goals Verification that Projects
specific performance targets the company hopes to are Addressing LR Goals
achieve, normally within a 3-5 year horizon
long range goals are vague, non-
specific, or non-existent
organization doesn't explicitly connect
project results to long range goals
long range goals are identified, but are long range goals are identified and are long range goals clearly support
long range goals are prioritized
constantly changing reasonably stable business plan
the effects of projects on satisfying
cause-effect between long range
long range goals is regularly
goals and projects could be explained
evaluated

Communication/Education some communication; minimal excellent communication; good

no communication; no education minimal communication; no education good communication; some education
Across Organization education education

Usefulness as a Tool for identified from bottom-up; expressed generally focus on outcomes rather stated as business outcomes, not as expressed as quantified business address the entire organization, and
Project Investigation as deliverables or solutions than outputs product or technology terms objectives, NOT solutions are balanced across organizations
Identification of Targeted
Business Needs a lot of blue-skying: not realistic or can be marginally realistic and realistic and achievable; reasonably
specific, quantified, a time-bound business objectives, Feasibility Potential
achievable in both scope and volume achievable if managed properly balanced across resource groups
often developed as part of an annual planning
cycle
cross-functional effects are clear, verifiable ties exist between
Development Methodology PM personnel involved in process
considered long range goals and strategic intent

different project types are included incorporates all possible types of

Portfolio Management Methodology
identification and use of an all-inclusive, logical,
project investment categorization scheme
projects are not even thought of in
Breadth and Balance
terms of "investment types"
Usefulness as a Tool in projects just happen; there is no
Project Classification attempt to list or categorize them
projects segmented by department (product, process, infrastructure), but project investments; budgets are well-
no attempts to balance balanced across overall portfolio
organization has one large list of overall list of projects is subdivided projects are categorized using a
projects by organizational unit business segmentation approach

Level of Process Definition process does not exist; no real process exists, but routinely violated good process exists, but not always rational, data-based process is
process exists, but not data-driven
& Compliance attempt to establish priority or overruled followed defined and followed
Project Prioritization Methodology proposals are given their priority financial standards are used to Proposals are analyzed and prioritized
techniques for assessing the relative attractiveness of Application of Financial some financial standards are used to post-project life cycle impacts are
"unofficially", often via power, politics, evaluate proposals within each within each portfolio category using
proposed project initiatives; includes use of absolute Evaluation Methods prioritize the overall list thoroughly examined
(financial) and evaluative (non-financial) criteria or personal agendas portfolio category rigorous financial criteria.

Application of a Business simple business cases (<4 pages) are business cases are prepared for large business cases are prepared for all one responsible party is assigned for
business cases are not used
Case Approach used projects only projects each business case

Project Investigation Methodogy
the response to targeted business needs;
rigorous assessment of alternative solutions
execution approaches, leading to
definition
Level of Process Definition no process defined for how to analyze good process exists, but not routinely good process exists, and is generally process is robust and comprehensive,
minimal process documentation exists
and Compliance alternative solutions followed due to time pressure, etc. followed and well-followed
a stakeholders fully understand what the
Level of Analytical Rigor a few sentences, and the project is alternatives are analyzed according to
and "solution-jumping" is the norm several alternatives are identified proposed project will deliver for the
project scope Designed Into Process "off and running" established criteria
organization
someone within the originating 1-2 people from both the originating all affected stakeholders are involved
Amount of Cross-Functional small team studies a few alternative many stakeholders input into a good
organization identifies "the obvious organization and a functional unit in a thorough investigation and
Involvement solutions analysis of alternative solutions
solution" consider a couple of options analysis of potential solutions
How the SPM3™ Model is Structured

basic elements that define the practice of SPM

a kind of “organizational competency”

observable organizational practices

STRATEGIC DIMENSION MATURITY CHARACTERISTICS

DIMENSION PINPOINT 1 2 3 4 5
 Introducing…
The 10 Strategic Dimensions

1 Connection Between Strategic Intent and Projects

2 Strategic Goals
Development and Communication of Long Range

3 Identification of Targeted Business Needs

4 Portfolio Management Methodology
5 Project Prioritization Methodology
 Introducing…
The 10 Strategic Dimensions

6 Project Investigation Methodology

Project Selection, Approval, and Launch
7 Methodologies
8 Coordination Across Project Portfolios
9 Financial Management Methods
Support of Project Management as a Business
10 Process
Introducing… the Strategic Dimensions

1. Connection Between Strategic Intent

and Projects

the configuration of organizational strategy

(using a framework like Balanced Scorecard)
DESCRIPTION in a way that facilitates connections between
organizational strategy and projects

 Usefulness as a Tool for Project Identification

PINPOINTS  Verification that Projects are Advancing Strategy
 Communication/Education Across Organization
 Frameworks for Structuring
Strategic Intent

 Balanced Scorecard Model

 Financial
 Customer
 Internal Business Process
 Employee Learning and Growth

 Stated Goals Model

 Strategic Buckets Model
 Increase Customer Loyalty
 Cost Reduction
 Reduce the Asset Base
 Quality Management
 Expand Market Penetration
 Competitive Advantage
 Optimize Process Excellence
 Supply Chain Management
 Product Line Growth
 Cycle Time Reduction
 Customer Service Excellence
 Six Sigma
 ISO (or other) certification
Introducing… the Strategic Dimensions

2. Development and Communication

of Long Range Strategic Goals

identification of specific performance targets

DESCRIPTION that the organization plans to achieve, normally
within a 3-5 year time horizon

 Usefulness as a Tool for Project Identification

 Verification that Projects are Advancing
PINPOINTS Long Range Goals
 Communication/Education Across Organization
 Examples of Long Range
Organizational Goals
• Gross margin = 11%
• 20% new products come from existing
Long Range
• 70% of product launches on time
Strategic
• growth in existing sales volume of 10%
Goals
• revenue from new customers > 6%
• 20% market share for product ABC

• Process cycle time = 5.5 days

• 94% manufacturing yield─Department Y
Long Range • Maintenance costs = 8% of mfg costs
Operational
• Average days in inventory < 1.4
Goals
• Annual waste product line A = $130,000
• Inventory turnover ratio = 12
Introducing… the Strategic Dimensions

3. Identification of Targeted
Business Needs

identifying specific, quantified, time-bound

DESCRIPTION business objectives, normally developed
conjunction with an annual planning cycle

 Usefulness as a Tool for Project Investigation

PINPOINTS  Feasibility Potential
 Development Methodology
 Examples of Targeted Business Needs
• Increase gross margin on sales of household
products at least 2% by 3rd Qtr, 20XX
• Reduce average customer return rate on
Targeted amateur digital cameras to 8% by YE 20XX
Strategic • Reduce average age of receivables to Tier 1
Needs 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
Targeted testing lab to 5.5 days next year
Operational • Reduce the average age of stored perishable
Needs goods by 4 hours next year
• 10% of the warehouse staff will be capable of
performing two functions by 2nd Qtr, 20XX
Introducing… the Strategic Dimensions

4. Portfolio Management Methodology

the configuration and ongoing utilization of

DESCRIPTION an all-inclusive, logical, business-based
project categorization scheme

 Breadth and Balance

PINPOINTS
 Usefulness as a Tool for Project Classification
Introducing… the Strategic Dimensions

5. Project Prioritization Methodology

techniques for assessing the relative

attractiveness of proposed project initiatives;
DESCRIPTION includes use of absolute (financial) and
evaluative (non-financial) criteria

 Level of Process Definition and Compliance

PINPOINTS  Application of Financial Evaluation Methods
 Application of a Business Case Approach
EXAMPLE: Weighted Factor
Scoring Matrix

Portfolio: New Product Development

Attributes (Relative Weight)

Net Present Potential # of Users TOTAL
RANK
Project Value
(0.60)
for Growth
(0.30)
Affected
(0.10)
SCORE

3 4 3
Alpha
1.95 1.00 0.30 3.25 4
4 3 2
Beta 2.60 0.75 0.20 3.55 3
4 4 4
Omega 2.60 1.00 0.40 4.00 1
3 5 5
Theta 1.95 1.25 0.50
3.70 2
Introducing… the Strategic Dimensions

6. Project Investigation Methodology

the response to targeted business needs;

a rigorous assessment of some alternative
DESCRIPTION solutions and execution approaches,
leading to thorough project scope definition

 Level Process Definition and Compliance

PINPOINTS  Level of Analytical Rigor Designed Into Process
 Amount of Cross-Functional Involvement
 Preparing a Project Business Case
© 2008 by Management Solutions Group, Inc.

1.0 Front Matter

Section 1 is the so-called “boilerplate”. It includes administrative information
relating to the business case document.

1.1 Cover Sheet

As 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 Control

Serves 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,
Introducing… the Strategic Dimensions

7. Project Selection, Approval, and

Launch Methodologies

rational approaches for determining which

specific projects will be executed, how
DESCRIPTION those projects will be initiated, and when
they will be launched

 Level of Analytical Rigor Designed Into Process

 Level of Process Definition and Compliance
PINPOINTS
 Approach to the Formal Justification of Projects
 Attention to Resource Constraint Issues
 Optimizing the Project Mix
Using the “Efficient Frontier” Method

A Good A Not-So-Good
Project Project

ROI ROI

Project Project
Expenditure Expenditure
 Optimizing the Project Mix
Using the “Efficient Frontier” Method

Optimal
ROI

Cumulative
Return on
investment

Budget
Limit

Cumulative Project
Expenditure
Introducing… the Strategic Dimensions

8. Coordination Across Project

Portfolios

managing the interrelationships between all

DESCRIPTION active projects, with specific emphasis on
resource management

 Resource Capacity Management

PINPOINTS
 Management of Project Interactions
Introducing… the Strategic Dimensions

9. Financial Management Methods

the extent to which the organization follows

DESCRIPTION a sound, business-based approach to
critical aspects of "project economics"

 Project Budgeting and Funding Practices

PINPOINTS  Approach to Project Benefits Management
 Approach to Asset Management
Introducing… the Strategic Dimensions

10. Support of Project Management

as a Business Process

the extent to which organizational behaviors

and practices demonstrate an appreciation
DESCRIPTION of the ties between business and project
management

 Structuring of the Project Mgmt. Function

 Business Knowledge of Project Personnel
PINPOINTS  Scope of the Project Manager's Role
 Management Involvement in Project “Business”
 Orientation to Project Decisioning
 A Sampling of Maturity Characteristics…

STRATEGIC Connection Between Strategic Intent and Projects

DIMENSION

DIMENSION Usefulness as a Tool for Project Identification

PINPOINT

MATURITY CHARACTERISTICS:
1 2 3 4 5
connections organization
non-specific organization has structure used
between uses strategic
statements of a clear business includes all aspects
strategic intent intent as a
mission, vision, plan, but it is not of organization's
and projects core approach
and values are explicitly tied to business; project
are clearly in project
in place projects links are possible
established identification
 A Sampling of Maturity Characteristics…

STRATEGIC
DIMENSION Coordination Across Project Portfolios

DIMENSION
PINPOINT Resource Capacity Management

MATURITY CHARACTERISTICS:
1 2 3 4 5
there is no real a work request a system to track resource supply project
attempt to resource vs. demand is resourcing is
management well-regulated
manage or system is in utilization is in monitored and via periodic
control resource place, but control place, but not managed review of the
utilization is still lacking well-managed reasonably well entire portfolio
 SPM3™ Application #1:
You Can Conduct a High-Level Diagnosis

…is your organization:

…taking a
…mature? …immature? “shotgun approach”?
 SPM3™ Application #2:
You Can Perform a Detailed Assessment

Examine all individual pinpoints and every set of maturity

characteristics. Now consider…

 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 BEGETS
SPM3
CARD MODEL
 If You Wish To Contact Me…

Gary R. Heerkens, PMP, CPM, CBM, CIPA, PE, MBA

President, Management Solutions Group, Inc.

(585) 820-3660

msginc@frontiernet.net

What Questions Do You Have?