Project Environmental Maturity Assessment is a method, in which the application of project management processes is assessed in an organisation. By interviewing individuals in the Project Office and by performing internal audits on a regular basis, it is possible to identify performance improvements of individual project application. According to Kerzner (2006:32), it is possible for a Project Office to improve its level of maturity by agreeing on a strategic model to be used for guidance. Management support and commitment to achieve a certain level of maturity within a certain amount of time can only occur when you have buy-in from the executives and they believe that the model used will indeed yield real results. In addition, he also expresses that there has to be a dedicated organisation that can take ownership of the maturity project and be responsible for driving the initiatives of constant improvement. The organisation is the target of the assessment, not the individuals; hence, the audit findings are indicative of the level of project process application throughout the organisation with the support of the Project Office. According to Raynor (2002: Online), detailed research, structured implementation and diligent auditing are key aspects of this improvement project. The value lies in the detailed level, on which the audits are performed by the central functions team. Assessment covers the following perspectives:
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Johansson (2005:24) elaborates on PEMA and audit findings that reflect the level of deployment of project management practices, not the intended approach. The results are presented to the management team in the form of a detailed report, which is discussed at a feedback meeting upon completion of the audit. Recommendations and corrective actions are highlighted during the meeting, while guidance and support are provided by the audit team. The results and feedback are used as a basis for continuous improvement projects within the organisation with full management support as market units are ranked globally. Each market unit strives to make the ‘top five list’, indicative of Project Office maturity. The responsibility falls on the market unit driver and central functions team to execute all corrective actions and actively improve project performance. “Senior leadership must offer continual support, with a focus on meeting clear, measureable objectives. There needs to be a commitment to improvements in project management within the organisation and setting goals with the appropriate metrics, funding and the financial cost justification” McIsaac (2006:33). Regular internal audits are performed to measure adherence, while striving for operational excellence.
Depending on the magnitude of the project and the operational maturity of the respective Project Office governing such project, a varying level of detailed application of the model will be applied. Typically for emerging markets like this one, management and control of process adherence is challenged. Mature Project Offices see process adherence as part of daily operation, whereas developing Project Offices find process adherence an overhead that they may not be able to afford. It is within this realm that non-standardisation thrives.
In the South African Project Office, the implementation of the PEMA program is performed in conjunction with the PROPS-C implementation. The reason is that the ways of work are very similar and one program truly complements the other. The benefit of handling these programs simultaneously is mostly the one of the project delivery teams. Their focus is on delivery of a world-class project, while ensuring maximum customer satisfaction. It is the aim of the central functions team to bring about change management, while implementing these programs, yet the impact that these programs have on the Project Managers should be kept to a minimum with maximum benefit.
The purpose of the implementation of five Customer Project Management (CPM) Key Performance Indicators (KPIs) is to have a unified methodology to evaluate and measure key focus areas that the organisation identified as having the biggest impact on the bottom line. All market units around the world have the same set of KPIs with equal measurement assigned. The result of these KPIs enables the central functions team to initiate internal improvement programs with the support of management. Five KPIs are as follows:
The next section provides supplemental information on each of the above listed KPIs.
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According to Segeda (2006:1), the definition of ‘Project Evaluation’ is an activity performed in order to report the success of a project, as well as assess the perceived customer satisfaction with Ericsson’s service delivery.
During the project conclusion phase, a ‘Project Evaluation’ form (Appendix A) is sent to several key stakeholders for completion. Questions are rated by the Likert scale from 1 to 5; with 1 being very dissatisfied and 5 being very satisfied (Likert 1932:1-55). Seven questions on the form pertain to the manner, in which the project is delivered to the customer, whether the project achieved its goals in terms of scheduling, whether feedback and progress reporting were in accordance with customer’s expectations, and if there were any problems during the project that resolved to the customer’s satisfaction, overall service assurance as well as re-use of services if offered in the future.
In addition to these seven questions, stakeholders also have an opportunity to add any other comments they want to be brought to the organisation’s attention. Findings mentioned in the form are discussed with the relevant stakeholder, upon which they are asked to comment on what he/she would perceive as ‘best practice’. Relevant feedback from stakeholders is recorded as ‘lessons learnt’ and included in the ‘Final Report’ issued at the end of the project. An overall percentage is calculated for each project evaluation, results are gathered monthly by each market unit and are submitted to a central services unit in Sweden in order to create a global perspective. Three levels of achievement are established by the team in Sweden at the start of each year. The levels are committed, robust and stretch, each level representing a percentage bracket. Regular comparative analysis reflects on the level of overall customer satisfaction experienced by stakeholders, which in turn forms a large part of operational excellence measurements.
According to Stöckl and Perkins (2006:1), ‘Project Margin’, or profit margin, is defined as a measure of profitability and an indicator of a project manager’s ability to control costs.
The data contained within the financial system, cost and revenue, is used to calculate project margin. The following serves as additional information in order to understand what is expected from the Project Manager. The actual project costs are defined as the costs that are incurred by the project in accordance with Ericsson’s accounting directives. Actual cost (AC) is one of the factors impacting the calculation of cost of sales (COS). If AC is higher than planned costs (PC), the percentage of recognised revenue is multiplied by AC to calculate COS. When PC is higher than AC, the percentage of recognised revenue is multiplied by PC. Any surplus or deficit when comparing actual to planned costs has a direct impact upon reserves for unrealised costs (RUC). When AC exceeds the calculated costs during the result analysis, it is stored as work in progress (WIP). In order to present a fair statement of the project's financial situation, the following is considered. Where there is too much AC for progress and it is stored in WIP so that when COS and AC catch up as progress occurs, WIP is used. It is like a storage facility for costs, an ‘asset’ that is ‘consumed’ later. The reverse of WIP is RUC. The planned margin of the project is the derivative of planned revenues minus PC. The planned margin is the ‘business case’ for the customer contract, established during the project planning phase; this is the target value that the Project Manager shall meet and strive to exceed through efficient delivery of the project. The planned margin set during the project planning phase forms the baseline, to which the actual margin is measured against at project closure phase. Gross profit margin is calculated by subtracting AC from actual revenue and dividing it by the net sales. The Project Manager is expected to perform constant cost analysis of the project from inception to completion, so as to ensure effective cost management. This KPI is measured with a five percent tolerance built in.
According to Varty, (2007:1) the definition of ‘Compliance to Billing Plan’ is measured as a variance between the actual billing date and the planned one, defined as a milestone in the Billing Plan.
The billing plan is created at the start of project execution phase and is a part of the financial system. These billing milestones are specific triggers, as defined in the customer contract related to customer invoicing with a basis on a specific value at a predetermined point in time. It is vital that the Project Manager is familiar with the customer contract and that he/she actively participates when the billing plan is uploaded into the financial system. Unrealised billing milestones impact directly the project’s cash flow and the Project Manager is penalised for poor project financial performance. This KPI is measured via reports generated from the financial system during the project life cycle, with a final trend and deviation chart being presented during project close out phase.
According to Krawiec (2006:1), ‘Project Add-on Sales’ are defined as any additional sales based on extended offers and/or change requests expanding project sales in line with the existing contract. An add-on requires a sales effort preparing an offer.
This KPI is a controversial one, as it is difficult to measure who is the responsible team member initially identifying the add-on sales item. In order to qualify the add-on sale, several individuals must be involved in the process from a financial, solution and execution perspective. Nevertheless, Project Manager’s ability to render consultative service to the customer is measured with this KPI.
Varty (2006:1) argues that the definition of ‘PROPS-C Adherence’ is a means of evaluating the precision, with which projects performed by Project Managers meet the standard customer project management process requirements, as identified in the PROPS-C model.
Adherence to the PROPS-C model is based on a framework that consists of twenty three areas of measure, against which compliance and/or non-compliance is noted during the audit. Audits are performed during two predefined points in time. The first audit is performed at tollgate two when the project phases change from the project planning phase to project execution. The second point in time when the audit is performed is during project closure phase. A checklist is available for the Project Manager, which can be used as a guide during the project’s lifecycle. Most of twenty three audit areas are mentioned in Figure 2.2: PROPS-C and Sarbanes Oxley adherence model. An overall percentage is allocated to Project Manager on the basis of the audit findings; corrective actions are noted and Project Manager is given an opportunity to remedy such findings within a predetermined amount of time. Three levels of achievement are established by the team in Sweden at the start of each year. The levels are committed, robust and stretch, each level representing a percentage bracket. Application of the PROPS-C model depends on the complexity and level of risk associated with the respective project. For example, a simplistic project that only consists of hardware deliveries will not be required to comply with all twenty three audit areas. Only basic criteria pertaining to delivery precision and revenue management will apply in this case. At the same time, a complex systems integration and customisation project would require the Project Manager to adhere to all twenty three audit areas without exception. As previously indicated, the implementation of this KPI varies on the basis of the maturity of each respective Project Office governing that particular project. Typically for emerging markets like this one, management and control of process adherence is challenged. Mature Project Offices see process adherence as part of daily operation, whereas developing Project Offices find process adherence an overhead that they may not be able to afford. It is within this realm that non-standardisation thrives.
The systems integration maturity program is based on the PROPS-C life cycle model utilised for network rollout projects. As such, it will have noticeable similarities or process overlaps. However, due to the complex nature of these projects, a section of specialised adherence criteria form part of these processes and procedures. At the onset of a potential project it is either categorised as a network rollout project or a systems integration project; basic versus complex. This determines which model should be followed. The systems integration maturity program consists of three levels, indicating the maturity of the application of processes and procedures within given market unit. The following requirements are to be fulfilled by the project organisation and Project Manager:
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The implementation of the systems integration maturity model is complex, and therefore non-standardisation within this area is rather frequent. Regular internal audits are performed to establish the level of compliance and associated corrective actions.
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