Improving management of change projects in times of crisis

Noiembrie 2011

ERNST & YOUNG S.R.L.

The financial and economic crises have caused fundamental questions to be raised regarding proven business and organizational models.

According to one study, last year some 40% of managers surveyed still said they expected their company to be extensively restructured.1 In order to undertake these kind of measures, companies need to be able to answer complex questions quickly and with a high degree of flexibility, efficiency and effectiveness, all against a background of rapidly changing environmental factors. To do this, however, companies must ensure effective management of all change processes and programs(project management organization).

Sustainable portfolio monitoring, strategic positioning of projects and tailored management tools provide the foundation for developing different solutions. Change projects of this kind are an important, strategic, core competency and never more so than today. In the current climate, only companies capable of optimizing their projectportfolio in a targeted manner, implementing change projects and programs effectively and efficiently, will be able to make a significant contribution to organizational change.

 

Portfolio monitoring: the basis for effective integrated planning

In an attempt to overcome the effects of the crisis, companies often initiate ad hoc projects that ultimately do not deliver the desired results. One reason for this is that there is no coordinated project portfolio management. If individual projects andprograms are to help the company move forward, they must be aligned with strategic corporate goals. But this is not simply a case of putting the right framework in place for comprehensive project portfolio management. It is also about initiating, planning and managing the “right” programs and projects in a targeted fashion.

The difference between projects and programs is that projects have defined goals specific to the project. Success is measured in terms of the quality of the outcome, compliance with timelines and budgets, and customer satisfaction. By contrast, aprogram is a group of projects with common results or potential. Program management places special emphasis on the interrelationships between the individual projects. Figure 1 shows the relationship  between the projects, program and portfolio in the context of project management organization.

The challenges facing the program managers mainly relate to evaluating the projects in their program and to prioritizing planned and ongoing projects in terms of their compliance with the company’s strategic goals. Program requirements with respectto strategic compliance have increased greatly in the past five years. As a result, 82% of companies believe that strategic change programs contribute significantly to future competitiveness.

Program management is an integral part of end-toend project portfolio management. The project portfolio is a collection of projects or programs that, when grouped together, enable strategic corporate goals to be achieved as efficiently as possible.Projects and programs in the project portfolio do not necessarily have to be linked to each other. Monitoring of the existing project portfolio focuses less on individual projects and more on the totality of ongoing and planned change projects and programs. In addition, it is not confined to financial aspects but also includes scheduling, content and strategy. In this way, any monitoring is aimed atenabling effective optimization and integration of all projects and programs within the company. Timely provision of information for decisionmakers is therefore an important deliverable of project portfolio management.

Studies have shown that project portfolios often have considerable potential for optimization. This is reflected in the fact that half of companies surveyed report that project costs account for more than 10% of their total costs. Only one in threecompanies completes 80% or more of its projects on time and within budget. Large-scale projects, in particular, lead to massive cost and scheduling overruns.

Four steps are required to optimize the project portfolio and identify projects and programs that make a significant value contribution to organizational restructuring during (or after) periods of crisis:

1. Stocktaking
2. Analyzing constraints and dependencies
3. Evaluating and prioritizing
4. Status tracking

This process is accompanied by ongoing monitoring and controlling.

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