allPM.com :: Most Popular 2007 Article - The Essence of OPM3® By Ralf Friedrich

Most Popular 2007 Article - The Essence of OPM3® By Ralf Friedrich

Published on Friday, May 30, 2008 - 03:08 PM

*** Editor's Note: The Essence of OPM3® By Ralf Friedrich was the lead article in allPM's January 2007 Newsletter and had 4724 views.

Introduction

The Organizational Project Manangement Maturity Model (OPM3®) is a PMI standard designed to enable organizations to undertand organizational project management, to measure their maturity against best practices and to increase maturity. Organizational or Enterprise project management is the “systematic management of projects, programs and portfolios in the alignment with the achievement of strategic goals.�?¹

In this article I will discuss a couple of aspects of the OPM3® model and its power for an organization. In a nutshell, OPM3® is a complete measurement system for organizational project management maturity. Note that it can be used for performance measurement as well. Using OPM3® allows you to establish a process with metrics that show how your strategy is being translated into organizational reality by selecting and performing the right projects.
Since its first release in December 2003, OPM3® has been discussed controversially within the PM community. There are some success stories about successful OPM3® implementations. However, many companies still do not use OPM3® for different reasons. Based on discussions with many people at conferences or during workshops, the common reasons for not implementing OPM3® are 1) it seems too complicated, 2) the self-assessment is in PMBOK® Guide jargon which the senior executive team will not understand, 3) there is not enough data to perform external benchmarks, or 4)I do not know how to sell OPM3® to the senior executive team. These reasons identify some of the negative aspects of the model but OPM3 is a means for getting better on the journey to implementing strategies successfully through projects. Can the negatives be overcome?

As it is with any successful model, the first release starts with high expectations on one side and technical problems on the other. The first release of a model is also very close to the essence of the model and the essence of OPM3® is very powerful. If you are willing to invest in the model and extract this essence, then the model has the potential to help your organization achieve its strategic goals. OPM3® has the power to improve your organization. It will be more efficient and effective than any other model currently on the marketplace.

A complete Measurement System for Organizational Project Management
First question: What is organizational project management? The OPM3® standard (p. 173) describes it as "The application of knowledge, skills, tools, and techniques to organizational activities and project, program, and portfolio activities to achieve the aims of an organization through projects." What are the key terms in the definition? The first one is “organizational activities�?. These are activities for example such as establishing career paths for project and program management, aligning the project portfolio to the strategy of the organization and be committed to the project management process. As the examples show, organizational knowledge, skills, tools, and techniques are different then just establishing the baselines for a project. So OPM requires a different skill set than project management. OPM is much closer related to the field of organizational development than to project management.

The next question: "How do you make sure that your organization develops in the right direction?" If your organization needs to become more agile, if your organization has to do more and more complex projects or if your organization has to change direction to enter a new market or leave a dying market, then you should be very interested in OPM3®. OPM3® will allow you to identify Key Performance Indicators (KPI's) which will provide you with data relevant to developing and controlling your organizational development. OPM3® is a complete maturity measurement system. The different KPI's are grouped in a system of some 600 Best Practices. A Best Practice is defined as "... an optimal way currently recognized by industry to achieve a stated goal or objective...." (OPM3®, p.171). One Best Practice is defined by several Capabilities which will produce Outcomes and the Outcomes can be measured using KPI's. What is really relevant for an organization? Identify the right KPI's. The KPI's within OPM3® are generic and every organization has to invest into making the KPI's specific. To identify the KPI's which add value to the organization, an assessment is done in the beginning of every OPM3® project.

With the set of KPI's, the effectiveness of the organization in terms of organizational project management is then measured. So, OPM3® in practical terms will create a continuous feedback system for the senior management and other stakeholders on how well the organizational strategy translates into organizational success. The means of delivery of the strategy is through portfolio, program and project management. That's the essence of OPM3®.

In the next section I will describe the process model of OPM3®.

The Process Model

When the development of OPM3® started in 1998, few professional project managers were really thinking about program and portfolio management in the way it is discussed now. In 1998 and 1999 the largest IT projects were fixing the millennium bug, also called Y2K. As those projects were the main concern of many senior executives, many other projects were being delayed. The complexity of Y2K projects was low to moderate, but the number of resources required was quite significant. Because there were so many interrelated projects, the need for program management was highlighted.

Today, companies have to achieve many different types of projects to stay competitive. The projects today, and I am thinking particularly of information technology development projects, are highly complex with different suppliers and sub-suppliers involved. In the current business environment, the effort in investing into portfolio and program management processes is fully justified.

The essence of OPM3® is the concept of measuring consistency in the execution of the organizational strategy.

A fictitious case: An organizational objective could be to launch four new consumer products every year with at least two derivatives for every new product. For every product, 10,000,000 units are sold. To achieve this organizational objective, a portfolio may be initiated, planned, executed, controlled and closed. Within this portfolio, four programs are initiated, planned, executed, controlled and closed and then every program will have three projects. The successful achievement of the organizational objective has three basic components: Delivering all 12 products to the triple constraint, manufacture the products and sell the products.

OPM in the context of this case requires an integration of the factory and sales force as well as performing portfolio, program and project management activities. On the implementation side, the organization has to define KPI's, which provide information on how every project performs and how the portfolio performs to achieve the organizational objective. The current version of OPM3® provides these measurements. They are in the process best practices and in the supplementary best practices. So, even if the most current PMI portfolio and program process descriptions are not aligned to the newest PMI standards, the KPI's to implement the measurement system according to the processes are in OPM3®.

Does Opm3 address portfolio and program management?

OPM3® defines a program management and portfolio management process. The current OPM3® project team is working on adapting these processes to the processes defined in the new PMI standards for program and portfolio management. Some voices say that the current implementation of the program and portfolio management processes does not fit the requirements of the organizations. Is this statement true?

To answer the question, I would like to return to the way the first best practices were identified by the original project team. The first best practices were identified using a modified Delphi technique in three rounds among a select group of subject matter experts. These best practices are in the current version of the standard listed after the best practices which are based on the PMBOK® Guide Edition 2000. I call them supplementary best practices.

The Best Practices

In OPM3® there are two different categories of best practices. One category is the so-called process best practices. The other is supplementary best practices, also known as Organizational Enablers.

The process best practices are based on the PMBOK® Guide Edition 2000. The 39 processes of the PMBOK® Guide have been duplicated for program and portfolio management. Then every best practice can be developed to promote Standardization, Measurement, Control and Continuous Improvement. In addition to the four levels of process maturity, there is one best practice for governance. How many process best practices are there? 39 x 3 x 4 +1 = 469 Best Practices.
The base definition of the capabilities for the best practices in every domain is:²

Governance	Governance is the ability to enable common process improvements by authorizing the appropriate governing bodies to make critical decisions on process improvement goals and plans.
Standardize	The ability: to assemble, develop, purchase, or otherwise acquire a common process. of organization to monitor compliance with process. to standardize the common process.
Measure	The ability to: develop internal standards regarding the performance of the common process. identify the characteristics of the common process that are critical today. measure critical characteristics of the common process directly. Have process owners be able to identify the common processes’ upstream measures. The ability to measure the common processes critical inputs.
Control	The ability to: develop a process control plan for the common process. implement a system for maintaining process control for the common process. operate the common process in a stable fashion. audit the stability of the methods used to operate the common process.
Continuously Improve	The ability to: make common process improvements, e.g. process simplification and reduction, incorporating lessons learned or industry best practices. identify root problems during execution of the common process. execute continuous efforts directed towards common process improvement. integrate common process improvements with systems that standardize the improvements.

The concept behind the process capabilities is that there is continuity from the portfolio to the project and back. This approach allows an easier implementation of a consistent measurement system.

The supplementary best practices function differently than the process best practices. The supplementary best practices cover the domains of organizational project management which are beyond the three core processes of portfolio, program and project management. As already mentioned, the supplementary best practices are developed through three rounds of modified Delphi. They contain plenty of wisdom from many project management practitioners. The original grouping was³:

Commitment to the PM Process
Business Alignment and Prioritization
Continuous Improvement
Success Criteria for Continuation or Culling of Projects
People and Competencies
Allocating Resources to Projects
Organizational Fit
Teamwork

The table below shows a few examples of the best practices in the different categories⁴:

Group	Examples
Commitment to the PM Process	Best Practice: A Board of Directors that is involved in setting project management policies with specified goals Best Practice: A common framework that is understood and used by all project stakeholders for conceptualizing, designing, planning, executing, managing, and closing-out all project-based work Best Practice: A common PM culture, with all people involved in projects sharing congruent beliefs, values and behaviors that support effective project working.
Business Alignment and Prioritization	Best Practice: A clearly identifiable set of projects that support the organization’s strategic aims Best Practice: A measure that compares the organizational resources applied to projects that support each major corporate strategy with the importance of the strategy to the organization.
Continuous Improvement	Best Practice: “Lessons learned�? are stored in an accessible location for project teams to minimize failed strategies. Best Practice: A change program or a framework organizing a series of projects aimed at developing or achieving maturity exists. Best Practice: A documented plan to achieve where the organization wants to go, and the ability to measure current project performance, create a target performance level, and identify the steps needed to get there. Best Practice: A process to capture and disseminate lessons learned from projects. Best Practice: Evidence of the capture/dissemination process and the re-use of information in subsequent projects. Best Practice: Learning from projects that is translated into the corporate approach. Best Practice: Learning that takes place in all of its dimensions (individual, team, organizational).
Success Criteria for Continuation or Culling of Projects	Best Practice: A means of identifying and selecting the projects to be undertaken that includes elements such as mechanisms for the assessment of the worth/value of projects to the organization. Best Practice: A means of identifying and selecting the projects to be undertaken that includes the identification of the investment (human and financial) it wishes to make available to projects and the balance of investment it wishes to make across different types of projects. Best Practice: A means of identifying and selecting the projects to be undertaken that includes evaluating how projects are linked to strategy (at either business unit or corporate level).
People and Competencies	Best Practice: A formal competency assessment mechanism that provides the ability to assess the level of competency of people involved in key project roles. Best Practice: A project management community containing all jobs that are necessary for the effective management of the total project portfolio, i.e. project sponsors, program managers, project control officers, and project managers. Best Practice: A project management community that provides sufficient competent resources to manage the organization’s total project portfolio.
Allocating Resources to Projects	Best Practice: Acceptance of priorities between projects by the PM community, (particularly the Sponsors, Project Managers, Line or Functional Managers and Customers) so as to allow the efficient and effective allocation of resources. Best Practice: Efficient redeployment of resources from projects that have been terminated prematurely to others that are consistent with the organization’s strategic priorities.
Organizational Fit	Best Practice: A clearly defined project team structure with defined roles and responsibilities. Best Practice: A corporate approach tailored to the needs of the organization and to the management of projects that acts as a route-map for all concerned as to what should be happening (in planning and control terms) at any point of the project’s lifecycle. Best Practice: A corporate approach to project management that identifies the structure of and interactions between project processes, stakeholder satisfaction processes, innovation and development processes, supply processes, and operational processes.
Teamwork	Best Practice: A culture that is based on teamwork and establishes high levels of innovation and creativity in work groups. Best Practice: Cooperation that is the norm and that takes place without formal intervention of authority. Best Practice: Team members know the right thing and do it. Best Practice: People in different roles and functions throughout the organization who collaborate to define and agree on common goals.

As you can see, the supplementary best practices cover domains of organizational project management which are beyond the three core processes of portfolio, program and project management.

The Self-Assessment

Many OPM3® assessments are limited to the self-assessment. The self-assessment is available on the web-site http://www.OPM3productsuite.com/ for registered users. There are 151 yes/no questions in the self-assessment. By design, the relationship between a question and the best practices can vary from one to many. The questions are highly complex and written in PMBOK® Guide jargon. Einstein once said thateverything needs to be explained as simply as possible, but not simpler. The standard self-assessment is too superficial to be effective. It does not really address what OPM3 is capable of doing for an organization.

To use the self-assessment is one possibility to do the high-level assessment. In my own experience, the questions in the self-assessment have been judged as irrelevant by senior executive teams, as they normally do not have the detailed knowledge of project management terms. Also, project management is viewed in many organizations as a technical discipline. If you use the self-assessment, there is high risk that the OPM3® initiative will be unsuccessful. Organizational project management is much more than project management, and OPM3® is good stuff for an organization. How do you convince the executive team that assessment and improvement are critical investments?

I recommend creating your own self-assessment questions, based on the objective of the OPM3® project. If you assess an organization and the organization does not practice portfolio management, then simply do not ask any questions about it. If portfolio management would be relevant, then put it in the recommendations that follow the assessment. Your own questions should be written in the language of the assessees. They should address the assessees’ interests and areas of expertise.

For example: If you interview the Senior Management Board, you should avoid any technical project management terminology they may not understand, e.g. do you use a standardize WBS on every project? First of all, the Senior Management Board may not know what a WBS is and secondly, you make them look ignorant, because they do not know. This is a good question to ask project managers. So a better way to ask is: "Do you get standard reports from the projects giving you information on how much work has been accomplished to date so that you can see if strategic objectives are met?" This question is within the reference system of the Senior Executives. If they say yes, then you should investigate at the project manager’s level, what the basis for the reporting is and most properly you will find that a WBS is being used.

Also, make sure you only ask one question for one best practice. You will ask many different stakeholders during one OPM3® high-level assessment. Many stakeholders will have different perspectives on the same organizational fact. Therefore it is important to show, where the organization is in alignment and where the organization has diverse views. All this information will provide you with a map of the organization. This map will show you where the flow from the strategy down to the projects is working and what has to be done to improve the organization.. You can select improvement opportunities and prioritize them to get quick returns and to address the longer term issues.

If you do the self-assessment professionally, there is normally no need for a detailed assessment. The facts are clear to propose an efficient and effective improvement plan.

The Hidden Beauty of OPM3®

OPM3® is a powerful tool to combine project management with organizational development. In Germany I gave many presentations for the Association of Organizational Development and the participants understood what is possible with the model.

Whenever I present the model to practicing project managers, they are critical and they do not see the value of the model. A project manager lives and dies for his or her project which is the central point of their work life. This focus is what we need to be successful in our trade. However, professional PM’s can be encouraged and enabled with OPM3 to take a process perspective so they can make their project centric work more effective.

Organizational Project Management has a different focus. It is about getting the whole organization ready for the challenges of the future and this is not the routine business of project managers anymore. It is part of the business of all managers within an organization and in particular the C-level. They should be the primary users of OPM3®. However, for this user group, OPM3® needs a functional packaging. The packaging could take the physical form of an Organizational Project Management Dashboard – a panel with organizational project management instruments and gauges -- showing the main OPM KPI's with current values so that the Senior Management Team can fly the organization successfully into the future.

About the Author
Ralf Friedrich, PMP, ACC, MSc was the Program of the first release of OPM3®. He is now a fulltime Senior Trainer, Coach and Consultant for IIL – International Institute of Learning, a New York based Training and Consultancy Company. Friedrich’s focus areas are competency and maturity models and project management staff development. He works with organizations to establish project management career paths, developing assessment centers for project teams, individual coaching of project leaders and senior executives and intercultural competency development.

© 2007 allPM.com

PMI®, OPM3®, PMP®, and PMBOK® are all registered trademarks of the Project Management Institute, Inc. registered in the United States and other nations.

Footers

¹ OPM3 standard p. xiii

² Derived from unpublished notes of the development of OPM3 ®, 2001 – 2002, by the OPM3 Project team

³ Derived from unpublished notes of the development of OPM3 ®, 2001 – 2002, by the OPM3 Project team

⁴ Derived from unpublished notes of the development of OPM3 ®, 2001 – 2002, by the OPM3 Project team

How well does management support newly assigned project managers?