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INTRODUCTION TO THE PRACTICE GUIDE

This practice guide is a resource for those who want to devise an integrated approach to managing an organization's portfolios, programs, and projects. This approach is based upon the management concept of organizational project management (OPM), which is described later in this section.

OPM advances organizational capability by developing and linking portfolio, program, and project management principles and practices with organizational enablers (e.g., structural, cultural, technological, and human resource practices) to support strategic goals. An organization measures its capabilities, then plans and implements improvements toward the systematic achievement of best practices.

This practice guide provides information and suggestions for creating useful OPM practices and methods, focusing on implementing and tailoring essential processes for organizational use, particularly in organizations that do not have a unified approach to managing the projects.

1.1 Overview of OPM Basics

“OPM is a strategy execution framework utilizing portfolio, program, and project management as well as organizational-enabling practices to consistently and predictably deliver organizational strategy leading to better performance, better results, and a sustainable competitive advantage” [1].¹ In short, OPM is the holistic management of portfolios, programs, and projects integrated with the organization's business management framework to deliver needed results. This strategy framework brings about balance and coordination, as Figure 1-1 reflects.

It is important to understand the relationship among portfolios, programs, and projects in order to understand OPM. A portfolio refers to a collection of projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives. Programs are grouped within a portfolio and are comprised of subprograms, projects, or other work that are managed in a coordinated fashion in support of the portfolio. Individual projects that are either within or outside of a program are still considered part of a portfolio. Although the projects or programs within a portfolio may not necessarily be interdependent or directly related, they are linked to the organization's strategic plan by means of the organization's portfolio.

As Figure 1-2 illustrates, organizational strategies and priorities are linked and have relationships between portfolios and programs, and between programs and individual projects. Organizational planning impacts projects by means of project prioritization based on risk, funding, and other considerations relevant to the organization's strategic plan. Organizational planning can direct the management of resources, and provide support for the component projects based on risk categories, specific lines of business, or general types of projects, such as infrastructure and process improvement. It is in this context that OPM exists.

Utilization of OPM has grown in the past 20 years, emerging from establishing good practices for a project, to establishing good practices for a program, and then to establishing portfolio, program, or project management offices (PMOs) for handling various aspects of support, coordination, and improvement. Some organizations adopt centers of excellence in order to coordinate OPM policy and competency development across multiple business units with PMOs. Many organizations have formalized the management of programs and projects, and in a growing number of cases, portfolio management. While some organizations have formalized practices, other organizations tend to manage projects in an ad hoc manner. In any case, projects are the common starting point when thinking about how to apply OPM, but the concept expands across the organization with the principle of engaging all necessary parts in the fulfillment of strategic goals dependent upon the program and project.

More organizations are beginning to realize that project management means more than having good project managers. An integrated leadership, management, and support environment is just as critical for the management of portfolios, programs, and projects as are other more traditional operational and support functions. Effective project management reduces unnecessary costs of doing business and leads to realized strategic objectives.

Project management, in terms of simply focusing on scope, time, and budget, is not sufficient for managing the scale and rate of change that is the norm in most organizations. Organizations that drive portfolio, program, and project management strategically with top management visibility use active executive sponsors on projects; consistent and standardized project management practices; methods to detect and cope with change effectively; and competent qualified project managers. Those organizations tend to be successful in delivering projects on time and on budget [2]. An OPM approach ensures that the portfolio aligns with the set of programs and/or projects that yield the appropriate value decisions and benefits for the organization. Portfolio reviews occur regularly and are adjusted as market conditions or strategy change. An analysis of the business impacts on the portfolio guides the portfolio review. The portfolio is adjusted, as needed, to deliver results or when other work makes it necessary to revise. These results directly link to business value realization. Feedback from value performance analysis influences the strategy of the organization.

1.2 Intended Audience for this Practice Guide

This practice guide is useful for organizations that would like to benefit from realizing their strategy through successfully implemented programs and projects that achieve intended benefits. This practice guide is intended for anyone who is involved in the oversight, design, management, appraisal, or performance and improvement of process, portfolio, program, and project results. This may include:

• Executives with responsibility for business divisions or business units;
• Executives or managers involved in the leadership, management, or oversight of programs and/or projects;
• Executives or managers responsible for developing OPM-related policies;
• Executives or managers involved in the support of organizational project management, such as those responsible for PMOs or centers of excellence;
• Senior program and project managers in leadership and liaison positions for OPM-related organizational capabilities; or
• Process and organizational change professionals (including quality assurance and capability management maturity improvement) who are involved with the design and implementation of portfolio, program, and project performance improvement initiatives.

1.3 Benefits of OPM to the Organization

OPM promotes the alignment of the organization's strategic objectives with related projects and their management, which many organizations consider to be a big benefit. Other attractive benefits are possible, as reflected in Figure 1-3.

Benefits tend to build incrementally. Organizational leaders should consider and carefully plan the selection, sequence, and realization of those expected benefits by investing in OPM practices.

Whether in the foundational or improvement stage of an OPM implementation, a benefits realization plan describing the steps, timing, and measures is needed to achieve organizational benefits effectively.

1.4 OPM Essentials for Implementation

Figure 1-4 represents the key elements that an organization needs to consider when implementing OPM. These implementation elements reflect current good practice in organizations that have undertaken the implementation of an OPM approach and realized success.

The OPM core-enabling processes facilitate an organization's ability to realize its strategic objectives through portfolio, program, and project management. The strategic alignment process ensures programs and projects support strategic intent. Organizational project management methodology defines how people and the processes work to select and deliver portfolios, programs, and projects. Governance provides a framework in which organizations can make decisions that satisfy business needs and expectations. Competency management ensures that the right skills and knowledge are available to support OPM.

As elaborated in Section 2, critical success factors are sustained leadership, continuous improvement, and change management. Sustained leadership is required to establish and retain the efficacy of OPM in the organization. Continuous improvement draws upon audits, benchmarking, lessons learned, and other factors to identify what needs to be improved; for example, people and processes, oversight, goals and objectives, and organizational perspectives. Change management capabilities and the implementation of supporting change management strategies, plans, and activities are necessary to embed significant change in the organization.

Having a good OPM strategy execution framework assumes the involvement of all parts of an organization that directly or indirectly affect, or have a stake in, the selection, delivery, and outcomes of projects. OPM is a broader concept than portfolios, programs, or projects; however, these three domains are the focus of OPM to ensure that the organization optimizes its work to deliver strategy in order to realize the organization's vision or future state.

1.5 OPM Fit with the Organization's Business Model

OPM processes, methods, and practices, adapted to the organization, will fit with the business model, the structural organization, and various functions that constitute the organization. The term “fit” in the context of this practice guide refers to the organization's challenge to implement what is actually needed to create the value sought from its portfolios, programs, and projects.

Organizations may have some elements of OPM existing already, such as executive portfolio steering committees, sponsorship practices through the delegation of authority, project procurement support processes, project manager training courses, or documented project management practices and procedures. By formally instituting OPM, all of the necessary elements integrate appropriately for an effective system of project selection, execution, and delivery across the organization.

From a structural standpoint, the leadership of an OPM initiative or program should be in a central leadership unit close to or within the executive team, so it can coordinate OPM processes and methods with existing organizational processes. These leadership activities often are found in units such as enterprise project management offices (or centers of excellence), program management offices, and the varieties of project management offices found in today's project-oriented organizations.

1.6 Tailoring the Approach to Implementing OPM Core Processes in an Organization

Organizations need to address all of the key implementation elements by documenting how the organization will approach, plan for, and bring about desired related processes, practices, and tools to achieve fit. The organization will advance its OPM capabilities to the degree that makes sense for its business purpose and in the appropriate sequence. OPM advocates continuous improvement, therefore, the organization should have the ability to accommodate strategic shifts, new business models, changing markets, or new technologies.

The OPM policy and methodology that an organization uses are critical to establishing a system of practices, techniques, procedures, and rules used in portfolio, program, and project work to meet requirements and deliver benefits. OPM methodology speaks to all levels and facets of performing portfolios, programs, and projects. The other core-enabling processes facilitate the implementation of an OPM methodology. A well-planned OPM methodology makes appropriate and useful connections and modifications within the business model of the organization. The result is a tailored OPM methodology that evolves to support the organization over time.

Tailoring is the appropriate selection and alignment of organizational practices and methods for the value and types of projects the organization performs, which results in “fit.” There are many dimensions of fit that each organization should consider carefully. Examples of important dimensions may include the following:

• A comprehensive, executive-led approach may be appropriate where there is a high degree of dependence on programs and projects for value delivery, rather than loosely managed functions or departments.
• A formal, defined and agreed-upon decision process may work better than an informal, nontransparent one when there is cross-functional involvement in major portfolio decisions.
• For organizations with multiple types of projects, it may be more efficient to align them to the appropriate levels of management rigor and governance by type, or group them in a program format, rather than using traditional grants of authority for functional or department managers.

Section 5 (Developing a Tailored Organizational Project Management Methodology) provides guidance that organizations can use to develop their own methodologies.

1.7 How to Use This Practice Guide

Figure 1-5 reflects the high-level input and outcomes of using this practice guide. In general, this practice guide is intended to assist organizational leaders with developing or improving an OPM framework that integrates the business model, the organizational culture, and this practice guide's elements and standards.

1.7.1 This Practice Guide and Related PMI Publications

It is important to note that PMI practice guides are intended to provide supporting, supplemental information and instruction for the application of PMI standards. Two key purposes of this practice guide are worth highlighting:

• This practice guide provides information that is unique but consistent with Organizational Project Management Maturity Model (OPM3®) – Third Edition. The following comparison between this practice guide and OPM3 is provided to clarify their commonality and uniqueness:
  • This practice guide provides the processes that an organization can use to develop, implement, and improve OPM; OPM3 provides a robust maturity model for use in assessing and enhancing an organization's OPM maturity.
  • Organizational enablers (OEs) are structural, cultural, technological, and human resource practices that can be leveraged to support and sustain the implementation of organizational project management. OPM3 experts will notice that this practice guide focuses on four of the 18 organizational enablers identified in OPM3 (see Appendix X2). Although all 18 are important, four are considered essential to implement and sustain OPM without necessitating a formal maturity assessment. By focusing on these four organizational enablers, this practice guide provides a foundation for organizations that are beginning to implement OPM. In addition, because this practice guide further elaborates on these four organizational enablers with process guidance, these four organizational enablers are referred to as “core-enabling processes” to reflect the added level of details.
  • In OPM3, Capabilities are formally defined as incremental steps leading to the attainment of one or more Best Practices. In this practice guide, capabilities are used more loosely to refer to the collection of people, processes, and technologies that enable an organization to deliver organizational project management.
• This practice guide is consistent with the current PMI standards for portfolio, program, and project management and Managing Change in Organizations: A Practice Guide.

1.7.2 How This Guide Is Organized

Section 1 (Introduction to the Practice Guide) provides the practitioner with basic concepts, principles, and definitions of OPM. OPM leaders can determine how these concepts, principles, and definitions relate to their organization's lexicon of related terms and activities. The organization maps the OPM components to the business model, noting the existing or missing OPM activity.

Section 2 (How to Prepare for an OPM Implementation) builds the case for OPM initiatives. This section is a resource for OPM leaders and senior management.

Section 3 (How to Implement and Improve OPM) describes the OPM implementation framework where the gap between the current state and desired future state is identified and the organization selects and implements initiatives to address this divergence and to move to the desired state. This section is a resource for OPM leaders and the implementation team to implement OPM for their organization. This section uses a change management approach within the OPM program structure.

Section 4 (How to Implement the Core-Enabling Processes) provides OPM leaders and senior management with the OPM implementation core-enabling processes necessary to facilitate an organization's ability to realize its strategic objectives through portfolio, program, and project management.

Section 5 (How to Develop a Tailored Organizational Project Management Methodology) provides OPM leaders with a process to create the organization's methodology for its portfolios, programs, and projects. This section offers guidance for tailoring processes and practices using management of a project as an example. The tailoring process, however, can be interpolated for portfolio and program management.

This practice guide helps organizations to identify and apply proven concepts, methods, and practices in order to realize and sustain OPM in the organization. It is intended to enable organizations to better structure the management of its portfolios, programs, and projects. This practice guide also refers to existing standards that organizations may want to include within their OPM context.

1.8 Summary

Section 1 covered the following points:

• OPM (portfolios, programs, and projects, collectively) plays a critical role in delivering the organization's strategy and intended benefits.
• When selecting, planning, implementing, governing, and delivering programs and projects, organizations that integrate OPM are more effective in achieving desired results than organizations that do not use this approach.
• Distinct processes and methods support the effectiveness of the application of OPM, which includes tailoring them to fit the organizational context.
• OPM is anchored in continuous improvement to help detect and react to change that inevitably affects the way in which an organization handles portfolios, programs, and projects.

¹ The numbers in brackets refer to the list of references at the end of this practice guide.