The impact of chosen planning models on overall PPM effectiveness

Organizations choose different models for planning and delivery of their portfolios of projects.  These can be summarized as:

  • Centralized – where control and authority for major planning and delivery decisions are located at the corporate level in the interests of standardization and achieving economies of scale for the enterprise
  • Decentralized – where control and authority are located in divisional units in the interests of close alignment and flexibility with business needs
  • Hybrids (i.e. federated/shared service models) – where control and authority are distributed between the two in order to balance these interests

The respondents to our Project Performance Delivery Effectiveness diagnostic survey were fairly evenly spread between these models.  The diagram below summarizes our analysis of the effectiveness of firms in each category.  We obtained responses from over 100 organizations from a range of sectors in the US and Europe – ranging from well-established, household names to smaller, growing firms.

The effectiveness scoring of each firm  was based on assessment against three categories of outcome measures, reflecting those things that need to be managed as discrete entities:

  • Portfolio outcomes – business objectives and targets, alignment of the portfolio to deliver them, and ownership and accountabilities for delivery
  • Resourcing outcomes – human and financial – matching supply demand and utilization
  • Project outcomes – delivery reliability, effectiveness/efficiency and stakeholder satisfaction.

It appears that non-centralized models lend themselves towards more effective delivery:

  • Respondents with centralized models appear to fare less well than the others – with only 27% of respondents in the first or second quartile (ranked by outcomes) – i.e. the bulk (73%) of such organizations are in the lower half of the effectiveness spectrum.
  • Those organizations with a hybrid model appear to fare the best, with 73% in the first or second quartiles.
  • Those with a decentralized planning and delivery model appear to fit between the two, with 53% of respondents in the first or second quartiles.  Another way of looking at this is that the bulk of these firms (66%) are in the middle half of the effectiveness spectrum.

All else being equal (and it may not be) there appears to be a quartile shift in performance at stake with the choice of delivery model. 

On the basis of these findings it would appear there is an argument for implementing a hybrid planning and delivery model to achieve the economic benefits of centralization (economies of scale) with those of decentralization (customer/business intimacy and flexibility).

There are, of course, no guarantees (some centralized organizations are in the top quartile of effectiveness, while some hybrid organizations are in the bottom quartile).

Changing an organization’s model is not trivial to implement and may not be appropriate, e.g. for smaller organizations.  The key point is that the right communication and behaviors have to be put in place in any model for it to perform effectively.

Tim Pare

http://www.linkedin.com/in/timpare

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Comments

  • tagesgeldkonto  On November 3, 2010 at 3:41 pm

    What a nice post. I really love reading these types or articles. I can?t wait to see what others have to say.

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