How to Leverage an IPOC in a Strategic

How to Leverage an IPOC in a Strategic Manner PMI-PMO Forum Presentation November 28, 2007 Joan René

IPOC ON BOARD! You just found out that the project your PMO is in charge of overseeing is rated “High Criticality” and there will be an outside Independent Project Oversight Consultant (IPOC) monitoring project performance and reporting to your internal and external executive management.

Risk Mitigation? Will the IPOC reduce risk or be your biggest project risk? In this unique presentation, you will be presented with information and tools that will demonstrate how to effectively leverage an Independent Project Oversight Consultant to minimize risk in achieving the strategic goals for your Programs and/or Projects in the public and private sector.

Topics You will Learn: § § § What generated the need for Independent Project Oversight What an Independent Project Oversight Consultant (IPOC) is What an IPOC is not IPOC Roles and Relationships Tools of the Trade Leveraging an IPOC in a Strategic Manner

IPOC What generated the need for Independent Project Oversight

What Generated the need? § § § IT Projects continue to fail Accurate information not provided to decision makers. Informed decisions are not being made in a timely manner. Conflicts of interest and political influences are the norm. Adding “independence” strengthens the project oversight consultant role by significantly reducing conflict of interest and political influences.

The Need: Greater Implementation Success Projects canceled 40% Projects causing Successful major problems Projects 33% 27% Source: The Standish Group International, Inc. ; based on a survey of 365 companies. 1. 2. 3. Three-fourths of technology projects run into trouble. On average, they take three times longer than estimated and they also cost five times as much.

Irrationality in Decision Making (Harvard Business Review) Most business initiatives fail because: § Cognitive biases and organizational pressures force us to play up the positive and mar our decision making. § As we compete for investment dollars, we exaggerate our project's potential benefits--and downplay its risks. § We then cling to our initial forecasts--refusing to adjust them to account for subsequent (and more negative) market and financial analysis. § We tend to seek only the information that supports our points of view. § We exaggerate our abilities and control over events. Daniel Kahneman – Nobel Memorial Prize in Economic Science for his research on irrationally in decision making.

Strange Choices We Make Under Subjective Uncertainty Texas Hold’em Solution – the big bet, the ALL IN solution – the big chance – disregarding or discounting the odds. “too good to be true” – avoiding flagging information that appears out of the ordinary. “Deal or No Deal” – playing with someone else’s money, avoiding probabilistic outcomes. Beating the odds euphoria. The power of reciprocity - we have an obligation to support – to the bitter end! Managing exception myth – paying more attention to the anomalies when they occur rather than prevention. Sunk Cost – that there is so much already invested into an outcome that it would be foolish to walk away from the opportunity before seeing it through. Damn the Torpedoes – full speed ahead – push through to the end, never looking back – until its too late! Anchoring – is just one way the brain makes sense of the world. We assume the information we are given is at least somewhat accurate, and therefore use that as an anchor around which to evaluate new information or make informed guesses. Like other subtle biases, anchors influence people at an unconscious level. I’m going with my Intuition! – confirm intuition about the decision. Belief based versus fact based. Selecting the facts – working backward from a goal, cooking the books, selective intelligence. Betting the Horses – people feel more confident their horse will win after they place their bet than before. Supporting the boss – is a good way to gain political rewards – unless you are wrong! Consistency – looking consistent is a critical attribute. But right is better.

What’s being done about it? § Demand for independent oversight is going up. § The State of California mandates IPOC based on the criticality of IT projects. § The federal governments’ use of independent oversight is growing § Private industry can benefit from independent oversight

The IPOC Domain l ia er Risks Serial Incremental Independent g na a M isk R Multiple Concurrent Dependent Technical Risk Complexity Program & Business Methodology Systems Engineering Methodology Independent Project Oversight

State of California An Independent Project Oversight Consultant Based on the Department of Finance Information Technology Project Oversight Framework

History: § § June 30, 2002 - Sunset of Department of Information Technology 2002 § Executive Order D-59 -02 and Management Memo 02 -16 assign responsibility for IT management and oversight – – – § Budget Act of 2002 – § created IT security programs within Department of Finance (DOF) Budget Letter (BL) 02 -37 described – – – § Vests IT responsibility with each department director Vests oversight responsibility with each Agency For departments outside of Agencies, department director is vested with both Finance‘s oversight program objectives Roles and responsibilities of departments, Agencies and Finance regarding statewide IT oversight. Describes Finance’s objective to create an IT Oversight Framework for projects 2008 § Oversight responsibilities to be restructured under a to-be-appointed State CIO.

Department of Finance (DOF) Objectives: § Create a framework for effective oversight of IT projects. § Implement an effective system of independent graduated oversight for all IT projects. § Establish statewide standards for project management and oversight. § Assess current department/Agency IT project management and oversight practices. Role: § Assess department/Agency project management practices and processes as demonstrated on current projects § Determine the level of oversight required for each IT project § Provide additional oversight for § § high criticality projects medium criticality projects for departments operating outside of Agencies

Current State CIO Governor: Arnold Swarzenegger Acting State CIO: Clark Kelsoe A State CIO to be appointed to office by 2008. In 2008, the IT Project Oversight responsibilities will be re-structured between the Department of Finance and the newly appointed State CIO.

IPOC What an Independent Project Oversight Consultant (IPOC) is

Definition of Project Oversight BL 02 -37 “…an independent review and analysis… to determine if the project is on track to be completed within the estimated schedule and cost, and will provide the functionality required by the sponsoring business entity. Project oversight identifies and quantifies any issues and risks affective these project components. ”

What an IPOC is An IPOC is § A support function performed by highly experienced and skilled practitioner(s) in project management § Independent of contractor biases or political influences § Responsible to pro-actively inform the client decision makers on the real-time and true project status in two ways: – – adherence to project management principles progress toward achieving established cost, schedule, and performance objectives.

What an IPOC is (continued) An IPOC is § A “Project Psychic” (future results based on present performance) – – § Predicts the future based on sound analysis and experience Sometimes warns of impending doom if changes are not made A “Project Psychologist” – – – Listens to challenges and issues from stakeholders Makes recommendations to restore/maintain project health Provides coaching, mentoring on tailoring and applying “best practices” (IEEE, PMBOK, CMMI, ISO 9000, etc. )

What an IPOC does § Conducts multidisciplinary reviews at designated decision milestones § Validates cost estimates, research, and methodologies § Provides independent assessment of cost and schedule compliance, and earned value reports and methodologies § Recommends approaches for non-technical and technical risk mitigation § Provides independent due diligence on project risk § Improves independent project reviews through synergistic relationships with other review functions § Assesses process maturity against accepted standards of performance

An Effective IPOC Provides § § § § Real-time awareness of a project’s status Independent assessment of a project’s progress A basis for risk management determinations Fair and balanced mediation between all parties Conflict-free assessment and advice The right information at the right time to make the right decisions Provides accurate data and recommendations for achievement of cost, schedule and performance goals § Makes recommendations for improving project health. § Provides coaching and mentoring based on “best practices”

IPOC What an IPOC is not

What an IPOC is not An IPOC is not § A decision maker on or for the project § Does not have authority to direct the project activities § Is not the “project police” § Is not directly responsible for the actions of the State (Customer) or the vendor

IPOC Roles and Relationships

Control Agencies and Executive Body § Control Agencies/Departments § § Department of General Services Department of Finance Legislature Executive body § § § Agency Secretary Project Sponsor Executive Steering Committee – § § Stakeholder advisory committee Project Director State Project Manager Typical IPOC Reporting Structure Typical IV&V Reporting Structure Note: The IPOC is a direct report to the Department of Finance. IV&V is dotted line to IPOC and IV&V contracts are managed by a member of the executive body. Which member varies from contract to contract.

IPOC Tools of the Trade

DOF IT Project Oversight Framework Components: § Identify Criticality and Oversight Level for Projects (low, medium, high) § Minimum Required Practices and Processes § IT structure and environment components used to assess department/Agency project management practices § Minimum requirements for risk management to be implemented on all IT projects § Minimum requirements for project oversight to be implemented on all IT projects

DOF IT Project Oversight Framework (cont. ) Reporting: § Project Management Capability Checklist § Used by Finance to assess department/Agency project management practices § Project Risk List and Risk Management Form § § Risk Tools for departments risk management program for ongoing project Means for escalation of risks § Project Oversight Checklist § Used for independent oversight reviews of individual projects § IPOR (Independent Project Oversight Report) § § Written oversight report submitted by IPOC to departments, Agencies and Finance Uses graduated oversight approach

Standard Practices for Used for IT (Incomplete) § PMBOK § § Knowledge Areas Inputs/Outputs for plan and process development § IEEE § § § Verification and Validation Requirements Traceability Configuration Management § SEI CMMI (for acquisitions and software development) § § Acquisitions Software development process maturity and assessments § ISO 9000

Other Tools for IT Project Oversight § § § § MS Project or other project management tool Risk Tracking tools such as Risk Radar Traceability tools such as Requisite Pro, DOORS, Excel Web-based document repositories such as Collabnet, Share. Point Service Management tools Every formula you had to learn for the PMP Certification Analysis tools and Metrics

IPOC Leveraging an IPOC in a Strategic Manner

ROI of Oversight Research and analysis conducted by Gartner and Meta reflect that IT projects managed using a strong centralized PMO: § § § 46% increase in on-time delivery 27% decrease in cost 38% increase in internal customer satisfaction 25% increase in external customer satisfaction 39% increase in employee productivity Source: CIO Research July 2003 http: //www 2. cio. com/research/surveyreport. cfm? id=58 SEI has documented that organizations that attain CMMI certification, which is focused predominately on core program management disciplines, achieve: § § § 33% decrease in defect repair costs 50% decrease in release turn around time 2% defects in fielded systems 25% increase in productivity, 10% increase in customer satisfaction Return on investment that ranges anywhere from 5: 1 to 13: 1 Source: Carnegie Mellon Software Engineering Institute White Paper 2004 “Why Make the switch? Evidence about the benefits of CMMI”

How to Leverage an IPOC • IPOC will test information and convert to results. IPOC will bring critical assessments and maximize the utility of your resources. • IPOC will expand your sources to enhance results. An IPOC will expand available information to improve your ability to make good decisions and boost credibility with your stakeholders. • IPOC will enable commitment to results. The decision is only moving forward when you commit to action. The IPOC will establish metrics to validate results establishing a decision performance improvement model. • IPOC will allow you to stay focused on results. An IPOC will focus on the critical success factors that will have a significant impact on the results of the mission. • IPOC will deliver results confidence. IPOC avoids overconfidence when evaluating “what we think we know”. An IPOC will test “expert” advise, especially when the expert is outside their area of expertise. When Results Matter!

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