By Linda P. Dowdell, President Dowdell Consulting Services, LLC June 8, 2006

1. The Needs Assessment Process, Project Selection & Approval Process, and the Role of the Project Management Office By Linda P. Dowdell, President Dowdell Consulting Services, LLC June 8, 2006

2. Overview • The Project Management Office (PMO) plays an essential and important role in helping with the management of multiple projects that require external, internal and cross-functional resources. • The objective of this presentation is to describe how the PMO helps define project management practices in relation to the selection and the approval of projects.

3. The PMO • The number of projects that are pending for approval, currently running, or about to start, requires the coordinated activities of cross-functional teams comprised of business units, business areas, systems areas, IT groups, products, services, and systems. • By applying well-known standards and practices (PMI and others), it provides a unifying structure throughout the life cycle of projects. It contributes in ensuring that projects are delivered on time, on budget and within scope, and that the organization’s strategic goals and objectives are fulfilled. • The PMO analyses, follows-up, and reports on overall projects’ progress to senior management or Governance Board. The PMO greatly assists the Governance Board in the Selection and Approval of projects.

4. Project Selection & Approval • The go/no-go project decisions are decided during a Project Selection and Approval phase of projects, a.k.a. Business Definition. • This phase shapes the overall direction of the business unit from the project’s perspective. • It is during this phase that the organization’s project management processes are initiated.

5. Project Life Cycle • Projects have a lifecycle that can be broken down into five major phases. The PMO has a direct/indirect involvement in each of these phases, a.k.a. (by PMI) Process Groups: • Initiating • Planning • Executing • Controlling • Closing • A Business Definition period usually precedes the Initiation phase when projects are initially requested. However, the Business Definition and Initiating phases can be integrated into one phase when a project manager is selected right from the start of a project request. • The PMO ensures that projects gain stimulus early in their lifecycle by participating in the Project Selection and Approval process.

6. Project Life Cycle (cont.) • A Business Area Manager or Project Sponsor completes a Business Case. • The PMO helps with the scoping and prioritization of individual projects that are based on business impact and project achievability. • During the Business Definition, the PMO • Facilitates a complete Business Case template to the Business Areas • Reviews Business Cases and provides guidance during its development • Provides a Business impact and achievability criteria template to the Business Areas.

7. Project Life Cycle (cont.) 0.0 Business Definition PROJECT MANAGEMENT 1.0 Initiation ENGINEERING * 2.0Analysis * 3.0Design * 4.0Construction * 5.0System/QA Testing * 6.0UAT * 7.0Implementation 8.0 Post Implementation *

8. OVERVIEW OF THE NEEDS ASSESSMENT PROCESS AND PROJECT SELECTION & APPROVAL PROCESS

9. Corporate Goals • Corporations develop their corporate goals or strategy for the entire corporation. • Large corporations usually have several major Lines of Businesses (LOBs) or Business Units (BUs), and a major IT organization to support the organization’s infrastructure.

10. Business and IT Strategies • From the Corporate Goals, Business Strategies are developed by each LOB executive team. • From the Corporate Goals, IT Strategies are developed by the IT support organization executive team.

11. 1. Business and IT Strategies Business Strategy • A Business Strategy of an LOB is then published to all its Business Areas (business groups within the LOB). • Business Areas may have their own business applications which are usually supported by their own System Support groups (System Areas). • Business Areas may also have assigned IT Support groups from the larger IT organization to support their particular infrastructure.

12. 1. Business and IT Strategies IT Strategy • An IT Strategy is also published to all IT Support groups that are deployed to each major LOB in order to address its infrastructure and IT project needs that are requested by the business. • These IT projects require necessary network connectivity, hardware and software to successfully support them.

13. Strategy Plan and Annual Budget • The LOB Business Areas and IT Support groups then use the published Business Strategy/IT Strategy to develop their individual Strategic Plans also called Business Plans/IT Plans. • Each Business Area develops a Strategic Plan and an Annual Budget to address the business needs stated in the Business Strategy. • Each IT Support group and Systems Area also develop a Strategic Plan and an Annual Budget to address the IT needs stated in the IT or Systems Strategy. • These plans are written for annual timeframes and address a budget pool and revenue objectives for the coming one-year period.

14. A Typical LOB Infrastructure • Business Areas typically have their own business applications which are usually supported by their own Systems Support groups (Systems Areas). Depending upon the size of the organization, each Business Area may be supported by a single Systems Support group; some other organizations may have several Business Areas supported by a single Systems Support group. Still others may have a combination of both. In addition, each Business Area may have one CTO and one CIO, and others may have several.

15. A Typical LOB Infrastructure • It is important to note that, Systems Areas may also be part of the larger IT Support organization. In this case, they may be called IT Operations and the whole IT organization may be called Technology and Operations. The Technology side which deals with the LOB IT infrastructure, and the Operation side which deals with the day-to-day IT operations.

16. 3. Tactical Plans • Each Business Area and IT Support group also develops a Tactical Plan. Tactical Plans identify the specific Projects or Project Requests planned to be undertaken over the next year to bring about the goals stated in the Strategic or Business Plan. • Note: Project Requests will be used to refer to Projects that have not yet been approved. • Thus, to address the Business Area goals listed in the Strategic Plan, each Business Area and IT Support group develops a Tactical Plan using specific document formats such as MS PowerPoint or MS Word.

17. 3. Tactical PlansHigh-Level Business Case • Each Project Request includes a high-level business case statement which can be part of the same Tactical Plan document or attached as a separate document. The business case statement details the benefits to executing the project and its strategic direction. A business case can become a separate document and can be part of a Project Charter. • The Project Requests can be individually entered in a PMO Projects database in order to have the appropriate controls in place. The information gathered in the database can be used to aid the Systems Areas in their analysis of Project Requests. It is necessary to provide sufficient level of detail describing the business need, thus making a high-level business case. The full business case will eventually become the Project Charter in later phases of the Project Life Cycle.

18. 3. Tactical PlansProject Requests Categories • The Tactical Plan document should also list a Project Request category. • Project Request categories provide the specific business direction so that the PMO could help balance coverage of desired strategic objectives. For example, there was a US regulatory mandate to upgrade all financial systems for Y2K compliance. • It is rare for a Project Request to fit just one category. In such a case, a distinction should be made between primary and secondary categories of that Project Request – ensuring that each stated Project Request should be assigned to one, and only one primary category.

19. 3. Tactical PlansProject Requests Categories • Profit & Loss • Strategic • Infrastructure • Regulatory • Non-discretionary • Discretionary

20. Project Prioritization Template • Once the Tactical Plans are compiled by the PMO, a Project Prioritization template is used by the PMO to enter basic information about the Project Requests. The template may be housed in a PMO repository system. The template may initially contain the following fields. • Project name • Business area • Category • Rank

21. Project Prioritization TemplateSorting • The PMO lists and sorts the Project Requests categories using the template to ensure coverage of the desired strategic direction of the Business Unit and to group Project Requests to help identify possible synergies or overlaps among all Business Area Project Requests. • After the PMO reviews the Tactical Plans, they are submitted to a Governance Board, along with the sorted Project Prioritization document.

22. Governance Board • A Governance Board is an LOB level management committee that is usually composed of a PMO Manager, CIO, CTO, and senior representatives from the Business and Systems Areas. The committee may be headed by the LOB executive. • Business Area representatives may consist of Business Area Managers, Business Analysts, and/or Business Relationship Managers. • System Area representatives may consist of System Area Managers, System Analysts, and/or System Relationship Managers.

23. 4. Screening and RankingScreening considerations • The PMO screens the Project Requests based on the mentioned categories and the high-level business case to ensure relevance of the need to the business strategy. In addition, Project Requests are thoroughly evaluated by the PMO as per the following Project Request considerations: • Screening Considerations • Small project requests with similar characteristics • Large project requests • Time decay • Legal obligations • Strategic focus

24. 4. Screening and RankingScoping priority • After the Project Requests are screened by the PMO based on strategic categories (e.g., P&L, strategic, infrastructure, regulatory), and Project Request conditions (time, decay, legal obligations, etc.), the same are ranked by order of priority to be scoped: • Ranking Scoping Priority • Low • Medium • High

25. 5. Review of Needs & Impact Analysis Scoping • Business Areas need to know the amount of effort required to implement each Project Request in order to complete a Full Financial Business Case so that Project Requests can be approved and prioritized by the Governance Board. • The Systems Area supporting the specific Business Area has the knowledge base needed to determine effort requirements. • Initial Impact Analysis includes work effort estimates and a forecast timeframe when the work could be completed.

26. 5. Review of Needs & Impact AnalysisScoping • Business and Systems Area representatives must work together closely to rationalize the project content that will achieve desirable business results. After the ranked Project Requests are entered into a central planning database or repository as a result of the screening and ranking in Step 4, the Project Requests with high priority rankings are reviewed by a Systems Area Manager, who in turn may assign them to specific Application Managers or stand-by Project Manager for an Initial Impact Analysis (scoping). • The initial estimate, to be completed in about three weeks, will become more accurate during the PLC analysis and design phases if the project is approved for implementation.

27. 5. Review of Needs & Impact AnalysisScoping • Large projects may require a separate scoping approach and a separate implementation effort. For these projects, additional staff may be required to complete the scoping and analysis work, as well as to complete the full project. Usually, a Project Manager is engaged immediately. • The impact analysis may continue by setting preliminary milestone goals and identifying deliverables required for completing each milestone and Project Requests are then rated by the PMO on business impact and achievability criteria using a ranking spreadsheet.

28. Approval and Prioritization • The objective of this meeting is to approve and prioritize the order in which the Systems Areas should initiate projects based on the results of the Impact Analysis and the stated benefits of the Tactical Plans. • The Governance Board approves the projects. The PMO uses a rating spreadsheet for the project selection and approval process. Using a business impact and achievability spreadsheet which provides an overall score, the PMO will have enough information for the Board to determine whether projects should be funded and executed. • Some projects would be re-analyzed to determine better achievability and impact ratings. Some other projects would be recommended for execution and funding.

29. 7. Scheduling • Once the Governance Board has approved and prioritized the projects, the Systems Areas can set a schedule for implementation of those projects. • The Systems Area will now work on project scheduling and the PMO is ready to create/update a Project Portfolio or IT Business Plan for the year. • The objective of this process is to synchronize the plans for implementing projects and system changes with other system events and resource pools and schedules in order to arrive at a manageable timetable to meet the needs of the Business Unit. • The Systems and Business Areas will each assign a Project Manager to develop a detailed Implementation Plan and initiate a formal project according to a standard Project Life Cycle. • Once the organization has made the go/no-go decisions, it is ready to exit out of the Project Selection and Approval phase and move into the next major phase, Project Initiation or Analysis.

30. 0.0 Business Definition 1.0 Initiation 2.0 Analysis 3.0 Design 4.0 Construction 5.0 System /QA Testing 6.0 UAT 7.0 Implementation 8.0 Post Implementation Start of Project Life Cycle (PLC) • Projects are initiated through a standard PLC. • PMI -- INITIATING • Business Definition • Initiation • PMI -- PLANNING • Analysis • Design • PMI -- EXECUTION • Construction • Systems & QA Testing • User Acceptance Testing • Implementation • PMI -- CONTROLLING • Scope verification • Scope change control • Schedule control • Cost control • Quality control • Performance reporting • Risk monitoring and control • Integrated change control • PMI -- CLOSING • Post Implementation • NOTE: The PMI Controlling phase occurs during all the phases of the project life cycle Controlling

31. 0.0 Business Definition 1.0 Initiation 2.0 Analysis 3.0 Design 4.0 Construction 5.0 System /QA Testing 6.0 UAT 7.0 Implementation 8.0 Post Implementation 8. Start of PLC A Systems Development Life Cycle

32. Progress Reports • Progress reports are reviewed monthly or quarterly • Project Status Reports • System Area Business Plan • IT Groups Plans

33. Tactical Plans Revised • Tactical Plans revised quarterly with new or changed business needs.

34. Complete Overview • 1. Business and IT strategies are developed • 2. Strategic plan and annual budget • 3. Each Business Area develops a Tactical plan • 4. Screening and Ranking • 5. Review of needs and impact analysis • 6. Approval and Prioritization • 7. Scheduling • 8. Start of PLC • - PLC starts here and project officially starts • 9. Progress reports • 10. Tactical plans revised

35. Q & A