BP1 - Week 2 - Using Performance Measures

Traditionally, business performance is measured only by financial results, such as return on investment (ROI) or earnings per share (EPS). These measurements however have many drawbacks. For example, your vice-president has informed you that a promotion is possible if revenue is increased by 10%. In order to be promoted, you may extend your working hours, improve customer service or learn new skills. On the other hand, you may use cheaper raw material, cut the outlay of development and research for new product, or lay off employees, any tactic though will likely have negative consequences for the business in the long run. This situation was changed by a new management system – balanced scorecard.

Balanced scorecard is a multi-dimensional measurement tool for organizational performance. It was developed in the early 1990’s by Drs. Robert Kaplan and David Norton. It was called “balanced” because it balances the financial perspective with the learning and growth perspective, the business process perspective and the customer perspective. The steps to applying balanced scorecard is from top to bottom: the leaders set up the strategy while senior- level management identifies scorecard measures for the organization and this flows down to departments and individual employees.

The major benefit of implementing a balanced scorecard is that the business objective is shared through the entire organization from top management to individual employees. Meanwhile, by setting up a target and rewarding the individual(s) who meet the target, this motivates employees to make full use of their energies, abilities and specific knowledge toward achieving objectives. I think this is the most powerful part about balanced scorecard. It can help management accomplish business goals through managing people. After all, people are most important element. Regardless of how powerful the software and equipment are, they are useless without poeple. For expample, in a large manufacture company, there are maybe over 50 or 100 employees working for one department, I wonder how many of them know whether their supervisors are satisfied with their performance, how many of them really think their work matter to the company’s objective, and how many of them receive the guidance from their manager on their personal career development. So the implementation of balanced scorecard will push management communicate timely and effectively with employees, change employees' attitude, improve their performance, and promote good practices. Since the measurements affect employees’ performance and behaviour, management has to be careful when they set up the criteria.

There are other business performance measurement tools including activity based costing (ABC) and Six Sigma. ABC evaluates costs based on business products or services. For example, it allocates manufacture overhead into accounts such as “machine set up”, “running machines”, “inspection” based on the process activities, while traditional cost accounting allocates overhead to cost objects based on product volume. ABC provides more accurate cost management by making those indirect expenses direct. ABC's cost objects are activities and the resources consumed by those activities. The company with high overhead and diverse products will benefit most from ABC. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process from manufacturing to transactional and from product to service. (From “what is six sigma”, http://www.isixsigma.com/sixsigma/six_sigma.asp) The relation between those measurements is that the balanced scorecard concept builds on the idea of ABC while Six Sigma is the product of the balanced scorecard. (From “An Introduction to Balanced Scorecard”, http://www.cio.com/article/123750/ABC_An_Introduction_to_Balanced_Scorecard)

PM1 - Week 2 - The Project Management Office

As the number of projects increase within a business or organization, project management offices (PMO) are set up to help improve the project performance. PMO is a department that gathers technical and management personnel to standardize the process of project management, especially the methodologies for repeatable processes in order to deliver projects on time and within budget. However, a PMO doesn’t manage individual projects directly. Instead, it acts more like a resource centre that keeps all of the essential elements including documentation, guidance, template and metrics for execution of a project and its management across the whole organization. PMO can also be called a project office, program office, program management office or project control centre. “Setting up a project office”, http://www.projectperfect.com.au/info_setup_po.php, Regardless of its name, here are some basic functions a PMO provides:
· Administrative and operational support to projects
· Maintenance of project management standards
· Project consulting and mentoring
· Project management training across the organization
· Provide project managers and project staff
· Portfolio management including capacity planning and risk analysis
“Project Management Office” Sept. 29, 07 http://www.aisc.com/Service/2

We know a PMO helps deliver projects more efficiently but what types of industries or organizations can benefit most from a PMO? I believe those large engineers, construction companies, IT and manufacturing companies, financial and investment companies and governments can benefit most, mostly for two reasons. First, those organizations could carry on multiple projects constantly every year and the benefit received will be bigger than the initial cost for setting up a PMO. As the author of “The Value of PMO” said, “A PMO reflects an overhead investment.” If the organization does not have many projects, to continue with a PMO would be an unnecessary fixed cost. Second, the similarity exists in many different projects at different locations for all those industries and governments. Since a PMO tries to standardize methodologies of repeatable processes, it can ensure all the managers who deal with different projects have the same core skills, standard processes and templates. In the long run, it can save organizations and government money by reducing the time and cost for planning; execution and control; providing better resource management; increasing project successes and; supporting those projects that offer the biggest payback.

After identifying the industries that can benefit most from PMO, you may ask how to measure the success of the implementation of PMO. What performance metric organization can be set up to evaluate this return on investment? The very straightforward one could be the measurement of cost saving, such as what we did in the Management Accounting course: find out the difference by comparing the two alternatives, adding PMO or leaving it out. But this seems too difficult since a PMO doesn't deal with an individual project and it's hard to allocate the cost to a different project. The web article I read “Office Discipline: Why you need a project management office” http://www.cio.com/article/29887/Why_You_Need_a_Project_Management_Office_PMO_/2 provides one quantitative and one qualitative metric: project success rate and customer satisfaction rate. The only problem with these measurements is that it may take a long time to find out this amount since many projects' life cycles may be longer than one year.


If you would like to know more about PMO, check out this website:
Understanding the Project Management Office
http://www.cio.com/article/12263/Understanding_the_Project_Management_Office/5

BP1 - Week 1 - System Integration

Systems integration (SI), a huge and interesting topic! Again, let’s start with the definition. From my understanding, SI is a process to connect different systems used by different departments or functions, making them work together in unity. The purpose of SI is to provide the precise information to the right people in the shortest time thereby permitting the business to react faster to changes within the global environment and remain competitive.

There are two approaches to process SI. First, integrate existing disparate systems. Second, abandon the old systems and implement an enterprise resource planning (ERP) or enterprise system (ES). To choose the right approach really depends on the financial situation and the complication of the business process. For small businesses to integrate an existing system should be a cost-effective way. But for a larger company the problem with integration of disparate systems is that many businesses have spent millions of dollars to improve their current systems but end up with some unsolvable technical problems. To re-engineer an existing system could be more challenging than to install a new one. So I believe ERP is a better solution for mid-size and large companies, especially with the improved flexibility of ERP software. Instead of buying the whole package companies need only to install one or two modules (such as finance or HR) while leaving the others for later.

By undertaking ERP, businesses can benefit from different ways such as integrating customer order information and financial information; reducing inventory; speeding up business processes, etc. However, some costs maybe under estimated while business expects the benefit from ERP, such as training, integration and testing, customization, and data conversion. Also, as ERP focuses on the improvement of the internal business process, employees may have to understand the new set of process, change their old methods of doing their work in order to adapt in with a newly-installed ERP system. Failure to do so may result in a waste of this huge technological investment.



ABC: An Introduction to ERP
http://www.cio.com/article/40323/ABC_An_Introduction_to_ERP/8

PM1 - Week 1 - Do I want a career in Project Management?

Do I want a career in Project Management? Well, probably not, at least not right now. I still feel more comfortable dealing with numbers. Besides, I barely know much about it. So far as I know, project management (PM) is the process to manage a series of project activities by applying your knowledge, skill, techniques and tools in order to accomplish the project targets. But is this definition a little vague? What are those skills and bases of knowledge? What techniques and tools are normally used? Also, having a career in PM, what are the job duties and responsibilities? Are any specific credentials or education required? How are the job opportunities? With all these questions, I searched on http://www.monster.ca/


First of all, I searched under the job title of "project manager" in BC. As a result, there are 37 job postings between July 27 to September 10, 2007. Twenty-seven of them are available in the Vancouver and Lower Mainland area, including three junior positions, 19 intermediate and five senior positions. From the listings, businesses and organizations hire project managers from all different industries and fields. Also job titles differ such as "project coordinator", "IT manager", "product leader", "business analysis manager" and "project manager." Actually, there can be seven types of position for PM based on the duties and responsibilities: project coordinator; project scheduler; assistant project manager; project manager; senior project manager; program manager and; portfolio manager. (From Kathy Schwalbe, "Information Technology Project MGMT", fourth edition.)

In addition, I took a closer look at those jobs. I went through all the postings from junior to senior positions and compared them based on some basic criteria.

Education and experience

As a project manager, besides the professional education and experience related to specific industry, it's required candidates also have the management background and experience. The education requirement varies but basically the more executive a position in a bigger company, the more education and experience are required. At the other end, junior positions often ask for only a college diploma with no experience in management while intermediate and senior position applicants are required to have a Bachelors Degree with 3-10 years experience respectively. A couple of companies require their candidates to have the experience in working with large projects, such as over $30M. One thing that surprised me is that only one employer - TELUS -requires formal PM training while most employers didn't even mention it prefering experience in project management as a higher priority.

Job duties and responsibilities

The work for a project assistant involves project liaison and the preparation of reports, schedules, budgets and related documents. The intermediate position of project manager is the most challenging one as it requires a lot of detailed work from initiation, planning, execution and control to its completion. Project managers need to deal with not only scope, time, resource, cost and quality of the project but also the general management process including human resources, communication with project team member, vendors and project stakeholders and reporting. For senior project managers, the key responsibilities are: plan and control the project; ensure its success; coaching, mentoring and building an effective team; communicate and negotiate with internal project teams and; to build a strong relationships and loyalty with customers.

Skills

Almost all of the employers require strong written and verbal communication skills from their applicants. Moreover, they have to have demonstrated expertise in their professional areas by showing their skills as team leaders, problem solvers and decision makers. Overall, effective communication and well-developed social and inter-personal skills are key factors to become a successful project manager.


The job list:

Project Assistant
Project Coordinator
Project Manager
Senior Project Manager
Business Analysis Managers
Project Engineer
Project Support Specialist