Archive for category Business Process Management

For more details about project governance, see Rise of the Project Workforce.

Project and workforce governance roadmaps should be designed to address the potential threats associated with:

• Cost and Revenue Accounting
• Portfolio and Project Processes
• Corporate Governance

This chapter identifies enterprise-wide threats and uses a symptom – cause – solution format to highlight steps executives need to take to effectively manage risk and reduce the likelihood that any of these threats may damage their business.

Cost Accounting

Related to cost accounting, we identify project governance issues in the areas of budgeting, chargebacks, timesheet management, travel and entertainment expense management, revenue recognition, and capitalizing costs.

The symptoms of cost accounting governance issues include: projects that are over budget, late, or failing; inability of project managers to plan projects effectively, or track costs accurately so that internal departments can be charged or external departments can be billed; inability of managers and executives to get timely, actionable reports; the inability of finance to determine recognized revenue and costs that should be capitalized and not expensed.

The threats of not dealing with these issues include not only failed projects, but the general inability to execute on corporate strategy, because important financial data is not available to project managers and executives. Moreover, under these conditions the finance department will have difficulty performing in nearly every way; lack of accurate data can easily lead to erroneous forecasts, inefficient invoicing, late payrolls, tax problems, and incorrect—and illegal—financial reports.

The causes of these problems are generally the inability to collect and manage accurate data from the many areas of the company. In some cases, the corporate culture does not support basic data gathering functions such as the tracking of time and expenses, measurable project status, and billable project milestones. Usually, the company lacks the processes and tools to collect this data, or has various processes and tools in separate departments.

The solutions to the problems, in all cases, require company leadership to implement top-down processes that allow accurate data collection and management, and real-time reporting.

Portfolio and Project Processes

Here we describe the processes of managing a company’s portfolio of projects, under the categories of: templates, methodologies, and best practices; status, health, and milestones; initiation and approval; risk management; issue management; change control; and pipeline analysis.

The symptoms of problems include: frequent change in project status, and surprising delays and budget overruns; Competition between projects and departments for project resources; inability to manage project risks and changes; lack of responsiveness to issues that arise.

The threats of these problems are: management lacks an enterprise-wide view of all of the company’s current and proposed projects, and therefore has no ability to allocate and manage resources or prioritize the company’s activities strategically.

The cause of these problems is typically that project management is not recognized as a necessary and critical business function. Therefore, no formal processes or tools are in place to approve new projects, manage resources and work-in-progress, or control risks, issues, and changes.

The solutions begin with establishing a central project management office (PMO) to define and enforce project management standards and best practices, and provide the right tools to promote enterprise-wide project management. These standards include project initiation methodologies, processes for tracking project status and milestones, policies for proposing and approving projects, workflows for risk management, and policies for managing issues and proposed changes.

Corporate Governance

This section addresses Sarbanes-Oxley sections 404 and 409 (internal controls and rapid reporting), and 802 (destruction and falsification of records), in addition to labor laws, accounting regulations, and risk management standards for financial institutions.

The symptoms of problems largely center around audits: the company has difficulty providing all the information demanded by an audit; too much time is spent preparing for audits and avoiding legal liability instead of running the business.

The overall threat of lack of compliance is to fail an audit or face legal charges.

A frequent cause of governance issues is manual record-keeping, based on separate spreadsheets, documents, emails, memos, reports, invoices, and so forth. Important information is easily lost or destroyed.

The solution requires companies to centralize and automate its record-keeping, and implement workflows that establish approvals and accountability.

For more details about the project/service delivery life cycle, see Rise of the Project Workforce.

Agile organizations maximize internal efficiency by investing only in high-performing and strategic initiatives. However, silo thinking often prevents organizations from having the visibility, across departments, to implement imperative initiatives such as project selection, ROI analysis, risk mitigation, and continuous business process improvements.

Understanding the project/service delivery life cycle helps organizations to break down these silos and build a shared long-term vision for managing people and projects across the organization in today’s dynamic world. The project/service delivery life cycle consists of these five steps:

1. Initiate. First, managers define the objectives and scope of the work to be performed.
2. Plan. Plan the work, the resources to deliver it, and the milestones to track progress.
3. Track. Review time, expenses, and budgets for each milestone; account for costs and revenue by group, project and task; proactively handle requests, risks, and issues.
4. Charge. Create accurate and timely chargebacks or invoices; integrate data with billing, finance, accounting, HR, CRM and other core information systems.
5. Analyze. Through executive dashboards and reports, present high-level metrics that assist with project tracking, compliance, process improvement, and decision making.

Project Workforce Management allows organizations to automate this life cycle, and break down departmental barriers throughout the cycle. It offers direct benefits to the various communities both inside and outside the enterprise, by addressing their specific needs and challenges.

Account Executives: Enables them to check the status of their customers’ projects at every phase, and look for new business opportunities that they can turn into new projects.

Customers: By tracking both external customers and internal ones (as interdepartmental chargebacks), the company gains considerable insight into enterprise-wide execution and utilization metrics.

• External Customers: Provide them with online billing and invoicing, and issue reporting and resolution.
• Internal Customers: Provide them with business intelligence and reports on chargebacks, progress, and project status.

General Administrative Staff: Relieve them from repetitive manual labor with automated workflows for time and expense entry, purchasing, and support for project and resource management.

Project/Service Delivery Teams: For the resources assigned to projects, automate time and expense and project status reporting, with support for input via web browsers and PDAs. Automation is especially beneficial when resources are assigned to multiple projects and tasks at one time.

Finance Team:

• Accounts Receivable (Billing): Automate billing to external customers according to approved project milestones and billable work completed.
• Accounts Payable: Automate the workflows of matching invoices to purchase orders and charging billable expenses.
• Payroll: Automate the workflows associated with employee timesheets and applying pay rules such as exempt/non-exempt status and overtime.

Project Managers: Provide a platform for creation of work breakdown structures and overall management of project delivery teams; track time, expenses, issues, change requests, and purchases. Gain visibility into the project pipeline.

Resource Managers: Provide a platform for fine-tuning the organization’s capacity in response to demand, with project calendars and plans, skills repository, resource request workflows, and skill matching.

IT Department: As a large and highly visible cost center, IT benefits by managing and controlling project costs and justifying spending.

Product Development Teams: By treating product development as a project, the organization can track effort and expenses for informed cost-benefit analysis.

C-Level Executives: From the various data collected across the organization, generate accurate reports and dashboards showing trends, financial indicators, customer satisfaction, project pipeline, billing, revenue, cash flow, overhead, and margins. Reports and real-time information executives can rely on.