What’s Different Project Management in the Public Sector John Alley, Director PMO, McMaster PSPMF - Sept 2008.

What’s Different

Project Management

in the Public Sector

John Alley, Director PMO, McMaster PSPMF - Sept 2008

Key Learning Points

• key differences for project management in the public sector

• how Project Managers can deal with those differences and succeed on public sector projects

• how a PMO can foster success given these differences

What is the Public Sector?

Public Sector Private Sector

An organization funded (mostly) by the public to provide service for the public.

Gover

nmen

ts (F

eder

al,

Provin

cial, M

unici

pal)

Higher

Edu

catio

n

Health

Car

e

Profit

Seekin

g

Utilitie

s

Charit

ies

Crown

Corpo

ratio

ns

“a degree of unlikeness” Concise Oxford Dictionary, 1990

• difference in kind

• difference in degree

Differences

Differences are important

• differences lead to different actions

• what about PM maturity?

• differences run deeper

What’s Different for Public Sector Projects

Resourcing

What’s Different?

• sources of project financing

Public Sector

Private SectorTaxes, Grants

Earned Revenue,

Capital Markets

More on FinancingPrivate Sector • profit seeking• grow or die• uses capital market• define a hurdle rate• find funds for any

project that benefits the bottom line

Public Sector• provide services the

market can’t• resist growth• rarely use capital

market• what’s a hurdle rate?• select the ‘best’

projects that fit the available funds

What’s Different – Constraints

• resources– fixed pot for all projects– every project will have limited funds

• time– legislated deadlines– political deadlines

• scope– usually starts at the minimum

What’s Different – Constraints

• many projects are triple constrained

• contingency• risks• quality of estimates

Resources – Thrive as a PM

• address the triple constraint:– seek a charter that identifies which one can be

adjusted– focus on risk analysis– make your estimates realistic

• understand the priority of your project among others and the strategic alignment

• know the business benefits and find ways to deliver benefits in stages

Resources – PMO Adds Value

• resist “On time, on scope, on budget”

• adopt a charter format that identifies the priorities among time, scope and resources

• pooled contingencies, risk analysis and stretch objectives

What’s Different for Public Sector Projects

Estimating

What’s Different?

• Size

• Scope of activity (for a given size)

Public Sector

Private Sector

Large Small

Public Sector

Private Sector

Complex Simple

What’s Different - Complexity

City of Hamilton• police• fire• bylaw enforcement• parks• recreation services• garbage collection• sewer services• roads• planning services• … and more

McMaster• 25,000 student school• 3400 bed residence• 18 food outlets• athletic club• parking service• bookstore• library• computer labs• health clinic• print shop • and more ….

What’s Different – Estimating

• many factors lead to low estimates– cost constraint– inexperienced

estimators– resource expertise– business complexity

Estimator

ExperienceResource

Expertise

Achievable

PredictableScope

Clarity

Speed of

Delivery

Cost

Constraints

Estimate

Estimating – Thrive as a PM

• use parametric tools

• get an independent assessment

• build on your history

• allow for costs of change management

Estimating – PMO Adds Value

• post-project reviews better estimates

• build standard estimates for key components– internal approvals– acquisitions– security testing

• build in gates as opportunities for re-estimating

What’s Different for Public Sector Projects

Acquisitions

What’s Different - Acquisitions

Bellamy Inquiry

MFP Leasing

Toronto Tax System

What’s Different – Acquisitions

• purchasing policy

– open and accountable process– accessible to all vendors– issues of interprovincial trade– clear and open selection– get the best value for public funds

What’s Different – Acquisitions

• limited exceptions for sole source– defined criteria– get the best value

• approvals are based on $ limits– defines accountability– limits risk

• the process takes time

Acquisitions – Thrive as a PM• know the rules - the $ limits and the

process for each

• allow sufficient time/cost/effort to follow the process

• maintain meticulous records

• the process protects the PM

Acquisitions – PMO Adds Value

PMO can build in compliance

– build the process into templates

– define standard time/cost/resources for each variation

– provide training on the process for PMs

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different – Strategic Alignment

Strategy

Strategic

Programs

Projects

Top-Down Bubble Up

Private Sector

Public Sector

Strategic alignment – Thrive as a PM

• Emphasize alignment in business case, charter and communications

• Understand competing priorities – slower pace for lower priorities

• break projects into smaller components – fit in as resources permit

– allow for benefits even if terminated early

Strategic alignment – PMO Adds Value

• promote strategic alignment of projects

• document and communicate priorities

• promote smaller projects

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different - Stakeholders

Private Sector Public Sector

Internal Stakeholders

Owners / Shareholders The public Elected Officials as individuals

Board of Directors Board of Directors / Cabinet / Council / Board of Governors / Senate

Finance Committee Finance Committee

Sponsor SponsorTeam members Team members

Management Management

Employees Employees

Internal customers Internal customers

Internal Audit Internal Audit

What’s Different - Stakeholders

Private Sector Public SectorExternal Stakeholders

Customers CustomersExternal Team Members External Team Members

Labour Unions Labour Unions

Suppliers Suppliers

Consultants Consultants

Consumer Groups Consumer Groups

Special Interest Groups Special Interest GroupsTaxpayers Taxpayers

Government Government – other levels/ branches

Financial institutions Financial institutions

Stock analyst/Bond rating service Bond rating service

Stakeholders – Thrive as a PM• Understand the importance of

– taxpayers– other branches and levels of government – special interest groups

• Communication plan to address stakeholders

Stakeholders – PMO Adds Value

• stakeholder analysis templates

• communication plan templates

• peer reviews / steering committee review

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different – Decision Making

ManagementEdict

ConsensusPrivate Sector

Public Sector

Decision-making – Thrive as a PM

• define who makes decisions and how

• make decision points visible

• apply facilitation techniques / creative problem-solving

Decision-making – PMO Adds Value

• develop standards for decision-making

• develop standard oversight structures– Project Selection Board– Steering Committees

• train your sponsors and managers

What’s Different for Public Sector Projects

GovernanceStrategic alignment

Stakeholders

Decision-making

Project Selection

What’s Different – Project Selection

QuantitativeCriteria

Qualitative CriteriaPrivate Sector

Public Sector

What’s Different – Project Selection

• the public sector provides services the market can’t– fire-fighting– roads– courts

• but what about private garbage collection, the 407, private prisons?

• what is the ROI on these services?

What’s Different – Project Selection

• quantitative vs qualitative criteria

• how do we compare services?– eg: fire fighting vs seniors’ recreation

• how do we balance service improvements, cost savings and legislated requirements?

• how do we align with strategy?

What’s Different – Project Selection

• How do we weigh the importance of each criterion?

Strategy

Cost

Savings

Cost

Avoidance

And

many

more …

Security

Service

Capability

Selection

Project selection – Thrive as a PM

• much of this is beyond the scope of a Project Manager

• define metrics that align with selection critieria

• ensure outcomes / benefits are clearly defined

Project Selection – PMO Adds Value

25% strategic fit

25% business case / service improvement

25% capacity, security, adherence to standards, project risk

25% corporate risk reduction

20% strategic fit

20% business case

20% value to external clients

20% sponsor commitment

20% project risk

facilitate consensus on a selection model

2 examples:

Project Selection – PMO Adds Value

• standard project proposal format– strategic fit built in– accountability built in

• standard valuation for– customer service improvement– cost reduction / avoidance– qualitative benefits

What’s Different for Projects?• Resources (Financing) – the triple constraint• Acquisition – policies / time• Estimating – second opinions• Governance

– Strategic alignment – metrics – Stakeholders – templates – Decision-making – define who and how– Project selection – define criteria / qualitative

Key Learning Points

• key differences for project management in the public sector

• how Project Managers can deal with those differences and succeed on public sector projects

• how a PMO can foster success given these differences

Questions?

John Alley, Director PMO, McMaster PSPMF - Sept 2008alleyj@mcmaster.ca