Project Management Office - Case Study Example

Project Management Office By Student's Name Course + Code Class Institution Date Executive summary The argument presented in this report focuses on the changes made by the Project Management Office, and highlight the divergent attributes linked to the project with respect to Eagle downs Coking Coal project. A holistic view of the project will cover the project's strategic alignment and evaluations tools, among others that will enhance the project management experience. The report will present critical aspects that help improve the approach to the project's benefit realization and management as a whole. In addition, the report addressed the risk management strategies maintained by PMO, project planning and the need for measurement of achievements in project management, a clear portfolio of a company regarding Project management strategies. From this report, it is found that PMO can only last for two years. This is due to lack of organizational support. Additionally, the unskilled project managers make it lack adaptation period between its changes. Lack of proper project maintenance is problematic. As such, it is recommended that proper project alignment should be done in line with project portfolio. Project management models should be designed and kept strategically for future references. More so, PMO culture environment should be maintained to captivate its culture. The report began with the strategic alignment and portfolio management that include governance mechanisms and risk management in chapter one of this report. Chapter two deals with program management aspects and approaches. More so, it has Benefit identification and management followed by evaluation tools and processes in the organization. It is then followed by the role of Project Management Office in portfolio management and then Benefits realization. Chapter three deals with findings and recommendations. Table of Contents Executive summary 2 1.0 Introduction 4 1.1 Background environment of the project 4 1.2 Strategic alignment and portfolio management 5 1.3 Program management 7 2.0 Benefit identification and management 9 2.1 Evaluation tools and process 11 2.2 Role of Project Management Office in Portfolio Management 13 2.3 Benefit Realization 15 3.0 Findings and recommendations 17 References 21 1.0 Introduction This report seeks to highlight the Project Management approach while attuning to PMO strategies in effecting rolling out projects. Evidently, it covers Eagle downs Coking Coal Project in Moranbah, Queensland, Australia. The content of this report will enable the organizational managers to evaluate the step-wise performance of the project. This will link the specific scenarios with PMO approaches such as project management and selection tools, models and specific project performance. The report displays a platform on how PMO has successfully managed different projects, using a case study of Eagle downs coking project. Also covered in this report is strategic alignment and benefit identification and management. Additionally, more recommended methods of improving the efficiency of PMO structured, including proper detection of early warning signs before the project failure. 1.1 Background environment of the project The Eagle downs coking coal project is one of the largest coal projects adopted in Australia. It was an idea of Vale, a great investor in the coal industry, also running Belvedere coal project in the port of Gladstone. The project started in 2017 and is expected to produce 4.5Mt. Of coal during the first ten operational years. Additionally, many economic processes in Australia were halted by increasing electric shortage. Again, there is a shortage of raw materials for steel and iron industries, key pillars of the Australian economy. To curb this, more investment in coal production was needed to increase electric supply and production of raw materials for coal-related industries. The support from the government and international organizations boosted this sector. Equally important was the formulation of Project Management Office, mandated by Vale to manage to ensure smooth management of his project to completion. 1.2 Strategic alignment and portfolio management The process of project selection starts with project identification. Here, several projects are identified by Vale. Included was coal project extraction in Queensland named Eagle downs coal project. Expert-oriented identification was done where CEO, Vale an external project consolatory farm, (Project Management Office) to benchmark the projects against customer's needs, project value, benefits and profits. The project selected was scheduled to start up in 2 months' time. There are several tools that were used in the selection of this project. The tools of evaluation included; Net Present Value (NPV), Benefit Cost Ratio (BCR), Opportunity Cost (OC) and Payback Period (PP) (Bolles et al, 2015, p 8). Net Present Value PMO uses NPV tool to estimate several project performance in different projects life cycles. Here, the Present Value (PV) of the project is equated to projects Future Value (FV), project interest (i) and accounting periods (n) as formulated below. The project with the highest Present Value is selected over the other projects. There was an indication that over a period of 10 years, Eagle Downs Company will be able to produce over 4.5 Mt. of coal. As such, huge profits are realize hence given a priority over the other companies. Benefit Cost Ratio (BCR) This tool is used when comparing the total costs of projects over their benefits. This is reached at by evaluating the total cost of proposed projects in terms of all total cost input and benefits to be realized at a given interest rate as shown below. Projects with high BCR are selected over the others (Bolles et al, 2015, p 8). The Eagle down project had a very high return hence being selected as a priority project by Vale and PMO. Opportunity Cost. This is an alternative foregone in order to enjoy benefits of other projects. Focusing on Vales projects, other projects were foregone to give room for the development of Eagles down coal project. The project was selected due to its high net Present Value and high BCR. More so, the project has a shorter payback period of two years. The profits realized within this short span are massive hence the need of adopting it over the other projects. Governance mechanism. To ensure the effective balance between the project and other business activities, there is the need for proper ongoing governance mechanism. Vale frequently reviewed other projects. This is to ensure that each project is in line with the organizations’ strategies. Frequent meetings are done by PMO in order to identify regular challenges facing the minor and major projects in the organization (do Valle and Soares, 2015). Project reviews are also done by PMO. Moreover, Vale does internal project assessments to captivate effective project management. Projects management is done through feasibility acceptance, proposal assessments, detailed planning and acceptance of different project contracts. This is done to all projects for their success. Risk management is done using NPV tools (Bolles et al, 2015, p 8). Projects with high NPV are considered to be less risky hence invested in. profit estimation tool postulate that companies with high profits, having a short payback period are less risky. As such, these tools were evaluated and ascertain that the less risky project was Eagle downs coal project. Management of change was key in captivating new technological advancement during project selection. PMO in conjunction with Vale adopted the gradual change in management of the projects. This was done through managing one project at a time then immediately followed by an extra project. The project transition was to be done using a proper channel in order to avoid project mix which leads to poor project performance. 1.3 Program management In Eagle downs coal project, work was integrated into sections and each section assigned an individual. As such, division of labor. The workers were sectioned according to their knowledge and skills. This element of the division of labor and specialization cropped up proper interdepartmental production hence the efficiency of work. There are several departments formed to effect this project; there is a department of extraction in the mining cite with a manager in charge. The manager is linked with his counterparts in the packaging, transport and marketing departments. This is a great idea of evading malpractices like poor resource allocation, finance vandalisms and customer mistreatment. From the mining field, coal is transported to various destinations where they are needed and the excess stored for future use. This is effected by proper communication among these managers and workers. The marketing director ensures that all the industries that are in need of the products captivated from this project get them immediately. Notably, all the managers in this program integrate under the control of the PMO entity. This is to ensure that there is a central management that directs all the relevant communication to the CEO, Vale. Project management was constructed as an interdisciplinary concept of leadership with an aim of providing a solution for a temporary problem. Therefore, because of this trait, PMO is able to attain a high innovation degree in the provision of solutions for more complex works (do Valle and Soares, 2015). It is a challenge in project management in huge organizations with a high number of workers. Multi-project mechanism crops difficulties in the projects coordination (do Valle and Soares, 2015). Hence better processes and defined working models should be captivated for effective project management. To solve this, PMO should be implemented for proper project alignment, support and oversight as seen in the international organization. Communication between the management and PMO is key for innovation and inversions of viable projects. Project management helps in keeping PMO models for project management. The models indicate the Autonomous Project Team (APT), Project Support Office (PSO), Project Management Centre of Excellence (PMCOE), Program management Office (PMO) and Chief Project Officer (CPO). The protocol of PMO ensures that the projects are completed successfully and on time. The main advantage to this project in the utilization of PMO to the maxim. This dwell on the fact that PMO members dedicated all their time and expertise for the success of the project. It is trying to innovate a faster way of extracting huge quantities of coal to meet the world market. More so, this entity helps in marketing the coal produced by this company. This is done through the internet. It has formed a website where customers can purchase their coal online hence enhancing online marketing. This is key for reaching a global market. Every worker is also protected from any health effect caused by coal. They are supplied with mining garments to sustain their health. The PMO department ensures that the environment is also protected. Scrubbers are fitted in this-this company to control any form of air pollution from Eagle downs Coal Company. 2.0 Benefit identification and management Before the start of the project, several stakeholders like the government, society and international groups were consulted for advice. Vale, the CEO of this company mandated a PMO entity to assess the benefits of the project. During the planning process, the following project benefits were identified; The project is able to add economic value to Australia. This is done through the provision of raw materials to coal-related industries and a source of electricity. This project will offer employment opportunities to both the locals and international societies. Exported coal will earn the state foreign exchange hence creating a favorable balance of payment. The owner of the project will be able to earn a lot of profits from the sale of coal. The massive profits are equated to 319 Mt. of coal globally. Additionally, there are increased development of infrastructure like road, railway network, and sea and air ports for transportation of coal products globally. Coal deficiency in the market will reduce hence reducing coal prices in the market. This will be captivated by the increased coal supply by this project and many others to be adopted in future. Technological innovation done by different PMO departments in this industry is providing different usage of coal not only in iron and steel industries but also in the provision of energy used and homes and industries. This embraces different markets for this product hence increasing its demand. It is, therefore, paramount for the government and other private institutions to support coal mining industry as Australia is doing. Project management is vital in promoting organization projects and achievements of the benefits. Frequent project assessment enhances proper utilization of resources to be used in project development. More so, project models kept by PMO offers immediate data base to be used in developing various projects by the organization. Planning gives the exact tools, time frame and the cost incurred in a given project. This helps the organization formulate the best mechanisms to accomplish the set projects. Planning helps in maintenance of multi-projects being handled by a given organization. There exist linkages between project benefits. This is exhibited in methodological standards kept for different projects. Similar organizational performance in different project management utilizes same concepts anchored by projects key stakeholders. Achievements are measured in terms of time and the outcomes of the project. In a profit-oriented project, maximum returns are used to gauge the achievements of the project. For such achievements to be captivated the following measures should be put in an account; allocation of resources should be effective, time factor, effective management, and selection of manageable and realistic projects, enough funds to be allocated for the project and qualified labor force. In Eagle down project, achievements were seen at the moment of planning. As per the idea of PMO, running this project, after the first year of operation, there was increased coal production in Australia. Also, many electricity from coal was spread all over the site and many people employed. This made the Australian government support the project by developing a railway network in Queensland for easy coal transportation. 2.1 Evaluation tools and process The evaluation process included the project check-ups stepwise up to its completion. This is done by the project manager on a weekly basis and send the feedback to the company managers. This process is essential as the project management office becomes aware of the tools to be supplied at a given stage of development (Salameh, H. 2014). Furthermore, the project manager can assess the proceeding of the project hence able to detect the exact resources needed and the time to be taken to complete the project. The project manager then devises a means of improving the appearance of the project whenever a need arises. Stepwise check-up of the project is aligned with the best practices including, employees questioning and directives to keep the project on track.at the evaluation stage, the project review is done to identify the strength and weaknesses of a given project. At the completion of the project, post project review is done, which has the following relevance: -To assess the procedural functioning of the project. After setting up the project, project review is done on a monthly basis to ensure that it is a continuous operation. The output generated by the project should merge with the stipulated. If this is not the case, there is the need for frequent assessment of the project to detect the mess (Heagney, J., 2016). -The post project review also helps in detection of strength and weaknesses of the project. The strength is seen where there exist a continued returns from the project. Weaknesses are formulated from the continued losses brought by the project. This captivates better decision-making strategies to remedy the situation. -Post project review also ensures that the project is well maintained. This is done through frequent repair of the project to smooth running. If the project is merchandised, there is the need for installation of modern machines for the project (Salameh, H. 2014). -Investigations on whether all the resources were utilized in the project can be done using post project review. This is where the managers and the stakeholders formulate projects auditing books to know where the project developed is worth the inputs used. -Post project review enhances documentation of the projects done by a given company. This ensures that proper company records are kept for calculation of company's total assets and capital which can be used during auditing. -It enhances follow-up activities which analyze the procedures used in the development of a given project. This information is paramount to be used as a reference in case of future development of a similar project. -Frequent project evaluation gives a chance for inventions and innovations. This, in turn, capitulates the adaptability of the project in future trends and emerging issues. In communication systems, all the projects in this department should be flexible enough to meet the future IT system hence the need for frequent reassessment. To substantiate all these, it is key for an organization to formulate the best evaluation methods by PMO. Follow-up activities should be done in all the projects developed and kept in the company's books of records (Salameh, H. 2014). 2.2 Role of Project Management Office in Portfolio Management PMO plays various roles that are key for the development of a given company. These roles are the ones that give the general portfolio of the company (Dictionary.com. 2017). The company solely depends on this entity for their projects. These roles include: Reporting the project status to the upper management. This role is paramount as the top management of the company gets a clear view of what is happening on the ground. It also creates an awareness of the resources used to maintain the projected and the anticipated period of the project completion. More so, the upper management understands the project better. By so doing, the investors increases confidence in the group and the project at hand. Progress reports ensure that corrections are being made and that progress is being monitored. Developing the worker competency PMO ensures that the skills being offered by the workers are of a high quality to our clients. This is done through workers training, workshops, and seminars in different places of work. This captivates integrity, innovation, and inventions among workers hence changing organizational phase. Additionally, specific programs are organized for managers to improve their skills for the realization of desirable outcomes (Salameh, H. 2014). The workers as well should be flexible enough to adopt new skills being formulated in them to increase their labor productivity. Implementing the methodologies used in project development PMO entity is mandated by the company to come up with the best method to be used in developing a given project. Project methodology involves activities such as investment patterns. Organizational orientation and implementation strategies, all who work in an integrated manner to realize the set objectives from the project. Information system to be used is implemented together with all the tools needed in the developmental process. The project scoreboard development is maintained by this entity. This is essential because methodology defines the direction that projects can take. Effective project methodology begets successful project implementation. It monitors and control development projects One of the primary functions of PMO in an organization is to plan and develop projects that are geared towards effective operation of the organization through a generation of profits. As such, this entity will ensure that projects are adopted and implemented as discussed in forums and meetings (Dictionary.com. 2017). Considerably, monitoring a project to success is a complex activity that requires all kinds of investments from the stakeholders. It will be futile to run a project without incorporating specifics such as Project management skills and knowledge. PMO will, therefore, serve to ensure that such projects are implemented to success. Enhancing workers specialization. Through the long-time experience, the workers exhibit desirable efforts in performing duties without a need for additional tools. As to that, they maintain the high degree of skill leading to surplus output in their specified project area (Dictionary.com. 2017). This makes the organization increase in revenue income and lowering maintenance cost realizing high-profit margin. Therefore, the PMO should adopt the division of labor and specialization mechanism to effect its working techniques. This will lower labor cost, increase productivity and returns in the long run. 2.3 Benefit Realization This project was beneficial to the government, the society and the owner. To the government, the element of unemployment among the youth reduced drastically. This is as a result of increased job opportunities in the coal mining site. Other coal-related industries like the steel and iron industries increased offering employment opportunities. The unemployment rate reduced at the rate of 1.85 annually. The government also obtained revenue from the project through taxation and earning of export duty from the industry. The revenue is used in developmental projects like construction of transport and communication networks in Australia. In communication companies, managers were interviewed on the achievements made by the PMO (Varajãoet al 2017). Tentatively, the employees were questions and expressed the feelings on the benefits accrued from this entity. This achievement was reached through a division of labor and specialization. This is where work in a given project is segmented into units, and each unit assigned an individual. The individuals in the segments become specialized hence using less effort and time in finalizing their work. Moreover, the use of machines has made work effective and efficient. Data gave out that 75% of the projects were able to use machinery in their operation. There is increased inventions and innovations. This is achieved through sharing of ideas by the project managers and employees. Consultations are done categorically to ensure that a more innovative project is formulated. The employees argued that over the last five years, innovation in Australia increased steadily as shown below. Year 2012 2013 2014 2015 2016 %ge increment 3% 3% 4% 6% 8% They said that in 2016, many companied were able to adopt PMO entities which drastically increased the level of innovation (Dictionary.com. 2017). PMO is beneficial as is ensures proper allocation of project resources. Achievement of this is seen where limited resources are used to come up with a huge project over a short span. Project managers ensure that the resources available will meet the project requirement to completion. Due to proper utilization of the available resources, the returns are greatly increased. A profit of more than US $20 billion can be realized annually in a single project (Monteiro et al. 2016). Many companies including Eagle downs company benefit from development loans and grants from donors, World Bank, IMF and other trade unions to finance their projects. They don't fear any element of project failure as the PMO is effective and steadfast. This has reduced the companies the burden of financial constraints in project development (Dictionary.com. 2017). Internal borrowing is also allowed to increase the company's financial base. Despite the many benefits accrued, there are also several limitations obtained from the project. The company experienced bad debts from global financial institutions in financing this projects. However, some of the loans can be written off with time in case the project is successful in its operation. Limited resources also reduce the chances of completion of other projects. This was due to handle many projects at once. As such, some project became stale hence the waste of finance and resources. 3.0 Findings and recommendations Findings It is evidenced that PMO can only last for two years. Their short lifespan is due to lack of organizational support. This is because of their overambitious plans and imposition of abrupt changes which are not embraced by other workers. Project management is A management practice that is innovative, inclined to achieve specified or stated goals within a given budget limits and time, through maximum utilization of resources, is what is referred to as project management (do Valle and Soares, 2015). Project Management Institute defines a project as an impermanent activity aimed at creating a distinct service and product. Whereas, project management is an art of organizing endeavors with an aim of reaching the expectations of stakeholders. As mentioned earlier, a dynamic market environment has called for innovative organizational ways that are up-to-date (do Valle and Soares, 2015). Organizations are undertaking highly complex projects as they grow in scope and size. Nonetheless, organizations have not been able to make same development in their practices of project management (do Valle and Soares, 2015). This can have an effect of increasing the rate of project failures in an organization. However, to overcome this, many organizations have responded by implementing a Project Management Office entity. In big organizations with a high number of workers, it can be challenging to attain same processes and obtain excellent results from all undertaken projects. Since numerous projects are implemented simultaneously it can be difficult to stay in control over the big companies' project portfolio, strategy and project coordination (do Valle and Soares, 2015). The findings are drafted in the figure below showing strength and weaknesses Fig: 1. (Getahun, 2017). Recommendations 1. Project alignment. The entire lessons studied must be reviewed. Project prioritisation was done and strategically aligned with corporate plans (Getahun, 2017). This entity should be working in line with the company's project portfolio. This yields necessary output needed by the company hence generating the targeted profits from the project. 2. Creating an environment that supports PMO culture. Evidenced from the case study in Queensland, workers played a major role in PMO activities which kept the PMO entity active (Getahun, 2017). 3. Strategic and practical implementation of project management. This is key in the case study of PMO functions (Getahun, 2017). Furthermore, must be a Project Management models designed by a given company. This is the genesis of PMO entity in that company. 3. Formulation of strategic project management system for the success and the value of PMO (Getahun, 2017). The case study in AB and Rio Tinto Alcan and Sony Mobile Communications displayed a successful PMO system for strategic management References Bolles, D. and Hubbard, D. (2015). PMO Framework and PMO Models for Project Business Management. 1st ed. [ebook] pp.4-8. Available at: http://wmpmi.org/downloads/pmo_framework_and_pmo_models_for_project_business_management.pdf [Accessed 15 Mar. 2017]. Dictionary.com. (2017). The definition of theory. [Online] Available at: http://www.dictionary.com/browse/theory [Accessed 15 Mar. 2017]. Do Valle, J. and Soares, C. (2015). Effective Implementation of the Project Management Office -PMO- in Organizations. 1st ed. [ebook] Rio de Janeiro, Brazil, pp.3-11. Available at: http://www.icoste.org/wp-content/uploads/2012/09/124_FINAL-PAPER-ICEC-2014.pdf [Accessed 15 Mar. 2017]. Getahun, E. (2017). 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