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 SectorPrivate Sector An organization funded (mostly) by the public to provide service for the public. Governments (Federal, Provincial, Municipal) Higher Education Health Care Profit Seeking Utilities Charities Crown Corporations

“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 Sector Taxes, Grants Earned Revenue, Capital Markets

More on Financing Private 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 LargeSmall Public Sector Private Sector ComplexSimple

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 Estimate Estimator Experience Resource Expertise AchievablePredictable Scope Clarity Speed of Delivery Cost Constraints

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 Governance Strategic alignment Stakeholders Decision-making Project Selection

What’s Different for Public Sector Projects Governance Strategic 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 Governance Strategic alignment Stakeholders Decision-making Project Selection

What’s Different - Stakeholders Private SectorPublic 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 Sponsor Team members Management Employees Internal customers Internal Audit

What’s Different - Stakeholders Private SectorPublic Sector External Stakeholders Customers External Team Members Labour Unions Suppliers Consultants Consumer Groups Special Interest Groups Taxpayers Government Government – other levels/ branches 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 Governance Strategic alignment Stakeholders Decision-making Project Selection

What’s Different – Decision Making Management Edict Consensus Private 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 Governance Strategic alignment Stakeholders Decision-making Project Selection

What’s Different – Project Selection Quantitative Criteria Qualitative Criteria Private 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? Selection Strategy Cost Savings Cost Avoidance And many more … SecurityServiceCapability

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 2008