UVK Verlag Tübingen
112 Gesellschaft für Projektmanagement

Project Benchmarking PBM

Roland Ottmann
There are some decisive objectives that come from Project Benchmarking (PBM). On the one hand, to discover and better understand projects, project processes and methods. On the other hand, to find suitable ways to implement the discoveries in a specific project. This means not looking for change, but striving for improvement. PBM is mutual giving and taking and all participants in PBM will benefit, because they think about their project in a very structured and grounded way.
P R O J E K T M A N A G E M E N T 2 / 2 0 0 0 12 Zusammenfassung Mit Projekt Benchmarking (PBM) verfolgt der Projektmanager zwei wichtige Ziele: Zum einen soll sein Projekt, die angewandten Prozesse und Methoden analysiert werden, was zu einem besseren Verstä ndnis des Projekts führt, andererseits müssen gangbare Wege gefunden werden, um die erkannten Verbesserungen in das laufende Projekt zu integrieren. Dies bedeutet nicht die Verä nderung, sondern die Verbesserung zu suchen. PBM ist ein gegenseitiges Geben und Nehmen, bei dem alle Beteiligten profitieren, weil sie in einer tief greifenden und strukturierten Art und Weise ihr Projekt analysieren. Abstract There are some decisive objectives that come from Project Benchmarking (PBM). On the one hand, to discover and better understand projects, project processes and methods. On the other hand, to find suitable ways to implement the discoveries in a specific project. This means not looking for change, but striving for improvement. PBM is mutual giving and taking and all participants in PBM will benefit, because they think about their project in a very structured and grounded way. Keywords Benchmarking, Processes of PBM, Project Benchmarking, Project Excellence, Risks and Factors of Success, Searching for Partners 1. BENCHMARKING (BM) AND PROJECT BENCHMARKING (PBM) 1.1 Benchmarking BM BM is neither an instrument for rationalisation nor for analysis of competitors. It is an instrument for observing and understanding - the basic requirements of learning. Learning from others is essentially different from the classical analysis of competitors and scores. BM means to search for companies which hold a top position in a special segment of the business, and learn how these companies achieve top position today. BM could guarantee lasting processes, a company which foresees trends and high-performing, competitive teams. BM is a structured process of learning from the best. Not “How could this be done better? ” but “How could we better learn from others? ” That is the question here. 1.2 Project Benchmarking PBM PBM is an instrument used both to optimise the processes of a project and the project management by: systematic identification and analysis of the key processes within the project comparison with best practice transfer ideas into a specific project integration of the project team in the process of realisation and taking action. PBM gives us the chance to compare the practices in project management, the project processes and the project results, too. PBM gives us the possibility to use skills and resources better and it pushes the project to the top of the priority list. In addition, we can see the short term results of our success within our daily project work. PBM also supports the creativity of project teams. This is best done if projects from other areas (e.g. investment, innovation or organisation) or from other branches of industry form the basis for the PBM. New ways of thinking inspire visions and can lead to new models of project management. However, it is necessary to have teams which are able to change their viewpoints and make the important transfer. For this, they need to understand the process of systematic learning within the project. PBM helps us to identify new and innovative pro- Project Benchmarking PBM Analysis of best practices in project management R O L A N D O T T M A N N P R O J E K T M A N A G E M E N T 2 / 2 0 0 0 14 cesses and methods of project management and enables continuous improvement. These are motivating aspects for our project team, too. 2. THE PBM PROJECT 2.1 The process of project benchmarking From now on, one of the project manager’s objectives must be to do all they can within their power. This is why project managers have to compare the project with other internal projects and with external projects. Project managers must see that either the project goals or the project timing is correct and of the right quality. 2.1.1 The objectives of the PBM project First, select which project will be project benchmarked. It is necessary to have a clear focus for one project so that good results and learning points can be created. The more ambitious the expectations, the better the results. The implementation of the project has to be improved to guarantee the satisfaction of the parties involved in the project and the projects stakeholders. The results of PBM depend on the different situations of projects and the different expectations of the parties involved and the stakeholders. For example, it may be that an innovative project can have extremely positive influences on project time and cost, yet a final negative effect on the stakeholders. This shows the very important interactions between the project objectives and careful definition of the objectives of the PBM project should take care of this issue. 2.1.2 The building of the PBM team The project manager, a few members of the project team and a project management consultant are the participants in the PBM project. Customer focus is very important in the PBM project. Several meetings should therefore be held with the customer and the top management of the company running the project, to discuss the expectations and the view of the current results. Experienced consultants are very helpful in finding partners, analysing the project, planning the PBM project and giving support in the implementation phase of the project. After defining and investigating the benchmarks, the status quo of the project can be established. Then we have to ask why it is better in some areas and worse in others. Issues of process improvement or implementation of new methods can benefit greatly from the input of a project management consultant. Furthermore, consultants can be very helpful in facilitating PBM workshops and their skill in all these areas will aid the success of the PBM project. It is also helpful to set up a steering committee, to include the customer of the project and the top management, with one representative of top management taking the role of the patron of the PBM project. This is necessary because the defined outcomes of the PBM project could be decisive for the organisation as a whole and generate major changes. 2.1.3 Analysis based on internal and external information Those who know how their project works are able to teach others. Thus, we see the positive effect of PBM because project structures, project processes and project results are internally measured for the first time. Data and knowledge can be gained to: ● support the daily project management ● improve the use of IT ● achieve continuous improvement within the project ● transform the company into a “learning organisation”. This analysis gives us a lot of knowledge about the project which is discussed in the PBM and we can build up a very clear picture of strengths and weaknesses of this project and its capacity to grow. There are many projects in our eco- Fig. 1: The process of project benchmarking 1. Detailed formulation of the PBM objectives 7. Implementation of PBM measures 6. Planning of measures to implement the PBM results 5. Preparation and evaluation of the PBM inquiry 4. Finding of suitable PBM partners 3. Analysis based on internal and external information 2. Building the PBM team 15 nomic world and a lot of project managers fail to understand the wishes of the customer and the demands of the users. That is why project teams often fail to perform. The prioritising of quality parameters of a project (quality, cost and time) is in permanent conflict and depends very much on their interactions. Clear aims, scope and the integration of the customer and user can solve this problem. To analyse the process of project management means defining benchmarks which allow us to see all aspects of measuring time, cost and quality. For example, ask how many employees are involved in the working process or how long the process run is. Precise analysis is a very important step and, without it, the PBM project will not identify weaknesses in the next step. Thus, we fail to improve our project management. The analysis of best practice within the PBM project is focused on methods and concepts and has to be organised in different sections. The assessment model of “project excellence” of the GPM German Association of Project Management is very good for assessing projects. When comparing project processes especially, it is necessary to understand the connections within the specific project. The measurement of the performance of the projects compared, can be done using the following sources: ● Literature, e.g. case studies, project reports, project surveys etc. The presentations of the winner of the German project management awards and prizes can be helpful, too. The GPM publishes the reports of the winning teams who take part in the annual German Project Management Forum. ● Question experts when comparing competitors or ask participants on conferences. ● Internal surveys and process descriptions of PBM partners. Later in the PBM project it is important to assess the project’s own performance and the performance of the PBM partners by using the benchmarks. This assessment has to be done by a team of assessors, because the core idea of the model of “project excellence” is to get consensus about the subjects analysed and the final results. Every project has some parties involved, e.g. stakeholders, customers, team members, investors. Every project has to support the strategic approach of the company, e.g fast growth, stability, liquidity. Every project has management processes, e.g. planning, organising implementing, controlling. These can all give direction and enable us to see the methods and techniques applied to the project. All these points can help to assess a project. Furthermore they are helpful because they provide well-defined terms which connect tasks, problems, skills and experiences. By doing an assessment based on the model of “project excellence” we hold up a mirror to the project. This reflects which ideas, pictures, wishes, expectations and projections the participants of the project want to express. The model of “project excellence” provides standards for questioning and the requirements of the assessment in the dimensions of: ● excellence of the process and scope of project management ● excellence of the results and tracing back of the results to the practices of project management. The model of “project excellence” divides into two main sections (Fig. 2): ● project management ● project results. Within these sections are nine fields of criteria - from objective-setting to achievement of objectives - and 22 fields of proof. The fields of criteria are the features for the strategic orientation of the project and the project work. The shaping of the fields of criteria will be marked on an ordinal scale. These marks show the profile of the project, which can be shown in a spider web diagram (Fig. 3). The process is very simple and it Project objectives max. 140 points Leadership max. 80 points People max. 70 points Resources max. 70 points Processes max. 140 points Customer results max. 180 points People results max. 80 points results of other parties involved max. 60 Points Key performance and project results max. 180 points Project Results max. 500 Points Project Management max. 500 points Fig. 2: The GPM model of project excellence P M - G R U N D S A T Z B E I T R A G P R O J E K T M A N A G E M E N T 2 / 2 0 0 0 16 is feasible to determine the current status of the project. However, it is possible to use the model of “project excellence” as an instrument for project planning and project implementation. If we compare the project with other projects we can identify fields of problems and also we can also find solutions. This means we will improve within the fields of criteria too. The model of “project excellence” enables us to have a clear and representative view of the project. The analysis and assessment is very simple but very meaningful, too. To compare the way of doing the work within the specific project, with the best practice of winners of project management awards, can provide a lot of knowledge. Comparisons like this can bring change and change can be disturbing. However, if this new knowledge can be viewed as a “trigger” to open up an organisation, then change can be enlightening. 2.1.4 How to find suitable PBM partners PBM partners can be found in: ● internal projects ● external projects of competitors within the same area of business ● projects foreign to the specific industry. Basic characteristics can be helpful to identify possible partners which means looking for PBM partners with comparability of the: ● project aspects (project of investment, innovation or organisation) ● industry of the project ● dimension of the project (large or small project). PBM is mutual giving and taking between the PBM partners. However, it is improbable for a weak project team to find a PBM partner because there is nothing to give and nothing to learn for the potential PBM partner. Therefore, before starting an external PBM, get your own house in order! If you start an external PBM, you should compare it with the best practice. It is not necessary to look for the best practice in project management within the same project aspects or the same industry. When you are looking for a PBM partner don’t ask “Who has done the best innovation project in the industry of video cameras? ” but ask “Who has generated the best results with their innovation project? ”. From this you can learn new practices and that means you can achieve new and better procedures. Looking for a PBM partner in this way and you will be successful! To compare projects and project processes opens a wide field of opportunities. To cooperate with the right PBM partner is an important factor of success. But, how useful is it to compare projects within the same industry? To get a drastic improvement it is helpful to learn about different projects but that means project teams must master the art of abstract thinking. The only way to become the “best of the best” is to transfer excellent strategies and methods, without copying the competitors. To select PBM partners means finding the “best in the class”. Without excellent projects for comparison we can’t get the input for internal change and if we allow mediocrity we will certainly endanger the success. Sources for finding PBM partners could be articles in project management journals and recommendations of project management associations e.g. GPM German Association of Project Management Nuremberg or IPMA International Project Management Association. If available, databases can be used, e.g. the office of the German Project Management Award with the GPM or the Associate chair of Project Management at the University of Economics and Business Administration in Vienna. Using your contacts from project management seminars and conferences can also be helpful. Another suitable way is to bring a project management consultant into the PBM team. Clearly, there are a range of interest- • to compare with other projects and identify improvement Project results max. 500 points Project Management max. 500 points Project objectives max. 140 points Leadership max. 80 points People max. 70 points Resources max. 70 points Processes max. 140 points Customer results max. 180 points People results max. 80 points Results of other parties involved max. 60 points Key performance and project results max. 180 points 60 100 140 180 points Fig. 3: The profile of the project shown in the spider web diagram 17 P M - G R U N D S A T Z B E I T R A G ing initiatives to draw upon e.g. the German project management award based on the model of “project excellence”, but we must recognise that the search for suitable PBM partners is very problematic. Firstly, many small and medium sized companies are afraid to enter into a PBM project. Secondly, there are very different aspects of quality within the potential PBM partners. In the best case, the potential PBM partner has an excellent record and statistical analysis. In the worst case, we find PBM partners and they are not able to give a clear view and exact statement of their processes. These PBM partners can have a lot of problems generating estimations of cost and time and agreeing capacity planning and controlling. Once a partner is found, the PBM partner gets an offer from the project manager to work on a common PBM project. Benchmarks are exchanged but care is taken about how much data to give. It should be clear that the willingness for the PBM project to go ahead is a question of sensitivity and it is the decision of the PBM partner which data and benchmarks will be available. In large concerns it will be possible to find some departments which have very good project management and project results. Therefore it will be appropriate to use internal knowledge first and, after improving the project work, search the external environment for a qualified PBM partner. 2.1.5 Preparation and evaluation of the PBM investigation Project managers are in need of benchmarks with future direction to control their project. Benchmarks like this are the basis for measuring short term aspects, like finance expenditure or operative output, and long term aspects like strategic factors of success. The benefits of benchmarks to compare the time needed within the running processes or for internal comparison in questions of controlling are undisputed, because we are able to show changes, e.g. of output, evaluate drop in performance or productivity and give a clear assessment of the status quo. The model of “project excellence” could be the established standard to generate benchmarks for project assessments in the medium term, but nowadays a lot of project teams suffer because they don’t have the necessary benchmarks to compare each other. Often we see that definitions, e.g. specification or the way to break down a project, can have different meanings. Compared projects could be very different and it can create problems if only the benchmarks are considered. It is very important to extract and transfer the potentials of improvement into the specific situation. This is the main success factor for comparing aspects in non-comparable fields. In other words, common sense is worth more than blind trust in numbers! 2.1.6 Planning of measures to implement the PBM results Getting knowledge out of the PBM project which can be brought into the running project immediately is very satisfying. Nevertheless, the results have to be fixed and archived for parallel or future projects. After visiting the PBM partner, the knowledge has to be fixed and put into a suitable format. The project manager has to explain the results of the analysis and the assessment to the project participants and the steering committee. In our fast-moving society we can see the signs of the flood of information. Managers are more and more stressed. The PBM team has to separate important, from interesting, information and data. The recently gained knowledge clearly has to be fixed, but how is this done? Wellmeasured out and organised information is the challenge for the PBM team, not quantity. Sequences of numbers are boring and rarely clarify trends and reasons for drops in performance. Diagrams, however, can show the benchmarks more clearly, e.g. in bar charts or spider web diagrams. In case of not quantifying results it is necessary to give a clear view of comparisons. Project managers have to learn that one picture says more than a thousand words. Before setting objectives it must be clear to the top management, as well to the project management, where the weaknesses lie and where action is needed. The experiences of the PBM partners are very helpful when setting objectives and planning appropriate measures. It is possible that extensive changes, within the project or in the company as a whole, are necessary. That is the reason why the top management has to give support and why a steering committee of the top management members is helpful. An important patron is now the requirement for a successful conclusion of the PBM project. If the faults and their causes can be shown, it is then possible to formulate smart objectives for improve- P R O J E K T M A N A G E M E N T 2 / 2 0 0 0 18 ment. The desired state has to be described by taking the project of the PBM partner as an example. However, we have to be aware of the conditions of our own project, company and industry. Not to copy the PBM but to adapt! The sharing of objectives and measures, in different sections of responsibility and levels of hierarchy, is the next step. That means creating a team for the change process, perhaps the change project, and this has to be done by considering the policy of the company, their strategic approach and their current organisation. And, it goes without saying, we have to include the employees in this as they have to achieve the goals. 2.1.7 Implementation of the results of the PBM It is proved that the PBM projects are never finalized after analysing the strengths and weaknesses of a project and comparison of the project with the “best in class”. The idea of a PBM project is to change and improve the project, and the project management of the organisation. However, there are top managers who only take note of the results of the PBM which is not enough. The only chance to achieve the objectives of PBM is to react to the knowledge. The essential results must be documented and standards set for future projects. There may already be a project or quality management handbook which records management procedures and some could be improved. Maybe the results of the PBM project lead to the creation of a project or quality management handbook. Whatever, there is something to change either procedures or structure or objectives or the strategy. But change is often painful and because of that seldom wished for. 2.2 The pitfalls for the PBM project Here are some points which can lead to the failure of the PBM project. 2.2.1 Weak or wrong partners The analysis of partners and their procedures are helpful to improve performance but that means not increasing performance automatically. An effective PBM project crosses borders and seizes new innovators and the “best in class” of project work. But beware of following the best, it could be wrong! To avoid such a crisis, we have to look for benchmarks which provide objective assessments. Then it is possible for creative project teams to develop a strategy to improve their own project and maybe overtake the best. 2.2.2 Team members of the project There is another enemy of the PBM project and this one is one of us. Maybe we have changed the procedures but our team members revolt because they are not able or not willing to change the way they do business. Perhaps this revolution is promoted by some managers because they blame the team members for previous, less efficient, methods. To overcome this, the people affected by the PBM project have to be involved. If people understand the better methods, they will develop new and creative solutions and they will embrace them with enthusiasm. The PBM project will be successful in part if team members work to reach the status of the best in class. However, they may not outdistance the best. The PBM project helps in a case like this, to improve the project work but never to be the best in doing project work. But, there is always the possibility to find a new excellent method which has never done before to support project work. There is the chance for a PBM team to set off to new shorelines of project management. If the PBM team is self-satisfied, it is unlikely to generate new ideas or even transfer them to the process. To overcome the resistance of team members it is necessary to communicate openly. Every member of the team has to understand why the PBM project shall be done and what the objectives of the PBM project are. This is the basis for involvement. Some techniques, like regular information circles giving a report of the recent results, integration into the PBM team, installation of a steering committee or motivation of passive team members, support the PBM project, develop the process of communication and promote the willingness to change. 2.2.3 Bare comparison of benchmarks Bare comparison of benchmarks is only a tool to locate the status quo, but not a PBM project! It has been shown that a PBM project has to define the position of the competition and analyse the weaknesses by using a few, but meaningful, benchmarks. That means that we have to look at compared processes. This has to be done by visiting the PBM partner. It is possible to define and generate benchmarks but it is also necessary to fix the same relationships and points of measurement. That can help to 19 P M - G R U N D S A T Z B E I T R A G avoid a comparison of “apples with pears”. The PBM project should not lead to a focus on benchmarks, as the single knowledge of benchmarks is worthless. The more interesting point of a PBM project is to understand why a PBM partner is better or worse in some benchmarks. This is an indispensable requirement to improve the project and project management and it provides benefits for project managers, their teams, organisations and their customers. 3. CONCLUSION The customer and the company which hold the project must get the feeling that something is happening. Successful projects are measured by hard facts and results. That means that a PBM project must generate visible quantitative effects like cost cutting, time saving and quality. The factors of success for the PBM project can identified by: ● concentration on the process of one project ● integration of the customer requests ● definition of the project’s position with the competition by using benchmarks ● careful selection of PBM partners ● analysis of weaknesses by using a detailed comparison of processes ● regular use of PBM as an instrument by the project manager within his project ● regular use of PBM as a method by the management representative for project management and therefore continuous improvement of the organisation. Somebody who is in the position to recognise risks is able to overwhelm the combined problems. Somebody who is in the position to locate chances and realise opportunities together with the participants of the project, leads to excellence for these participants. Project managers and representatives for project management should not hesitate to use project benchmarking. PBM is a highly valuable tool for any project. ■ References [1] Boutellier, R./ Baumbach, M./ Schwarz, G.: Benchmarking Arbeitskreise: Erfolgreiche Praktiken statt “Best Practices”. In: Absatzwirtschaft 6/ 97, S. 48-53 [2] Camp, R. C.: Benchmarking. Munich, Vienna 1994 [3] Hammer, M./ Champy, J.: Business Reengineering. Frankfurt/ Main, New York 1994 [4] Hanser, P.: Benchmarking, Von den Besten lernen. In: Absatzwirtschaft, 2/ 96, S. 32-41 [5] Hummel, T./ Malorney, C.: Total Qualit y Management. Munich, Vienna, 1996 [6] Kamiske, G. F./ Brauer, J.-P.: ABC des Qualitätsmanagements. Munich, Vienna 1996 [7] Kaplan, R. S./ Norton, D. P.: Balanced Scorecard. Stuttgart 1997 [8] Karlöf, B./ Östblom, S.: Das Benchmarking Konzept: Wegweiser zur Spitzenleistung in Qualität und Produktivität. Munich 1994 [9] Leibfried, K./ McNair, C.: Benchmarking. Freiburg im Breisgau 1993 [10]Mertins, K./ Kempf, S./ Siebert, G.: Benchmarking: Praxis in deutschen Unternehmen. Berlin 1995 [11] Ottmann, R.: Qualitätsmanagement. In: Projektmanagement-Fachmann. Rationalisierungskuratorium der Deutschen Wirtschaft. 4. Auflage, Eschborn 1998 [12] Schröder, A.: Die Besten im Vergleich. BDU-Depesche 1/ 96, Bonn 1996 [13] Schwarzecker, J./ Spandl, F.: Krisenmanagement mit Kennzahlen. Vienna 1996 [14] Spendolini, M. J.: The Benchmarking Book. New York 1992 [15] Watson, G. H.: Benchmarking - vom Besten lernen. Landsberg/ Lech 1993 Author Roland Ottmann, with examinations in mechanical engineering, economics and project management, has a wide and varied experience of project-based management at both the theoretical and the practical level. He is executive partner of Ottmann & Partner Ltd. - consulting and training for excellence in project management. He gives lectures at several German universities. He is a board member of the GPM German A ssociation for Project Management e. V. He was the initiator of the German Project Management Award, project manager for the model of “project excellence”, the German Project Management Awards 1997-2000, and the International Project Management Award. He is a trainer for the PM award assessors. Address Ottmann & Partner GmbH Management Consulting Bahnhofstraße 9 D -90552 Röthenbach Phone: 0911/ 570 00 04 Fax: 0911/ 570 76 95 E -Mail: Info@Ottmann.de