Level 4: Benchmarking Introduction Project management benchmarking is the process of continuously comparing the project management practices of your organization with the practices of leaders anywhere in the world; its goal is to gain information to help you improve your own performance. The information obtained through benchmarking might be used to help you improve your processes and the way in which those processes are executed, or the information might be used to help your company become more competitive in the marketplace. Benchmarking is a continuous effort of analysis and evaluation. Care must be taken in deciding what to benchmark. It is impossible and impractical to evaluate every aspect of project management. It is best to decide on those few critical success factors that must go right for your business to flourish. For project management benchmarking, the critical success factors are usually the key business processes and how they are integrated. If these key success factors do not exist, then the organizations efforts may be hindered. Deciding what information to benchmark against is usually easier than obtaining that information. Locating some information will require a critical search. Some information may be hard to find. Some information you would find helpful might not be available for release because the organization that has it views it as proprietary. Identifying the target companies against which you should benchmark may not be as easy as you believe. Benchmarking has become common since it was first popularized by Xerox during the 1980s. Benchmarking is an essential ingredient for those companies that have won the prestigious Malcolm Baldrige National Quality Award. Most of these award winners seem willing to readily share their project management experiences. Unfortunately, there are some truly excellent companies in project management that have not competed for these awards because they do not want their excellence displayed. They view it as a competitive advantage. Using the Project Management Maturity Model: Strategic Planning for Project Management, Third Edition By Harold Kerzner Copyright 2019 by John Wiley & Sons, Inc. Leve l 4: Ben c hmarking 98 Benchmarking for project management can be accomplished through surveys, questionnaires, attending local chapter meetings of the Project Management Institute (PMI), and attending conferences and symposiums. Personal contacts often provide the most valued sources of information. There is a so-called code of conduct for benchmarking: Keep the benchmarking process legal. Do not violate rules of confidentiality. Sharing information is a two-way street. Be willing to sign a nondisclosure form. Do not share any information received with a third party without written permission. Emphasize guidelines and checklists, but avoid asking for forms that may be highly sensitive. Benchmarking should not be performed unless your organization is willing to make changes. The changes must be part of a structured process that includes evaluation, applicability, and risk management. Benchmarking is part of the strategic planning process for project management that results in an action plan ready for implementation. Characteristics Level 4 is the level where the organization realizes that its existing project management approach can be improved. The complexity rests in figuring out how to achieve that improvement. For project-driven companies, continuous improvement is a means to maintain or improve on a competitive advantage. Continuous improvement is best accomplished through continuous benchmarking. The company must decide whom to benchmark and what to benchmark. Level 4 has certain characteristics, as shown in Figure 8.1: The organization must establish a project management office (PMO) or a center of excellence (COE) for project management. This is the focal position in the company for project management knowledge. The PMO or COE must be dedicated to the project management improvement process along with other activities. This is usually accomplished with full-time, dedicated personnel. Benchmarking must be made against both similar and nonsimilar industries. In todays world, a company with five years of experience in project management could easily surpass the capabilities of a company that has used project management for 20 years or more. The company should perform both quantitative and qualitative benchmarking. Quantitative benchmarking analyzes processes and methodologies, whereas qualitative benchmarking looks at project management applications. T he P roje ct O ffi ce or Center of E x ce ll e n ce 99 The Project Office or Center of Excellence When companies reach Level 4, they are committed to project management across the entire organization. Project management knowledge is now considered as essential for the survival of the firm. To centralize the knowledge regarding project management, organizations have created a project management office (PMO) or a center of excellence (COE) for project management. Major responsibilities for a PMO/COE include: A strategic planning focal point of project management An organization dedicated to benchmarking for project management An organization dedicated to continuous improvements in project management An organization that provides mentorship for inexperienced project managers A centralized data bank of lessons learned, possibly with a best practices library An organization for sharing project management ideas and experiences A hotline for problem-solving that does not automatically inform senior management An organization for creating project management standards and processes A focal point for centralized planning and scheduling activities A focal point for centralized cost control and reporting An organization to assist Human Resources in the creation of a project management career path An organization to assist Human Resources in developing a project management training curriculum Most companies view the PMO and the COE as being two names for the same thing. There are, however, fundamental differences, as shown in Table 8.1. Despite the responsibilities, companies struggle with the organizational reporting location of the PMO/COE. There appears to be agreement that the location should be at the senior levels of management Benchmarking Opportunities Historically, benchmarking has been accomplished using two approaches: competitive benchmarking and process benchmarking. Competitive benchmarking concentrates on deliverables and quantitative critical success factors. Process benchmarking focuses on process performance and functionality. Process benchmarking is most closely aligned to project management. For simplicitys sake, we will consider only process improvement benchmarking. We can break it down into quantitative (i.e., integration) process improvement opportunities and qualitative process improvement opportunities. Figure 8.3 shows the quantitative process improvement opportunities, which center on enhancements due to integration opportunities. The five major areas identified in Figure 8.3 are the five integrated processes described in Level 3 of the project management maturity model (PMMM). Figure 8.4 shows the qualitative process improvement opportunities, which center on applications and further changes to the corporate culture. Included in the qualitative process improvement activities are: Corporate acceptance: This includes getting the entire organization to accept a project management approach. Pockets of project management support tend to hinder rapid acceptance of project management by the rest of the organization. To obtain corporate acceptance, you must: Figure 8.2Simplified PMO organizational chart. Project managers Center of excellence Support staff Tools Project ofce Ben c hmarking O pportunities 101 Increase the usage and support of existing users Attract new internal users, those who have been providing resistance to project management Discourage the unnecessary development of parallel methodologies, which can create further pockets of project management. This is done by showing the added costs of parallelization. Emphasize the present and future benefits to the corporation that will result from using a singular methodology as a starting point to project management maturity. Integrated processes: This is a recognition that the singular methodology can be enhanced further by integrating other existing processes into the singular methodology. Typically, this includes business processes such as capital budgeting, feasibility studies, cost-benefit analyses, and return-on-investment analyses. New processes that could be integrated include supply chain management. Enhanced benchmarking: Everyone tends to benchmark against the best within their own industry, but benchmarking against nonsimilar industries can be just as fruitful. An aerospace company spent over 10 years benchmarking only against other aerospace companies. During the mid-1990s, the firm began benchmarking against non-aerospace firms, and found that these firms had developed outstanding methodologies with capabilities exceeding those of the aerospace firm. Software enhancements: Although off-the-shelf software packages exist, most firms still need some type of customization. This can be done through internal upgrades for customization or by new purchases, with the software vendor developing the customization. There also exist roadblocks to completing Level 4 and reaching Level 5, as shown in Figure 8.5. The singular methodology created in Level 3 was developed internally within the company. Benchmarking may indicate that improvements can be made. The original architects of the singular methodology may resist change with arguments such as, It wasnt invented here, or It does not apply to us. Another form of resistance is the argument that you have benchmarked against the wrong industry. People are inherently fearful of change, and benchmarking opens the door for unexpected results to surface. Sooner or later, everyone realizes that benchmarking is a necessity for company survival. It is at this junction that a serious commitment to benchmarking occurs.The questions in the benchmarking assessments can change if the firm is looking for specific information as part of benchmarking. The number of assessment questions can increase or decrease for quantitative and qualitative benchmarking, in which case the grading would have to be adjusted. Other categories could also be included, such as industry benchmarking or benchmarking against specific companies such as those of a certain size. But the intent with this level and the assessment questions is to make sure the firm at least realizes the importance of benchmarking. As companies mature in project management, benchmarking may change from industry or competitive benchmarking to world-class benchmarking. Level 4 can begin as early as Level 1. If this is done, then the information received can be valuable for Levels 2 and 3, and minimize downstream changes.

Summerize the above in 3 paragraphs with 5 lines each.