High Tech Manufacturing
Situation
A $300 million provider of custom hardware, software, and systems to the Semiconductor chipmakers was experiencing difficulty in managing a significant backlog of business in an industry upturn. The symptoms of the situation were: 1) $9m/quarter financial losses; 2) average delay of shipments relative to customer commitment: 38 weeks; 3) On-time shipments compared to customer commitment: 0%; 4) Customer satisfaction scores were very low.

Approach to the Issues
An Assessment was performed by interviewing key stakeholders internal to the company as well as 5 key customers. The results of the interviews were analyzed to provide a baseline score for Project Management Capability. The assessment also provided an analysis of cultural issues that would need to be taken into account in the design of the desired state. Executives were consulted to create specific measurable goals for Project Management Capability improvements. A design for work to be accomplished to take the organization from current state to desired state was prepared addressing the 3 elements or organizational development important to Project Management: People, Process, and Tools.

The Solution
Based on the roadmap for improved PM capability, it was important to understand the plan for improvement in the context of risks, including the cultural issues that needed to be addressed. The implementation plan included a carefully executed internal communications that focused on the benefits of improved PM capability for all involved (for example: the PM's were going to be able to be responsible for project performance because of training and software tools that would allow them to utilize specific new PM skills). The communication campaign also made it clear that improving the Project Management Capabilities of the company was a process that required the support of the entire organization, including the understanding that applying new tools and techniques involves a period of trial, frustration, and even some failures before significant and sustained improvements could be made. The work was begun to enable the desired state taking into account People, Process, and Tools.

People-
The human element of improving Project Management Capability involved 3 main areas of concentration: Structure was addressed by creating a Project Management Office (PMO). This was a new functional organization that provided Project Management services and support to the organization. It included central planning and reporting functions. Many organizations choose not to create a PMO, but in this case, the fact that all company revenues were derived from custom projects made a compelling case for consistency of Project Management process. Knowledge was transferred via targeted training to Executives (2-hour awareness session), Team Members (8 hours), and Project Managers (35 hours) and it was a specific goal of this company to have the PM's achieve Project Management Professional (PMP) Certification. Skills of the PM group were built and strengthened through coaching. There were several occasions where new tools and techniques were taught in class and the first application by the PM's led to questions and concerns. Working with the Teams in the early stages of implementation were crucial in building confidence and patience.

Process
The assessment done in the earliest stage the engagement provided insight and data on the existence of Project Management Process and the extent to which it was followed. PM process work was then prioritized with the assistance of key stakeholders, and processes were written, adjusted per feedback, and utilized by the Teams. This engagement focused on Risk and Scope Management which were determined to be root cases of financial, schedule, and customer satisfaction variances.

Tools
Upon completion of the People and Process work, attention was turned to creating requirements for Project Management Software. This company had 13 Program Managers, 35 active projects ranging in size from 250 to 2,000 tasks. It was determined that software was a requirement to implement and support an organization dedication to changing to a culture driven by data and plans. Earned Value Management (EVM) was a requirement of the software, and the Microsoft Enterprise Project Management (EPM) solution was selected. A successful 90-day pilot (one project) was performed before rolling out to the PMO.

Results
There is no easy fix to the issues described above, but this company managed expectations carefully, concentrated on Scope and Risk Management, and had significant improvements within one year. 1) the company broke even in the 4th quarter of implementation; 2) all customer commitments were re-baselined and shipped 97% on-time to the new commitments; 3) average delays for the late deliveries dropped to 2 weeks; 4) this company regained its position in the Top Ten VLSI industry customer satisfaction survey 4 quarters from the start of implementation; 5) $18 million in late delivery penalties were forgiven by customers due to capability, the culture began the change from reactive to being in control of project performance.