THE IMPORTANCE OF ANALYTICS IN MODERN PPM
The need to improve the business management system has always existed. But the complexity and intensity of the processes ensuring the required level of efficiency of the businesses have multiplied only in the last decade. The key to solving the problem was found at the beginning of the 90s in “business engineering.” It allowed to dramatically increase the number of tracked characteristics of the business and see the relationship between them.
The know-how of business engineering was a detailed and formalized description of the elements of business management. This became possible since standards have emerged for describing those parts of management that cannot be quantified (for example, structure and business processes). Merging standards and computer technology provided a real breakthrough. Despite the “triumphant march” of PPM systems adoption and process reorganization, it soon became clear that they have one major drawback—software can do everything you ask, but it cannot help you know what to ask. Hence, the objective need for data analysis in enterprises with a complex management structure, which would give an understanding of “what to ask” of your PPM system.
Modern project analysis uses various types of project analysis:
- Express analysis;
- Project risks;
- Financial and economic.
Each type of analysis has specific evaluation criteria. The multi-criteria approach is used in project analysis in all international methodologies, including the EU Guidelines for Project Evaluation, the GRI (Global Reporting Initiative) standards on sustainable development.
The role of data analytics in projects and portfolios pre-inception
The project parameters, which are vital to success, are:
- Project life cycle
- Project environment
- Business process
- Project life cycle
The life cycle as a project parameter depends on the formulation of the project goal. The goal of the project determines the expected result of the project. When forming a goal (both in project management and strategic management), it is necessary to use SMART principles:
The duration of the life cycle, the cost of the project, and the evaluation of its effectiveness depend on how specifically the goal of the project is formulated. For example, it is impossible to formulate as a project goal the opening of a bank branch in city X. With such a formulation, an event is not defined that corresponds to the achievement of a project goal. A correct formulation is the opening of a branch and the achievement of the number of deposits of the population for $100 million.
The life cycle of a project is understood as a period from the moment the idea of a project is born to the moment the project goal is achieved. Distinguishing the project life cycle and product life cycle is necessary. The product life cycle can be much longer than the project life cycle. The typical duration of project life cycles in different industries varies depending on the industry in which projects are implemented:
- infrastructure projects – 25 years;
- energy projects – 15 years;
- common machine building – 8 years;
- IT & high technology – 4 years.
- Project environment
The project is implemented in a specific external project environment. The external environment is understood as a set of macroeconomic, political, legislative, and natural factors that influence the parameters and characteristics of a project, determine its external risks and the necessary adaptation tools of a project. The system of interaction with stakeholders of the project also applies to environmental factors. Under the internal environment of the project refers to a set of factors that characterize the management system of the company implementing the project and the adopted project management system.
- Business process
The business process of the project initiator with the project during its life cycle includes the following stages (stages) of work:
- Project initiation, development of project documentation, work, and event planning;
- Project analysis and justification of its effectiveness and investment attractiveness, development of a business plan;
- Searching for investors and creditors, forming a group of project stakeholders, choosing a form of project financing;
- Arranging to finance, signing contracts;
- Project implementation;
- Project monitoring, settlements with creditors, investors;
- Achievement of the project goal, completion of the project.
The role of data analytics in projects and portfolios post-creation
Data analytics after the project “has been born” is equally, if not more important, than the “pre-party.” Most PPM software solutions are excellent at capturing project detail. But just capturing data points has “limited” strategic value. Strategic value comes from turning data into reports that inform strategic decisions by illustrating the relationship between all organization’s projects, their effect on resources, and ultimately profitability. To help teams working with project ensure their projects are on time, within budget, and done to specifications. These questions must be answered:
- Where do we stand on the plan vs. actual activities?
- Are we meeting the milestone and deliverable dates?
- Are we exceeding planned budgets?
- What is the overall status and where are the bottlenecks in the project?
Project management professionals live and die by project status reports that track these issues. There is a common thread that ties these reports together. Most projects do not work in a vacuum. Actions taken on one project affect the cost and available resources throughout the company. Singly and together, projects affect organizations’ strategic objectives. A broader view of project management analytics can provide a wealth of information to turn projects into strategic activities that elevate organizations.
From basic status reports based on siloed data to true project analytics
To achieve this effect, you must consolidate and organize data across all projects. Project analytics need the same ground-level data—time sheets, budget records, plans, and schedules. But they need it for all projects in progress. For analytics to have strategic value, executives and project managers need to have the ability to see the workloads and resources assigned to multiple projects.
A consolidated view of that information enables project stakeholders to:
- Assess the viability of projects within a portfolio;
- Decide whether projects are meeting Key Performance Indicators (KPIs); and
- Provide clients access to relevant data for checking on their projects’ progress.
To effectively merge data analytics into project management, companies must be able to mine all the information entered into both unstructured data sources (documents, spreadsheets, and email) and structured sources (such as a project database).
Eliminate “Tunnel Vision” in your organization
PPM systems with a limited list of features make project managers make decisions based on partial information. This is sometimes called “guestimations” or “project tunnel vision.” And it is dangerous. Tunnel vision is more than just a lack of data and limited reporting. The tunnel vision syndrome begins with the people and culture of running projects. Many project management organizations work reactively.
Strategic project management concepts are new to most organizations, and many of them are not prepared to move to a strategic mindset. This shift can only begin by adopting a complete toolkit that provides a complete set of data for evaluating their current state of projects to further develop a plan of action to take projects to the next level. To develop solid performance management and analytics strategy, project management professionals need to ask themselves the following questions:
- How easily accessible are project data? Is data siloed or centralized?
- What are the primary components that need to be assessed across all projects? Is it resource-driven? Is it budget driven?
- What are their organizations’ goals and targets? How will they be measured? Do they have defined KPIs in place?
- What is their risk management strategy? What kind of tools do they have in place to conduct “what if” analysis?
Turning project management into a strategic asset means including analytics in PPM and governance frameworks. A well-thought-out governance framework and a PPM strategy is a crucial step in identifying what metrics and analytics are needed to improve project performance.
A modern PPM solution designed to drive your analytical strive
PPM Express is an SaaS platform that enables an organization with a full portfolio and project visibility by aggregating project-related information across groups, portfolios, and systems. PPM Express connects all projects data – terms, budgets, performance indicators into one wholesome picture. Advanced Customization options make it extremely adaptable to any business landscape or economic environment. PPM Express makes long-term and short-term reporting easier. It is designed specifically to accommodate the need of PMOs and executives in portfolio transparency and flexible.
The dashboard includes portfolio details (viewing and editing), a summary with a “progress bar,” and a Status section with summaries for all current portfolios. Data aggregation makes it possible to obtain data from multiple sources without the need for “manual data transfer.” PPM Express transforms your business processes by giving users valuable insights into the overall performance and valid indicators of changes in budget baseline, schedule changes, performance and development parameters. You can view statuses and progress on all projects and portfolios, update the status on projects, budgets, risks, milestones, and releases. Synchronizing your data on every separate project will give both, the PMOs and executives, an elegant way to track the meeting schedule, budget framework, access to separate specialists in the organization, resource usage in one dashboard.