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PArt FOUr

Governance in Your Project-Based nonprofit

White, Karen R.J.. Practical Project Management for Agile Nonprofits : Approaches and Templates to Help You Manage with Limited Resources, Maven House, 2013. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/harrisburg-ebooks/detail.action?docID=2128325. Created from harrisburg-ebooks on 2020-11-16 07:30:55.

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Now that we’ve discussed what project management is, how to apply it to your organization’s efforts, and how to man-age your project volunteers, it’s time to talk about the role that the leadership of your organization plays in ensuring the suc- cessful management of its projects.

The Project Management Office Many organizations, especially larger ones, have found the estab- lishment of a formal project management office (PMO) to be of value. Research has shown that organizations with PMOs report significantly more projects coming in on time and on budget and meeting intended goals, improvements in productivity, and in- creased cost savings compared to those without a PMO (PM So- lutions Research, 2012; Project Management Institute, 2011; For- rester Research, 2011; ESI International, 2011).

Just as there are different forms of organizations, there are sev- eral forms of PMOs. The PMO can be part of the organization’s strategy-setting team, identifying projects aligned with the organi- zation’s strategies. The PMO can be a support function, supporting

Project Management office Functions

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project managers with processes, tools, and training. The PMO can also be a line unit, providing project managers for specific projects. Or it can be a business unit that provides all of the above.

In his PMI award-winning book, The Strategic Project Office: A Guide to Improving Organizational Performance, Kent Crawford identifies six primary PMO functions: processes/standards/meth- odologies, project management software tools, project managers, consulting/mentoring, project support, and training (see Figure 13.1). It’s important to note that for project management to be suc- cessful you need to address each of these functions to some degree, whether you have a PMO or not, and even if you’re an agile non- profit. The maintenance of repeatable practices and effective tools and support, as well as the leadership of experienced managers, all contribute to the success of your organization’s projects.

The PMO in Your Agile nonprofit Your agile nonprofit needs to consider the risks it faces with its projects and identify the PMO functions most critical to success. In most nonprofits those functions will include the establishment of basic common practices, standardized project and portfolio reporting, integrated volunteer engagement and oversight, and mentoring and training. And while it might be nice to have a cen- tralized PMO to oversee these functions, the reality is that many nonprofits cannot carry the associated overhead. Rather, these functions will be integrated into the job responsibilities of existing staff, primarily the chief development officer or operations man- ager, plus the human resource manager and the volunteer manager (if there is one).

In addition to implementing the practices described in Part Two of this book, you’ll want to establish just enough project man- agement practices to minimize the overhead of reporting project status and maintaining the project portfolio. Some best practices to be considered include:

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 All status reports are placed in a central repository on the same day in the same format.

 All status reports are easily accessed by any project stakeholder.

 A project portfolio calendar/spreadsheet is updated at the same time each month.

By establishing consistent reporting in a manner that provides consistent information to all stakeholders you will minimize the thrashing around that frequently occurs as stakeholders query

Figure 13.1. Project management office functions.

PROJECT MANAGEMENT OFFICE FUNCTIONS

Function Description

Processes/ Standards/ Methodologies

Project management methodology maintenance and support, standard reporting and controls, lessons learned, project governance/portfolio management, project management “community of practice”

Project Management Software Tools

Deployment of enterprise project tracking tools, templates and repositories, help desk, establishment of common “project language” (i.e., common chart of accounts, common coding conventions)

Project Managers Supplemental expert project managers

Consulting/ Mentoring

Assistance with methodology application, knowledge sharing, assistance to “troubled projects,” project assessments and audits

Project Support Project controls expertise, project initiation/planning expertise, project tracking and reporting, project management tools assistance

Training Project management training, methodology training, establishing a career development program

PROJECT MANAGEMENT OFFICE FUNCTIONS

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different sources for project information. Adapting the use of a portfolio wall is one such easy solution, as long as the information currency is maintained.

The Portfolio Wall A portfolio wall is a centralized location within the work area where current project status information for all active projects is portrayed. In addition, all future projects are identified with a de- scription of their objectives, their anticipated start date, and the name of their sponsor or owner. The use of a portfolio wall en- ables project team members to not only review the current status of their own project but also understand where it fits into the orga- nization’s overall priorities. It also enables project managers — be they volunteers or staff members — to know what other projects are underway, thereby enabling collaboration and communication across projects. For instance, one project manager might notice another project’s next major activity is a mailing at the same time as his or her project’s mailing. Combining the mailings might be a means of saving costs.

Integrated Volunteer engagement Many nonprofits have a manager responsible for all volunteer en- gagement. If there’s no such position in your organization, then the specific responsibilities associated with that role should be as- signed to a member of the operations management staff so that your organization stays engaged with volunteers between assign- ments. The volunteer manager should work with the organization’s managers to establish a uniform volunteer recognition program and to ensure that your organization’s volunteer policies are in alignment with local and federal labor laws. This manager assists with the recruiting of your volunteers and works with your project managers on volunteer assignments based on the volunteers’ skills and interests.

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training and Mentoring An important function typically associated with a PMO is the development of leadership and project management skills within the organization. Within the nonprofit organization this means providing training and mentoring not only to staff members but also to volunteers performing the role of project manager. Formal classroom training, on-site workshops, and professional associa- tion memberships are ways in which technical project manage- ment training can be obtained.

People frequently learn new skills and adopt new practices, however, only to lapse into old behaviors and approaches when the application of the new is “too hard” or when time pressures are introduced. It’s during those times that an active mentor can reinforce the new, encouraging their protégé to continue to ap- ply the new skills and practices. A mentor is defined as someone who is “a wise or trusted counselor or teacher.” Project manage- ment mentors provide support by imparting to their protégés the wisdom they’ve gained through experience and continued learning. Your organization, therefore, should establish a formal mentoring program for its project managers, to reinforce class- room training and to aid in their further development, either to become more senior staff members or, in the case of volunteers, potential board members.

Summary For-profit organizations have recognized the benefit of the func- tions typically found within a project management office and have made PMOs a core management structure in their organizations. While it’s not necessary for your nonprofit to establish a formal PMO, the performance of the key functions of that office, espe- cially those related to the oversight and development of project management capabilities, will enhance the overall performance of your organization.

PROJECT MANAGEMENT OFFICE FUNCTIONS

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Can nonprofits continue to operate the same way they’ve op-erated in the past, given the ever-increasing demands be-ing placed on them? Should they take a more business-like approach? In other words, should effective portfolio management be a best practice for nonprofit organizations? If so, then what are the changes needed in nonprofit organizational behavior — at the organization level, the director level, the management level, and the volunteer level? What education is required? How is this facilitated?

In previous chapters I stated that leaders of nonprofit orga- nizations find themselves being asked to do more with less and to be agile in making decisions. Applying the discipline of proj- ect portfolio management enables the chief development officer to be responsive to these demands in a calm and effective man- ner. The project portfolio will advise the chief development officer which staff members or volunteers are working on what, which ones are available for assignment, and what other projects would be impacted should a staff member or volunteer be assigned to a project or re-assigned to a different project. A well-maintained project portfolio will enable your organization to be positioned to deal with the unexpected.

Leveraging Your Project Portfolio

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Similar to a financial portfolio, a project portfolio is a list of the investments your organization is making in project-based work. A fully-functional portfolio communicates the priorities, returns on investment, and budgets for the projects your organization is undertaking to achieve its strategic and operational objectives.

Project portfolio management (PPM) is defined as the contin- uous process of identifying, selecting, and managing a portfolio of projects in alignment with key performance metrics and strategic business objectives. It’s about “doing the right things right.”

Project Portfolio Management and Strategic Planning

Effectively managing your project portfolio requires clear, consis- tent, and constant communications as well as complete integration of all the organization’s business plans and budgets. When devel- oping your nonprofit’s strategic plan, your executive team needs to consider what it takes to actually run the organization — that is, what it takes to perform the day-to-day operations associated with your organization’s mission. Each manager should be asked to determine the tasks performed by each position and to rank those tasks relative to their contribution to the overall mission. Tasks that have little impact on the mission should be challenged; per- haps those are tasks that should no longer be performed by staff; perhaps they should be performed by volunteers or not performed at all.

Upon completion of this analysis, the executive team, the man- agers, and the board will understand what resources are required to sustain the organization. This requirement should be reflected in the organization’s overall plans and those resources blocked off (considered unavailable for use) when planning your strategies. The remaining resources can then be allocated to strategic initia- tives — to be managed through the application of project manage- ment practices.

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One challenge faced by nonprofit organizations is staying fo- cused. Volunteers, donors, and other stakeholders will come for- ward with suggestions for projects, some aligned with the organi- zation’s mission, some not aligned. It’s imperative that your board and chief development officer acquire the skills needed to assess and address these suggestions. They need to have the ability to keep an open mind when being pitched an idea, to understand if there’s merit in the idea, and the ability to gently let the idea-owner know if the idea doesn’t align with current plans. Sometimes, however, a suggested project is one that merits placement into the organiza- tion’s portfolio. That means that the suggested project is more stra- tegic than another project in the portfolio, and that other project is then not undertaken. The ability to inform the project sponsor and stakeholders of its suspension, or to tell a donor that their project is not aligned with the organization’s strategy, requires great com- munication skills. You want to be able to explain, potentially in detail, why the project is not going to proceed. This means being able to express the decision in terms of the organization’s current strategic objectives or current resources and capabilities, without attacking the project itself or giving false expectations that it might be entertained in the future.

Your Portfolio and Staff Each year, as part of your organization’s budget cycle, your execu- tive team reviews and updates your organization’s strategic objec- tives for the upcoming year. They also determine how much fund- ing should be available for day-to-day operations. These decisions determine how staff time should be allocated.

When translating the strategic objectives into a cohesive fund- raising program, for example, a manager should consider these allocations. Suppose your executive team has determined that ac- quiring new cardiac equipment is the number one objective for your healthcare system; then your development office should en-

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sure that the fundraising projects (appeals, special events, etc.) in support of this endeavor are adequately staffed and resourced. Throughout the year, as work assignments are reviewed and made, it should be kept in mind which staff are be available to work on which projects. A documented project portfolio enables the man- ager to do this. Your project portfolio clearly identifies each ac- tivity associated with the cardiac equipment acquisition and the people assigned to work on those activities. This visibility allows the manager to know that those people are working on the organi- zation’s most strategic objective.

How Do You Do It? Managing using a project portfolio consists of three phases — initi- ate/plan, execute, and control — as shown in Figure 14.1.

The initiate/plan phase begins with an affirmation by your or- ganization’s leadership that a project portfolio would be of ben- efit to your organization and that you will adopt the use of it into your decision process. Once that decision is made, your leader- ship needs to define the content of the project portfolio. It might be that not all projects are of a magnitude or impact that they need to be tracked as separate activities — perhaps they should be grouped into one entry in the portfolio. An example of this class of project is a quarterly CEO presentation to the business community. While it’s a project and should be planned as one, it might involve only the CEO, his or her administrative assistant, and someone from your public relations department — not a tre- mendous use of resources and not something that the leadership team needs to monitor the performance of. On the other hand, an annual holiday gift drive is very visible to the community, consumes many volunteer and staff hours, and is something your leadership team should be on top of.

After defining the types, or classes, of projects to be moni- tored, your leadership team needs to establish the criteria by which they’ll monitor the performance of those projects: budget,

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resource consumption, schedule, etc. For instance, do they want to be notified when a project is more than ten percent over bud- get? Or when a project is more than five days late in meeting a milestone? And if they’re notified, are they prepared to assist in resolving whatever issues the project team is confronting? The criteria you select should align with your organization’s overall performance measurement, so that you can determine the im- pact the project’s performance is having on the organization. I recommend the criteria be kept to no more than three, so that reporting can remain agile. Budget performance, schedule per- formance, and the top three most-likely risks are the ones I like to monitor when given the choice.

These criteria and the support that’s available need to be shared with all staff and volunteer project managers so that they appreciate the importance of controlling their assigned projects and of effectively communicating the status of those activities to your organization’s leadership.

Figure 14.1. Project portfolio management phases.

PROJECT PORTFOLIO MANAGEMENT PHASES

Initiate/Plan Phase  Confirm commitment  Define the portfolio  Develop criteria/measures  Prepare the environment

Execute Phase  Identify current projects  Prioritize projects  Approve or cancel current projects  Add new projects

Control Phase  Track performance of portfolio projects  Make corrective actions as needed

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establish Your Project Portfolio The development of a portfolio is straightforward for most or- ganizations. I encourage my clients to adopt the “keep it simple” mindset. Although there are some very sophisticated project port- folio management technology tools available, I find they’re overly complicated for most nonprofits. A simple spreadsheet posted to a common bulletin board for all to see is frequently all that’s needed to show the progress of your portfolio (see Figure 14.2).

When establishing the portfolio you should first identify the work that must be done, such as regulatory projects, and make

them the first priority for resource allocation. Then survey your staff; ask them what they’re working on, for whom, and when it’s expected to be completed. Find the hidden projects that every organization has, the work that came in via a request in the hallway or in a ca- sual conversation with a donor. Then determine the nature of the project — is there an active spon- sor? Does the project have fund- ing available to see it through to completion? Does it align with the organization’s strategic objectives? If the answer to any of these ques- tions is “no,” then it would proba- bly be wise to cancel the effort and inform the requestor why.

As you survey the work under- way try to understand the nature

of the people working on the project. If the project is heavily vol- unteer-staffed with no paid staff hours supporting it, then perhaps you can authorize it to continue as an external, volunteer-based

 glOSSARy Mandated projects are projects that must be performed to remain in compliance with laws, regulations, and other statutory requirements. One such project could be updating the language in all solicitations to clarify IRS guidance.

Strategic projects are projects that further the mission and the strategic objectives of the nonprofit, such as a walk-a-thon to support a capital campaign.

Operational projects are projects that enhance the operations of the nonprofit. A typical operational project could be the update of the office’s technology.

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project and ask the volunteer leader to keep you informed. If the effort is consuming staff time then it needs to be sanctioned within your portfolio since it’s consuming a portion of your budget.

A well-balanced portfolio will consist of a mix of mandated projects, strategic projects and operational projects — both current and future projects. And appropriate budget dollars will have been allocated to cover the resources required to execute and deliver on the portfolio.

Manage with Your Project Portfolio A project portfolio is akin to your financial portfolio and requires the same level of management discipline if good results are to be achieved. A generally accepted practice is to update your project portfolio with the latest project status information monthly, tak- ing corrective action as needed. Use the information in the port- folio report to inform your decisions: Do we have the resources to undertake another program? Is there capacity for another special event? What would we trade to make those resources available?

Don’t hesitate to make hard decisions about projects using your portfolio. Be sure your resources are allocated to strategic projects, not pet projects. There can only be one Priority #1 project. If a project is no longer aligned with objectives, or demonstrates that it won’t be able to achieve its objectives, don’t hesitate to cancel it. A project cancelled in a timely manner can be as effective as a completed one if the cancellation releases resources for a higher- priority project.

Use project priorities to help you make decisions about re- source assignments. Two golden rules I recommend applying are: don’t have individuals work on more than two or three projects concurrently; and avoid “thrashing” — that is, don’t start/stop/start projects to make key resources available. To free up key resources focus instead on achieving a project’s objectives as quickly as pos- sible. Use volunteers and board members appropriately. Leverage board members and their relationships on strategic efforts; use staff

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members on mandated projects. Watch out for volunteer-managed projects that migrate into staff-managed projects. Question the business case for each project, especially volunteer projects. Cancel volunteer projects (diplomatically!) if they consume an inordinate amount of staff time or create resource conflicts with strategic or mandated projects.

Share Information on Your Project Portfolio It’s important to share information on the approved project port- folio with your staff, your volunteers, and your stakeholders. They all like to know what’s being worked on, what the priorities for the organization are, how their efforts fit into that bigger picture, and how they might help out.

When communicating the status of your organization’s portfo- lio, not only should each project’s name and schedule be disclosed, but also each project’s priority, its sponsors and project manag- ers, the benefits to be expected, and its current status (you can use color in addition to words to show status — green to signify every- thing’s okay, yellow to signify there are problems, and red to show that the project is on hold).

In Figure 14.2 you can see that the number one priority proj- ect is behind schedule because of resource conflicts. The sponsor of the project, Dr. Jones, has been trying to obtain wording from the designated patient family for the appeal, but that individual has just not been responsive. When the chief development officer learns of this, she can volunteer to assist in obtaining the wording or suggest an alternative source for the appeal wording.

Case Study: Project Portfolio Management In the foundation’s start-up years, many volunteer-managed ac- tivities had been undertaken, sometimes with board knowledge, sometimes without, leading to varying degrees of success. One ac- tivity resulted in the creation of marketing materials that the foun-

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dation was unable to use because the messaging wasn’t aligned with the foundation’s mission. Another activity, while well-intended, re- sulted in a tremendous administrative burden for the foundation’s support staff and wasn’t sustainable within the foundation’s oper- ating budget. And in yet another situation, a project upon which the foundation was relying went awry, and its final objectives were never achieved, partially due to the lack of staff oversight of the volunteers.

After some years of maturing, the foundation’s board found it- self in the position of being able to refine the foundation’s overall mission and to establish specific focus areas for its work. Each of these focus areas was supported by donors and other stakehold- ers from around the globe. This broad reach of support resulted in many suggestions for specific projects in support of each area. However, the foundation had limited staff capacity to oversee proj- ects, even those that were volunteer-managed activities.

The board decided to apply the principles of project portfo- lio management to address the lessons learned from those early efforts. Applying project portfolio management would provide a means by which the board could determine which of the suggest- ed projects the foundation would undertake in the current year, which ones would be deferred, and which could be transferred to other entities for execution. The board began the process by col- lecting all project ideas that had been submitted to the founda- tion’s office or to individual directors. These ideas, plus ideas the directors had also developed, were then aligned with each of the program areas. If the project didn’t support one of the areas, it was considered a potential for the future and automatically deferred to future years. Then the board went through a series of prioritization exercises, where each suggested project’s priority was considered within its program area. The top three projects in each area were then compared against each other to create a list that represented the combined priorities. Funding was then allocated from the top down, until the budget that had been established for project ac- tivities was consumed. Those projects that were in the top nine,

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but below the funding line, were retained within the portfolio in the event funding became available. The other prioritized projects within each program area were also kept in the portfolio, but in a deferred status.

Applying the project portfolio management practices of priori- tization and oversight provided the foundation:  The discipline required to ensure that projects were

aligned with the organization’s overall mission and strategies

 Knowledge of the organization’s priorities and which projects were approved in support of those priorities

 A framework by which decisions on how to use the foundation’s donations could be made

Summary Project portfolio management is indeed a best practice per- formed by many for-profit industry leaders. It encourages an organization to allocate its resources, and thereby the work, to those activities and projects that contribute most significantly to the achievement of the organization’s strategic objectives.

The lack of a project portfolio management approach can re- sult in an organization that’s chaotic, misses opportunities, burns through resources, and doesn’t achieve its strategic goals (see Figure 14.3).

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Figure 14.3. A lack of project portfolio management leads to poor performance in new products or services.

No Portfolio Management Means ...

End Result: Poor New Product Performance

Immediate Results

Reluctance to kill projects New projects added

No Focus

Increased time to market Higher failure rates

Too many projects: Resources thinly spread

Quality of execution suffers

Weak decision points Poor Go/Kill decisions

Too few stellar product winners

Many “ho-hum” launches

Too many mediocre, low value projects:

Good projects starved

No rigorous selection criteria Project selection based on

emotion, politics Many failures

Wrong projects are selected

No strategic criteria for project selection

Scattergun effort New products don’t support

business strategy

Projects lack strategic direction and alignment

THE RISk OF HAVING NO PROJECT PORTFOLIO MANAGEMENT

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It’s characteristic of nonprofit organizations to operate under the oversight of a board of directors. These individuals are of-ten asked to serve on the board because of their passion and willingness to support the mission of the organization. Typically they’re executives or community leaders with experience in setting strategic direction and aligning operational plans to that direction.

However, in the project-based nonprofit organization, the di- rectors have the following additional responsibilities to fulfill:  Create and communicate the organization’s plans for the

year, including any strategic objectives.  Select and sponsor projects to implement strategy. • Approve business cases. • Approve project charters. • Review high-impact projects.  Prioritize projects on a continuing basis.  Communicate changes in strategy and priorities to

project managers.  Co-own projects and participate in their oversight.

The role of Your Board and other Project sponsors

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Project Sponsor responsibilities The Project Management Institute (2013) defines a project spon- sor as “the person or group who provides resource and support for the project and is accountable for enabling success …. From initial conception through project closure, the sponsor promotes the project.”

A significant responsibility of the project sponsor is to allocate the financial resources required by the project team. In many or- ganizations this means that the project sponsor is responsible for developing the financial justification for the project, with inputs from the project manager as to the estimated project costs based on the scope defined by the sponsor. If the available funds are not sufficient to meet the project costs, then the sponsor needs to re- define the project scope, working with the project manager and the team until the scope fits the available funds.

Usually the project sponsor acts on behalf of the organization to approve the project charter, authorizing the project manager to be- gin spending funds on the project. However, in some organizations this authorization might be delegated to the operations manager or someone in charge of the philanthropy office’s activities. It’s im- portant to note that while the authority to sign might be delegated, the actual authorization still must come from the project sponsor.

Another significant role the project sponsor needs to fulfill is that of the project champion. The sponsor needs to assist the proj- ect manager in identifying opportunities to improve project per- formance as well as potential risks that might curtail overall per- formance and ways to mitigate those risks. The former frequently entails highlighting other projects underway that might contribute to a project’s success, such as leveraging another project’s market- ing collateral and thereby saving on costs. The latter might mean assisting the project team in identifying additional resources that might be needed to complete the project. Being able to provide this level of active sponsorship to the project requires that the project

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sponsor possess an active understanding of the project’s current status, risks, and issues, an understanding best obtained by par- ticipating in the project team’s status meetings and having regular communications with the project manager.

One challenge that many project teams encounter is the un- availability of the project sponsor when a key decision needs to be made. Should a project sponsor not be available, the project manager needs to be able to obtain that decision from an autho- rized delegate or be empowered to make the decision himself or herself. The project manager, in order to be able to comfortably make that decision, needs to feel that he or she understands the organization’s strategic objectives and how this project fits into the picture. Hence the project sponsor needs to be able to share that information with the project team as a whole and especially with the project manager. Likewise, the sponsor needs to communicate organizational changes. I recall one project on which I worked that was going to be significantly impacted by an organizational re- alignment. The project sponsor was aware of the pending realign- ment but wasn’t in a position to share it with our team. As a result, some decisions our team made resulted in wasted volunteer efforts and disgruntled volunteers.

Project Governance responsibilities Project governance is defined as those activities needed to es- tablish strategies, performance objectives, and the alignment of projects with those strategies. Depending on the maturity of your nonprofit, your board might find itself in the position of provid- ing governance to the projects underway. In other cases your se- nior management might provide project governance. Provision of project governance means that your board or senior management actively reviews status information, budgets, and certain deliver- ables, to ensure alignment with the project’s initial charter and the nonprofit’s objectives (see Figure 15.1).

THE ROLE OF YOUR BOARD AND OTHER PROJECT SPONSORS

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Portfolio Oversight responsibilities In addition to sponsoring projects, your board members should provide oversight and guidance relative to your project portfolio. They should be prepared to receive and review project status in- formation, to make the hard decisions and not approve projects that aren’t aligned with your organization’s strategic objectives or necessary for continued operations.

Saying “no” in a politic manner to a donor who wants to pro- vide money to the organization for a project that’s not aligned with the overall mission should be the responsibility of a member of your board, not a member of your staff. And when approving proj- ects, your board should ensure that donor stewardship is consid- ered, that funds being applied to an initiative are available to use on that project.

Figure 15.1. Project management reviews, conducted by the project manager’s management, are focused on the application of project management practices, especially the thoroughness of project plans and controls. Project governance reviews, typically conducted by the project sponsor, are focused on the project’s overall performance towards its stated objectives.

GO/NO GO DECISIONS

Project Initiating Planning Execution Closing ManageMent Phase Phase Phase Phase reviews Review Review Review Review

Project Monthly Monthly Monthly Monthly Monthly governance Status Status Status Status Status reviews Review Review Review Review Review

PROJECT PORTFOLIO OVERSIGHT RESPONSIbILITIES

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Summary A nonprofit’s board or senior management team plays an integral role in the overall success of the organization’s projects by ensur- ing that the right projects are chartered, that changes in the or- ganization’s strategies are communicated in a timely manner, and that guidance is provided to project teams when requested. Active participation in the review of the organization’s portfolio and the appropriate provision of resources are key functions of the role.

THE ROLE OF YOUR BOARD AND OTHER PROJECT SPONSORS

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