Project and Portfolio Management in a Federated Governance Model
Prince2 us fed_pro_sept09
1. For Portfolio, Programme, Project,
Risk and Service Management
Using PRINCE2™ to Manage US Federal
Government IT Projects
Applying the PRINCE2 project management method to support
Capital Planning and Investment Control (CPIC)
Richard Tucker, PMP
ICOR Partners, LLC
White Paper
September 2009
2. 2 Using PRINCE2 to Manage US Federal Government IT Projects
Abstract each agency to institute effective and
efficient capital planning processes for
This paper shows how the PRINCE2 project selecting, controlling, and evaluating their
management method supports US Federal investments in IT projects. These projects
government project managers as they represent the strategic investment in IT
deliver IT investments while satisfying capital assets that define an agency’s Select Control
requirements of the Clinger-Cohen Act and IT portfolio.
Capital Planning and Investment Control.
OMB requires each agency to institute
Since enactment of the Clinger-Cohen Act effective capital planning.
(CCA) in 1996, the US Federal government Evaluate
requires its agencies to improve their
The CCA references use of a three-phase
management, oversight and control of
cycle for capital asset management to
investments in information technology.
provide oversight of investment budgeting
Central to the CCA is an obligation for
and spending. First, by selecting IT capital
agencies to select, control, and evaluate
asset investments that will support core
IT Investment Management Cycle
their portfolio of IT projects in accordance
mission functions performed by the Federal
with the principles of Capital Planning and
Government; Next, through controlling
Investment Control (CPIC), an approach to The Control phase is an ongoing
their projects effectively through the
IT investment management referenced in investment management process designed
application of best practices in project and
the CCA. to monitor the progress of IT projects
performance management; And then, by
against budgeted cost, schedule,
In the same year the CCA was signed into evaluating investment results through a
performance goals, and expected mission
effect, the UK government released demonstration that the return on
benefits. The Control Phase helps to ensure
PRINCE2™, a principles and themes based investment is supporting initial business
that each investment is properly managed
project management method designed to case objectives. CPIC links the strategic
toward the intended objectives defined by
provide direction and oversight of planning of mission attainment to the
the investment’s business case. However,
government/contractor projects. Project tactical performance of project delivery
the Control process does not manage the
managers can find it difficult to meet the and IT systems operations. The three
investment project. The responsibility to
requirements of CPIC while running a project. phases of CCA’s IT Investment
define a project management governance
Industry leading project management Management process are performed
model is left to the agency and the project
guides suggest one approach, contractors annually, and applied to IT investments
manager. It is not defined by CPIC.
have another, while investment oversight continuously, throughout the life of an
groups within the agency reinforce the asset’s existence within the agency’s In the Evaluate phase, project outcomes
additional requirements of CCA onto the IT portfolio. are measured, and systems are determined
project team. to be fit for purpose. Performance results
are assessed to: (1) identify needed
Select, Control changes to products or systems to maintain
Capital Planning and Evaluate
optimal business operations; (2) measure
the project’s effect on mission and strategic
and Investment During the Select phase, the agency
goals; and (3) continuously improve the
agency’s investment management
Control determines investment priorities according
to their mission needs, and makes decisions
processes based on lessons learned,
self-assessments and benchmarking.
The Information Technology Management about which technology initiatives (new
Reform Act of 1996, commonly referred to and ongoing) they will fund for the next
as the CCA, requires US Federal agencies
to “identify and collect information
fiscal year. The Select Phase determines
which projects are to be included in the The Challenges
regarding best practices” for managing IT
related projects. The CCA identifies the
agency’s IT portfolio for the coming year.
Projects identified as significant to the of CPIC
government’s approach to information mission (a major investment) must include Interpretation of the CCA and CPIC has
technology investment management as a comprehensive business case that led to conflicting and competing solutions
Capital Planning and Investment Control supports the IT portfolio selection process. to satisfy its many requirements. OMB
(CPIC). Specifically, the CCA, through continues to amend their supporting
oversight from the President’s Office of Circular A-11, which keeps agencies’
Management and Budget (OMB), requires reporting requirements a moving target.
3. Using PRINCE2 to Manage US Federal Government IT Projects 3
Agency responses to these changes are when CPIC reporting is a pre-defined of CPIC while controlling and delivering the
often seen as adjustments in the project output designed into the project method, project. You must use a method that defines
management processes and tools used to CPIC becomes integral with the other daily how and when to apply project management
control the investment. Such a response management and decision-making processes and techniques. The method
weakens an agency’s ability to mature their activities of project management. must be scalable to the size of the
project management practices. Instead, investment, and it must define governance,
agencies should continue to develop and Additional challenges face government tools and techniques that can balance the
mature their project methods and tools, project managers. The goals of CPIC are pulling forces that may exist between
while adjusting reporting output to match focused on budget management, not government and contractor. PRINCE2 is a
the OMB A-11 annual requirements. project management, which creates conflict de facto standard project management
in tactical management objectives. IT method from the UK government. It is
Practitioners often confuse the cyclical phases Investment Management support offices public domain, available for anyone to use
of the CCA’s Select–Control–Evaluate as a within the agencies are tasked with collecting to manage a project, it can support the
project management lifecycle, for example, and reporting financial information from many requirements of CCA and CPIC, and
thinking that a project is in development the agency’s projects, while project it can be tailored to fit most any size project.
activities only during the Control phase. managers focus on performance to cost
This is inaccurate. The three phases of the and schedule milestones, earned value
CPIC IT Investment Management lifecycle
define the sequence of when budget and
management, risk and issue status, and
baseline change control logs. Too often, What is PRINCE2?
investment management activities occur to the data and information that reports PRINCE2 is a structured project
plan, monitor and report the progress of IT project status is gathered using tools and management method recommended for
investment dollars. The “project” lifecycle techniques that are in contrast with the use on all projects commissioned by the UK
of CPIC has a linear progression, from investment management reporting government. In 1989, the Central Computer
Planning and Acquisition, to Management requirements of the CCA, CPIC and OMB. and Telecommunications Agency (CCTA) of
In-Use and Disposition. It starts when a the UK government first established PRINCE
business need is first defined and IT systems (PRojects IN Controlled Environments) for
planning activities warrant a new project
initiative, then continues to product
Finding a Solution controlling information systems projects,
but the method soon realized a greater
acquisition/development, systems operation
(production), and then asset retirement. In
to CPIC following. The UK Office of Government
Commerce (OGC), continued development
response to this, agencies should define Project managers are searching for a of the method into what is now PRINCE2
and operate an enterprise lifecycle governance model that can support both (2009). Improvements include greater
management framework that integrates the day-to-day needs of project delivery clarity of seven principles that guide
governance, processes and information into and the requirements of CPIC investment behavior of the project team as they perform,
a decision model that includes the management reporting. While the PMI’s streamlining of the processes defined
requirements of investment and acquisition Guide to the Project Management Body within the method, and instruction on how
management, enterprise architecture of Knowledge® is clear in identifying to tailor PRINCE2 to suit most any project’s
planning, project management office tools and techniques for performing needs. PRINCE2 has gained wide acceptance
(PMO), IT systems operations and project management activities, it is by its throughout Europe and Africa, and is
maintenance, and capital asset control. own admission “a guide rather than a quickly gaining popularity in North America.
methodology”, and it is not designed to
CPIC defines the activities of budget address compliance requirements, such
and investment management. as those defined by CCA. To operate
a project in a way that will achieve the ™
Project managers react to the oversight needs of CPIC, project managers must
and governance of CPIC as a set of tasks utilize a method that supports sustainment
and requirements that are in addition to of an investment business case, clearly
their effort to running the project. This has identifies a governance process, and lends
led to frustration while project mangers itself to regular reviews for “Go/No-Go”
work to deliver their projects. Project decisions, as required by US government IT
managers sometimes view CPIC reporting investment management budget cycles.
as a “check the box” activity. Maintaining
compliance to CPIC reporting can take Satisfying the requirements and objectives
considerable effort if it is not integrated to of CPIC is not easy. However, with the right
the project governance approach. However, project management method the project
manager can easily achieve the requirements
6. 6 Using PRINCE2 to Manage US Federal Government IT Projects
Business Case Quality Risk
A project initiates with a need to drive The criteria under which project products Risk management is a key tenet of
transformation through an organization are verified and accepted must be PRINCE2. It identifies, assesses, and
to fulfill new or evolving mission established early in the project lifecycle. controls uncertainty that may affect project
requirements. The business case defines PRINCE2 applies the tenets of quality outcome. Risk planning starts early in the
why a project exists. PRINCE2 uses the management at the start, where they PRINCE2 method, where it is first used to
business case to carry requirements are central to project delivery, making mitigate project threats while initiating the
through to fulfillment, while maintaining the final product fit for purpose. This project. Where other project management
the project team’s focus on objectives. supports achievement of desired benefits standards offer a model for managing risk,
defined by the business case. A robust PRINCE2 defines the procedures, tools, and
Organization quality management approach reduces techniques for performing the risk process.
The PRINCE2 method defines roles and the likelihood of discovering product
responsibilities at multiple levels for performance issues when it is too late. Change
directing, managing and delivering a Since change is inevitable for almost any
project. A PRINCE2 project’s organization Plans project, controlling variance to plan must
structure includes the executive oversight, A plan is not just a schedule, but also a be included in the management approach
project board, program sponsorship, senior holistic approach to governance. PRINCE2 for maintaining the project baseline.
users, suppliers, team managers, support projects follow defined and approved PRINCE2 identifies an approach to change
staff, and project assurance personnel. plans that integrate requirements, cost, control that addresses issues that enter
Projects must often share resources with schedule, quality, risk, roles, resources, the project plan. PRINCE2 integrates
other parts of an organization. Clear and communications. Performance to plan change control of the project lifecycle
identification of the extended project is measured in each stage of the project. phase to configuration management of the
team reduces confusion and minimizes Exception Plans define deviation from operations and maintenance phase.
conflicting demands on staff as they serve baseline, which are integrated into the
multiple requirements across the business. master plan to steer performance back Progress
toward cost, schedule and quality goals. The PRINCE2 method establishes
mechanisms to monitor, compare, review,
and report actual performance to baseline
objectives. Risks are mitigated, while
Business quality issues and problems are addressed
and corrected. Upon successful completion
Case of scheduled goals, the next stage plan is
authorized, progressing the project toward
completion. Numerous reporting templates
are defined by PRINCE2, that include
Progress Organization definitions of each report’s contents and
use, all supported by the various processes
within the method.
PRINCE2 The Capital
Change Processes Quality Planning Lifecycle
of CPIC
So, let’s go back. The Clinger-Cohen Act
directs agencies to manage their IT budgets
by measuring the return on investment
Risk Plans using a Select-Control-Evaluate process.
CCA also directs OMB to perform oversight
of agency IT spending. In response to CCA,
OMB recommends that agencies apply
planning, acquisition, management, and
disposition lifecycle controls to their major
The PRINCE2 Themes Support Performance
7. Using PRINCE2 to Manage US Federal Government IT Projects 7
Integrated Project Team
Business Planning Management IT System
Acquisition Disposition
Requirement & Budgeting In-use Retirement
IT Investment Management Cycle
Select Control Evaluate
The Capital Planning Lifecycle
IT projects. Simply put, each agency must assurance and control, and other project proposed budget to OMB during the Select
have a defined plan for buying, building, management techniques. However, these phase. Approved through the President’s
operating and retiring their IT assets, and are only broad brushstrokes of guidance for budget, the initiative receives funding from
they are accountable to report project the project manager. The CPG does not Congress to become a sanctioned project
status timely and accurately. define a project management method that ready for acquisition.
must exist beneath these phases. So then,
OMB annually releases Circular A-11, how can project managers lead their Quality and risk management are central to
a budget management directive that projects toward success while meeting the PRINCE2, initiated during the Starting up a
requires agencies to report their annual requirements of CPIC? Project and the Directing a Project
IT budget (using the Exhibit 53 form) and processes of the Pre-project stage. The
report progress toward goals within the Planning and Budgeting PRINCE2 method supports the CPIC
business case of each major IT project The CPG’s objectives of the Planning and Planning and Budgeting phase through
(using the Exhibit 300 form). However, Budgeting phase are designed to support IT development of the project business case.
A-11 does not define, nor prescribe, investment decision-making. Alignment of The project manager justifies the business
a project management method or strategic planning to project performance case to ensure that the investment is
approach for tactically controlling and goals is determined by utilizing an agency- planning to build the right product, is
delivering the project. Circular A-11 is level enterprise architecture plan. An fulfilling the right business need, and that the
only a process for reporting status of the Integrated Project Team (IPT) is established final products will serve the organization’s
budgeted and funded investments. to manage the project. The IPT formulates mission. Once the business case is reviewed
a clear definition of system functional and accepted by the investment board, the
OMB provides agencies additional project is authorized to proceed to the
requirements, performs an analysis of
direction in their A-11, Part 7 Supplement: Initiation Stage.
alternatives to select the best technology
Capital Programming Guide (CPG). The
solution, and establishes operating and
objective of the CPG is to show agencies
reporting baselines. They must apply PRINCE2 keeps a focus on the business
how project management activities relate
risk management techniques to reduce case to maintain IT business value.
to IT investment management. It helps to
the chance for incurring costs associated
answer the question, “Will this
with delivery failure, and integrate earned CPIC’s requirement for EVM necessitates
investment drive transformation of the
value management (EVM) into the a “deliverables-based” work breakdown
business toward the agency’s mission?”
contract acquisition strategies. The agency structure to define project scope. During
The CPG defines a Capital Planning
implements an executive review process the PRINCE2 Initiation stage, the product
Lifecycle: a four-phased approach to IT
to oversee investment performance and breakdown structure becomes the
investment management. The lifecycle
adjust the investment as the needs of the framework for managing solution delivery.
identifies strategies to achieve greater
mission change over time. Activities of the PRINCE2 Directing a
service delivery and move program
effectiveness toward mission goals. The Project process establish oversight and
Upon completion of a comprehensive governance to lead investment plans
CPG recommends use of risk management, planning effort to define an integrated
earned value management, quality toward mission goals.
project plan, the agency presents its
8. 8 Using PRINCE2 to Manage US Federal Government IT Projects
PRINCE2 Stage-Gate Project Management
Subsequent Final
Pre Project Initiation
Delivery Delivery
Stage
Stage(s) Stage
Integrated Project Team
Planning Management Disposition
Acquisition
& Budgeting In-use
IT Investment Management Cycle
Select Control Evaluate
PRINCE2 Project Management for CPIC
Acquisition and actual results of both government decision. The ERC recommends corrective
In the Acquisition phase of the Capital and contractor resources applied toward action plans where necessary to keep
Planning Lifecycle, the project team development activities. Once the integrated the project moving toward its strategic
validates decisions and objectives from the project plan is approved by the ERC, a and mission goals. Solution acceptance
Planning and Budgeting phase. The team baseline is recorded as the project plan. activities of the Acquisition phase include
re-examines the mission needs to affirm a complete review of delivered products
The Control phase of CPIC is used to measure to affirm that they meet all requirements
investment justifications in the business
and improve investment performance. It and objectives defined by the business
case to determine a “build versus buy”
instructs project managers to perform case. Product quality reviews, system
acquisition strategy. The IPT addresses
regular monitoring of product development testing, and recording IT assets into a
acquisition risks, and then the project is
progress, cost, schedule and performance configuration management baseline also
initiated. Teams are established, contract
variance, review of scope within the work happen. Any product deviations discovered
support secured, and then development
breakdown structure, and assessment of during solution acceptance are addressed
activities of the Acquisition phase commence.
risk to the investment. Change control must through rework or an accepted variance to
An Executive Review Committee (ERC) be applied to maintain progress toward plan. Additionally, contract performance
assesses the project team’s plan for contractual scope. Investment control and requirements are assessed to determine the
solution delivery. Following a successful oversight is in the hands of the project contractor’s success to the cost, schedule
procurement, the IPT operates project manager during the Control phase. Periodic and performance goals of the contract.
governance that integrates scope, cost, status reports are brought to the ERC.
schedule and quality into a comprehensive PRINCE2 uses a stage-gated approach to
As part of the CPIC Evaluate Phase, the
project management approach. EVM controlling project progress.
IPT and ERC conduct reviews of project
is used to monitor and control planned
progress to reaffirm the acquisition
9. Using PRINCE2 to Manage US Federal Government IT Projects 9
The PRINCE2 Controlling a Stage process
In Summary
continues to provide justification of
Acquisition phase activities performed Since introduction of the Clinger-Cohen
Author
during Subsequent Delivery Stages. The Act in 1996, agency CIOs and project Richard Tucker is a management
PRINCE2 processes provide oversight of managers across the US Federal consultant with more than 20 years of
product development activities, guiding government have been working to improve experience in IT project management
the project team as they fulfill business their IT investment management practices. and Federal capital investment
case requirements. The project manager The OMB A-11, Part 7 Supplement: Capital management. He provides practical
conducts a review of the investment’s Programming Guide provides project knowledge and advice to US Federal
status to the detailed business case. Impact managers guidance on the four phases of agencies and departments. He is a
assessments are performed on any new the Capital Planning Lifecycle, while certified PRINCE2 Practitioner and
or existing risks and issues. The project oversight performed using Capital Planning a Project Management Professional
manager assesses progress towards cost, and Investment Control monitors the value (PMP). He is an active member of the
time, quality and benefit goals. Exception returned from the dollars invested in IT Federal CPIC Forum and contributor to
plans are introduced to address and correct assets. However, without a project delivery numerous online communities where
variances to baselines. The project manager method that supports the control and he shares his interest and experiences in
reviews completed work packages against reporting requirements of CCA and CPIC, project management methodology and
defined specifications. Configuration teams continue to struggle to operate tools implementation.
records and stage plans are updated upon projects that exhibit best practices that Richard Tucker, PMP
acceptance. Then, following the Managing produce the right measures required by OMB. Certified PRINCE2 Practitioner
a Stage Boundary process at the end of Best practices defined in commercially ICOR Partners, LLC
each Delivery Stage, the Project Board driven project management guides fail to www.icorpartners.com
authorizes continuation to the next stage provide an approach that connects project
plan for the project. management methods to the IT portfolio
results defined by CPIC business cases. Trademarks and
Management In Use Acknowledgements
and Disposition In contrast PRINCE2 is a scalable and proven • PRINCE2™ is a Trade Mark of the Office
Once the IT system goes into production, project management method, having of Government Commerce.
the Evaluate Phase of CPIC prescribes that supported government and commercial
• The swirl logo™ is a Trade Mark of the
the project manager performs regular projects for more than two decades. It
Office of Government Commerce.
Operational Analysis (OA) to measure supports continuous justification of the IT
investment by focusing on sustainment of • PRINCE2 content, diagrams and logo’s
investment performance to predefined
the business case, driving results to the are correct at time of going to press but
goals, and to determine, measure and
organization’s mission. may be subject to change without notice.
report on the return on investment.
Operational Analysis requires regular • PRINCE® is a Registered Trade Mark of
monitoring of achievement toward original PRINCE2 is scalable to the enterprise, has no the Office of Government Commerce in
business objectives. Performance goal cost to use and supports US government the United Kingdom and other countries
baselines are defined, thresholds set and IT Investment Management controls.
For Further Information:
measurements taken to improve service over
time while driving operational costs down. The processes of PRINCE2 are scalable to www.ogc.gov.uk
This continues until the asset is taken out of suit various sized projects, ranging from www.best-management-practice.com
service (retired) during the Disposition Phase. only thousands of dollars to those that are www.usergroup.org.uk
tens of millions in scope. Project team www.apmgroup.co.uk
Management in Use involves post project
performance is governed through stage-
operations of the IT system. To enter this Our White Paper series should not be taken
gated project plans, measuring progress of
phase of the Capital Planning lifecycle, the as constituting advice of any sort and no
product delivery, not activities. Most
delivered IT solution must meet the defined liability is accepted for any loss resulting
important, PRINCE2 defines the roles of
requirements of PRINCE2’s Product from use of or reliance on its content.
stakeholders, the project board and
Descriptions. The IT solution must also While every effort is made to ensure the
delivery teams. It establishes governance,
perform to the objectives of the business accuracy and reliability of the information,
process and controls to bring the
case. The PRINCE2 Managing Product TSO cannot accept responsibility for errors,
investment from concept to fulfillment of
Delivery (MP) and Closing a Project (CP) omissions or inaccuracies.
the mission objectives, all the while
processes ensure that the project has met
improving the project management
its requirements and is ready to enter the Content, diagrams, logos and jackets are
practices of the agency.
final phases of the Capital Planning lifecycle. correct at time of going to press but may
be subject to change without notice.