In program management, following the money—if pursued with authority and diligence—allows businesses to keep control of activity and aid in predicting project trends and any obstacles that may lie ahead. Program management is a very different animal from project management. Program management centers on the delivery of outcomes and benefits through coordinating multiple interrelated projects across several business units, whereas project management usually focuses on completing limited and specific operational deliverables for a single business unit.
Another distinction is that programs usually manage major transformational deliverables of the organization, not just incremental improvements as do projects. Since program management is concerned with coordination, a good analogy might be that the program manager performs as an air traffic controller rather than a pilot—and both are needed to fly efficiently and safely.
Programs are usually most effective when multiple business units, vendors, management teams, and technologies are necessary to deliver a new future-state vision. In terms of scope, programs generally last for years, involve dozens of staff and contractors in implementation, and require investment of tens of millions of dollars. Due to their nature, programs can take years just to achieve full budget approval while moving from early conception to corporate-level consensus. Program proposals are extremely visible within the organization, typically initiated by senior management and approved at the executive or even board level.
Despite this, a surprising number of programs end up fizzling out or have very murky beginnings and endings. On the flip side, programs can also take on a life of their own, with all projects in the firm seemingly becoming part of the program. This ends up as unwieldy as an overburdened, top-heavy ship in rough waters that sinks under its own weight and lack of maneuverability. We have seen two tactics that ensure neither of these fates fall upon a newly-established program.
First, clearly define criteria for when projects should not be added to or should be removed from the program. This step controls scope creep and allows projects to end predictably and gracefully. The end goal of program managers is to put themselves out of a job by completing all the projects of the program and moving them to the normal operational management, thereby successfully finishing the program.
Second, staying focused on the accounting and financing of the program throughout the program timeline gives the program manager exceptional navigational control towards success. Unfortunately, effective and thorough methods for ongoing program accounting are often overlooked when a program is proposed and are unusually hard to initiate after the initial board approval of the program. To ensure that the program's sponsor's financial expectations are always aligned with the delivery team's, the accounting method must be consistent with the methodology in which the original budget was put together—which is why it is critical to develop these plans (and authority) as part of the proposal process and not after the program's inception.
Another potential source of trouble is that when a program is approved, it usually has a multi-year scoping budget attached to it. But as individual projects are approved, their budgets are often delegated to and managed by the individual business units, thus making it difficult to integrate projects into the holistic view of the overall program costs. The difficulty arises in distributed program accounting because many business units have unique project reporting and budgeting methodologies that are totally incompatible in terms of timing, detail, and units of measure with other business units. Typically, many business units do not want to spend the time and effort to change their recording method for a 'home office' program (and do not have the staff time or budget allocated to do it). Inability to effectively integrate critical accounting information leaves the program manager (and sponsors) nearly blind to the true financial status of the overall program compared to the original forecasts.
Another challenge of distributed program budgeting is that the program's individual project budgets become embroiled in competitive cost justification within the business unit's other tactical budgets. Because many program projects include major infrastructure improvements (that cannot be justified at the business-unit level), these projects are subject to interruptions, staff reduction, and even cancellation by the business unit, delaying the program's goals. In this scenario, by relegating budgetary control to the business units, the program manager has also forfeited control of the resources necessary for successful completion of the program.
To avoid these scenarios, new programs should have a separate budget that is approved and controlled throughout the life of the program directly by the executive committee or board level that originally approved it. Also, the program manager needs to have appropriate staff, tools and methodologies, and budget for an entire program accounting function that will allow for continuous and consistent tracking of all related staff costs, capital expenditures, and operational expenses for all projects within the program for its duration.
The goal is to allow the program manager to effectively report and be accountable to the sponsoring management for how much has been spent of the forecasted multi-year budget, how much is projected to be spent to complete the original outcomes, and any delta between that and the original budget. Another goal is to equip the program manager ahead of time with a capability that effectively forecasts where critical budgeting problems may be arising in order to implement mitigation plans.
In effect, by providing the program manager with the tools and authority to follow the money, executive management insures the program is executed throughout the years of implementation as originally envisioned and does not fizzle out or sink from scope creep.
