Term Project 1 - PMO - Group 2

Term Project 1 – Business Case Proposal for Toyota EPMO Group 2 Student Name Student Number Lo, Geianne Joyce 301237756 Mendez, Kristina Joyce 301313872 Owarieta, Oghenero 301275053 Santiago, Emmanuel 301331635 The Business School, Centennial College PMGT 729 - Project Management Office Professor Joan Rempel January 30th, 2024

Table of Contents Lists of Tables and Figure...………………………………………………………………………...2 I.Executive Summary ………………………………………………………………………………2 II.Summary of Current Challenges & Opportunities ………………………………………………4 II.1 Challenges ……………………………………………………………………………4 II.2 Opportunities …………………………………………………………………………4 III. Detailed Impact Analysis of Gaps & Opportunities. ………………………………………… .... 5 IV. PMO Goals and Measures ……………………………………………………………………… 6 V. Anticipated Costs and Returns …………………………………………………………………..7 V.1 Anticipated Costs.………………………………………………………………………..7 V.2 Anticipated Returns ………………………………………………………………… ....... 8 VI. Anticipated Risks …………………………………………………………………………… .... 9 VII. Sign-Off to Proceed ………………………………………………………………………….12 1

I. Executive Summary This Proposal will give specific recommendations on how to set up a Project Management Office (PMO) for our chosen organization, Toyota. Toyota is a Japanese car company that started in 1937. Over the years, the company has been dedicated to maintaining high-quality and efficient products, which has made it very popular. Today, Toyota has expanded its product reach to over 170 countries and regions (Toyota Motor Corporation, n.d.) As the company grew, its project management office and standards also evolved to enhance Toyota's operations. In this report, we will focus on suggesting the type of PMO implementation that would support the ongoing growth of Toyota. In that regard, we have noted challenges in 3 areas, and these are the reason why we recommended setting up a EPMO Organization for Toyota. Firstly, managing process change posed difficulties, requiring careful navigation. Secondly, there is a high percentage of contractor-to-employee ratio making us vulnerable to losing knowledge or leaking confidential information. Lastly, fostering a collaborative culture proved challenging due to Toyota's global reach, requiring effective communication and coordination across diverse teams. Overcoming these hurdles was crucial for the successful execution of the project, highlighting the need for strategic solutions tailored to address the unique complexities 3

associated with process change, contractor involvement, and global collaboration within the organizational context. II. Summary of Current Challenges & Opportunities As Toyota embarks on this journey to establish a PMO, the organization is poised to not only overcome existing challenges but also to capitalize on numerous opportunities to elevate its project management capabilities. Challenges (Project Auditors, 2002): 1. Complex Project Portfolio : If Toyota is managing a complex portfolio of projects, a PMO can help streamline project management processes, ensuring better coordination and alignment with organizational goals. 2. Resource Allocation : In the automotive industry, resource management is crucial. A PMO can assist in optimizing resource allocation, preventing bottlenecks, and ensuring efficient use of personnel and financial resources. 3. Global Operations : If Toyota operates globally, managing projects across different regions can be challenging. A EPMO can provide standardized project management methodologies and tools, fostering consistency and collaboration across the organization. Opportunities (Project Auditors, 2002): 1. Strategic Alignment : A EPMO can ensure that projects are aligned with Toyota's overall business strategy, contributing to the achievement of organizational goals and objectives. 4

control of confidential information is a challenge. resource allocation for dynamic needs.  All employees should sign an NDA and safe keeping of NDAs. Global Operations  Lack of consistency in project management across different regions.  Communication challenges and potential misunderstandings.  Difficulty in aligning global projects.  Introduced PMO to provide standardized methodologies globally.  Foster collaboration and communication through centralized tools  Ensure global projects align with the overall organizational strategy. Table 1. Detailed Impact Analysis of Gaps & Opportunities IV. PMO Goals and Measures ORGANIZATIONAL GOAL PERFORMANCE MEASURES OBJECTIVE Efficient Project Portfolio Management and Reporting  Project Delivery Time: Reduce project completion times by 10%.  Fortnightly portfolio/project status reporting.  Regular monthly Steering Committee meeting every 15 th day of the Month.  Streamline project management processes through the PMO  Implement a regular portfolio/project reporting cycle.  Create a Project Steering committee and organize meetings. Optimal Resource Allocation  Resource Utilization: Increase resource utilization rate by 20%  Switch the ratio of contractor-employee ratio by 40/60.  Bottleneck Reduction: Achieve Y% reduction in resource-related bottlenecks  Develop resource allocation strategies to prevent bottlenecks  Implement tools and processes to track and optimize resource usage.  Enhance flexibility in resource allocation to meet dynamic needs Consistent Global Project Management  Standardization: Achieve 60%  Implement standardized project 6

standardization in project management methodologies globally by year-end.  Collaboration Index: Increase collaboration by 100% across global project teams through JIRA/Confluence Implementation. management methodologies and tools globally.  Foster consistent communication and collaboration across regions by maximizing collaboration tools. Table 2. PMO Goals and Measures V. Anticipated Costs and Returns Establishing a Project Management Office (PMO) involves both anticipated costs and potential returns (Cappels, T. M. 2014). The costs are associated with the setup, operation, and maintenance of the PMO, while the returns are often measured through improved project outcomes, organizational efficiency, and strategic alignment. Here is a breakdown of the anticipated costs and returns. Anticipated Costs: PARTICULARS 7.20% 2024 2025 2026 2027 2028 Set-up Cost/One-time Cost 165,000.00 Hiring (Recruitment Costs) 15,000.00 Infrastructure (Office and IT) 80,000.00 Communication and Collaboration Tools 15,000.00 Consultant Fees 40,000.00 Contigency 15,000.00 Operational Cost 835,000.00 935,200.00 1,047,424.00 1,173,114.88 1,313,888.67 Salaries (overall C&B) 750,000.00 Training & Certification 20,000.00 Other Costs 65,000.00 TOTAL 1,000,000.00 935,200.00 1,047,424.00 1,173,114.88 1,313,888.67 Project Budget 10,000,000.00 15,000,000.00 20,000,000.00 40,000,000.00 50,000,000.00 Projected Project Budget Savings % 5% 10% 10% 10% 10% Projected Project Budget Savings 500,000.00 1,500,000.00 2,000,000.00 4,000,000.00 5,000,000.00 NPV ROI AMOUNT (in USD) 4,413,245.96 3 years and 1 month Table 3. Anticipated Costs 7

While the initial investment in a PMO can be substantial, the potential returns, both tangible and intangible, can significantly contribute to the organization's success in the long term. Regularly monitoring and evaluating key performance indicators will help assess the PMO's effectiveness and contribute to continuous improvement. VI. Anticipated Risks Addressing anticipated risks proactively through effective risk management strategies and continuous monitoring will contribute to the success of the PMO implementation. Classification Description Structural Risk  Lack of involvement and support from key stakeholders.  Ambiguity in defining roles and responsibilities within the PMO.  Resistance to cultural and procedural changes within the organization.  Designing a PMO structure that does not align with organizational needs. Governance Risks  Lack of commitment and support from top-level executives.  Difficulty in prioritizing projects based on strategic objectives.  Lack of standardized decision-making processes within the PMO.  Poor communication between the PMO and relevant stakeholders. Budget Risks  Underestimating the initial budget required for PMO setup and operations.  Insufficient funding allocated for ongoing PMO operations.  Unanticipated expenses arising during the PMO implementation.  Difficulty in measuring and demonstrating the return on investment. Table 4. Anticipated Risks 9

Heat Map ROI Uncertainty Budget Overruns Limited Funding Allocation Inadequate Executive Support Unforeseen Costs Inadequate Stakeholder Engagement Ineffective Change Management Poorly Defined Roles Insufficient PMO Structure Cost Benefit Figure 1. Heat Map Existing PMO Organizational Structure 10

Figure 3. Propose PMO Organizational Structure VII. Sign-Off to Proceed 12

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