Aug 19, 2013

The Hows and Whys of the PPM Research

Posted by Jeannette Cabanis-Brewin in Portfolio Management, Project Management Events, Project Management Office (PMO), Project Management Research | 0 Comments

75% failure rate for PMOs? Well, maybe. Or not.

In May, as a follow-on to our State of Project Portfolio Management 2013 study, we hosted a webinar featuring the study results that drew our largest audience ever, and which elicited hundreds of questions from attendees. Of course, in the limited time available during the webinar, only a few of those questions could be addressed. But since then, I’ve been doing interviews with some of our “project management experts” in-house and recording their answers to many of our audience’s “burning questions.” Today we kick off a series of blog posts in which those interviewees will share their knowledge around measuring PPM value, coping with cultural resistance, structuring the organization to do PPM effectively, dealing with resource management and prioritization conflicts, and more. These posts will run weekly through September.

Today, I’m kicking off the series by addressing some of the questions that webinar attendees asked about the study itself.

Q.  Forrester in 2011 reported that 75% of PMOs fail within three years. Can you comment on whether there has been any improvement in this statistic?

A. I’m a big fan of Forrester’s research – and I also know that the “killed by success” phenomenon has been much in evidence for PMOs over the years. I can’t say if there is “improvement in this statistic” without asking the same question to the same group of companies, but I can say (with the caveat that comparing our research to the Forrester study is very much an apples-to-oranges situation) that there are some aspects of our State of the PMO and State of PPM studies that indicate a better longevity for PMOs than three years. For example, in looking at companies that report “best in class” capability in PPM, 71% of these firms have had a PPM process in place for five years or more. Since 30% of firms reported that the PMO manages the PPM process, at least some of these PMOs are therefore at least five years old.

More directly, in looking at the State of the PMO 2012 study, we see that the median age of PMOs in high-performing organizations was four years (and some had been in place much longer). One gentleman that I interviewed in the follow-up research told me their PMO had been established for eleven years.

How you ask a question, and to whom you address it, can often shade the results you receive when doing survey research. A group of companies in which project management is less mature will have higher rates of PMO failures. It may be that the research participants in PM Solutions Research studies – a pool that has been focused on project management research, and under development for over a decade – includes companies with more mature practices, and thus a set of more long-lived and successful PMOs.

Q. How were these industries selected? How did they address IT when it was part of a financial services firm?

A. The industry question on the survey lists several industry areas in a multiple choice format as follows:

   What is your company’s primary industry? (select one only)

  • Finance & Insurance (financial services, banks ...)
  • Information (telecom, software, publishing, broadcasting ...)
  • Manufacturing (computers, consumer goods, aerospace ...)
  • Professional & Technical Services (consulting, business services ...)
  • Pharmaceutical & Biotechnology
  • Public Administration (government, legal ...)
  • Healthcare & Social Services (practitioners, hospitals ...)
  • Utilities (power, gas, water, sewage ...)
  • Education (colleges, universities, technical schools, services ...)
  • Energy
  • Other:

This list of industries was developed from similar lists at sources such as the US Economic Census, the Small Business Administration, and the US Chamber of Commerce. Over the years we have refined it to reflect more closely the types of organizations that usually participate in our studies. Any pool of research participants in studies of this kind is self-selecting, so we expect it to be of more interest to some industries. However, we don’t “choose” the industries, apart from supplying a list (and the catchall category “Other” to make sure we don’t leave anyone out!).

The individual participant would have had to make that call as to whether they classed their organization as IT or Financial Services (increasingly, this same quandary applies to Healthcare).

Q. Have you seen any changes or trends related to the size or scope of projects that are covered in these PPM projects?

A. While we frequently ask about the value of the portfolio or of the average project in our research, in this case we did not collect that data point. What I can say is that there was a slight but significant increase in the numbers of projects in the portfolio over 2003. This may be related to a trend towards “chunking” projects in smaller bites for more reliable estimation, rather than a larger number of projects per se – but that’s just an educated guess. Thanks for the great suggestion for the next round of research!

We are open to hearing from our readers about other questions they’d like to see answered in future research as well. Email me at jcabanis-brewin@pmsolutions.com.

Next week: J. Kent Crawford answers your questions about measuring the value of the portfolio, and the PPM process.

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