May 14, 2014

Establish PMO Value Metrics Without Delay!

Posted by Allen Young in Performance Measurement, Project Management Office (PMO), Project Management Research | 0 Comments

Struggling to communicate the value of your PMO to execs? Speak their language: metrics.

One of the issues that surfaced in the newly-released State of the PMO 2014 research study was that PMOs have a public relations problem: they are delivering value (significant value: see the graphic from the study at right), but they have trouble communicating that value to executives. Two of the biggest challenges for PMOs, according to the study, are relationships with executives and proving that the PMO is not merely overhead expense. This post will set you on the right path to becoming a PMO whose value is never questioned … and it isn’t that complicated!

The best way to demonstrate the value that a PMO adds to its organization is through the use of a comprehensive set of metrics. This goes above and beyond the traditional measures such as on time and within budget on a per-project basis that many companies are used to. Metrics should be established at the project/program, portfolio and PMO levels. PM Solutions’ Center for Business Practices (now PM Solutions Research) published Measures of Project Performance and Value in 2005, listing just about every conceivable metric that one could imagine.  No firm would ever use all of them and few, perhaps unfortunately, have the ability to implement more than a handful. The challenges to success with implementing metrics include:

  • Ability to gather the required data; this is typically the biggest issue
  • Establishment of baselines, which can be compared against ongoing actuals over time
  • Determination of how many metrics can be successfully introduced to the organization over time

To help companies deal with these obstacles, PM Solutions utilizes a model with three stages of metrics (short, intermediate and longer term adoption), which includes a mix of twenty-one key project, portfolio and PMO measures across the stages. These are shown in the table below.

Not every firm will adopt all of these metrics, and the priority order may vary slightly, but we have found over time that this provides a good starting point in most cases. These metrics are typically gathered into and reported out of spreadsheets in the early going. Once the company implements a sophisticated PPM tool, it can usually be leveraged to help automate the sharing of metrics via dashboards and reports, if not always the data gathering.

Even for firms that have no existing baselines at the outset, you have to start somewhere, and there’s no better time than the present. Once data has been gathered for an agreed-upon period of time—typically three months to up to a year—baselines should be set. Going forward, the baselines should be compared to the actuals to measure variance. The numbers won’t be pretty in the early going, but should begin to show improvement over time.

Top management routinely evaluates the value of the investments and business decisions it makes based on financial data, so it goes without saying that they will want similar data to validate the return on investment of the PMO. Just listing the services a PMO provides isn’t enough. Without the data to support the ROI, judgment will more likely be passed based on personal biases, departmental perceptions and political whims, which is a far riskier place to be.

If your PMO isn’t already doing so, consider adding these key metrics. Begin to demonstrate the value-add, and how the organization can’t afford to live without it!


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