Physician heal thyself – quantifying a PMO’s value

A (tired) cliche states “you can only manage what you measure” – as a PMO often focuses on improving management outcomes, one would think that most PMOs would be a poster-child for metrics.

Unfortunately this is rarely the case and a perceived lack of realized business value can be the final nail in a PMO’s coffin.

A webinar I have presented on Seven Secrets to Successful PMOs reinforces the critical importance for a PMO to effectively and regularly communicate the business value it has generated.

So how do you go about defining and measuring this value?

It all comes back to the business case and objectives that were defined, documented, approved and communicated during the PMO’s initiation.

You don’t have these?  It’s never too late (at least as long as your PMO is not shut down!) to work with the appropriate sponsors & stakeholders to define SMART objectives for your PMO – a key area of focus in this use of that acronym should be “M” – Measurable.

What are some of those core metrics that could capture a PMO’s value?

Let’s start with PMO’s that are focused on improving project success rates.

In low PM maturity organizations, success might be defined as on-time, on-budget.  If so, then you could use:

  • Number of projects completed in the measurement period that were over budget or behind schedule as a percentage of total project completed in that period
  • Total portfolio budget overrun as measured by adding the budgetary overruns or surpluses on all completed projects
  • Average schedule delays on completed projects as measured by taking a weighted average of the percentage that projects were behind their originally committed schedule when completed.
  • Average scores for objective customer satisfaction surveys on completed projects

In higher maturity organizations, project success is usually equated with achieving the expected business outcomes from the project.  If the objectives for an individual project are also SMART, it should be possible to determine whether or not a project has succeeded.  My suggestion is to create a very simple metric to assess overall portfolio success in this context – for example, give yourself 2 points for every project that achieved all of its objectives, 1 point for every completed project that achieved most of its objectives, 0 points for every completed project that achieves less than half of its objectives and subtract a point for each project that delivered on none of its objectives.  Add the individual project scores and divide by the total number of completed projects to get an average value for the measurement period.

Things get tougher when a PMO matures from project oversight to portfolio management.  In that context, some metrics to consider could include:

  • Strategic utilization of resources – what % of the resource pool was utilized in a given measurement period on “high value” activities?
  • Utilization of resources on stealth or unsanctioned work (of course, this is challenging to measure even with a time entry system in place but it is important to try!)
  • Overall return on the portfolio of completed projects – measuring the tangible business value generated from completed projects as a function of the total cost of delivering those projects

The proactive PMO leader will build the definition and capture of a baseline of the defined metrics as a core deliverable of the PMO’s implementation project – by doing this, the PMO is able to start measuring and communicating on delivered value as early as one measurement period after its launch.

PMOs might fail for a variety of reasons, but defining, measuring and communicating realized business value is an ideal preventative tonic for this cancer.

Categories: Project Portfolio Management | Tags: , | 1 Comment

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One thought on “Physician heal thyself – quantifying a PMO’s value

  1. Pingback: Building a better PM through grenade juggling « Easy in theory, difficult in practice

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