Value scorecard for project management offices defined
Half of all project management offices (PMOs) are shut down within three years because they are not seen to be delivering "value" to the organisation.
Guy Jelley, CEO of Project Portfolio Office (PPO) says it is essential that PMOs are able to measure their successes (and failures) and communicate these effectively to decisionmakers and stakeholders within their organisations.
According to Jelley, when the subject of PMO value came under the spotlight at a recent Gauteng PMO Forum, where around 80 PMOs were represented, delegates acknowledged that they should prove their value by tracking appropriate metrics. However, there was some vigorous debate about what these metrics should be.
Based on the discussions, the PMO Forum - an interest group that falls under the umbrella of Project Management South Africa (PMSA) and is sponsored by PPO - distilled sufficient consensus to develop a basic PMO metrics framework.
However, Jelley warns that there cannot be a one-size-fits-all PMO scorecard or set of key performance indicators (KPIs). "You will still need to consider the environment in which you operate and tweak them to suit your project portfolio and your organisation," he says.
7 most common metrics
The framework has been built around seven of the most common metrics categories that are widely used by PMOs everywhere:
- Strategic contribution;
- Improved time to market;
- Resource management;
- Return on investment (ROI);
- Stakeholder management;
- People and skills;
- PMO effectiveness.
Each of these has associated pros and cons, as well as potential difficulties that could be encountered should they be included in a PMO value scorecard.
Jelley acknowledges that this is not an exhaustive list of all possible metrics. However, he believes that having too many metrics in a scorecard could do more harm than good.
"Bearing in mind that no set of metrics will work for every PMO, PMOs need to define their metrics with the understanding that these need to be strategically focused, help to drive decision making through the provision of accurate information, and more importantly, demonstrate the strategic contribution of the PMO," he adds.
PMO Forum's 4 metrics
Given that businesses today are evolving at a rate never seen before, traditional tactical metrics such as project management processes, governance and templates can no longer be considered sufficient to meet the needs of today's businesses and the modern PMO.
Delegates at the Forum therefore came up with a list of four essential metrics that they felt today's PMOs must include in their value scorecard, despite the challenges they pose.
These metrics include:
- Percentage of terminated projects - the number of terminated projects not aligned to strategy as a percentage of the total project portfolio.
- Number of project resources with an agreed career path. However, defining development paths for project resources is a complex exercise, particularly when budgetary restrictions can hamstring the process.
- Effectiveness score of project sponsors and owners. This is a difficult one as there is often a reluctance to rate sponsors negatively when there's likelihood of them sponsoring future projects.
- Number of improvement initiatives implemented based on the PMO Roadmap. However, these maturity/organisational capability assessments can be a time consuming and resource intensive process.