Yesterday I listened in on my CEO Kent Crawford’s webcast on “Unlocking the Value of the PMO” I was struck by the theme of the questions being asked by the participants. “What if you don’t have the authority to implement resource management policies?” “How do you get the executive level to pay attention to the need for portfolio management?” and so on.

Granted, webinar participants are a self-selected group, and the title would draw those who are seeking (or struggling) to communicate more clearly what a PMO offers to the organization. But, listening to their questions, I shared some of their frustration. Nevertheless, one quick audience poll that Kent took offered a glimpse into their problems: nearly two-thirds of the listeners were not measuring performance.

[Pause while I let that sink in.]

Thus the title of this blog post. If you aren’t measuring benefits … you have nothing to say to the C-level of your organization except “Trust me, this is working” - an unlikely strategy. I’m repeating myself here (see my previous post) but being able to assign either a dollar value, or an important organizational goal achievement (which isn’t always money), to the activities of the PMO is absolutely critical. Kent pointed out that there are four subjects that are relevant to the C-level’s information needs:

1. Governance - How does the PMO make the organization run more smoothly and predictably?

2. Portfolio Management - How does the PMO help us work on the right projects, all the time?

3. Resource Management - How does the PMO help us put the right people on the right projects, and optimize the value of our human capital?

4. Performance Measurement - How is this making us money, or moving us towards important strategic goals?

A PMO director who can’t answer at least one of those questions with facts is in deep trouble these days.

Well, as they say at the races, Ils sont partis! … the gates are open and the horses are away: the PMO of the Year Award competition is off to a running start. Already I am getting questions from prospective applicants, and from some of last year’s applicants who are ready to try again. One fellow asked me if I could tell him where his organization stood in the rankings, which isn’t really an answerable question, since we didn’t sort or rank below the top six or so who formed the pool from which we chose the winner and finalists. (This is by way of saying, please don’t write and ask me this question!)

What I could do, and what was interesting, was to glance at the evaluation form that had come back from the judge. His PMO had scored high in almost every area; but the area where the judge had reservations was whether or not the PMO had business impact on the organization as a whole.

And, there it is in a nutshell: whether your PMO is a winner or a loser (and I am not just talking about the award here) all hinges on business value and/or perceived organizational impact.

I say perceived because I think that many PMO directors still have not realized that there’s a large component of marketing communications, not only in establishing a PMO, but in institutionalizing it. I’ve written before that PMOs are vulnerable to their own success: once the systems for executing strategy through well-run projects are in place, it’s tempting to think you can rest on your laurels. But, no such luck. When project and program management is working well, it’s invisible: nothing bad happens. And the PMO becomes, apparently, a line item of overhead.

So, the perennial question PMO directors have to answer is: What have you done for me lately?

Implementing a measurement program within the PMO that tracks the benefits provided can provide those answers, but only if it’s wisely designed. Too often, PMO leadership self-measures by metrics I can only call navel-gazing: numbers of people trained in PM, schedule compliance, numbers of project completed, and the like. They forget that a key piece of their role is as liaison with the executive level, and their metrics need to measure things that the executive level cares about.

So, you trained 100 people and they got their PMPs. So what? Aaron Coffman at American Power Conversion (a 2006 award finalist, mentioned in my last post) matched PMP achievement with dollars earned or saved due to projects being delivered on time. Bingo!

It’s not always about money, of course. The 2007 winner, Norton Healthcare, succeeded in large part because the PMO made sensitivity to the needs and concerns of clinical staff paramount. “How will this impact hospital staff?” was a central question involved in selecting and prioritizing the portfolio. Consequently, they have been able to pull off massive capital building and technology projects without ticking off the doctors who run the place … in fact, making themselves indispensable.

So, helping the executive level to perceive the value of the PMO is an exercise in walking a mile in non-project management shoes. What are the drivers of value in your organization? Answering that question is a good place to start.

Join us for more along this same line at our Webinar, Unlocking the Value of Your PMO, next Thursday, March 11. “See” you there.

Around here, we believe in baselining … otherwise, you can’t tell if you are making any progress. The start of a new year seems an appropriate time to look around at the business environment, as well as our internal organizational environment, and make a few resolutions based on a clear-eyed view of present circumstances.

Looking up economic data for a project I’m working on, I came across Moody’s Business Confidence Index. Wow! Love that steep and continuing climb: it bodes well for ventures of all sorts and sizes. Yet even the most confident of the business leaders surveyed were not rushing out to make large investments in inventory or facilities; instead, their immediate plans primarily focused on process improvement.

This is an approach that makes sense to anyone that has ever managed anything, including a home or a garden. During the last recession, when homeowners quit spending money on vacations and new cars, a new word - cocooning - entered the lexicon. Instead of running off to Aruba, they put in a patio, added a little fountain, put up bird feeders … and discovered the beauty of their existing assets and resources. A recent column in the New York Times (Doing More, Spending Less) indicates that the same trend is resurfacing now.

On an organizational level, if we “do more, spend less” that translates to process improvement. And what process is most likely to yield organizational performance improvement? A decade of research carried out under the auspices of PM Solutions tells us that, across the board, improvements in project management processes also correlate to improvements in an array of organizational performance metrics, from the financial bottom line to the qualitative bottom line of customer and employee satisfaction.

No matter where you turn your gaze in the organizational household - aligning the portfolio with strategic vision, improving the portfolio management process, training staff in project management, implementing processes to turn around (or turn off) troubled projects, or improving resource management - you will see an area that, tweaked and polished, results in money saved, morale boosted, or customer confidence improved.

In Italy, it’s traditional to clean out closets and cupboards on the first of a new year, and get rid of all the unused stuff that’s weighing you down - Arrividerci to all that junk! Let’s not forget that the very word “economy” comes from the Greek for “household.” January 2010 seems the ideal moment to take a good look around you (that is, assess and baseline) at how your household is running. Then start cleaning those organizational closets! Tucked behind the inefficiencies and outdated assumptions, you may just find a forgotten treasure.

[For some thoughts on how the PMO can be instrumental in this improvement, see our new Solutions Brief: "Recession? Bah, Humbug!"]

Eavesdropping on the attendees at the CBP Summit here in sunny Cambridge, Mass yielded the following gems:

“Project management is like a ‘black art’ to the executives … no one understands how it works. They kind of want it but are scared of it at the same time.”

“This merger is a little different, because they are keeping the team intact…”

“I worked in the space program, but never built a rocket; worked in the computer industry but never designed a chip … project management is transferable. It’s like Jack Welch said: he never made a lightbulb at GE but he was a great CEO.”

“If I were naming PMI today, I think I’d name it something different. The People Management Institute. The Process Management Institute. The Performance Management Institute. The focus on the project makes us blind to the larger issues.”

“We’re looking for predictable outcomes … instead of the ‘project black hole’.”

“My company is back in the 80s. How do you fast-forward through project management into strategic management-by-projects?”

… It’s exciting - but also daunting - to hear the recipients of the PMO of the Year awards describe what they’ve done - and the speed with which some of the improvements were implemented. Stay tuned for some brief interviews with the Award winner and the finalists later today and tomorrow.

Meanwhile, if you have an answer for that last question: we are all ears.

Debbie’s comment regarding improved employee morale being an ancillary benefit of project management brings to mind a discussion I had with a client CIO last year who had been wondering about measuring the benefits of the project management and portfolio
management methodologies he had introduced into his organization. Naturally he was thinking about “hard numbers” such as projects completed on time and in budget.

This CIO had not yet thought about measuring the human benefits he was achieving: the sense of satisfaction the staff would receive from knowing they were working on projects that were important to the company, the sense of accomplishment associated with achievement of commitments they had made, the feeling of belonging to a team with a common objective. As someone who had been doing project-based work for the past 30 years, I knew that working with a good PM, reasonably applying PMBOK® Guide-aligned
processes, was a much more positive experience than working with a “shoot from the hip” PM.

When I shared my experiences with this CIO and we discussed measuring these indirect benefits, he realized that yes, perhaps there was something there to be surveyed and considered. And, no surprise, the results of his HR survey were aligned with Jeannette’s comments (in her post Agility Happens!) regarding employee satisfaction improvements.

Project management, when practiced right (just enough project management process, as indicated by the risk profile of the project) definitely has a positive impact on employee morale and turnover rates.

I’ve been gratified to see so many people engaging around the topic of metrics. Yet, I know from experience that when you start advocating for a measurement program, there are always a few skeptics who view it as just more process and overhead. That’s why I wanted to share today some links to brief case studies we’ve done with a few of our consulting clients.

You see, one of the things we promise in each and every client proposal is that we will care enough about their success to measure the impact of the work we do. So it’s exciting to see that promise making a difference. For example, a targeted mentoring program established at Merchants Insurance Group resulted, among other value-adds, in one program realizing 758% revenue growth in the first two months of introduction. In another case, helping a manufacturing company to complete a new factory on schedule helped the company to begin realizing profits seven months ahead of schedule. Not only that, but 400 new jobs were created by the project.

With job creation as a primary focus of the American Recovery and Reinvestment Act, it seems to me that the need for project discipline, and smart performance tracking, has never been greater. Not only the public agencies who are now receiving the funds, but the contractors and vendors who carry out the work are being called on to plan realistically, execute efficiently, and show by the numbers that they’ve succeeded.

Without proper performance measurement, there’s no way to know. That’s why we need to measure performance. Yet the question persists:  Does the cost of measurement pay for the value?  My response is a classic one … it depends.  It depends on who’s asking you to measure…and why?

For example, if you feel that your process is not working and want to validate a new one, then yes, by all means … measure your performance!  You need to remember, though, a measurement program takes commitment, resources, and time. First, you have to know what to measure and always keep in front of you WHY you are measuring…what your objectives are, and what you are going to do with the information once obtained. Then, assuming you have the support and the resources, you’ll need a measurement model to be consistent in the planning, collection, and analysis of your measures.

Developing Performance Measures
While there is general agreement that “you can’t manage what you can’t measure,” the actual measurements themselves can prove to be a source of conflict. What will you measure and why? What’s the connection between the performance measures we collect regarding individuals and their tasks and the ultimate performance of the company—if any?

Measures are the easy part—knowing what you want to measure, and why, is hard.  Therefore, following a structured process helps to develop less fuzzy measures, while engaging a wide variety of the people who actually do the work in the process prevents the chosen measures from diverging too far from reality or ease-of-use.

There is no single set of measures that universally applies to all companies. The appropriate set of measures depends on the organization’s strategy, technology, and the particular industry and environment in which they compete. Like any aspect of any “living company,” measures cannot be static: they cannot be chosen once and locked into place. Along with strategy, they evolve and are refined as the organization becomes more focused on and skilled at meeting strategic goals.

Again, if you commit to a measurement program, you will need to have appropriate sponsorship and know what your ultimate objectives are; you’ll need a model to begin implementing. The PEMARI model (Planning; Establishing Measures; Measuring; Analyzing; Reporting, Improving) has proven to work well in dozens of organizations. (This model is discussed in more detail in our white paper here.)

Pilot your program using this model.  Show success and value to the organization, and then expand the program to a larger audience.  Performance measurement can transform your organization and reap huge rewards when done properly.  Basically, I’m an advocate.  My only advice is, don’t start it if you can’t finish it.  And, if it is a politically sensitive area, bring in external staff to facilitate so that there is no perception of an “agenda” from the stakeholders or senior management.

What have been your experiences–good and bad–with implementing measurement programs?