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: fully 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.

Since today kicks off the 2010 PMO of the Year Award application period (see the contest information, and download application materials here), and since I’ve been writing a series about roles in the PMO, it seems a good time to review the previous winners of the award, and see what they have in common with regard to people management.

One thing that’s immediately apparent is the quality of PMO leadership. It’s been my privilege to meet almost all the PMO directors of the winners and finalists for the past four years (the leader of the Australian Securities Exchange PMO, a 2009 finalist, has been just about the only one who couldn’t make it). While this may be a very subjective assessment, it’s striking that, in retrospect, they were all charming and personable people … “attractive” not necessarily in the sense of appearance , but in the sense that you wanted to spend more time talking with them, and that their enthusiasm for their work was contagious. At the same time, it was obvious that they were the kind of leaders who constantly say: “I couldn’t have done it without (my team, the project managers, my executive leadership, my spouse).”

Several years ago, Dr. Frank Toney noted that humility was a characteristic of the best leaders; the PMO of the Year award-winning PMO Directors seem to bear this out.

It’s worth noting, as well, that winning PMOs have primarily been staffed PMOs: they follow the trend identified in the research of centralizing project management roles in an organizational home within the PMO. And they have been intimately involved in helping their staffs succeed: providing training and other career development opportunities. Some of the top PMOs even have staked their success on developing their human capital; the case of American Power Conversion, a 2006 finalist, comes to mind: they meticulously baselined their project outcomes by whether the leading PM was PMI-certified or not, and then followed the trend of results as they pushed to certify all the project managers under their umbrella. The results were astounding: take a look at the graph of PMP-led projects vs. non-PMP-led at the link above.

All this makes sense, of course because, in the end. a PMO is just people. Trained and qualified people led by a director they have trust in … are winners every time.

This just in: Our partner in presenting the PMO of the Year award this year is the PMO SIG of PMI. They’ve got a new blog all about PMOs: check it out here.

In 2003, when I began researching PMO roles for our books, Optimizing Human Capital and Project Management Roles and Responsibilities, I proposed adding a role called “Manager of Project Managers” to our list, and was met with some skepticism, and rightly so. At that time, there was little evidence that project personnel were being managed and supervised within project offices: the matrix organization ruled.

Nevertheless, because we hoped that the book would be prescriptive - a force for change - rather than merely descriptive of present circumstances, this role (along with others that were rare at that time) was included. Whether it was because we correctly fingered the pulse of the industry … or because companies took our advice … by 2007 when we did our State of the PMO research, the majority of enterprise-level PMOs were actively managing a stable of project managers, plus a wide array of specialist positions, within the PMO.

What do I mean by “managing”? - well, pretty much everything that HR used to do: hiring, training, performance reviews, mentoring, and providing oversight. In addition, the PMO Resource Manager (the most common take on this title among our clients today) also stays close to the Project Portfolio Management process, assisting the PMO Director and/or Portfolio Manager in allocating and levelling resources to optimize the organization’s strategic portfolio.

Does your organization have a PMO Resource Manager? Share insights about the role with us, and we’ll be sure to include them in the next edition of our Roles & Responsibilities book.

Next week in our review of PMO roles: The Program Manager.

On Thursday, at the PMI conference in Belo Horizonte, Brazil, the conference organizers featured a track of simultaneously translated presentations in English (adding additional complexity to their conference planning … and pulling it off beautifully, too). The keynote was Greg Balestero, CEO of the Project Management Institute. He spoke on the theme of project management in times of economic stress, and one statistic - to which he kept returning several times during the presentation - seemed particularly significant.

According to research by PMI, there are somewhere between 16 million and 20 million people around the world working on projects. (My personal bias is that it’s probably many more than that, but they don’t realize they are doing projects!) In contrast, there are only about 400,000 people holding project management certifications of various brands.

Whoa. That’s a lot of room for seat-of-the-pants, PM-by-accident, lucky (or unlucky) breaks on projects. Conversely, that’s a lot of room for improvement.

Of course, there’s an argument to be made that holding a certification doesn’t automatically make you a better project manager. But knowledge of the basics is so powerful that providing training - whether or not the recipients go on to achieve certification - is a must for companies that hope to sail through this particular economic stress. That’s doubtless why the companies doing the most training also report better organizational performance on a diverse scoreboard of measures, according to our 2009 PM Value study.

I’m still digesting that Accenture research on what companies that emerged strongly from the 1990-91 downturn did differently during the bad times. As I said in my previous post, this is one of those business news articles that is all about portfolio management, without ever mentioning it.

I suspect that is because a lot of companies - and many management researchers - don’t know there is a name, a history, a set of standards and best practices - for what they are trying to do.

A key finding, for me, was that the most successful companies had a keen insight into their business. Now, this might sound elementary, but 15 years in business journalism have taught me that business is not as rational as you might think. Companies frequently have no idea what is going on within and across departments; duplication of effort is therefore the norm rather than a fluke; and lacking any systematic measurement system, they also have trouble knowing what is working and what isn’t.

That’s why implementing project portfolio management (PPM) usually results in some AHA! experiences. “You mean … we were doing THAT? … three times?” and the resulting cost savings.

So, PPM is one of those project management tricks that both saves money … and allows companies to invest in some “blue horizon” projects that will carry them forward. A tuck here, and let out a seam there, and you can take the “stitch in time” that lays the ground for growth.

But, there’s another aspect of PPM that’s also in line with the research linked to in my earlier post. With apologies for the resolution on this graphic, check out the Portfolio Scorecard model we proposed in our book, Seven Steps to Strategy Execution:

Balancing with realism means taking resources into consideration

Now, usually, you’d see the profitable projects (”bread and butter” projects is one nickname for these) and the necessary ones in two blocks of that square. But, in fact, they fall into the same category. You are going to do these things … no matter what. Either they are required, or they make money (rarely both) and so they are IN.

What’s missing from the balance equation in many models is the upper left quadrant: Do we have the capacity to do this? The people, the skills, the cash … the software, the space, the ideas: the resources that, without which any list of projects is just a wish list.

The Center for Business Practices’ Strategy & Projects Summit is in full swing this morning, here in Cambridge Mass … I’m blogging with a view of the Charles River, which is a nice change. And, speaking of change: the Massachusetts Biotechnology Council’s here with us, listening to my CEO Kent Crawford do his presentation on the PMO - material drawn from our books on the topic.

I say, speaking of change, because last year at the Summit I chatted with a young man who worked for a Cambridge-based biotech firm and he had a familiar-sounding tale to tell: tasked with implementing portfolio management, he struggled to get his execs–doctors and scientists by training–to buy in to the process. As I recall, he said that they felt project management was both less of a rigorous “science” than they were used to dealing with, and more of a standardized approach than they liked to submit to–as people who were used to thinking of “academic freedom” in their approach to daily work.

What a difference a year makes!

Looking at the Mass Biotech website, we find not just our Ultimate PMO seminar being offered (and it is at capacity) but a meeting of the organization’s Project Management committee coming up within the month, addressing how biotech companies can implement sustainable practices. Here’s a quote:

Inherent in the concept of sustainability is the minimization of waste and reducing the use of natural resources to better match the rate at which they are replenished.

There’s a nice resonance between this balancing of resource use with resource availability … and the very same kind of resource balancing that PM practitioners are used to managing in terms of human resources. This may well be yet another area where the tenets of project management prove to be portable across industries, across sectors … and even across the divide of a changing global economy and climate.

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.

Well, the numbers are crunched, sliced and diced, and our new research report on Resource Management Challenges has been posted on our website … and while I can’t say the results hold any big surprises, there are a few things I wanted to hold up and point at (which I will do, actually, in person, at our Strategy & Projects Summit in Cambridge this May.)

In an earlier post, I wrote about one of the (human) resource challenges pointed to in this report: the fact that executives often assume there are plenty of resources to accomplish planned work when, in fact, there are not. (This is a research finding so familiar to most of us from our daily work lives that it probably warrants a resounding “Well, duh!” We can only hope that some executives will read it and recognize themselves in it …)

The other finding that I put under the heading “(human) resource challenge” centers on tools for resource management. Once again, the findings merely validate the sense of disappointment with tools that has become almost a cliché. If I worked in the software field, it would give me a headache to read that, while almost half (47.9%) of all organizations use automated information systems to assist in resource management functions, they are lukewarm at best when describing the value of those systems. Almost half (47.3%) thought that the tools did not accurately calculate resource forecasts. More than half (55%) said their managers did not use the systems consistently or effectively.

As we all know, software only works well when it has good data to work from, and skilled users. That’s why this is a (human) resource challenge. Bad experiences with tools of any kind, in our experience, result from poor preparation for their implementation. The best project management software in the world won’t raise the PM maturity level of an organization with poor management support for the process and resistant or untrained users.

One of my favorite scenes in movie history is from The Lion in Winter, which takes place at Christmas in the castle where Henry II (Peter O’Toole) has imprisoned his uppity spouse Eleanor of Aquitaine (Katherine Hepburn). In the midst of a raging domestic battle over the king’s mistress and his succession plans for their three sons, Hepburn winds up lying on the floor. “Ah, well,” she says in a calm, philosophical tone, her cheek on the threshold. “What family doesn’t have its little ups and downs?”

Well, it’s Christmas time again, and members of the global family we call “the economy” are having our ups and downs. Mostly downs, you might say, And yet - speedreading the headlines in the various business and tech newsletters arriving daily in my inbox, I’m getting the sense that, at the same time that certain aspects of our economic life are darkening and dwindling, other aspects are getting ready to come into their own.

Case in point: Management Consulting News reports in its December 2 edition on the generally lousy state of the ten top publicly-traded consulting firms the organization tracks. No surprise there; but wait - there’s one exception:

Of the companies in the MCNews Index, only Hewitt has managed to hold onto a gain in its stock price over the period of the last two years. From the inception of the Index in January 2007, Hewitt’s stock price has gained almost 6.0 percent, while all of the remaining companies face heavy losses in their stock values.

What interests me about this fact is that Hewitt, alone among all the other companies in the MCNews Index, has been a finalist in our PMO of the Year Award competition. Their innovative management of information technology globally and their application of project management problem-solving techniques to the challenges of going public are described in the 2008 awards program. Since I don’t much believe in coincidence; I’m betting that great project and portfolio management has allowed this HR outsourcing and consulting firm to do the things that less-savvy businesses are now scrambling to implement: resource optimization, portfolio management, aligning strategy with action via projects. None of these processes can be well managed without a PMO, so companies that hope to thrive in lean times should take a leaf from Hewitt’s notebook.

A few years ago I attempted to map the high-performing organizations in our Strategy & Projects study to available financial metrics. It turned out to be impossible, as the companies ranged from big nonprofits to small close-held consultancies; from government agencies to the Fortune 500, so no common metric could be found. But, what I did find when I Googled their names was a string of superlatives along the lines of:

Winner of the 2005 Best Place to Work Award!

Professional Services Company of the Year!

Customer Service Award!

Regional Poll Says We Are Tops in Patient Care!

… and so on. That’s when I knew that our instincts about the bottom-line effects of managing by projects were correct. Now, I’m thinking that economic collapse is the perfect environment for project management to prove that executing strategy as a portfolio of projects, balancing resources wisely across the portfolio, eliminating rework and duplication, and so on, will be the differentiator between organizational success and freefall.

Going up?

No, this post isn’t about the Rockies … except in the sense that projects face a rocky road when confronting with resource management challenges … which is, according to our research, the most common challenge in project management.

No, the divide I’m posting about is the one between projects and the executive level … the divide between decision makers and reality. That divide is legend, but it’s also apparently very real: in our latest study on Resource Management Challenges (to be released soon at www.cbponline.com) respondents indicated that executives commonly believe that there are enough resources to accomplish projects–when the reality is quite the opposite.

Resource Management literature is filled with descriptions of “best practices” and software vendors rave about the resource management capability of their sophisticated tools. Yet study after study shows that resource management issues continue to be the number one challenge to organizations that practice project management. What are the root causes of these resource challenges and what can be done about them? And how do best-in-class organizations manage their resources differently from the rest of us? The Center for Business Practices recently conducted a survey in order to understand the issues surrounding resource management challenges and to see if we could find some possible answers to those questions, and here are some of the findings:

• Resource management maturity is low in organizations
• There is a direct connection between the level of resource management maturity and the performance of organizations
• There are significant challenges particularly in resource planning and estimating

What’s particularly puzzling is that organizations fail to practice many of the resource management standards noted by the Project Management Institute. In fact, organizations don’t seem to even practice some basics consistently — like creating staffing management plans for their projects. But high-performing organizations are significantly more likely to practice these standards than low-performing organizations. Those standards in particular include:

• Resource career plans used to effectively utilize and train employees
• Information about potentially available resources used for estimating resource types
• Staff assignments are effectively negotiated with functional managers
• Scope of work and resource data is used in estimating activity durations
• The organization has a centralized pool of resources
• Resources required is used to determine the duration of activities
• Project performance reports provide information on resource performance
• Resource leveling is used to keep resource usage constant
• Resource reallocation from non-critical to critical activities is used

It isn’t hard to imagine how bad resource management can cause otherwise good strategic planning and portfolio management to implode. High-performing organizations (as identified by our study) address strategy, the portfolio, AND resource issues wholistically by centering project personnel in a strong, effective PMO. They have a resource-sharing culture as well as a project management culture.

So, to us it looks like the enterprise PMO is the pass across the Great Divide: a place where strategy management, portfolio management and resource management meet and synchronize.

You can read more about my PMI paper on this subject at: Resource Optimization: The Most Significant Challenge to Project Management Effectiveness

I’m presenting it at 2:30 today. Or, stop by the booth and chat with me about it if you are in Denver this week.