Does Your PMO... Blow?
|Situation: You are interested in PMO performance issues.|
At the end of 2008, ESI International conducted a study of 387 Program Managers, inquiring about the maturity and success of their PMOs. Only 8% of those surveyed described their PMOs as being successful.
Among the study’s findings:
Of the 92 percent who do not believe their PMO is successful, the main reason was a lack of:
Thirty percent of the respondents said the existence of their PMO has been seriously questioned in recent years. Among the attributable reasons are:
We spoke again with J. LeRoy Ward, PMP, PgMP, and EVP of ESI International about the survey. “PMO executives are keenly aware of the obstacles to their success,” said Ward. “Closing gaps in skills, knowledge and tools are critical for enabling PMOs to meet these challenges and enhance organisational project performance.” We then asked him a few more questiosn to get down to specifics.
Q. How does the survey define success? It seems as if large numbers of these PMOs achieved some measure of success, but perhaps didn’t meet the higher standard set here.
The survey did not set out to “define success”, but to identify barriers to it. Success is something that needs to be defined by each organization and should be determined based on the strategic goals and objectives set out by the executive, executives, or governance committee who supported the founding of the PMO. We have found in our more than 26 years of helping organizations improve their project management performance that success most commonly includes: cost control/savings; improving time-to-market; a decrease in troubled projects; increase in client satisfaction (internal or external); and increased revenue and profit. Other measures of success are more internal to the practice of project management to include better teaming, improved documentation and consistent application of best-in-class methodologies.
In the survey, we did ask respondents how they defined success from a very high level/broad perspective. They said:
• 25% -- client satisfaction
• 22% -- project success
• 22% -- consistent methodology deployed
• 8% -- number of people trained
• 7% -- higher ROI
Clearly, these measures reflect the varying roles that PMOs can play within an organization. One of the qualitative survey respondents, a senior PM from a UK-based retail operation, put it this way, “The PMO has to justify its existence and provide quantifiable benefits for its existence.” My one comment on these numbers is that I was surprised that only 7% defined success as proving a higher ROI. In fact, this should be right up there with client satisfaction. While deploying a methodology is an important function from a project manager’s point of view, it is largely lost in the most important issues facing business owners, the very owners who pay for projects.
Q. One of your study’s findings was that “The PMO is seen as an extension of administrative support, rather than a professional body with value-add skills.” Was that sort of comment restricted to those that are very governance-oriented (rather than support-oriented)? What are the best ways to demonstrate (and perhaps document) value-add skills in these environments so they aren’t questioned later?
Based on the way the survey was conducted, it is difficult to draw a conclusion as to whether or not the role of governance would affect the perception of the PMO as more administrative rather than a professional body with value-added skills. That said, a proper governance structure includes the involvement of senior leadership and provides a direct communications channel that should enable the PMO to consistently demonstrate its value as a professional body with value-added skills. In other words, my 33+ years of professional experience leads me to conclude that the opposite is true. If PMO has a well constructed governance structure, it is more likely to be perceived as a value-add function.
The “best” way to demonstrate value-added benefits for PMOs varies by organization. However, framing that conversation in a way that focuses on improved project and business outcomes with an emphasis on financial benefits should speak effectively to executive management. From a financial perspective, this can include, but is certainly not limited to: cost containment due to improved project success; increased revenues driven through smart project selection; or reduced labor expenses brought about by improved project management efficiencies. The greater the degree a PMO can work with executive management in identifying, selecting and aligning projects to an organization’s strategy, the more likely executive management will view the PMO as an integral player in setting such strategy, thus increasing the value of the PMO to the organization. To be sure, the ability to successfully execute those projects to realize the intended benefits is where the “rubber meets the road” and where reputations are earned or destroyed. From an executive’s point of view, the ability to beat a competitor to market, to satisfy existing clients, to expand geographically, or to expand a product line to a new demographic, and to demonstrate that project management was the vehicle which helped them accomplish that, will strengthen the role of the PMO and cause it to be seen as integral to business success.
Q. Another situation that arose when people questioned PMO value was “Budget cuts necessitating cost justification, a difficulty for the non-revenue producing PMO. “ What are the best ways for a PMO to demonstrate and document ROI? (the more specific the better)
Let’s take the case of a PMO in a global drug development organization. Studies by the pharma industry have shown that it takes, on average, 11 years and USD802 million to produce a drug that one’s doctor can prescribe. Needless to say, that’s a long time and a lot of money (no matter what currency you’re using!). As a PMO director in this organization, I would first select a random sample of drug development projects that the organization has completed within the past 5-10 years. We would then be able to average the length of time and money it costs us to produce our drugs; then we could compare that to the global average mentioned above. We would then initiate a number of improvements through the PMO to the Global Drug Organization to help boost performance. For example, we might institute or change the way projects are selected (portfolio management); we might establish criteria to be used in each phase of the drug development life cycle such that, if certain metrics were not met, the project would be terminated. We might change the way we form teams for these projects option for the Integrated Product Development Team approach, in which a core team is assembled at the outset who plans the entire project from start to finish having as its representatives members from each functional group within the company who will work on the effort (e.g., research, toxicology, clinical, legal, marketing, IT, etc.) We may also embrace the “heavy weight” project manager concept on certain strategic projects a concept used in the pharma and global auto industries. Finally, we may provide relevant, targeted training to each project manager to ensure they have the requisite skills and tools to do the job. Based on these and other improvements, we would then begin to gather project metrics that will enable us to benchmark these forward projects against our own experience, as well as the global data. To the extent we have shortened our time frame, reduced our costs, and produced “blockbuster” drugs, which is defined as any drug that earns more than USD1 billion/year, we can draw a correlation between our improvement efforts and our project management initiatives. The key issues most organizations have in demonstrating ROI is that they fail to establish this critical baseline. Project managers can often work with the same intensity as the fervently religious in that their “belief” in project management, far outweighs any evidence they can bring forth to prove their case. Belief, faith and hope work well in religious circles; rarely do these emotions ever convince a group of executives regarding the value of project management.
[Editorial note: Electronic copies of the report are available upon request. Contact J. Scott Punk, APR]
Is the Triple Constraint the WRONG way to Define Success?
|Situation: You want to take a broader view of managing projects.|
My new favorite author spoke at our local PMI chapter meeting last night. Aaron Shenhar's book, Reinventing Project Management gives you a LOT of food for thought, but I think that one of his points is truly a breakthrough concept in our field. It cuts to the core of why there is so much controversy around PMBOK-based approaches and Agile approaches. In his presentation, given mostly to PMPs mind you, he says, "PMI has given us a great foundation. However, it's time to leave that foundation and go to the next level."
During his talk, he described a number of reasons why the standard approach to projects must change. A lot of it sounded rather "Agile" in nature. For instance, he talked about the Triple Constraint theory as being a key impediment to successfully delivering projects - because it incorrectly defines the success criteria. He said, success should not be defined just in terms of Scope, Cost, and Time - which are strictly efficiency-based. The focus should be more on business results and customer satisfaction.
His definition of success is broken down into the following categories:
- Efficiency (criteria similar to the triple constraint)
- Customer (criteria = customer satisfiers)
- Team (criteria = customer satisfiers)
- Business Needs (criteria = things like ROI, strategic fit, and competitive advantage)
- Future Needs (criteria = future value, like in the case of new technology where much of the value is yet to be defined)
His theory (he describes it as 'project manager as mini-CEO') is "If you approach projects with this broader set of success criteria, you will be a better project manager, because the results will be better." It's hard to argue with that.
It feels to me like he is calling for us to combine what PMI is starting to address separately as leadership skills with the PM approach in general.
How do you define project success? If the Triple Constraint good the way it is or should some of these higher level issues always be considered when managing projects?
What Really Makes You a Leader?
|Situation: You're in a mood to Show off your leadership skills...|
There are LOTS of great discussions happening right now in the new Leadership GIG. As a part of that, I thought it would be interesting to get your opinion on what is the most important predictor of leadership potential. If you have a moment now, just click on the graphic below to tell everyone what you think.
Project Mgmt is UP ... and Down.
|Situation: You're Interested in Quirky PM Trends|
Since 2004 - it looks like "Project Management" is more newsworthy, while the term "Project Management" has become better understood and less searchworthy. Google Trends graphs the search volume over time of any key word set you put into it. Type in "Project Management" and you get the charts below.
What do you think it means? (if there is any meaning to the trends...)
Defining User Requirements the FUN Way...
|Situation: You Need to Get REAL Requirements in a Way That Makes Sense.|
The Design industry is known for understanding what people need and how to satisfy those needs - that's what they do. Many of their approaches to defining those needs are stripped down versions of the sort of things we do in IT. Sometimes we immediately dive down into the details of requirements gathering exercises without stopping to figure out which of those exercises would be best given what we are trying to accomplish (our business results).
Ideo Method Cards are a tool developed in house for the folks at Ideo. They use them with clients and also sell the cards for about $50. They are essentially flash cards that offer quick methods for understanding user needs, broken down into four categories of exercises: Learn, Look, Ask, and Try. Under each category are about 10-14 method cards. For example, Learn is "Analyze the information youve collected to identify patterns and insights." The cards under that category include:
- Activity Analysis
- Affinity Diagrams
- Anthropometric Analysis
- Character Profiles
- Cognitive Task Analysis
- Competitive Product Survey
- Cross-cultural Comparisons
- Error Analysis
- Flow Analysis
- Historical Analysis
- Long-Range Forecasts
- Secondary Research
The other 3 categories include other methods, but you get the idea. Each method card inlcudes a description of the technique.
So you sit your team down around a conference table and thumb through the cards and figure out exactly what sort of analysis would be helpful in the context of your project. The net result is a well thought out approach to requirements gathering.