Proving PMO Value: Think Thin

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Categories: PMOs


Amidst all the talk about the value of project management offices (PMOs), maybe organizations should be looking at size.
 
"PMOs do not have to be big", says Ardi Ghorashy, PMP, PgMP, a partner with 80/20 Consulting Inc., Markham, Ontario, Canada, told me in a recent interview.

"The biggest mistake I think that companies make is that they create a monster organization with a lot of overhead and they also bring all the project managers to report into a PMO. That creates a big lump sum of cost sink that becomes very visible at the executive level every year when you review your finances.

Then the question will always get asked, 'What's the return value on this investment.' And project management has traditionally been very difficult and notorious at quantifying its ROI.

... By its nature, a PMO has such an encompassing impact on the organization that it affects a lot of things. You can't really measure it very easily. .... These days we say PMOs need to be implemented extremely thinly. [Thin] PMOs will demonstrate the value very, very easily."  

What do you think? Are "thin" PMOs the way to go?
Posted by Kelley Hunsberger on: May 21, 2009 05:06 PM | Permalink

Comments

Frank L. Harper, Jr., PhD, PMP, ITIL, SSGB, OPM3 QA Lead
An "appropriate" PMO is the way to go. What determines the PMO's appropriateness? The effort required by the PMO to orchestrate the efficient and effective delivery and execution of an organization's critical strategic initiatives is the indicator. This effort will dictate the role(s) the PMO will have to assume to "make it happen" AND the number of resources required to "get the job done."

Steve Rollins
Hello Kelly and Ardi, I read Ardi's post and I have to ask just how much experience either of you really have to make such a statement concerning large PMOs (not to be rude)? I believe on the other hand that PMO value is scaled to the organization based on availability to serve. If the PMO is not producing then something else is wrong. I resist the notion that a large PMO is wasteful. Just the opposite, its nirvana to those who believe in the value proposition of project management. Many PMOs would love to have more people that they can in-turn help the business with. My Kindest Regards!

Ron Goris
Kelly,

I agree that PMO's need to not only "think" thin but "be" thin. Creating a leviathan with tentacles everywhere but cloudy (at best) definition and demonstration of value is only going to lead to more problems, confusion, and demands for cost reduction.

I've always wondered HOW organizations define, quantify, measure, demonstrate and communicate the value PMO's bring to the organization.

Would one method be to simply quantify, track and communicate the year-over-year ROI on the accumulated volume of projects that are approved and delivered by their PMO and PM's? We would need to ensure that all costs are included and that there is a simple and cost effective manner of capturing this information and confirming its accuracy.

Yes I did say "...simply..." above. Can this be a simple (and consistent) method of measuring value? Well, this just looks at the hard dollars of a project. What about the soft or hard to quantify benefits that may result from delivering certain projects? How (or should) they figure into this equation?

As we all know, not all projects are successful. For those that are terminated early, how do they impact this value equation? For those that are allowed to run their course and then determined to be "less than successful" how do they affect the value equation? I would submit that the later group would be easier to build into the equation than the previous one because they did finish and their ROI can be measured.

Then comes the really interesting question....who does the measuring and reporting?

This would need to be done by an impartial party that does not have ANY political or other stake in the outcome, one way or the other. They would also need to provide feedback or findings to all stakeholders on a regular basis so that appropriate actions can be taken to positively affect the value equation. Does this "party" exist in organizations today?

Suggestions....?


Ron.

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