The Money Files

by
A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

About this Blog

RSS

Recent Posts

Project Budgeting in 60 seconds

How to demo your project deliverables

Project Cost Management: An Overview

What you need to know about your project supplier

In Memoriam: Wilhelm Kross

Project Management Metrics: The Hot Topic at #GartnerPPM

Categories: events, metrics

The Gartner PPM and IT Governance Summit was held in London last week. Lars Mieritz, a Gartner analyst, gave a good presentation about using metrics for communicating project success and effectiveness. He started out by saying that the top concerns of C-level executives and their direct reports, based on their research, were:

  • Demonstrating PMO value
  • Effective reporting and executive dashboards
  • Measuring the business value of projects, programmes, and portfolios.

Gartner has many years of research in this area and he shared an interesting trend: in 2003 the top concern of CIOs with regards to IT strategy was the need to improve governance and provide leadership. In 2013 the top concern was delivering business solutions. There’s been a shift towards integrating IT more effectively with the rest of the business.

Why metrics count

Project management metrics based around portfolio performance help improve the perception of success. When researchers asked people what they thought of their PMO the views were pretty poor:

  • 29% said they got some value out of the PMO but it was largely bureaucratic
  • 33% said it was an integral part of getting things done
  • 28% said it was a useful admin/support function.

As Lars said, he hasn’t spend decades in PPM only to be considered a useful admin function, so it’s clear that PMO customers believe there is certainly room for improvement in the services the PMO provides.

KPIs, said the verbatim comments that formed part of the feedback of this study, don’t link to business strategies. They don’t talk about shareholder value. Metrics relating to output don’t explain how to improve this output. Metrics don’t identify or clarify issues relating to performance. And finally, business management teams can’t relate to technical measures.

So, PMOs have plenty of metrics, but PMO customers don’t understand them or think they are useful. What should we be doing instead?

Creating good metrics

The main takeaway for me from this section of the presentation was that you shouldn’t copy someone else’s dashboard. What works for one business isn’t going to work for another, so templates aren’t actually that useful here. Every PMO is unique and provides a variety of bespoke functions to the rest of the organisation, so you should tailor the reporting and metrics in use to reflect that.

Metrics, Lars said, should reflect a strong customer focus to ensure they are well-understood and take a business view of project success. How is success viewed? he asked. Then shape management communications (i.e. reporting and metrics) along those lines. He offered some questions to ask yourself when putting together the relevant metrics for your PMO:

Is there organisational acceptance for standardisation around a single approach or method of reporting? This is particularly relevant if different business units have built their own measures and techniques over time or due to mergers and acquisitions. Different techniques mean different results.

Are the definitions of KPIs and metrics simple and useful for external comparisons? Even if you don’t need to compare performance of your PMO and projects with other companies right now you can be that someone will ask you to benchmark performance at some point in the future. Make your life easy and prepare for that now.

  • Can you use data from other departments to save reinventing the wheel?
  • Is all the underlying data readily available and more importantly, credible?
  • Does everyone understand why you are gathering metrics and the purpose and objectives of this initiative?
  • Are there sufficient resources to put together a full, comprehensive metrics plan? Do you have enough people or budget to support any training required?
  • Is there senior management buy in? Setting up metrics is, after all, a project and it needs executive sponsorship.

Implementing project metrics

Once you’ve defined what metrics are relevant for your PMO, you then have to go ahead and implement them. Lars recommended engaging with users to ensure they understand the process and how these metrics will help improve things. For example:

  • Average time lag between identifying an issue and corrective action – shows you delays in addressing problems and then you can work on speeding this up.
  • % of projects with complete documentation – shows you where projects might be at risk due to information not being gathered; identifies project managers who many need additional support.
  • % of projects with a status report over 10 days old – shows you where project data is out of date and who needs a kick to remind them to update it.
  • % of total effort required to reach end of first phase – shows you potential for project to deliver on time and accuracy of planning/estimates.

“Good dashboards show where the problems are,” he said. And that gives you the chance to show what you are doing to eliminate the problems.

Dashboards should track what is important. He also had a great recommendation for PMO leaders who have to produce short reports for their colleagues or sponsors: if you don’t have much time to present statistics (or many pages to present on) then cycle round the metrics you show each time. For example, average number of training days per project manager won’t change much from month to month so show this one month and then report on something else next month. Over time it will give you the chance to report on more metrics, and of course if someone wants to see the training days figures they can always ask for them.

In summary, Lars concluded that metrics should enable us to take action, otherwise what’s the point of them? He said that we should seek metrics that are simple, intuitive and focus on goals and that finally metrics don’t replace judgement. You’ll always have to apply your contextual knowledge to a dashboard to interpret the full situation.

 

I attended the Summit as a guest of Genius Project.

Posted on: June 15, 2014 05:30 AM | Permalink | Comments (2)

3 Principles for Project Metrics

Categories: metrics

On your project you will have a number of measures and metrics. Key performance indicators (KPIs), critical success factors (CSFs) or success criteria and benefits can all be measured, and you may have some other targets to achieve as well such as customer satisfaction measures.

So what makes a good metric?

According to John Seddon in Freedom from Command and Control: A better way to make the work work, there are 3 principles for making sure your metrics are robust and useful.

1. Does it help understanding?

Seddon believes that the test of a good measure is that it helps us understand and improve performance. If it doesn’t, there isn’t much point in gathering the data. Targets, for example, are measures that don’t help us understand performance. They are arbitrary figures, created perhaps on a whim. Worse, they can focus people on the wrong things, and not on how best to do the work.

Capability measures look at the system of work (in a systems thinking environment), so they encourage people to look at how things are done and therefore they help improve the work. They can be more motivating than arbitrary targets.

In a project setting, by this definition a target held by the Project Management Office of closing 10 projects each quarter is not a good metric. A measure of how long it takes to complete the testing phase is useful, as that gives you data you can compare across a number of projects. Then you can draw some conclusions as to why some projects have a longer testing phase than others and in turn this will help with your estimating.

2. Does it relate to purpose?

The second test of a good measure, according to Seddon, is that the measure must relate to “the purpose of an organisation from the customers’ point of view”. In other words, measures must relate to something that means something to someone.

In a project environment, the person who is likely to be deciding what is important is your main project stakeholder or sponsor. Whatever matters to them is the thing you should be focusing on. For a project manager, this could be the triple constraint in the form of the time-cost-quality triangle. Or you could be told that the response times on the new website you are building are the most important thing and the sponsor wants reports every month about how much you have been able to improve them by. A lot of project measurements don’t actually relate back to what internal and external customers care about, so it is worth looking at what your project is measuring and checking that you aren’t wasting your time.

For more about what customers care about and how you can identify what is important to them, my book, Customer-Centric Project Management, includes a couple of case studies and some templates.

3. Does it integrate with the work?

The third test of a good measure is that it is easy enough to record. If it doesn’t integrate with the way that the work is done, no one will collect the data. That’s true enough – I’m sure you have occasionally been asked to produce reports and have struggled to find a way to represent the data or even to find it, as it isn’t ‘natural’ to be capturing project information in that way.

Seddon also believes that metrics that look backwards aren’t much help. Making decisions based on data that was captured in the past isn’t a good way to plan work going forward. I don’t agree – in a project environment capturing lessons learned, time measures and data that will help future estimates is, in my opinion, a good use of time. But I do see what he means in a service environment. His book is aimed at people in a call centre-type service organisation or manufacturing, where knowing that last week you answered 30 calls an hour or built 60 widgets doesn’t give you an accurate prediction of what will happen this week.

How many of your project measurements meet Seddon’s 3 criteria? And if they don’t adhere to these principles, are you happy about why not?

Posted on: May 17, 2013 04:53 AM | Permalink | Comments (3)

2 Types of Measures

Categories: metrics

Freedom from Command and Control“There are two kinds of measures of use in managing a system: permanent and temporary,” writes John Seddon in Freedom from Command & Control: A better way to make the work work. “Permanent measures, those that are related to purpose, are the guiding measures for all performance-improvement work. Temporary measures are those that are useful in ascertaining the nature and size of a problem before action is taken.”

Seddon is an occupational psychologist who has spent his career trying to improve systems by taking the waste out of processes. One of the ways he has done this is by focusing on what gets measured, a kind of ‘What gets measured gets done’ approach to improvement. His work has no doubt resulted in a lot of projects, particularly those that relate to continuous process improvement, but his book doesn’t cover project environments particularly. Still, I think that the way he splits measures into these two types is relevant to project managers – and we are focusing on governance this month at ProjectManagement.com. Let’s take a closer look at the types of measures Seddon explores in his book.

Permanent measures

Permanent measures, are, as you have probably guessed by the name, permanent. As nothing much is permanent on a project, these are the kind of measures you are likely to find in your Project Management Office or Portfolio Office. They are the measures that help manage the work overall. Some examples of permanent measures are:

Capacity and demand. This can help with resource scheduling on an ongoing basis. It helps to know what work is due to complete and when project managers will be free to take on other projects.

End-to-end time. This is how long it takes to complete the work from the customer’s perspective. As not many projects are repetitive, this is a bit of a pointless measure on projects. However, if you are repeating similar initiatives over a period of time (such as rolling out new software to an office at a time), it can be very useful to know how long it takes to complete one implementation.

Accuracy. In a project environment, this would be covered by project audits. The ‘accuracy’ of a project could equate to scope items covered, fit with requirements or how customer-centric you are and how much value you create for customers.

Temporary measures

Temporary measures are those that don’t last long. They aren’t permanently built into the fabric of how companies report projects. As such, you could have temporary measures on your project, especially if your project has a RAG status of Red and is in trouble. If you are trying to rescue a failing project, you will want to gather some data on what has been done to date and how best you can recover the situation.

It’s less easy to see how Seddon’s examples of temporary measures relate to projects. Here they are.

Type and frequency of demand. This could be a PMO measure, especially if you are looking to recruit an additional project manager or more staff in other capacities. You could measure the type and frequency of demand over a short period of time to check that you really do have cause to hire someone. Equally, on your project, you could use this type of metric for resource management. For example, as you move into the testing phase your resource needs will change. This is something that you won’t measure when the project is over as staffing up to support the product is a task for the operational team.

Type and frequency of ‘dirt’ in input. Seddon is mainly writing about service organisations like call centres, so he means incomplete application forms, letters that don’t have enough information in and so on. In the world of projects, this could be things like project initiation forms that don’t have enough information in for the stakeholders to sign off the scope, incomplete business cases, requests for projects that appear in the form on an email with a good idea rather than a thought-through assessment for a new project etc. He recommends that a few small changes could make a big difference, such as changing the forms or template letters used. For example, you could amend the form on your company intranet so that it is rejected unless someone enters all the detail required to submit a new project for consideration.

Type and frequency of waste. ‘Waste’ to Seddon means steps in the process that don’t add any value. These could be things like handovers between teams, lost time, rework and errors. There are probably numerous places on a project or in your project management processes where things get lost or handoffs between teams are not as slick as they could be.

I’m a big believer in taking what we can from other areas of management practice and applying them to projects, so I think it is worth considering what we can learn from the type of metrics used in service organisations and the like. Do your project or PMO metrics fit any of these categories?

Posted on: April 27, 2013 09:20 AM | Permalink | Comments (2)

Could you use a balanced scorecard?

Categories: metrics

Many companies use a balanced scorecard to monitor progress against a number of key business strategies or objectives. Areas on a balanced scorecard are typically things like shareholder value or growth measures, quality of service and engagement measures for both staff and customers. The scorecard could look something like this:

Each month the key measures will be rated so that the company’s performance can be measured month by month. A popular way to do this is with the red/amber/green colour coding.

Could you adapt the principle of a balanced scorecard for your project? You can change the quadrants to match the things that are important on your project, for example your key success criteria. Your project scorecard could look something like this:

The idea is to have metrics that you can measure monthly for your project. Choose metrics that you can measure easily and that won’t take you too much time to gather – you don’t want to be spending all month pulling together statistics. Ideally they metrics should mean something to the project team and your sponsor as well. The balanced scorecard layout is just an alternative way to display the information graphically.

Metrics help you manage. What metrics do you use to keep your project on track?

Posted on: August 12, 2012 03:21 PM | Permalink | Comments (0)
ADVERTISEMENTS

"Bad artists copy. Good artists steal."

- Pablo Picasso

ADVERTISEMENT

Sponsors