Is Your PMO a Profit Center?
Andy Jordan is President of Roffensian Consulting S.A., a Roatan, Honduras-based management consulting firm with a comprehensive project management practice. Andy always appreciates feedback and discussion on the issues raised in his articles and can be reached at [email protected]. Andy's new book Risk Management for Project Driven Organizations is now available.
I assume that companies create PMOs because they believe that they will be beneficial to the organization. We are all free to debate how successful a particular PMO has been at achieving its goals, but at a fundamental level it was set up to help the company through reduced risk, improved efficiency, better consistency, improved process, etc.
The challenge for many business leaders has always been understanding and quantifying that benefit--it comes back to comparing the outcome of a project portfolio run under the auspices of a PMO with what the outcome would have been without that PMO, and that is very subjective. In this article I want to explore the concept of treating the PMO like many other areas of the business--give it profit and loss accountability, force it to become a profit center.
Baselining
I’ll get into how we determine the dollar values of PMO activities shortly, but success cannot be an absolute value, it has to be relative to previous performance, and that requires an understanding of the current state. In an ideal world, this analysis would be completed before the implementation of a PMO so that the benefits can be measured since inception, but there is no reason why a financial model can’t be “retrofitted” to an existing PMO, you just need to create a baseline to start from.
In order to create that baseline…
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