The Money Files

…At least, that’s what a survey by ESI would have you believe.

The funding for PMOs has historically been a bit iffy. That’s not a technical term, by the way. PMOs have struggled to prove their value and there is a cyclic effect when times are hard in business: PMOs start to lose their funding and get scaled back or cut completely. That, according to ESI, is finally changing.

The study of over 900 respondents held earlier this year reports that 49% of PMOs are funded as a corporate overhead. Even the word ‘overhead’ doesn’t do the PMO any favours. I know PMOs aren’t exactly revenue generating but they should be a governance and cost control centre rather than a bottomless black hole of overheads. In fact, where a project is done for a client, and a PMO is part of the deal, 40% of them are funded by the project. So you could argue that the PMO is a revenue centre in those situations. However, the study does not make it clear whether those costs are passed to the client or not. I digress…

Corporate i.e. central funding is a good thing for PMOs. ESI believes that corporately-funded PMOs have a far greater opportunity to mature and to provide a wider range of benefits and services both to projects and the business as a whole.

Funding increases on the way

Enterprise PMOs are optimistic. The report concludes that around 30% of enterprise PMOs thought they would be seeing increased funding in the next financial year, so they must think they are doing a good enough job, growing enough and gaining enough recognition to be worth the extra investment. The ESI pundits report that enterprise PMOs typically have a wider influence and higher visibility than those PMOs set up to support an individual project or programme.

PMOs that are supporting individual initiatives are less optimistic about their future and their funding. This is hardly surprising: if your department has been set up to support a project and then that project finishes, your future is uncertain. You can foresee the end of the project from Day 1 so it is no shock that project level PMOs are a bit more reticent about their future.

The challenge of resource management

Another interesting statistic from the ESI study is that resource management is perceived to be the thing that the PMO is worst at by the people who actually do the job.

About half of respondents reported that their PMO has been ‘very ineffective’, ‘ineffective’ or ‘neither effective nor ineffective’ at resource management across projects and programmes.

This is a shame (and a surprise). I thought one of the main benefits of a PMO was to handle resource management and make sure that the right people were working on the right projects at the right time. They certainly have the tools and the remit to do that, if they want. Resource management is tough because it’s probably the part of project planning that deals with the vagaries of your people more than any other. There are just so many variables and things that might change. Keeping track of who is doing what when is more than a full-time job and relies heavily on the support and input from the team members themselves. Plus more and more of what project managers do is knowledge work which makes it very difficult to estimate. This is going to continue to be a challenge for project managers and PMOs.

Another resourcing point flagged by the study is the lack of access to team members trained in Agile working practices. More and more teams are adopting Agile but the training and change management aspects of embedding this in the organisation seem to be lagging behind.

And the challenge of recognition

The survey invited participants to say what other people thought the PMO struggled with as well as giving their own assessment. Inability to effectively manage resources was not something that made the top list of reasons why people challenged the PMO.

The main reason for ‘challenging’ (for which I would read ‘complaining about’) the PMO was about the value that it added to the organisation. In other words, people saying that it didn’t add any value to the business. That’s not really a surprise. Executives have struggled to see the value of the PMO for some time and it’s only when you have a programme of quick wins and a high profile about the work that you do that the value of a PMO is clear. And even then you won’t always win over the detractors. There will always be someone who says project managers should just get on with it.

PMOs provide a valuable role within a company and the regular ESI studies show the changing landscape of the global PMO. It will be interesting to see if we are still hearing the same complaints and complements about PMOs in a few years.

In this video I discuss the 6 tools and techniques related to project cost control.

I’ve written before about Carlos Serra’s great presentation at PMI EMEA this year. In this final article about my thoughts around what he discussed, I’d like to highlight the barriers he flagged that prevent organisations from effectively carrying out benefits realisation management.

1. Low levels of competence

First up, one of the major barriers to effectively measuring and achieving benefits is lack of skill. Project managers that don’t know how to do this won’t do it. Simple.

Qualifications and credentials can help, but I think you would also benefit from coaching or a PMO manager who could guide you through the processes, especially the first time you do it. It starts with a robust business case that explains what the benefits are and then carries on to go through processes to identify how they are going to be measured and then actually measuring them. It’s quite an involved process so without prior experience or a lot of support it’s no wonder that people struggle.

I’m not sure of any qualifications that particularly address the detailed processes of benefits realisation management, but I’m sure there are some.

2. Out-of-date culture

A culture that ranks projects on their project management performance (i.e. did we hit the budget and deadline?) instead of their overall contribution to business strategy is one that doesn’t value benefits management. Ideally, the business culture should evaluate projects on their outcomes, not their output, but that requires a change of mindset and a longer term vision – or an awareness, at least, of the longer term.

I feel it is hard to change culture, especially at the top, but at least if you are aware that success is being measured in ways that don’t tangibly relate to benefits then you can work accordingly.

3. Lack of integration

Integration across all areas of the business helps: no one gets much done in an organisation that is riddled with silos. For example, in the area of benefits management you’d want to be able to link the processes of:

• Portfolio management
• Governance
• Operations, and
• Change management

with benefits so that you can track them through the whole project life cycle and the whole business from conception to delivery and beyond.

Integration at this level requires a degree of maturity that I don’t see very often. If you don’t feel that you have the business integration across the whole piece that would successfully lead to good benefits realisation, then I would recommend you start with what you can influence and see what difference that makes.

4. Poor processes

Poor processes are a barrier to getting most things done and benefits management is no exception. When there is a gap in the process for managing benefits then you’ll find things fall down through the holes.

Carlos pointed out in his presentation that one of the common areas for poor processes is in businesses that provide products and services to external customers. I can see why it is harder perhaps to track benefits in companies like that, but if you want to make sure that your project management division is achieving company-wide benefits, it should be an end-to-end process, even if the end is external.

Setting up robust processes must take time: I imagine a fair amount of time as it requires a deep level of organisation maturity, at least in that area if not in all areas of managing projects and project selection.

5. Lack of leadership

This one comes up time and time again, doesn’t it? If benefits management is not taken seriously at the highest levels in the organisation, then the lowly project manager (or even quite a senior project manager) doesn’t have a chance at being able to adopt good practices on his or her projects.

Benefits realisation needs to be led from the top, with a focus on a suitable culture, mature processes and a corporate overview that stresses that projects are done because of the outcomes that the business receives.

I really enjoyed learning more about benefits from Carlos. I hope you did too!

• Read an introduction to benefits management here.
• Read about tools and roles for benefits management here.
• Read about how you can manage benefits here.

And find Carlos’s blog online here: Projectizing.com

In this video I explain why project managers should be commercially aware.

The APM have recently produced a research paper about what makes projects successful, called The Conditions for Project Success.

The 12 factors that “provide a framework for project success” are not likely to be things that come as a surprise:

1. Effective governance
2. Goals and objectives
3. Commitment to project success
4. Capable sponsors
5. Secure funding
6. Project planning and review
7. Supportive organisations
8. End users and operators
9. Competent project teams
10. Aligned supply chain
11. Proven methods and tools
12. Appropriate standards

The bit that is most interesting in the context of this blog is how those factors map to successfully delivering on your project budget.

What makes for a successful project budget?

The research report looks at how strongly each of these success factors map to common measures of success such as time, quality, stakeholder satisfaction and then a general measure of success across the board. The budget one relates to “delivery to budget” so I take from that whether or not the project was completed without exceeding the budget.

The top six success factors which influence your ability to hit your budget targets are:

Planning and project review

This was in the top three for all success measures, which makes a lot of sense. This area covers progress monitoring, good scheduling, a flexible approach backed up by risk management and a sensible approach to managing change, good project initiation and an approach to lessons learned.

Effective governance

This was another factor that correlated strongly to project success across all the measures. You can’t monitor and control your spending unless you have clear governance in place. And more than clear governance: it needs to be effective at keeping that spending under control.

Goals and objectives

Unsurprisingly, this was the third success factor that mapped widely across all areas.

Proven methods

Related to the budget measure specifically, proven methods (i.e. “best practice” techniques) has the same statistical influence as goals and objectives and the next one…

Supportive organisations

This relates to whether the culture, structure and environment are set up to be conducive to project success. The example given in the research document is that trade unions are supportive of the project.

Competent project teams

As you’d expect, having project managers and team members who know what they are doing and are capable of carrying out their roles without making stupid mistakes is pretty important.

Commitment to project success

This relates to everyone involved believing that the project is achievable. In other words, making sure everyone is aligned to the vision and that the vision is not ridiculous. This has to flow across all the team members from the sponsor to suppliers and any other third parties involved.

The least important success factors

The three success factors deemed statistically the least important to being able to deliver to budget are:

• Aligned supply chain
• Capable sponsors
• Appropriate standards

What about funding?

Surprisingly, secure funding as a success factor comes in at number nine. It’s not in the bottom three, but it isn’t in the top six either. I thought that was odd: surely secure funding is a pre-requisite for hitting your budget?

I suppose, on thinking about it, that it isn’t. If your funding isn’t properly in place then you don’t have a budget to hit.

Subsidiary success factors

The survey also looked at subsidary success factors: those that aren’t considered the main ones (the 12 mentioned above) but that are still statisically significant when you look at their contribution to project success. I should probably add at this point that it was a survey, so these are respondent-reported outcomes rather than an independent expert analysing project data and assigning success factors and measures objectively.

The three subsidiary success factors that correlate with delivery to budget are:

1. The project has realistic time schedules
2. Tight control of budgets is in place to ensure that the value of available funding is maximised
3. The project has active risk management.

Again, none of this stuff is rocket science. If making sure that your project delivers within the budget you have agreed, then you need to make sure you have enough time to do it, manage your money well and mitigate risk in a sensible way.

Do these results about project success factors and their impact on whether or not you can deliver to budget come as a surprise to you? Let us know in the comments.

About the survey: The study was done by asking 25 leading project management professionals to come up with an initial framework for success factors and then checking it out with 862 practitioners. You can read more about it on the APM website and the whole report from BMG is available as a PDF download here.