Product Operations Program ManagerBarcelona, Cataluña, Spain
There is extensive literature about what a PMO adds to the organization, but less on the actual (quantified) VALUE that is added. Look forward to your inputs. Saving Changes...
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Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
Value is not about ROI. The value is simple to demonstrate if you follow strategic planning to create the PMO. Strategy is the way organizations answer to environmental events. The answer is through the defined functions/process. In accordance to strategy the organization must decide if project/program/portfolio functions/process must be implemented. if yes, then the next step is to evaluate if a physical business unit (the PMO) deserves to be created of not. If you follow this steps then there is nothing to demostrate. If the same with any other physical units like sales, marketing, manufacturing, etc.
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1 reply by Eduard Hernandez
Apr 03, 2018 11:00 AM
Eduard Hernandez
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Thank you for your prompt reply. The strategy could be driven upon realization of a quite simple exercice, SWOT, thus by looking into and oustside the company.
Could be the case that the company decides to initiate several programs and projects that will create value. Could then be that the organization decides that a PMO will be needed in order to ensure a professional management of Programs & Projects. For that purpose, an expedniture is made, and then a return would be expected. Does this chain of reasoning make sense?
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Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
On the other side, organizations must think in terms of benefits realization. To do that, they must pay attention to the definition of benefit, value and cost which are not monetary only. Saving Changes...
Product Operations Program ManagerBarcelona, Cataluña, Spain
Apr 03, 2018 10:31 AM
Replying to Sergio Luis Conte
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Value is not about ROI. The value is simple to demonstrate if you follow strategic planning to create the PMO. Strategy is the way organizations answer to environmental events. The answer is through the defined functions/process. In accordance to strategy the organization must decide if project/program/portfolio functions/process must be implemented. if yes, then the next step is to evaluate if a physical business unit (the PMO) deserves to be created of not. If you follow this steps then there is nothing to demostrate. If the same with any other physical units like sales, marketing, manufacturing, etc.
Thank you for your prompt reply. The strategy could be driven upon realization of a quite simple exercice, SWOT, thus by looking into and oustside the company.
Could be the case that the company decides to initiate several programs and projects that will create value. Could then be that the organization decides that a PMO will be needed in order to ensure a professional management of Programs & Projects. For that purpose, an expedniture is made, and then a return would be expected. Does this chain of reasoning make sense?
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1 reply by Sergio Luis Conte
Apr 03, 2018 11:31 AM
Sergio Luis Conte
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Sorry Eduard, but not. You can ensure a professional management of programs and projects without a PMO. Please, I am writting this trying to help you because I bring the bread to my table working in this type of things including today where, for example, I was part to demostrate that an special division inside the EPMO was needed in my actual work place. On the other side, the wrong point here is to expect a ROI from a business unit unless you are thinking that the business unit will act as a center that will sell services. Then, you will have a cost of operation but you will have incomes from the services the business unit will sell. For example, if you decided that the PMO will provide project management resources and each other business unit involved into project will pay for them then you have an income there. In my personal opinion, if the organization think to create a PMO expecting ROI forget about to create it. Why? Because is not value perceived.
PMO should be consider a business unit, would you question the ROI of the finance dept. or marketing. The PMO is about the benefits like stated by Sergio. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
Apr 03, 2018 11:00 AM
Replying to Eduard Hernandez
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Thank you for your prompt reply. The strategy could be driven upon realization of a quite simple exercice, SWOT, thus by looking into and oustside the company.
Could be the case that the company decides to initiate several programs and projects that will create value. Could then be that the organization decides that a PMO will be needed in order to ensure a professional management of Programs & Projects. For that purpose, an expedniture is made, and then a return would be expected. Does this chain of reasoning make sense?
Sorry Eduard, but not. You can ensure a professional management of programs and projects without a PMO. Please, I am writting this trying to help you because I bring the bread to my table working in this type of things including today where, for example, I was part to demostrate that an special division inside the EPMO was needed in my actual work place. On the other side, the wrong point here is to expect a ROI from a business unit unless you are thinking that the business unit will act as a center that will sell services. Then, you will have a cost of operation but you will have incomes from the services the business unit will sell. For example, if you decided that the PMO will provide project management resources and each other business unit involved into project will pay for them then you have an income there. In my personal opinion, if the organization think to create a PMO expecting ROI forget about to create it. Why? Because is not value perceived. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
And Eduard, I fully understand you that some people still think in terms of ROI or NPV and these type of things. Those people are lost, believe me. So, in my case, what I tried to say is sending the same message in multiple formats according to my audience. Believe me, this was not easy.
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1 reply by Eduard Hernandez
Apr 04, 2018 5:25 AM
Eduard Hernandez
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Sergio, thank you for your elaborated answer! Indeed, some companies use PMO as a service to the company, with an internal customer. In this cases, I believe that ROIC could be actually measured, although it might not be straight-forward.
A certain capital is invested in order to implement a more efficient use of resources that trigger an earli(er) completion of projects, market benefits, etc. ROIC then is increased by an increase of operating profit. From that perspective, I do agree with the comments from Kiron and Michael.
A PMO should be initiated based on a business case of some kind, and ideally there are some quantifiable metrics which justify its one-time and ongoing run costs.
These will trace back to its mandate - if that is to elevate organizational PM capability, then there is benefit in understanding what the costs of low maturity are and use those as a baseline for comparison once the PMO has started delivering value.
Kiron Saving Changes...
Michael DelaneyPartner| Delaney Management LLCWest Chester, Pa, United States
I agree with Kiron that the justification of a PMO would have included expected benefits and that a quality management plan should have identified metrics and KPIs. The PMO should on a regular basis report the performance of these. Some examples may be project related, such as schedule and budget performance others may be customer satisfaction or rework reduction. These can be quantified and improvements linked to the PMO activities. Saving Changes...
Product Operations Program ManagerBarcelona, Cataluña, Spain
Apr 03, 2018 11:33 AM
Replying to Sergio Luis Conte
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And Eduard, I fully understand you that some people still think in terms of ROI or NPV and these type of things. Those people are lost, believe me. So, in my case, what I tried to say is sending the same message in multiple formats according to my audience. Believe me, this was not easy.
Sergio, thank you for your elaborated answer! Indeed, some companies use PMO as a service to the company, with an internal customer. In this cases, I believe that ROIC could be actually measured, although it might not be straight-forward.
A certain capital is invested in order to implement a more efficient use of resources that trigger an earli(er) completion of projects, market benefits, etc. ROIC then is increased by an increase of operating profit. From that perspective, I do agree with the comments from Kiron and Michael. Saving Changes...
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