How to Measure PMO Success
Organizations establishing Project Management Offices (PMOs) have often reached an inflection point: company growth has outstripped current systems, or has outpaced the ability of disparate departments to coordinate their efforts in a way that aligns with organizational strategy. A PMO is a logical next step.
A company might establish its own PMO, bring in outside help or, as in a recent engagement of ours, outsource PMO activities while that same PMO team works to hire and upskill an internal staff to take over on a permanent basis.
PMO projects often revolve around technology; for example, enabling a company’s CRM system and accounting software to mesh for more effective information sharing is a frequent objective. But any cross-departmental issues or situations requiring improved coordination across an organization are prime candidates of PMO attention.
Here’s the problem, though: over the past decade, PMO project failure rates have hovered at around 70%, a state of affairs carrying a price tag of between $50 billion and $150 billion in lost revenue and productivity. Succeeding 30% of the time will earn you a nice paycheck if you’re a major league baseball player, but in project management you’ll want a higher batting average.
How do you position your PMO to perform more consistently than that distressing 30% success rate? What are the roadblocks along the way? And how will you measure PMO success?
Begin with the end in mind
Failing to plan is planning to fail, says the old maxim. And to be sure, the success or failure of any PMO effort lies in correctly identifying not only the challenges but the correct path to their resolution. It’s not at all unusual for our assessments to reveal issues that are quite different from the reasons we were called in. It’s safe to say that if problems are misidentified, your chances of correcting them are slim.
Traditional PMO assessment tools, including the Crawford Model and the Maturity Cube, have their advantages, but from our point of view they leave some unanswered questions on the table. In these models, operations are ranked on a scale of maturity ranging from “Does this process exist?” to “Is this process performing at peak effectiveness and efficiency?” Processes are rated on a scale of 1 to 5, with 5 being the highest, based on Capability Maturity Model Integration (CMMI).
The trouble here is the exclusive focus on processes. A PMO prescription that doesn’t consider those processes within the context of overall organizational strategy is not likely to be successful. We often encounter organizations whose operations are tied into knots with paperwork and procedural t-crossing and i-dotting, a sure sign of an excessive focus on process.
Still worse is the failure to view both process and strategy through the lens of company culture. “Company culture eats strategy for breakfast,” said Peter Drucker, and we agree. But we would further add that culture eats strategy only after strategy has eaten processes. A process-focused PMO road map that fails to account for strategy and culture is destined to wind up in that 70% column.
More than process
These shortcomings of traditional assessment models led us to the development of the Operational Maturity Model (OMM). As the name implies, the OMM also assesses maturity of processes. But in addition, the OMM recognizes that every organization will have its own state of maximum effectiveness, unique to its culture and its operational needs.
In other words, there is no ideal, cookie-cutter set of conditions that would result in a CMMI score of 5 across all PMO areas. And in fact, that may not even be desirable: it’s possible to be very effective at lower maturity levels in certain areas of focus. Each organization is unique, and the key to the OMM model is in evaluating how PMO operations impact operational effectiveness, not merely the consistency of processes.
Your organizational fingerprint
Recognizing that each organization is unique, we use the OMM to develop an organizational ‘fingerprint’ to represent how PMO efforts are managed and how they boost the effectiveness of projects. As with a real fingerprint, we map more than 20 nodes to identify the status of core operational areas and the gaps between their current state and desired state. These nodes covering basic operational areas run the gamut from reporting and governance to portfolio management and financial management to project integration and coordination. It should be noted that while most of these areas of measurement are the same across organizations, additional nodes can be put into the mix to accommodate the unique needs of any given company.
By way of an example of this customization, a finance organization in New York was primarily concerned with demand management. We designed an assessment revolving around seven nodes relevant to the issue for a tailored PMO approach to their situation.
The assessment of the current state begins with a fast-track analysis process conducted by a few senior team members who rank nodes according to operational importance and develop a simple spreadsheet. This often identifies prominent problem areas.
The outline provided by that fast-track process is then filled in through a comprehensive series of staff interviews at several different operational levels, covering each applicable node. All responses are reported anonymously to encourage honest, unvarnished feedback and a true reflection of the starting point for PMO improvements. The results of these interviews are compiled and thoroughly reviewed by our team. The final report that results includes options to achieve more project management effectiveness in ways that do not challenge the existing culture (optimizing), moderately challenge culture (incremental culture shifting), or represent a significant break from existing culture (jarring, big, and expensive).
The assessment, of course, is not only a snapshot of the current state of affairs but a road map to the desired state for each node in the organizational fingerprint. The mileposts between Point A and Point B are expressed in the form of Objectives and Key Results (OKRs), specific metrics that show the way to the destination (learn more about OKRs in this post).
In almost every case, we first look to implement the high-impact changes that will have little or no effect on cultural alignment; the low-hanging fruit, so to speak. Deeper and wider changes may require not only leadership buy-in but the alignment of competing internal interests, or the “what’s in it for me?” factor. PMOs are all about change, of course, but as humans we are wired to resist new ways of doing things, especially if they appear to be done only for change’s sake. The road map laid out by the OMM is about working on the right things in the right way to get the whole team rowing in the same direction.
Did it work?
So, back to the original question: how do you measure PMO success? The simple answer is that progress is measured against the OKRs specified in the plan. At any given time, individual nodes and their associated objectives can be – and should be – reviewed and reevaluated if necessary.
More to the point is how best to ensure success in a sphere where 7 of 10 efforts fail. As you’ve gathered by now, the work done up front will go a long way towards that goal. That work must be about not only the processes for improvement but placing those processes within the overall context of organizational strategy and culture.