Project Management in Practice

Beyond the alphabet soup of PRINCE2, MSP, MoP, PMBOK, ITIL, Agile

Category Archives: Forecasting

Building PMO metrics


The Christmas and New Year is always a good time to take some time off the hurly burly of daily grind and reflect on how things are going. Towards the end of the year I did some work on what metrics would help us run our PMO more efficiently. Metrics are always difficult to establish, especially as they only tell a story once you have a baseline to measure against. This is probably a heavy topic for the first post of the year. Apologies for that.

Building-PMO-Metrics

While I see a pressing need for making decisions on evidence, I am also cautious against spurious interpretations of metrics, which can easily happen if taken out of context. You only have to look at statistics driven sports such as baseball or cricket where fans and officials will take diametrically opposing views of players or tactics using different statistics. Numbers are just that. What you interpret from them is what gives them meaning.

The first task was to explore what type of metrics would be useful for our business. I work for a IT professional services firm. It has unique challenges from other types of businesses. I did some research on what other similar organisations are doing. I found this compilation from OpenAir and excellent resource. There are three articles in this and the first one by Thomas Loh is by far the best. This was an excellent start. The key is not to go chasing every metric under the sun, but the ones that you need to measure. That is even more crucial when your PMO is lean and you are in the process of building its maturity. Capturing metrics and analysing them takes effort and time. You cannot afford to be spending either frivolously.

The standard metrics of utilisation, profitability, billing rate etc are quite easy to measure after the effect. We were looking at getting at least one forward looking metric that can help validate our decision making. We decided to invest in our effort in an area that is most challenging for a services business like ours – that is the pull between resource and demand.

Resource-vs-DemandIn services business you either have too much work or too many people. It is crucial to have a good handle of this to maximise profitability. The cycle of winning new business always takes time. If you have left your efforts to bring in new work too late, you will inevitably have periods of low revenue. Unlike products which you can sell at a later time and recoup some revenue, if not all, lost consulting time cannot be archived and sold. That is effectively lost.

To ensure an optimum work pipeline, we can use the charge rate to either stick to our margins, because work is plentiful or use discounting effectively to be more competitive than usual in tough market times. We want to be making a decision on them at the correct times (i.e., not stick to higher margins when market is tough or give away margins when not necessary). We are looking at using Backlog (total value of contracts yet to be executed) as a forward measurement for that.

The aim is to look at recording the backlog value three months out and updating the actuals at the end of the month. As we currently do not have a baseline, I do not expect us to be able to use this effectively in the next year. However, once we have built a picture, we should be able to predict with some confidence what it means to be at a certain point in our backlog and what that is likely to mean in terms of likely actual income.

Because we are looking at it three months out, we’re likely to have enough time to win new business to fill up the pipeline if it is looking less than promising. If pipeline is strong, we know we do not need to compromise on margins. There is likely a follow up on this topic this time next year on how this measurement plays out. Hopefully my challenge is not unique to me and the process is helpful for others to reflect on.

I am keen to understand what predictive measurements you have successfully implemented.

Image credit: communicationstuff.com

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Have Project Management tools kept pace with time?


I have recently been looking at optimising the way we manage projects. One thing this has led me to think is whether some of the project management tools have kept pace with the way people work today. I am not looking to re-invent the wheel. Neither am I wanting to be lazy. I am after a way to effectively manage delivery by utilising all my resources to the best of their capability.

Projects have been undertaken since humans first realised they could organise themselves into a unit to achieve mighty things. Even before the discipline of project management was a recognised one, we managed to build the pyramids, the Great Wall and the Taj Mahal to name a few. Does that mean it is a profession that exists for no purpose? That is not true. Many of these projects were run by autocratic rulers who had no regard for human life. All three of the projects I mentioned cost the lives of thousands of workers. Fear for life was a successful motivator even as recently as a few decades ago in the communist Soviet Union.

As we have realised fear alone cannot achieve good outcomes, we have put in effort into devising methods to manage projects in a predictable manner. We have many methodologies – most of them very mature. But it seems applications have not matured to the same extent that methodologies have. It still amazes me how many organisations still manage projects by using Microsoft Excel. The next most widely used application I have seen is Microsoft Project. That however has seen no useful upgrade between the mid 1990s, when it first came out and 2010.

Microsoft has realised the folly of that approach and has been concentrating on their enterprise offering of Project Server. I have previously posted about using Project Server and utilising it to identify resource gaps. Having used it for a few years, I have come to the conclusion that it takes considerable effort to keep updated. Unless you have a PMO with enough resources to stay on it, it is nearly impossible to use effectively. Interestingly, LiquidPlanner has taken a different tack to managing projects by accommodating uncertainty through a high and low effort estimate. That is a very useful method if one is using it to manage product development. However, I was unable to find a way to use any sort of baseline that would allow me to track how the overall project is going compared to the original plan.

I have been trying to think what would make a project management tool stand out from the rest. I want to get away from managing in a hierarchical manner Project Managers have traditionally operated in. I want to ensure that the people working in projects I manage have the ability to raise risks and issues with a minimum of administration effort. I want to know the status of projects as close to real time as possible, but not have to chase up for updates continuously. That only serves to annoy technical people, and is a complete waste of my time.

This is the age of social media. People are used to collaborating in all aspects of their life. Being connected is not a bad thing. The project management discipline can benefit from this constant connectivity. If done well, it can provide early visibility of risks and issues, provide a platform to share ideas, sharing knowledge and lessons learned. Having a mobile presence is a must to achieve this. Some of the Agile product management tools have done well in this respect. Another complicated factor is the need to integrate the output from this with billing or ERP systems used by the organisation – in our case SAP Business One.

My search is yielding mixed success. I have been looking closely at two products – WorkFlowMax and AtTask. Both seem to fulfill most of what I am after. I am keen to hear from you if you have tried something similar. What has your experience been? Have you found any products to be good in the areas I am looking for?

How do I forecast resource requirements in Project Server?


I have been looking at various ways of resource forecasting to the executive and the board. We are a typical professional services company. There is so much work we can take on and also another minimum amount to ensure we have enough to keep all staff busy. This is a delicate balance to handle. Any decision to hire new staff cannot be made simply on a hunch. A seasonal spike needs to be adjusted by moving out some other projects or sometimes by getting in some contractors. However, continuously shifting work to the side has implications about customer satisfaction and potential lost opportunity for growth. Read more of this post

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