Project Management in Practice

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

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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.


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.

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Managing Projects Better

How do I lead when I’m not the line manager?

If you have been managing projects for any length of time, you will have come across scenarios where you are utilizing resources in your projects that actually do not report to you. This is true regardless if you are coming in from the outside and managing a project for an organization, or you are part of the internal Project Management Office (PMO). The project will be identifying resources that may be a combination of existing subject matter expertise and some external skills to complement specific gaps. I have found Project Managers from an internal PMO finds it easiest to deal with external resources for the project. Internal resources usually have their own line managers to keep happy. They are the hardest ones to manage. External resources can be difficult, as they are beholden to the organization, not the Project Manager.

Cross-functional teams are all too common to make worrying about it any use. In fact, this is how project teams should be structured. Most change initiatives will require expertise across the organization, rather than simply a collection of software engineers for example. A Project Manager is not the correct person to lead a team of that nature in day to day business operations. What then does a Project Manager to do to ensure a successful project?

Most successful projects have one thing in common – a sense of purpose for the required change from the top management of the organization. From a project point of view there are two options open to the Project Manager – the carrot and the stick. First is an inclusive approach – to get the line managers contributing resources for the project to be stakeholders in the project itself. If that is not viable or the managers simply refuse to engage, then ensure the mandate for the project comes from above the line managers. They will then have reason to direct their subordinates to contribute towards the success of the project. If the Project Manager is left holding neither carrot or the stick, then consideration must be given whether they should continue with the project. Ingredients are perfect for failure.

If the first hurdle has been crossed and there is buy in from management for the project, it still not a guaranteed success. Actions always speak louder than words. It is easy in theory to provide some resources to a project. However, when push comes to shove, line managers always have the ability to pull the rug from under the project. Consider some practical steps to make that less likely. One approach could be to have the project team located together, where day to day influences can be reduced by the project team around them. If someone has been allocated to the project for a set period of time, they can be provided new contact numbers, email addresses etc. If they have been assigned on a part time basis, it is incumbent on the Project Manager to know the likely demands on that resource. If the resource is involved in billing, beginning of the month may be particularly busy for them and project work may have to be planned outside the first week of the month.

A cross-functional it is precisely that. In their day jobs, they usually do not deal with each other. For many of the team the thought of accountants sitting next to software developers or scientists may be a bridge too far. Project teams by nature have to be less change averse than the others in the organization. They are the ones that will produce the products that will achieve the change. The Project Manager should seek out team members with those qualities.

Above all, a Project Manager needs to exude authority, understand the purpose and be able to communicate that effectively to the team. If that can be achieved, the team will follow.

What are the challenges in establishing a PMO?

I was recently talking to Terry Teoh from Deloitte in Wellington regarding some of the challenges in setting up a Programme Management Office (PMO). It was a very interesting discussion, which he kindly agreed to have published as a blog post.

The first challenge Terry identified is the one of lack of stakeholder buy-in at leadership level. It is imperative that the PMO lead constantly weaves in the business benefits of the PMO approach – i.e., why are we doing this? This needs to be done at the leadership and management levels. This paves the way for team members to work effectively with project teams at the delivery level. To be effective, the PMO also needs to constantly articulate the benefits of the process to the programme teams as well – i.e., why would filling out this report for the governance meeting help?

Another challenge identified was the one of the PMO being an administrative function. It is critical that the scope of the PMO includes activities that provide strategic and governance value. This can be delivered by ensuring PMO is responsible for frameworks and programme structures, methodology and metrics for performance measurement, integrated views of work plans and dependencies and budgets and capability development for governance of projects and programmes. As soon as a PMO gets a reputation as chaser of reports, their value becomes questionable.

Flexibility of process and approach was identified as another key challenge. The worst approach a PMO can take is a text-book one where a “thou shalt do” culture exists. Approach needs to be tailored to suit the organisation and its culture. The effort of support and hand-holding necessary at the beginning of establishing a PMO to ensure people understand and do things correctly, is often underestimated. This also enables the PMO to recognise how to enhance and tailor the process and provide guidance along the way.

The last major point of discussion was the necessary skills within the PMO staff. One comment Terry made that resonated well with me is the fact that the worst PMO staff you can get are the ones that have done PMO work all their life. PMO requires expertise in a range of fields that directly relate to the programme and the projects it is likely to commission – IT management, financial management, project planning and control etc. This also enables the PMO to put themselves in the other person’s shoes with the right perspective. Without this, success is difficult to achieve.

I’m keen to hear what challenges you have faced in establishing PMOs.

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