When Times are Tough… where do PMOs add value?
I started my career many years ago in a strategic level PMO. This was before any book or manual such as P3O or Management of Portfolios guide by OGC. At times, I am asked by organisations to look at why projects and programmes may be struggling to deliver to time and to cost etc.
This has recently got me thinking about how the PMO landscape has changed over the recent years since the introduction of the P3O guide and with the more recent book of Management of Portfolios. It seems these days the vast majority of discussions and articles seem to be about PMOs operating at a portfolio level (the portfolio office), ensuring the right projects are selected and executed in the first place and these projects are aligned to an organisations strategy. However, my more recent experiences and discussions with various organisations, I have started to hear their leadership teams stating that their main concern is around controlling their current projects or change investments and increasing the probability of their success; especially when there is very little extra budget to call on when things go wrong.
It seems when times are tough for some organisations, when budgets are being squeezed, that the concerns at executive level surround increasing the probability of successful delivery based on the projects currently selected as opposed to selecting the right projects in the first place (probably because currently there is little budget to select projects against!).
This got me thinking, ’where does the PMO (portfolio, programme, or project) add the most value with tight budgets?’ My current thoughts are around a PMO developing and owning process and governance, which adds challenge and scrutiny to ensure that projects are more tightly controlled (without hindering delivery speed) and what is being reported at project level, is the one version of the truth.
Developing metrics like earned and burned (earned value analysis) gives greater visibility to show how much effort and cost has been spent against the baseline cash flow of a project, and also has the proportional amount of deliverables or milestones also been delivered against the baseline plan.
For example, just because a project has spent 50% of its budget does not mean it has delivered 50% of the outputs or deliverables. If a project has only delivered 30% of its outputs, spending 50% of its budget the PMO (portfolio, programme, or project) can work with project managers to ascertain how much extra budget is required to finish the project, and also what is the resolution rather than asking for more budget or time.
Although some people could find this a complicated metric to train and deploy across an organisation, it can be done in a more simplistic way. Ultimately what people want to know is:
• How much effort or cost has the project spent?
• Is the project on plan for delivering what it should deliver?
• How much does it need to spend to finish the project?
You could argue that project managers (or programme managers) should carry out this level of planning and control them. There are some project managers who can carry out this level of planning and control, but not all project managers are able to display this skill. If a PMO takes time to develop themselves on these planning and estimating skills, a PMO (at any level) can own the process, train up and develop project managers requiring this skill, in turn increasing an organisations maturity to deliver projects. Another way a PMO adds value in this area is by reporting these metrics across multiple projects and programmes, making suggestions where some budgets can be altered on a project-by-project basis, with the outcome being that some budgets may be moved from one project to another.
At its most basic level, portfolio management has always been carried out in some way, shape or form since the dawn of businesses being created. Somebody has always made a decision on where to spend and allocate resources and budget, which has traditionally been the responsibility of the executive or directors of a company (or management budget holders).
I am not saying that PMO’s should avoid operating at a portfolio level, but with all this recent talk of PMO’s working towards a portfolio or strategic PMO, have we lost the focus on where a good PMO adds immense value? In addition, in this current climate should the PMO be looking towards adding value on a ‘back to basics’ level? If so, where is the OGC manual, which tells me how to plan, baseline, track, and report a project plan?
Ralf Finchett Jnr
The APM has a guide on Earned Value Management, which is free to download for all APM members.