A PMO should improve Project Management performance and maturity by providing support for business decisions and ensuring you manage projects in a controlled way. It should also improve project performance in alignment with your PMO’s goals.
But, not every PMO meets these standards. In fact, according to the PMI, failing PMOs often have unclear focus areas or scope.
If you want your PMO to succeed, you must know what you’re trying to achieve with it. There are three primary objectives for a PMO:
- Reduce project failure
- Stay within cost constraints
- Operational excellence
And each objective comes with its own metrics, so you can measure your PMO’s success.
Let’s look at each objective and their metrics in turn.
Objective 1 - Keep Project Times Short
Whether it’s because your stakes no longer align with your organization’s strategy, risks are too high, or your costs outweigh the benefits, consider the following metrics:
Metric 1: Actual Planning vs. Scheduled Planning
Has there been any project slippage? How long did you estimate your project would take? What’s the difference in days, weeks, or months to how long it actually took?
Then, consider why the project drifted. Discover where your teams failed to meet deadlines. And, did they speed up other aspects of the project to lessen the deficit? You’ll need to determine whether the project is still opportune, and whether the current scope requires redefining.
Project management software will give you visibility into each task, so you can evaluate how long teams spent on each one. So you can understand patterns in your projects and make improvements to your planning.
Metric 2: Number of Change Requests
People request change for the greater good of the project. If they see a problem they want to fix, or recognize a better way to do something, they can put through a change request. Of course, these demand review which naturally takes time.
Change requests are necessary if you want to stay flexible. But it has to be a controlled process, otherwise, you may put the whole project in danger. You must understand and track the number of change requests, as this will help you determine which projects need to be reconsidered or stopped.
To standardize and reduce the time of approval processes, you can implement change request forms. So you can standardize getting approval for necessary changes, reducing the time it takes to do so.
Metric 3: Number of Decisions
How many decisions are to be taken? And for how long? Can any of these tracked decisions be regarded as risks and/or change requests? The number of decisions, their velocity, and their importance are all important indicators to consider when measuring project health.
Track decisions in a decision log, so you can see a list of critical decisions made over the course of the project. And invest in a tool that efficiently analyzes your data, so your stakeholders can gain faster insights.
Objective 2 - Stay Within Cost Constraints
If the focus of your PMO is on keeping costs in control and not exceeding budgets, consider the following metrics:
Metric 1: Investment Plan vs. Budget Revision
If there’s a gap between cost estimation and actual expenses, your project will end up over budget. Or if your scope is fuzzy, and you don’t know the details of the resources you need to complete your project, there’s no way you can estimate costs properly.
Knowing what you need to invest and how much operations will cost will help you stay within budget. Of course, always keep in mind the fact that the costs should be worth the anticipated benefits.
Metric 2: Budget Planned vs. Expenses
It’s easy to evaluate your costs when you’re paying for them with expenses. You can tally up your invoices, and know how much you have left in your budget.
But what happens when you’re evaluating the cost of your internal resources? This is much more difficult, as sometimes teams might take longer on a deliverable than initially estimated. Or they might require additional people to complete a task. And this of course impacts your budget.
A tool that tracks your processes will ensure you don’t allocate too many resources, and go over budget as a result.
Metric 3: Number of Financial Risks and Their Mitigation Costs
Scope creep, supply chain issues, unstable and rising costs of raw materials… you can’t always avoid financial risks in your projects. But you can gain visibility over them and learn how to mitigate them.
Knowing the number of financial risks you have and how much you need to course-correct will allow you to allocate a margin to your project. It might be 10%. It could be 25%. Include the buffer you’re comfortable with. So you can confidently respond to risks and remain within budget, or ask your project sponsor for an arbitration.
Objective 3 - Operational Excellence
When your focus is on the quality of your deliverables, consider the following metrics:
Metric 1: Defined Deliverables, Owners, and Approvers
We’ll break this metric down into three parts to better explain this.
- What are the number of deliverables you’ve defined? If you have a clear overview of your project, you should be able to find this out easily.
- Then, compare the number of these deliverables with the number assigned to an owner. If there is a deficit, that simply means you have deliverables that won’t get done.
- Finally, find out the number of deliverables assigned to validators, and compare this to your number of deliverables. Again, a deficit isn’t good news. If no one is approving the work, your project won’t move forward.
Metric 2: Gate Management
In Phase-Gate, each stage consists of the work that results in the deliverables. But, if anyone has any lingering reservations about the deliverables, the project won’t progress as it should.
So, you’ll need to consider the following:
- Number of passed gates vs. total number of gates. When this number matches, the quality of each phase of the project matches stakeholders' expectations.
- Number of deliverables approved vs. total number of deliverables. Again, if this number matches, it shows that all deliverables are of expected quality.
- Number of approved deliverables that have reservations. This signals that the project is moving forward, but there is something wrong with one or several deliverables. This gives teams the opportunity to correct the issue while work on the next project phase begins.
- Number of projects in each current gate. If too many projects are in the early stages, at the same time, your organization may face change management issues.
Metric 3: Risk management
How many identified risks do you have? Are these risks justified? Sometimes, too many risks may indicate a lack of understanding or a lack of motivation for the project. So you need to determine what’s a real sticking point and what isn’t.
From there, ask yourself how many of your real risks have a mitigation plan?
Don’t be fooled; we’re not repeating ourselves here. Because the focus of your PMO is on quality, the implications of risks are different.
When your PMO prioritizes costs or time, your focus will be on the cost if the risk occurs and how much it will cost to avoid it. But, when your PMO is aiming for operational excellence, you don’t want the risk to occur at all.
So, you need to mitigate your risks each and every time. Therefore, you’ll need the same number of mitigation plans as the number of risks. Then, you can deliver high-quality projects and achieve your PMO’s goal.
Track the Metrics Right for Your PMO
The top 10% of PMOs consistently measure their performance. The metrics they use help organizations improve the performance of their projects with:
- Consistent communication
- Project alignment
- The ability to confirm the business value of outcomes
- A strong strategy for organizational change
- Satisfied stakeholders
If you want to improve the performance of your PMO, you need a good way to measure success and track metrics.
A project dashboard will reveal which areas your PMO's performance is strong, and where you can improve. It will also allow you to configure the angle of your analysis, to track and report on the metrics right for your PMO. Then, use these insights to implement key changes that take you closer to your strategic goals.