Project leaders typically spend a lot of time monitoring the progress of their projects and programs: understandably so, as that’s where the value comes from.
However, as Project Management Office leaders, wouldn’t it be good to know that your function is successful too?
Assessing your PMO’s performance is important because:
- It helps you explain the value of what you do to others
- It shows how you are improving
- It identifies areas where you can deliver more value – development areas to focus on.
The best time to start recording metrics was when your PMO was first set up. But don’t be disheartened if you don’t have them in place already…The second best time to start recording metrics about PMO performance is today.
Performance measures are the most meaningful when you have data over a long period so the sooner you start tracking something (anything) about PMO performance, the better. It gives you more facts with which to work and to benchmark your progress over time.
Here are 10 metrics you can use to assess your PMO’s performance over time.
How good is your PMO day-to-day? Start by looking at how your PMO runs.
Your PMO is probably a cost center, in that it doesn’t generate revenue for the business. As a result, you want to be able to show that it’s doing really well with the resources it has and isn’t squandering money.
Metric #1: Financial Management
Review by: Comparing forecast to actual opex of running the PMO including staff costs, travel expenses etc.
Metric #2: Staff Turnover
Review by: Calculating percentage staff turnover in a year. Some turnover is to be expected and it’s often good to bring new views into the team. Too much turnover could be a sign that something is wrong with the leadership or direction of the team. This is a good benchmark to use to compare the PMO team against other teams in the business.
Metric #3: Resource Utilization
Review by: Calculating the utilization (productive time) of the PMO team. This will help you see how much of their time is spent on which functions. If your PMO has line management responsibility for the project managers too, it will help show you how much PMO admin and support time goes into supporting project management effort.
Metric #4: Process Efficiency
Review by: Pick a process and work out how long it takes to complete. This is often done with project start up to identify delays in the approval process but it could be any process that the team is involved with.
Effectiveness of Delivery
How successful is your PMO at executing projects? This group of performance metrics allow you to work out how good the PMO is at getting work done.
Metric #5: Budget Variance
Review by: Work out an average budget variance for all projects in the portfolio. Your project management software should do this for you, otherwise work out the total budget forecasted divided by the total actuals incurred.
Metric #6: Schedule Variance
Review by: Doing the same, but for project schedules!
Metric #7: Accuracy of Estimates
Review by: Looking at how accurate team members are at producing estimates. Over time, this should improve as the PMO supports the estimators with tools and data. You can work it out through timesheet data (forecasted time compared to actual time spent on an activity) for scheduling and the budget information for the project for financial estimates.
Bonus tip: If you use Earned Value, there are a lot of delivery effectiveness metrics that you can draw from your EV analysis. Start by working out what is important to track at portfolio level over time and then record actuals and variances to spot trends.
Strategic alignment is a hot topic in PMOs right now, and is a core goal for any team wanting to show that they really add value to the business.
Metric #8: Project Classification
Review by: Looking at how many projects are truly strategically aligned, and classified into the appropriate categories. You’ll need to get classifications or categories set up for this – you might already have broad-brush programs that you can use. Alternatively, look at creating categories such as Mandatory, Revenue Enhancing, Process Improvement, Small Change and so on. Look at the spread of projects in each area. If you have key strategic goals to improve revenue this year but hardly any projects in that category, that’s a warning sign. Volumes of projects can be tracked to give you metrics to compare. Over time you should see a shift towards the best strategic alignment.
Metric #9: Project Prioritization
Review by: Several elements go into prioritization: as you’d expect, strategically important projects get a prioritization of ‘1’ or ‘Top’. But are they actually being prioritized in practice? Look at resource allocation and see if top priority projects are getting the resources required in a timely way or if they are being tied up on other work. Check that processes are expedited for priority strategic work and that they aren’t stuck in the organizational bureaucracy waiting to be discussed and moved to the next stage behind several lower-impact projects. This is a measure of how seriously and practically the business acts on the priority ratings given to projects.
Metric #10: Investment Alignment
Review by: Calculating what percentage of the company’s overall portfolio budget is allocated to strategic work. This can be an eye-opener for senior decision makers as it often uncovers things like the bulk of the annual budget being spent on IT hardware refreshes or other items that the Board might not consider to be ‘strategic’.
These 10 metrics can help you assess your performance as a PMO, and spot areas where you can increase the value and services you offer to your organization. Tracked over time, you can see the trends and prove to your colleagues that the existence of the PMO is driving business performance improvements. Data is incredibly powerful in telling the story of your organization’s maturation!