Exploring Value for Money in a PMO
One of my training classes had ended for the day and the room was emptying. I sensed that, given the level of debate throughout the day about PMO services, that some of the delegates were wanting to talk further about their organisation’s PMOs.
Jane started, “Would you pay for a bad meal and poor service in a restaurant.”
Andy replied, “No, I would send the food back before I got the bill”.
Jane then relating this scenario back to the core problem exclaimed,
“Why should I overload my project with the cost of poor PMO services, bearing in mind that I can’t send the PMO back to the kitchen!”
I was aware that the answer to this question was potentially complex and leaving it unanswered could lead to an unsatisfactory end to the day. So, I suggested to them that we would deal with these issues the following day.
Before Jane left the room I asked Jane where she would start to address the problem of poor PMO service. She replied, “The Project Managers and other stakeholders must be able to ask the PMO some basic questions about their services”.
Jane continued. “How do we know the PMO is taking the right actions and whether or not they are carrying them out properly? “Is the PMO the most economic place for all aspects of the work to be done, given their competencies and expertise levels?” Jane paused for a moment before saying “Also, we need to be able to have a say in what the PMO should stop doing, given that it may be ineffective, and what should the PMO start doing that we consider to be more effective.”
As Jane was gathering her belongings just before leaving the room, she made a final remark to Andy, “I just need practical assistance when starting a project. To have consistent standards and workable templates and tools is critical – the project administration needs to be minimised and efficient as possible. I also need to have skilled PMO resources available when I need them.”
Jane’s fundamental questions and needs compelled me to examine my own understanding of PMO ‘Value for Money’.
PMO Value for Money
So what do I understand it to be?
When setting up and running a PMO I recognise Value for Money (VfM) as a way of assessing whether or not the organisation has obtained the maximum possible benefits from the PMO services provided, given the available resources.
When working with the stakeholders to agree on measures the discussion covers more than just cost, it also accounts for resource use, fitness for purpose, timelines and convenience. When this information is brought together, the stakeholders recognise it as a valuable exercise.
I use an approach to explore VfM with the stakeholders, that come under the three “E” headings of Economics, Efficiency and Effectiveness – which I will explore later.
I considered Jane’s experience to be similar to VfM in a ‘PMO restaurant’ and set about drafting a basic PMO service menu that I thought I could review with my customers to determine whether the dishes were appetising and would represent VfM.
Starters
- Builds / deploys a common set of project management processes and templates, which should save PM’s from having to create these on their own. This enables faster project starts, with less effort.
- Facilitates and deploys; common terminology and accountability, roles and responsibilities, lifecycle phases, gates etc. Reduces misunderstanding and confusion.
- Facilitates planning and the containment of scope, improves accuracy of estimates and quality of deliverables. Enables early identification of risk and reduces time needed to mobilise projects.
Mains
- Tracks basic information on the current status of all projects and provides visibility to senior management in a common and consistent manner, applies exception based management – based on the levels of authority and tolerance (time, cost, scope, risk, quality and benefit).
- Tracks organisation-wide metrics on the state of project management, project delivery and the benefits (value) to the business in general and the PMO specifically.
- Provides proactive management of project issues and risks, handling the dependencies to and from other projects within the portfolio.
- Provides resource management (capacity planning and resource tracking) – and works with the PM’s and functional managers to ensure projects have enough staff with the right skills at the right time and are used efficiently.
Desserts
- Provides training (internal /external) to build core project management competencies. This could be instructional training (Planning, Earned Value, etc.).
- Delivers coaching to help apply good practices to specific projects. Assists the PM’s in understanding and applying the practices quickly.
- Advocates project management to the organisation. Educates and sells to senior management and others within the organisation, the value of using consistent project management processes.
- Seeks opportunities to leverage and reuse knowledge.
So, these dishes may be appetising, but at what price? This is the challenge for most PMOs, to be able to demonstrate its benefits to the organisation and its customers, given that those benefits may be expected to cover in part or in full, the PMO’s operating costs.
So bearing the price in mind – what else do we need to consider? I called upon the prioritised measurement criteria – that I use when running a PMO – to demonstrate real benefits:
Can the PMO:
- Reduce risk (project, operation, organisation), quicker project starts, product quicker to market, increased confidence in project investment
- Stop pet projects at initial investment stage
Prove or disprove business strategy before major investment committed - Resolve conflicts and contentions for scarce and costly resources
- Collect and complete, accurate and timely data
- Plan the programmes and projects to make use of scarce resources and reduce reliance on external resources
- Identify and manage interdependencies
- Prioritise of critical path activities to optimise resources
- Monitor progress on projects against key deliverables
- Ensure there is no duplication of scope or double counting of benefits in the portfolio
- Co-ordinate the change control process across multiple projects, programmes and business operations
These benefits are seen as positive improvements by the stakeholders; and during a project, I know that if I can’t deliver these benefits, I will lose organisational support for PMO services.
During the next day of the class I got the group to produce a value proposition for a PMO, and here is what they developed:
- A PMO must be seen as a professional group who have valued skills.
- PMO charges (costs) are fundamental to the perception of its value.
- PMO size needs to be based upon size and capability of the organisation as well as project portfolio (size and value) and services required.
- PMO benefits must be declared, managed and realised
- A PMO should be self-funding (benefits outweigh the costs)
Economics, Efficiency and Effectiveness
I asked the group to recast the proposition for the PMO under the three “E” headings and got the following:
Economics – direct and indirect operating costs (staffing and infrastructure)
Efficiency – doing the ‘things right’ (assurance, standards, knowledge, tools, expertise, coaching and training)
Effectiveness – doing the ‘right things’ (governance – business case approval, gate reviews)
Having considered how VfM can be expressed in terms of the ‘three Es’ – economy, efficiency and effectiveness, you can then start exploring these terms with your stakeholders to assess the current state of PMO provision and their key requirements:
- Project Managers – need practical hands on assistance, project start-up support, consistent project management standards and language and appropriate delivery resources available as required
- Senior Management – might need timely and concise information to enable them to make right decisions
- Other business units with whom information flows may be necessary, e.g. IT, HR, Audit, Procurement
- Business community – may need to be reassured that change will happen with the least disruption to BAU and will generate the expected benefits
- Suppliers that are involved in the projects – may need a forward view of potential requirements
When you next go to a restaurant, are you going anticipate how to deal with poor service? Are you going to pay for a bad meal or are you going to send the food back before you get the bill?