Project Management and a Project Management Office, is a fairly new concept to enterprise institutions and businesses. It didn’t become an industry with standards and certifications until the 1990’s. Because it’s an industry in its infancy, the responsibility of proving it’s value and impact on the organization is often left to the Project Management Office (PMO) itself. The best way to do it is to determine, track and measure KPIs that demonstrate the value the PMO brings to the organization. The specific KPI’s you need to track and measure will vary by industry, but there are a few standard metrics that will help you establish the value the PMO brings, and share the direct impact the PMO has had on the entire organization.
Why Are KPI’s Important for the PMO
Leaders and researches in the PMO industry all agree that clearly determining the value of the PMO is a very difficult task. A 2015 Global State of PMO report found that 44% of c-suites and executives questioned the PMO and the value they bring to the organization. That’s quite a hurdle to overcome! In order to showcase the PMO’s value and have a say on strategic business decisions, it’s important for you to have KPI’s that reflect the impact the PMO has on the business. Once you can refer stakeholders and executives to specific and measurable improvements the PMO has done, showcasing your value to stakeholders will become a much easier task. KPIs take the general, and sometimes unclear notion, of a PMO and translates it into metrics the stakeholders can understand, metrics like project success rates and number of fully documented projects. With the right KPI’s a PMO can track the success of his action, determine which initiatives are more beneficial and which ones need to be terminated, and demonstrate the value their office brings to the entire organization. But how do you determine which KPI’s to track?
Which KPI’s Should You Measure
The KPI’s you choose to track and measure should be unique to organization and in direct correlation with the business objectives and the PMO’s function within the organization. Nevertheless, there are some general KPIs that most PMOs will want to measure.
Project Completion Rates
Measuring how many of the organization’s projects are successfully completed is a useful way to tell the impact the PMO has on the organization. Measure the amount of projects successfully completed versus all the projects in the portfolio, which will give you the project completion rate. Begin by measuring the project completion rate for a specific period. This will give you a benchmark. If you can complete more projects in the same amount of time in the next period your project completion rate has increased— which is a good sign demonstrating the impact of a PMO.
It doesn’t do an organization or team any good to complete numerous projects if the projects aren’t complete to the customer’s satisfaction. Surveys, interviews, and NPS scores are great ways to determine customer satisfaction.
This KPI is one that establishes a baseline of how the organization views the PMO. It is similar to the customer satisfaction KPIs, but relates to the stakeholders inside the company and measure how happy they are with the performance of the PMO. The best way to get this data is to survey managers and ask if they feel as though their jobs have gotten easier since the implementation of the PMO. Do they feel as though the PMO has supported their projects and saved them time? The frequency of your survey depends on many unique factors to your organization, but you want to ask often enough capture changing perceptions and thoughts, but not so often that you exhaust the stakeholders with surveys.
Contribution to ROI
Determine how much revenue the PMO is directly contributing or indirectly impacting in the organization. This metric can be quite nuanced to measure, so you would want to use proxies. For example, you can measure the ratio between estimated costs and actual costs. If as a PMO, you manage to get the two closer together, it is a sure sign of contribution to ROI and showcases the PMO’s alignment with business objectives.
3 Things to Consider When Measuring KPIs
- If you want to see any improvement in your chosen KPI’s, then it is crucial that you record the initial state of each project. It will be impossible to determine the impact on speed, accuracy, completion, or ROI if the initial state of the project is not recorded.
- Create strategic and consistent times to measure progress throughout the project.Creating milestones and checkpoints for each project will help to track improvements or areas that still need improving.
- KPI’s are not a “set it and forget it” metric. This is an ongoing process, that needs to be consistently evaluated and aligned with business goals.
In order for the KPI’s that the PMO measures to continually add value to the organization, it’s important it to continuously evaluates which KPIs impact business objectives and how the PMO can impact those objectives.
Tell A Story With Your Metrics
Knowing which KPI’s to track and measure is a very important aspect of the PMO’s responbilities with KPI’s, but if the PMO can’t share the data and findings across the organization in a meaningful way, especially to executives and sponsors, then tracking the data hasn’t done them any good. The PMO has to be able to tell a story with their data. A compelling story captures the executive’s attention and translates the numbers and charts into a personal experience that impacts business decisions. And when you have an executive’s attention, they are actively engaged in the project, which correlates to its success. For this reason Gartner warns that the “more is better” approach to dashboards and metric reporting is not the best approach to take. They advise to keep your reporting simple, clear, and consistent to keep from overwhelming sponsors and executives with metrics that don’t tie directly to their key interests. Meaning you shouldn’t overwhelm them with number of completion rates or stakeholders satisfaction, you should frame those with explanation. For example, explain how, by instituting a center of excellence, the PMO managed to decrease time to market rate, or how the new workflow the PMO has created led to increased project documentation rates and reduced project failure rates. You should always remember that the C-suite has their own set of interests, and your KPIs should align with those. Use the KPIs to demonstrate the way the PMO improves ROI and drives the organization forward.
Sum it Up
Every PMO will have different KPI’s that they need to focus on. Ensure that each metric you measure directly aligns with business goals and objectives, and that you can tell the broader story in order to increase executive engagement and overall project success.