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Project Management Blog

 

ep 266

 

Here is another one of our Best PM Podcast episode that garnered 61,871 total downloads.This is an interview with Roland Dumont du Voitel entitled “PMO and Capitalizing on Diversity”.In this interview, He says that building on diversity focused on individual talents and qualities changes both corporations and provides also higher levels of creativity. This applies even more to project structures than to corporations. In project management we see that diversity is not a goal in itself. Its importance comes from the tasks and objectives of the projects. Just think of the diversity you create with mergers, acquisitions, global software projects, or even offshoring of services. http://bit.ly/1Wx2ghZ ‪#‎BestofPMPodcast

 

Published in Blogs
One service that is typically associated with a PMO is reporting on the status of all the projects being executed within the organization. This concept can be extended so that the PMO tracks a complete, portfolio-wide view of all active, pending and historical projects.

On the surface, this might seem simple. However, it can be quite time-consuming. First, the PMO must work with the management stakeholders to define what is in the consolidated status report. Some organizations like to keep each project to one line, with some type of overall status indicator such as green (okay), yellow (caution) or red (trouble). If the reader wants more information, he can follow up with the project manager. Other organizations like to see a full status report on each project. If there are questions or concerns, the status report may contain the answers so that additional follow-up is not required.

Problems Gathering the Status

The PMO needs to collect status information on each project, consolidate it and report it. However, like all activities that rely on people, this can be easier said than done. Your PMO will probably encounter the following challenges:
  • Timeliness. First, chances are that all of the project managers will not send you the required status information within the timeframe you need it.
  • Accuracy. In many cases, the information will not be accurate. For instance, the project manager may make his or her project appear to be on schedule, even though not all scheduled activities are completed. The rationale is that the team will make up the activities in the next reporting period. You may spot this if the accomplishments for the previous period do not reflect the same work that was supposed to be completed according to the prior status report.
  • Completeness. In many cases, the information on the report is accurate, and it may also be timely. However, you may find that it is not complete. For instance, the information provided may be very brief and may not provide a real sense for the status of the project.
Overcoming Status Reporting Problems

Of course, these problems need to be overcome. The PMO can address these types of chronic problems through activities such as the following:
  • Explain who is requesting the information and what it will be used for. This is a key aspect of consolidated reporting. People do not like to spend the time to provide information if they don't feel it will be used. If they understand who is requesting the information, it might become a higher priority for them.
  • Be clear on the information you need and use what you are requesting. You want to be clear on the information you need and how it will be used. Make sure that you do not ask for status information that you don't need for consolidated reporting.
  • Clearly communicate when the Status Reports are due. The PMO will have difficulty gathering status information from some percentage of project teams. Make sure that you do not give anyone the excuse that they did not know when it was due.
  • Follow up with project managers on items that need further explanation and clarity. If you receive status information that does not contain the content or format you need, make sure you follow up with the project manager. This follow-up is designed to make sure that the project managers know what you need, with the hope that they will provide this in future Status Reports.
  • Use the governance process if necessary. If you find that the PMO is spending too much time running around for the information every month, you are going to have to go to the Sponsor for backing. Senior managers need to be held accountable if project managers in their organization cannot get the status reports in correctly and on time.
Consolidated Metrics

There are a number of places where the organization gains value with the implementation of project management. If the PMO does not attempt to track and quantify some of these benefits, the organization will have no idea what value has been provided. In general, the metrics associated with project management value are also indirectly indicative of the value of the PMO. For instance, if more projects complete within expectations, it would indicate the value associated with project management, and would also point out the value provided by the PMO.  

Organizational Metrics

One of the most difficult items the PMO will be asked to work on is determining the value of project management. It is one of the most fundamental questions for your sponsor and senior management to ask, and yet it is also one of the most difficult to successfully answer. There seems to be intuitive value in implementing a standard project management methodology, but if you try to quantify the value, you will quickly become stuck. There are a few approaches to these organizational metrics. One is to rely on industry research and look for companies and case studies that are similar to your organization for comparison. The thought is that if someone else was able to measure value and you are a similar company implementing in a similar way, you should be able to claim similar value.

The second method is to actually try to calculate the value associated with using a methodology. For instance, the PMO can work with project managers on different types of projects to determine the cost savings associated with maintaining good scope change procedures, managing risk proactively, and managing client expectations effectively. As you continue to interview a subset of the project managers, you should start to see some trends that you can apply to the rest of the projects in your organization.

You could also look for the reuse value associated with using a common project management process. Again, this approach asks project managers to estimate the savings associated with using similar processes on multiple projects and getting their estimate of the cost and time savings associated with reusing the common processes on an ongoing basis.

There are some areas of service where the PMO does not already have a sufficient level of expertise. Metrics could be another one of these areas. Many companies do not know much about defining and capturing a good set of metrics. Some consulting firms have a strong expertise in this area that could be leveraged to make sure you start off on the right foot.

Summary

The PMO is in the unique organizational position of being able to view all of the projects going on in the organization. Therefore, the PMO is the logical organizational entity to define and collect a common set of metrics, and it is the logical place to collect common project status information for consolidated reporting. These activities can be simple if all the projects collect metrics and report status as requested. However, this is rarely the case, which makes these valuable services a couple of the most time-consuming services the PMO performs.  

At TenStep we are dedicated to helping organizations achieve their goals and strategies through the successful execution of critical business projects. We provide training, consulting and products for organizations to help them set up an environment where projects are successful. This includes help with strategic planning, portfolio management, program / project management, Project Management Offices (PMOs) and project lifecycles. For more information, visit www.TenStep.com or contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. .
Published in Blogs
It is difficult to address all the potential services having to do with PMOs, but here is an attempt to summarize some of them. Keep in mind that probably no single PMO will undertake responsibility for all of the services mentioned below. However, understanding the nature of the many services that can be offered will help you determine the most important areas that will be offered by your PMO.

Establish and Support a Document Repository

One of the value propositions for deploying common project management processes is the ability to reuse processes, procedures, templates, prior examples, etc. However, the ability to reuse documentation does not come about like magic. If project managers want to see whether there might be pre-existing material that would help them, they are not going to be expected to contact every other project manager. To facilitate process and document reuse, the PMO needs to establish and manage a Document Repository. This could be as easy as setting up a directory structure that everyone in the organization can access. It might also be more elaborate and multi-functional, like a tool specifically designed for document management. Depending on how you implement this facility, you need to properly set up a classification structure, make sure that only approved information is posted there, make sure the information stays current and relevant, and make sure that the facility is actively marketed and utilized by the organization.

Convert Key Learnings to Best Practices

At the end of every project, the project manager, team, client and major stakeholders should get together in an end-of-project meeting to discuss what was planned and what actually happened. At some point in the meeting, you should turn your attention to lessons learned. The lessons should be collected and consolidated in the Document Repository. However, one problem with lessons learned is that they typically only apply to that one project.

As the PMO collects more and more key learnings, they may start to see patterns emerge in the lessons learned. At some point, lessons learned from projects can be raised to the level of a best practice. A best practice statement implies that the benefit can be gained for all projects, not just the few that reported it.

Coordinating a Common Resource Pool

All companies need to have a process to staff projects. In some companies, the resources are allocated per business unit. In other companies, all of the project people are assigned to one central staff. Since the PMO is a focal point for all project management-related activities, it is the right place to manage these common resource pools. The resource pool could be for project managers only, or it could be for all potential project team members. Creating a common resource pool involves taking a skills inventory of all shared resources and keeping track of when each person will become available from his current project. The PMO can then have the information available as new projects are ready to start. In fact, the PMO can have certain projects started based on the availability of skillsets.

Document Review Service

Document reviews can be offered on a stand-alone basis to help ensure that project managers are utilizing the standard templates as they were intended and that they are being completed clearly and consistently. This service basically just involves project managers sending in project deliverables to receive a quick review and feedback. The PMO is not “approving” the document, but they are providing feedback on the content, format and readability of the specified document.

Defining the Role of Contractors on Projects

Most companies utilize contractors for some portion of their workload. The question that your company must answer is how best to utilize contractors and how best to utilize employees. There is not one answer that fits all companies. Each company and each organization must determine the things that are most important to them and create an overall policy for utilizing contractors within that context. For instance, one company might decide that their business runs on their legacy systems, and they are not going to trust contractors to keep those applications running. Another company may decide that the legacy systems represent the past, and that new projects represent the future. In that company, they may decide to rely on contractors for support, but they may prefer to utilize employees for new projects. Likewise, some companies insist that all senior positions be staffed with employees. Other companies do not have a problem placing contractors in any position where they are short of employees or do not have the right employee available. The PMO can help determine the right policies for your company.

Benchmarking

As your company becomes more sophisticated at utilizing metrics, you might realize that collecting internal data on internal projects is valuable, but can only take you so far. You don't really know how efficient and effective your project delivery is unless you can compare how you deliver projects against other companies. Benchmarking studies (one-time) and benchmarking programs (longer-term) are a way to compare your organization against others. Benchmarking requires that you gather a set of predefined metrics that describe the result of very well-defined processes. The resulting metrics that are captured from other companies, using the same set of processes and definitions, can be used to create benchmarking statistics that allow you to compare your organization against others. This information can be evaluated to determine if there are changes that can be made in your organization to achieve similar results.

Benchmarking is an area that few companies want to try to start on their own. It requires a lot of work, and the processes you define need to be applicable to a range of outside companies. If you are going to benchmark, you are generally going to need to utilize an outside firm that specializes in benchmarking. This company may already have the core set of processes, metrics and benchmarks defined. They can also spend the time to get other companies involved, they can conduct the study and they can help interpret the results.

Summary

Many companies are finding that they must build project management capabilities if they are going to meet business challenges in the future. It is also important to implement project management processes consistently across the organization. This leads to efficiency and helps to deliver projects better, faster, and cheaper. The next step is to determine how best to identify the common project management processes and make sure that they are leveraged as needed by the entire organization.

Many companies give this responsibility to one or more people in a Project Management Office (PMO). There are many structures for a PMO and many types of services that the PMO can offer. Each organization must first determine the services that are important to them and then create an overall approach for implementation. Since this is a culture change initiative, the effort can be time-consuming and difficult. However, the rewards are also large. If the PMO is established with a clear vision, strong sponsorship and a solid approach, it can be a vehicle for creating a tremendous amount of value for the company.

At TenStep we are dedicated to helping organizations achieve their goals and strategies through the successful execution of critical business projects. We provide training, consulting and products for organizations to help them set up an environment where projects are successful. This includes help with strategic planning, portfolio management, program / project management, Project Management Offices (PMOs) and project lifecycles. For more information, visit www.TenStep.com or contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. .
Published in Blogs
There are almost as many varieties of PMO as there are companies. There are strong PMOs and weak PMOs. There are some that have many responsibilities in the organization and some that have only a few. Some companies rely on the PMO to be responsible for all areas of project management and project execution. Other companies only want the PMO to provide a consolidated reporting view of all the projects in the organization.

Before you can jump in and start up a PMO, you must first define what the PMO will look like. Without this foundation, all of the other work you do will be in jeopardy.

The place to start creating your PMO is through a formal organizational definition. The value of defining a logical organization is twofold. First, you gain clarity and agreement on what you are doing and why. This information is communicated to clients, stakeholders and your own staff so that everyone starts off with a common set of expectations. Second, this exercise provides a framework for the PMO to guide decision-making in the future. For instance, you would not want to undertake any projects that did not help you achieve your organizational objectives. Likewise, major decisions can be evaluated based on whether they fit into your strategy.

Building a Logical Organization

The term "logical organization" means that when the definition is complete, the organizational structure will only exist on paper. Once the logical organization is defined, you still need to actually staff the PMO at the right level to support the logical organization. Many companies have the expertise to perform this definition by themselves. However, defining missions and strategies is not something that you do every day. That is why consultants are sometimes brought in to assist. There are consultants that specialize in these organizational assessments. They can facilitate the definition process and make sure that the resulting logical organization provides a firm foundation for the subsequent staffing and project execution.

The following major components are used to define your logical PMO.

Mission. Describes what the PMO does, how it is done, and for whom. It is a very general statement, usually aligning the PMO to the value it provides to the business. An example of a PMO mission statement is "The Acme Project Management Office (PMO) implements and supports project management methodology to enable our organization to deliver projects faster, cheaper, with higher quality, and within estimates and expectations."

Strategy. There may be many ways to achieve your mission. A strategy is a high-level set of directions that articulate how the organization will achieve its mission. Defining a strategy also helps get the PMO aligned in the same direction as strategies in the rest of the company. Strategy defines how you will do things over the long-term - say three years - and is used as an overall framework for the more detailed tactical decisions that are made on a month-to-month and day-to-day basis.

Sponsor. All organizations do not have a sponsor, but a PMO typically does. In this respect, a PMO is similar to a project and, in fact, many PMOs are established with a project. The sponsor is the person responsible for the PMO funding, and in many cases the sponsor is the manager that the PMO reports to. Sponsors are important for all initiatives, but they are absolutely critical for a culture change initiative such as this.

Clients. Clients are the main individuals or groups that request and utilize the products and services your organization provides. (These people may also be referred to as customers.) While there may be many stakeholders (below), it is important to recognize who the clients are. They should be the ones the PMO focuses on to help them meet their project and business objectives.

Stakeholders. These are the specific people or groups who have an interest or a partial stake in the products and services your PMO provides. Internal stakeholders could include organizations you work with, but who are not directly under the PMO umbrella. External stakeholders could include suppliers, investors, community groups, and government organizations.

Objectives. Objectives are concrete statements describing what the PMO is trying to achieve in the short-term, perhaps up to one year. The objectives should be written at a low level, so that they can be evaluated at the end of the year to see whether they were achieved or not. A well-worded objective will be Specific, Measurable, Attainable/Achievable, Realistic, and Timebound (SMART).

Products / Services. Products describe tangible items that the PMO produces, and are typically produced as the result of a project. Services refer to work done for clients or stakeholders that does not result in the creation of tangible deliverables. Services provide value by fulfilling the needs of others through interaction with people. The PMO achieves its objectives through the creation of products and the delivery of services.

Transitional Activities. Transitional activities are the specific activities and projects that are required to implement the physical PMO. If the PMO is new, these activities describe the work required to build and staff the new organization. This does not imply the creation of a full workplan, but it includes the immediate activities required to get you to the point that the PMO workplan can be put into place.

There are other aspects of the organization that can be defined as well, including the PMO vision, principles, goals, skills, roles, and responsibilities.

Summary

A PMO should be established based on a need to help the organization in project management and project execution. There are many ways that a PMO can be established. The correct way for your company can be determined with an exercise to create a logical organization definition. When you have a consensus on the definition, the PMO has a much better chance of success and of meeting sponsor, client and stakeholder expectations. Once the logical organization is approved, the staff can be put into place to build the physical organization.

At TenStep we are dedicated to helping organizations achieve their goals and strategies through the successful execution of critical business projects. We provide training, consulting and products for organizations to help them set up an environment where projects are successful. This includes help with strategic planning, portfolio management, program / project management, Project Management Offices (PMOs) and project lifecycles. For more information, visit www.TenStep.com or contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. .
Published in Blogs
Michael O’Brochta, PMP, President, Zozer Inc.
Curt Finch, Founder and CEO, Journyx

The Project Management Office (PMO) is an office with the capacity to institute a wide variety of positive changes within a company. Indeed, many organizations understand the co-dependence between the executive and PMO, and act to establish PMOs for just this reason. Unfortunately, it is often one of the most incorrectly managed and underutilized portions of an organization.  Findings presented at the 2010 Gartner ITxpo indicate that nearly half of all PMOs result in failure. The question, then, is why do such a drastic number of businesses feel that their PMOs do not deliver value?

There are a number of answers that need to be explored, but given the highly individual nature of each PMO, it is difficult to provide a definitive list of failure points. However, an issue that pervades nearly every PMO across the board is a problem of metrics. Too many PMOs do not measure their success with the appropriate key performance indicators (KPIs), and due to this failure, high-level executives can easily question the PMO’s worth, particularly the results-driven chief financial officer. The PMO, with its emphasis on measuring process and protocols, can fail to focus on KPIs that are relevant to the overall progress of the business. Because of this failure to properly document its success, many otherwise productive PMOs are being shut down.

The following is a list of important potential KPIs by which a PMO might measure its productivity in the context of overall company success. This list has been extracted from a 2002 study conducted by the Center for Business Practices and documented in the book “Justifying the Value of Project Management.”  These specific KPIs are particularly relevant to executives and have been found to improve the practice of project management.

It is important to remember two things here. First, as previously mentioned, the role of a PMO is (and should always be) very specific to the needs of a particular company. One should not try to apply these KPIs directly. Rather, they should be tailored to reflect the PMO’s prescribed role. Second, too many KPIs can lead to a muddled sense of where accomplishment truly lies. Like having too many gauges on the dashboard of a car, measuring too many indicators of success can be tricky and confusing. It is better to pick a couple of KPIs that fit your company well and focus attention on those rather than trying to measure a plethora of indicators that will lead to hazy results. With those factors in mind, let’s take a look at some KPIs that you can use to demonstrate the effectiveness of your PMO:

1. Time to Market

Time to Market= Elapsed Time from Idea Conception to Delivery

Alternate Time to Market= Actual Completion Time – Budgeted Completion Time

The PMO can improve a product’s time to market in two ways. First, it can increase the speed at which projects are completed. The benefits here are obvious, as a project that is completed faster generally means greater customer and company satisfaction as it will be available for distribution sooner. The PMO also improves time to market by promoting better adherence to project schedules. Doing so promotes customer satisfaction, improved trust in the project team, and a greater ability to accurately predict future project lifecycles. More importantly, it ensures that a time-dependent product, such as a video game with a pre-Christmas release date, will not miss a deadline that would result in drastically reduced or nonexistent sales. PMOs that consistently improve time to market can streamline processes. For example, projects can be rolled out on time without having to hastily skip steps in the development process.

  1. Service Availability
Service Availability=Actual Start Time-Optimal Start Time

Service availability refers to the time it takes to start a project compared to the desired start date. It differs from time to market in two ways: first, it can measure the time that is allotted for specific tasks as opposed to only referring to the completion date of a final product and second, it can be measured at numerous points during project development. As a reference point for a business, it makes sense because it measures the capacity to complete more projects or allocate more time to valuable projects. Further, having a good measure of service availability allows the PMO to divert resources to critical path tasks should the need arise. The PMO specializes in increasing service availability by streamlining tasks and accurately scheduling future projects. If the above equation has a lower number, that means a higher service availability. However, a business must be careful not to have such a high amount of availability that resources are being benched. Wasted resources can drain just as much money from a business as a poorly managed service schedule.

3. ROI

ROI= (Revenue-Investment)/Investment*100

The PMO contributes to a company’s ROI by making sure that projects are successfully completed according to the specifications laid out by the parent company and other key stakeholders. Because of this, examining ROI as a KPI offers an incomplete view into the productivity of the PMO. This is because the PMO does not generally influence financial returns directly. Rather, it provides the framework upon which success can be built. ROI, then, must be looked at in combination with other metrics to determine the specific influence of the PMO on the overall performance of a business. ROI can be used to measure success, but it should be looked at on a per-project basis to determine the actual impact of the PMO.

4. Sales Growth

Sales Growth= (Current Sales- Previous Sales)/Previous Sales

The PMO contributes to sales growth in much the same way that it influences ROI. It does so by providing an environment that allows sales to grow more effortlessly, often by improving the other metrics in this list, such as time to market and service availability. Still, measuring sales growth does not specify the PMO’s role in the improvement of that growth. Nonetheless, improving sales growth will likely appeal to high level executives, and in particular CFOs, because it is something savvy investors look for in a company. As such, and despite its obvious limitations, sales growth is an important metric because improvement in this area creates more financial opportunities for a business, and can convince many nonbelievers of the importance of a PMO.

5. Service Utilization

Service Utilization= Billable Hours/Total Hours

In addition to streamlining tasks by increasing service availability, service utilization allows a PMO to ensure that time is being used efficiently. Here, service utilization means looking at the resources assigned to a project, and in particular, the human resources. An advanced PMO will not only be able to decrease the number of people who are over or underworked, but they will be able to assign people to the tasks that they are best at, thus maximizing the value of their time.  Increasing the quality of service utilization means a better quality project outcome in the same amount of time. This will optimize customer and employee satisfaction, and will guarantee that a business is getting the most value out of their hires and contracted labor.

Demonstrating improvement in these KPIs can help show the success of a PMO in a company. Ultimately, the PMO has not yet been accepted as a necessary component in many businesses, and so it is up to the office itself to prove the value it provides. It bears repeating, however, that since each PMO is unique, these KPIs must be looked at with an eye to the specific needs of a company. Nonetheless, armed with these measurements of success, a PMO can gain the executive support necessary to survive in a competitive business environment.

About the Authors: 

Michael O'Brochta, PMP, has been a project manager for over thirty years. He is an experienced line manager, author, lecturer, trainer, and consultant. He holds a master's degree in project management, a bachelor's degree in electrical engineering, and is certified as a PMP®. As Zozer Inc. President, he is helping organizations raise their level of project management performance. As senior project manager in the CIA, he lead the maturing of the project management practices agency-wide. Since his recent climb of another of the world’s seven summits, he has been exploring the relationship between project management and mountain climbing. Mr. O'Brochta's papers and presentations at PMI national, international, and regional conferences have consistently been popular and well received; his last three PMI Global Congress presentations have drawn the largest audiences at those events. 

Curt Finch is the CEO of Journyx. Founded in 1996, Journyx automates payroll, billing and cost accounting while easing management of employee time and expenses, and provides confidence that all resources are utilized correctly and completely. Curt earned a Bachelor of Science degree in Computer Science from Virginia Tech.  As a software programmer fixing bugs for IBM in the early ‘90’s, Curt found that tracking the time it took to fix each bug revealed the per-bug profitability. Curt knew that this concept of using time-tracking data to determine project profitability was a winning idea and something that companies were not doing – yet… Curt created the world's first web-based timesheet application and the foundation for the current Journyx product offerings in 1997. Learn more about Curt at http://journyx.com/company/curtfinch.     
Published in Blogs

Time and attendance tracking is necessary for obvious reasons, yet many business owners do not realize that this data can deliver enormous benefits to the organization, aside from payroll.  In fact, having employees track their time against tasks and projects allows managers to develop key performance indicators to measure progress against strategic goals such as increased billability, adherence to project estimates and project profitability optimization.

Key Performance Indicators

A 'key performance indicator' or KPI measures an organization's progress towards a strategic goal.  When leveraged correctly, KPIs can make a huge impact. 

First, you must determine what the most important business goals are. It might be increased profitability, reduced number of defective parts per thousand, maintaining a certain percentage of customer satisfaction, or perhaps revenue per store location. Once this is established, you can create a KPI to help you measure your progress.

Next, you must ensure that your KPI is measurable. "Make customers more successful" is not an effective KPI without some way to measure the success of your customers. "Be the most convenient drugstore" won't work either if there is no way to measure convenience.  In addition, it is essential that your KPI definition remain stable from year to year. For example, "increase utilization rates” needs to be more specific and address such things as whether to measure by hours or by dollars.

Keep in mind that a KPI is part of a SMART goal—one that is Specific, Measurable, Achievable, Relevant, and Time-based. For example, consider the goal, "Increase average revenue per sale to $10,000 by January." In this case, “average revenue per sale” is the KPI. This goal wouldn’t be SMART if it wasn’t achievable, if the word “January” was left out, or if it was not relevant (e.g. if this was a portion of the organization that had nothing to do with sales or marketing, such as human resources).

Simple and Useful KPIs
There are three basic KPIs that you should be able to calculate from any time and data labor source.

  • Billability. This is often termed the utilization rate. It is the percentage of time in a given period during which employees are working in a revenue-producing capacity. You must configure your timesheet system to track whether or not work is considered billable to the customer. Once you have this information, utilization for any period, group or person is found by the formula “B divided by T”, where:

    B = Billable hours for the employee/group in the period
    T = All hours worked for the employee/group in the period

    Most organizations try to keep their utilization rate above 70%. A higher rate is better, until you’ve reached a point where administrative tasks that are necessary to the business—like tracking time—are not being accomplished. Then you know you’ve pushed it too far.
  • Adherence to Estimate
    Many contractors or consultants do a poor job with bidding appropriately. In order to avoid underbidding or overbidding, and general human error, you can use the formula [(E-A)/E] where:

    E = Estimated hours to complete project
    A = Actual hours used to complete project

    Improving this number can be difficult for some companies until they understand a simple truth: similar projects often have a strikingly similar ratio of early phase cost to overall project cost.  The early phases of a project are usually referred to as the “requirements,” “design,” or “specification” phases. If after carefully tracking time on a batch of similar projects, you find that the first two phases usually take about 10% of the total project time, you can then use that data to predict the length of future projects.

    The following diagram shows how tracking the time it takes to complete a project helps in planning future projects. By tracking time and subsequently learning that the first two phases of Projects 1 and 2 took approximately 10% of all project time to complete, the projected length of Project 3 becomes easy to determine. If the first two phases of Project 3 take 1.8 months to complete, you can estimate that the entire project will be completed in 18 months. This project estimation technique has proven itself to be extremely accurate for similar projects in a variety of companies.

  • Percentage of Projects Profitable
    “Percentage of projects profitable” is a KPI that can really affect your business in a positive way. As an analogy, consider British Petroleum (BP) and its experiences in drilling for oil. BP created a strategic vision for the company called “no dry holes.” Drilling for oil and not finding it is expensive. Rather than try to make up for all the dry holes by finding an occasional gusher, BP decided to try to never have a dry hole in the first place. Changing the attitude that dry holes were an inevitable cost of doing business fundamentally changed its culture in very positive ways.

    If you set a strategic goal for your company of “no unprofitable projects,” it will change the nature of discussions in your business. For example, it empowers frontline employees to legitimately push back when a project is being taken on for political reasons. Conversely, having the attitude that the winners will make up for the losers doesn’t do this.

Measuring this KPI is easy because you can obtain direct per-project cost data from your timesheet system. Correctly applying indirect data (such as sales or accounting time) to the direct costs is a bit more complicated. Connecting all of this to revenue data gives you per-project profitability. Once you have that data, you can work on your KPI of percentage of profitable projects to try to maximize it. The formula for this KPI for a given time period (usually a quarter or a year) is:

 # of profitable projects/# of projects

Other KPIs that could be useful are:

▪ Calendar time to complete a job (because overhead costs increase substantially due to delays)
▪ Percentage of customers satisfied
▪ Time to complete initial free estimate

Unfortunately, many businesses that track time and attendance for payroll and billing overlook the other benefits such data can provide. Real-time access to relevant KPIs, however, can give early warnings of project problems and lead your company to faster growth and more profitability.

About Curt Finch

Curt Finch is the CEO of Journyx. Founded in 1996, Journyx automates payroll, billing and cost accounting while easing management of employee time and expenses, and provides confidence that all resources are utilized correctly and completely. Curt earned a Bachelor of Science degree in Computer Science from Virginia Tech.  As a software programmer fixing bugs for IBM in the early ‘90’s, Curt found that tracking the time it took to fix each bug revealed the per-bug profitability. Curt knew that this concept of using time-tracking data to determine project profitability was a winning idea and something that companies were not doing – yet… Curt created the world's first web-based timesheet application and the foundation for the current Journyx product offerings in 1997. Learn more about Curt at http://journyx.com/company/curtfinch.  

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Question:

Sam,

My project is large and has a number of stakeholders. To be honest I don't have time to communicate with all of them. It is hard enough to get all my own work done on time. It seems the more I communicate with others, the more questions they have and the more work is generated for me. There must be a better way.  

Stiny

Answer:

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right-peopleI want to suggest that there is an order to how you develop a PMO, and probably any organization, and the first step is getting the right people.  Then you develop the processes and then tools.  Of course this is an iterative process – not waterfall, but if you do not have the right people, forget it.

The right skill set is important, but that is very dependent on your situation and what you need.  I firmly believe that you can teach people almost anything in terms of skills, as long as they are the right people.  I think the right people for a PMO need to have a few important characteristics.

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overheadWe are currently facing a challenging economic climate which is forcing many companies to cut costs in order to survive.  There are different ways of doing this, and unfortunately, a popular one is slashing employees, projects and even entire departments.  Consequently, almost everyone in the business world is now looking for a way to justify their work to upper management and other stakeholders in order to be spared.

Many executives do not fully understand the value of the PMO in their organization, endangering the survival of the PMO when the time comes to cut back.  In fact, Josh Nankivel of PMStudent.com recently polled project managers about how the economic climate is affecting them, and he found that 27% had experienced project cutbacks, 14% had experienced PM layoffs, 11% had experienced financial scrutiny of projects, and 10% had experienced project staff reductions.

The answer to this problem is threefold: PMO managers first need to focus resources on the right projects, then ensure that these projects are successfully executed, and finally, effectively communicate the value of these projects to upper management.
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Saturday, 04 December 2010 17:58

Rescuing Trouble Projects

rescueYou are not impervious to having troubled projects in your portfolio. Any project can fail. Even the most seasoned and skilled project manager may, at one time or another, find themselves at the helm of a troubled project. Having a project in trouble does not necessarily signal the Project Manager is doing a poor job. Projects can go off course for a variety of reasons; some reasons are outside the span of control of the Project Manager. What are some of the common causes for projects to fall into troubled waters and what are some prudent steps to get the project back on course?

If you poll a group of seasoned project professionals with the question, “What are the chief causes of Troubled Projects?” you are likely to receive a variety of responses, though quite possibly there will be some commonly attributed causes. At the macro level, we put forth that projects generally fall into trouble for one or more of three reasons; 1) Poor Planning 2) Misaligned Expectations 3) Ineffective Risk Management. Let’s elaborate on each of these points.

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