Are Your PMO Measurements All Wrong?

An adage in construction says to measure twice, cut once. It means that taking the extra time up front to make sure your measurements are accurate saves time and reduces waste by not making mistakes later. That’s great advice, but it won’t do any good if you’re measuring the wrong thing. No amount of measuring will solve that problem. 

Guess what, PMO Leaders? We’ve been measuring the wrong things for years! We’ve become so obsessed with keeping our projects on budget, in scope, or on time that we’ve missed whether they are bringing value. We’ve become so addicted to reporting Red, Yellow, or Green on our status reports that we’re not paying attention to whether or not our projects are returning their ROI projections. We’ve become so enthralled with our burndown charts, defect tracking logs, and other internal facing metrics that we’ve lost sight of why that project was started in the first place.  We must understand there is a difference between a Project Report and a PMO Report. 

Executives Aren’t Focused On Your Internal Measurements 

What makes matters worse is that you lose executives when you are providing project-based measures to them and represent the measures as PMO metrics. The next time you sit through a project or portfolio update with your executives and start getting into some of the measurements outlined above, watch their eyes start to glaze over. What you are reporting on is how the sausage is made. It may be interesting to you and your project managers, but it’s not interesting to them. Executives are interested in results. They want to know what value each project is generating and if it’s contributing to the company’s goals. 

Too many PMO Leaders are measuring and reporting the wrong things. It’s like your Accounting department saying that they generated 1,500 invoices last month. That’s an internal facing metric that’s important to the Accounting team but an executive cares more about the $2M in billing resulting from those 1,500 invoices. That’s when the glaze factor disappears.  It is critical to understand your audience and report measures that fit that audience.  A project status report is a necessary report for the project team, but most likely won’t add value for an executive.   

True, underlying activity is important.  PMO Leaders need to capture internal measures for team improvement.  When meeting with executives and trying to demonstrate the value of your PMO ensure you aren’t giving them project metrics.  What really matters are the RESULTS. More invoices means more money. Can you translate project activity into something your leadership cares about? 

What Measurements Do They Care About? 

One thing is for sure: all executives care about the bottom line. The bottom line formula is simple: Sales - Expenses = Net Income. It’s a measurement that is tied to bonuses, dividends, shareholder value and so many other factors that are important to a company. Start looking at ways the projects in your portfolio will help increase sales or reduce costs, and you’re starting to measure the right things.  Also, spend some time building relationships with your executives and ask them what measures they want to see.  You might be surprised how much they know about your PMO and the work being done by your team.  This is a great opportunity for you to show just how much value your team is providing to help the company hit their targets. 

For example, let’s say a project that is scheduled to complete in 6 months is running two months behind. Rather than just report that it’s delayed, translate for them the negative impact on the company’s net income for the year of missing two months’ worth of cost savings (lower expenses). Now you have their attention! 

You can also tie project performance to specific company objectives. Perhaps the goal is to sell the company in 5 years. The number that must be reached to make the sale profitable for everyone is a 25% increase in EBITDA over the next five years. Show how your project(s) contributed to that bottom line. “Our project portfolio contributed 2.5% of the 5% EBITDA increase needed for this year, and we expect another 2 - 3% increase in the coming years” is so much better than “our project portfolio is on time, on schedule, and on budget.” 

True, it’s important for YOU to know that your projects are red, yellow, or green, and that they are on time, within scope, and within budget. This helps you and your team manage activity and keep things on track. Just remember that your executives care more about results. Translate your PMO’s activity into bottom line results and now you are measuring the right thing! 

SOLUTIONS MADE SIMPLE SUMMARY

How to Measure the Right Things 

It’s easy to fall into the trap of measuring and reporting out on the wrong things to executives. Take the following steps to ensure what you are measuring is meaningful to them. 

1. Assess Your Measurements - Review your project status and update reports and determine what metrics you are measuring. Is it something that’s important to the PMO (project status and activity) or is it important to executives (bottom line results)? If it’s all about project status and activity, start bringing in elements of bottom line results. Read the article 7 Steps for Projects to Deliver Benefits for suggestions on how to do that. 
2. Ask Your Executives What Measurements are Important to Them - This will help you get an understanding of why these projects were chosen and the results they are expected to bring. Also, you can gain insight into larger company goals for the future.
3. Speak in the Language of the Business - Projects are not done just for the sake of doing projects. They are initiated and completed to move the business forward. Make sure you understand the impact your projects have to the overall company objectives and learn how to communicate with your business partners in their language. 

Definitions: 

Glaze Factor - An indicator of how meaningful the measurements you are capturing are to your audience. If their eyes glaze over because they are not paying attention or interested, you need to change your measurements.  

ROI - ROI stands for "Return on Investment." It is a financial metric used to measure the profitability or efficiency of an investment relative to its cost. ROI is expressed as a percentage and is calculated by dividing the net profit generated by an investment by the initial cost of the investment, and then multiplying by 100 to get a percentage.