Only 50% of PMOs survive. Fight back!

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Axe_manDo you want to have a job in three years’ time?

Yeah, me too.

But only around half of PMOs survive for three years or more (according to the Association for Project Management). So what can you do to reduce the chances that the axe-man will end your career early?

Well KPMG research points to 5 key “best practices” that will help keep your head on your shoulders!

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Project Methodology Matters

You can’t argue with numbers. 90% of organizations that consistently delivery projects successfully use appropriate project methodologies “often” or “always”.

This good news for all those accredited professionals, but might be a little daunting for those struggling to get a handle on the portfolio. Getting people to buy-in to methodology, getting them trained, putting the appropriate tools and processes in place is a significant undertaking, one that requires staying-power.

I’ve seen a few PMOs called into question because it takes more than a couple of months to put processes and methodologies in place… and that’s a rookie mistake. If your execs believe that you can solve this in a few months, you have not set appropriate expectations and you’re begging for failure. Getting a methodology consistently used and supported can take years.

So, methodology matters, but make sure executives understand the level of time and cost involved.

Effective Project Risk Management

It seems obvious, but better risk management leads to fewer failures.

It turns out that this is one area many organizations are investing in. Complexities here include alignment of project risk frameworks with organizational risk frameworks.

Yet almost half of organizations don’t make this alignment (47%).

Similarly almost half of organizations (48%) fail to communicate the approval of risk framework, despite this being a quick-win that has a real impact on success rates.

But the statistic that surprised me most is that around 1 in 5 organizations aren’t doing anything to improve risk management. Clear room for improvement all-round.

Use of a Project Management Office

According to the research, good outcomes are strongly correlated with PMOs, but the number of organizations with a PMO declined by 30% (this was a 2013 study – I haven’t seen later data). So what’s going on? Well, we come back to the fact that many PMOs fail – half of them within 3 years.

According to the KPMG report, “PMOs are created to improve project performance; yet, few organisations are giving the PMO enough resources and authority to do the job.”

Without strong executive sponsorship, the PMO will never have the resources and authority that’s needed for success – yet 72% of PMOs are being called in to question by senior executives. That’s about as far from sponsorship as it gets! But you can turn this around…

Use of Portfolio / Prioritization Techniques

Project prioritization and portfolio management are correlated with strong performance. I’ve covered the reasons for this before and I’m going to keep my comments here brief (“For a change!” I hear you cry).

Now one point that was interesting is that the study talks about this being something “more mature PMOs” do… and I would absolutely argue that picking the right projects should (often) be the very first step on your journey to improve portfolio performance.

It’s quite possible to get high-impact results from a prioritization process in weeks-to-a-couple-of-months. This builds support for the PMO, gives executives and implementation teams more confidence and gets everyone focused on common priorities.

This case study will give you an idea of what’s possible.

Finally, think about the prioritization process you have. I often hear cries of, “But we have a process…” but when I dig in, process is often deeply flawed. You can get an idea of how your process measures up here. There's also a link to a useful backgrounder / infographic at the end of this blog.

Clear Business Case

Don’t confuse a business case with return on investment (RoI). The two can be closely related, but basically, organizations that define the business value of their projects, and measures the value that’s delivered, perform better.

Why might this be?

Well, first, if you’re clear about what the goals of your project are, you will be able to make better in-project decisions.

And of course, if you know you’re going to be measured on the outcome, on performance against those targets, you’re going to make sure you focus on actually making the decisions better.

So what about that RoI? Does it have no role?

No, that would be daft, but RoI alone is a shaky basis for a business case.

As part of your prioritization process, you should be building a quantitative, balanced view of the attractiveness of your projects. This is basis for the business case and RoI is potentially one of the components of that business case.

What’s next?

Of the five items that KPMG cites as leading to success, some are quick, some require time and investment. Project prioritization can start adding value immediately. Standardizing project methodologies will often take over a year and the other items fall somewhere in-between.

By taking a good look at your maturity level on each of these factors, you’ll get a good idea of where to focus your energy.

 Project Prioritization Ultimate Guide