PMO Metrics – Introducing them into your PMO!
PMO Metrics – Introducing them into your PMO!
What are PMO metrics and why are they important?
One of the key chapters I wrote in my book, the “PMO Lifecycle: Building, Running and Shutting Down” is on PMO metrics. It is up on Amazon. Go grab a copy today! I wrote Chapter 17 – PMO Metrics and Performance Measurement because I realized how important they are to running a successful organization. I think when you have the right metrics in place, you can drive a level of maturity into your Project Management Office (PMO) that you cannot achieve without them. However, you also can drive bad behavior as well, so we have to be careful as we venture down the path of creating PMO metrics for your organization. Most PMO Managers here they need PMO performance metrics in their PMO, and it is true, but the issue is how fast do you put them there? Not all PMOs need performance metrics from the start.
Wait.. Wait before we go to far I actually have YouTube video on this I wanted to share. Check it out!
Why are PMO metrics so important?
There are many reasons PMO Metrics are important and why I use them in every PMO I run. These reasons include:
1. PMO metrics are important because they provide a way to track and measure the effectiveness of PMO activities. This information can help to improve the PMO’s ability to deliver value to the organization. Metrics can also help to evaluate and assess PMO performance.
2. PMO metrics provide a snapshot of an organization’s performance and allow for better decision-making. PMO metrics should help organizations track progress and measure impact, as well as identify areas for improvement. By using PMO metrics, organizations can increase their efficiency and effectiveness while also reducing the risk of failure. Over the last several PMOs that I have run, I have spent some time trying to understand what metrics are right for my organization. I also have to understand how I can use these metrics to help projects’ performances across the PMO. I did not rush to have metrics for the sake of having metrics, but more focused on how it helped the organization.
3. PMO metrics can be a valuable tool for your PMO executive team to understand the maturity level of your organization. This is something most leadership teams care about and great for showing how mature is your PMO. As you continue to refine and improve processes and procedures in your PMO, metrics can show you where you are going off track and where you need to adjust/adapt. It is this insight that will help you move the dial for your organization. Metrics will also help project managers see how they are executing their projects, and where they can make course corrections based on that data. So not only are they great for you, the PMO Director/Manager, but for your project managers as well. Executives will value seeing the PMO metrics because it shows them you are attempting to run your organization as effectively as possible, and when you see data that shows otherwise, you can make those course corrections.
However, with that being said, one of the key components of making metrics work is that you must make sure your management understands them. You must make sure that metrics are driving towards identifying areas of improvement and performance, and not used for punitive purposes. Let me say that again, we do not use them for punitive purposes! That is one of the worst things PMO Managers can do is set up a series of metrics and then have your project managers be stressed that they have to hit metrics instead of doing the right things for their projects. It happens. I seen it done before and I must tell you; it does not make for a very productive or happy PMO. Have you heard the term watermelon metrics? You know, green on the outside and red on the inside!
Metrics vs KPIs – What’s the difference?
I love this question because I get it all the time and I think it needs to be cleared up. I like to describe it like this. A key performance indicator (KPI) is a kind of metric. All KPIs are metrics, but not all metrics are KPIs.
KPIs have these characteristics:
• They are defined by the management team and customers.
• They cascade throughout an organization.
• They are based on corporate standards.
• They are easy to comprehend.
• They empower users.
• They lead to positive action.
Or another way of saying it is that metrics are a way of measuring something, while KPIs are a way of measuring something and using that measurement to decide. For example, you might have a metric for the number of emails sent each day, and a KPI for the number of emails that result in a sale. Here are some more examples just to make sure you are clear because so many people get this confused:
• If your goal is to increase sales by 20%, you might use “sales growth” as one of your KPIs.
• If your goal might be to make 100 sales in a day. Your KPIs could be the number of sales you have made each hour, or the number of sales you have made each day so far.
See the difference? This is important for PMO Managers to have this nailed as they venture into the PMO Metric space and again, important to ensure you are creating the correct ones for your PMO. Ok, now you know what they are, how about we move into creating them for your PMO?
How do I create PMO Metrics?
When thinking about PMO metrics, it is important that you are clear on how to create them. You must have a consistent process in place to create metrics. This is important to ensure you are capturing a common set of fields/data for later use in dashboards and reports. Without a common set of data for each metric, it will be hard to get dashboards and reports setup and making sense, but to understand how well you are performing to these metrics. There is a great saying that goes “you can’t improve on what you don’t measure”. Therefore, if you don’t measure you are doing good or bad, you don’t know whether you are doing good or bad!
So, it is important we have a common set of fields that we capture for each metric. These fields include:
• Baseline number (the starting point for the metric)
• Target number (the target you want to reach with this metric)
• Unit of measure (how you will measure the metric)
• Leading indicator (for example, customer complaints)
• Lagging indicator (for example, days lost due to injuries)
• Reporting method (when and how data will be reported)
These fields can be tweaked and adapted for your PMO metrics, but a important starting point for any organization.
PMO Metric examples using common template and fields.
Ok, now we have the fields we need. Let’s look at some examples of metrics you can create for your PMO. In this first metric example, we are capturing how many PMP certifications are project managers have in our PMO. This metric is perfect for a Supportive PMO. Let’s look at this example.
Ok, let’s keep going because I really think this is important to understand.
PMO Metric by Type – Not every metric is going to fit every PMO!
When you are creating metrics for your PMO, make sure you are considering your PMO type. See, not every metric you can dream up will apply to every PMO. They are not plug in play in that manner. They are, when you have the same PMO type, so Directive to Directive or Supportive to Supportive, but not when you cross different types. Think about creating PMO metrics, depending on the type of PMO you are running. Directive, Supportive, and Controlling for example, would all have different metrics. You would not create PMO metrics that apply to a Directive PMO for a Supportive PMO. It would not make sense and you would not have the data or processes in place to collect that type of data.
• A metric that tracks how many projects are completed on time.
• Or a metric that tracks how many projects complete on budget.
These are not applicable for a Supportive PMO and therefore should not be created. You must understand what data you are collecting and have control over for the type of PMO you are running. In those two examples, you are not likely going to have that kind of information.
In the two metrics examples noted above, what we did is give you a great example of two Supportive PMO metrics, but I know that many of you run Directive PMOs, so I wanted to give you metrics that you could create now. Here are some examples:
• # of projects completed on time
• # of projects complete on budget
• # of project with cost overruns
• # of change requests on projects
• # of projects aligned with organizational goals
• # of projects using vendors
• # of project completed this fiscal year vs last fiscal year
There are an endless number of metrics that you can create for your PMO. However, I think it is important to balance that number. Too many or too few, it is a balance that your culture will have to decide what is right! Let’s look at an example of a Directive PMO metric using our same process from above.
In this example, I chose an easy one to make sure you are clear on the process. This metric focuses on “Projects completed on time”. You can see, we use the same fields and processes as the other two example metrics covered earlier. This metric should be setup for every Directive PMO!
See how easy this process is and how you can get started today?
PMO Metrics Best Practices
Now we have created some metrics, it is time to think about some best practices. Remember when I said there are endless opportunities to create metrics? That’s so true, but we have to have some controls in place. Let’s look at some best practices for creating PMO metrics.
1. When your management team or customers ask you to change your approach to PMO metrics, first consider how you currently measuring the success of your PMO. You might already have the right metrics in place, but you’re reporting them wrong.
2. Keep your management team and customers involved throughout creating metrics.
3. Establish metrics around business value. This keeps your PMO connected to value-related customer requirements and helps to ensure your programs and projects will be set up to deliver that value.
4. Set metrics only for areas you control. Setting metrics that are outside your span of control, or outside the direct impact of your project or effort, jeopardizes your credibility and the image of the PMO—even if you deliver on those metrics.
5. Limit the number of metrics (four is a good number), especially when your PMO is new and is still maturing.
6. Tie new metrics to existing organizational metrics to ensure alignment.
7. Work with a certified Six Sigma Black Belt or Six Sigma Master Black Belt Process Engineer to create PMO metrics.
Does that make sense? It is important to remember these when creating your PMO metrics for your organization.
PMO Metric Dashboards
Ok, we created our PMO metrics, and we put processes and procedures in place to collect the data. The next logical step is to create dashboards and reports. There is nothing better than setting up a series of PMO dashboards and reports in order to tell how well the organization is performing against those metrics. Let’s look at some PMO metric dashboards now. Here is one dashboard example on costs and monthly overages. Again, just one of the hundred of examples we can create for our PMOs.
In this example, you will see we are tracking the differences between Actuals and Estimates for project tasks on construction projects. Do you believe it is important to understand those overages each month? I think so, I think it is extremely important. If project managers keep having monthly overages, not only do they cost more, but they go longer, and they take longer time commitment from the resources. We end up having to delay the start of other projects while we wait for these resources to free up. It is great to see these metrics in a format that can be easily consumed by your PMO leadership team. I think it is critically important to have these dashboards if you are going to move your PMO forward.
How great are these dashboards? I can keep creating them and giving you countless examples, but I think you get how powerful this is and the difference it can make in your PMO! If you like these dashboards and are interested in creating these yourself, then I highly encourage you to check out my PowerBI Dashboards and Report course. Check it at the link and sign up today to get creating these dashboards for your PMO.
To summarize, we covered a lot of information around the importance of PMO metrics and getting them setup and running in your organization. We covered why metrics are important, how to create them, and then showed some basic dashboards and reports. The metric examples I showed, I actually used them in my PMOs, so there are real metrics used in real organizations. It is interesting because they were tied to my yearly performance goals, so it was critical I hit those metrics yearly. I used to track and report this metrics monthly to my management team, and then we, as a group, would decide on course corrections if they were not on track.
I believe strongly that PMO Metrics are an important step to driving your PMO maturity into the future. As discussed, to many metrics is not good, and too few metrics and you don’t move the bar fast enough. So, it is a balance that you and your management team are going to have to decide on for your PMO.
Good luck, I am here to help and you can reach out anytime.
If you like this article, I am sure you will love this one. The Power of PowerBI – https://www.billdowpmp.com/new-mpug-article-on-powerbi/
Or if you are new to PMOs and just looking to get started, definitely check out my article here: How to Build a PMO.
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