Portfolio Management Trends Heading into 2021

As we close the books on the chaotic year that was 2020, it seems we are all taking a collective sigh of relief.

But before we try to wipe the slate clean and start anew, it is important to reflect on what happened and how we can adjust and improve. Let’s take a look at what happened within the Project Management Office (PMO) and discern how it impacted roles and businesses and reactions to those changes. 

Here are the findings of a survey recently conducted by KeyedIn of more than 200 project and portfolio management professionals.

The State of the Industry

What are the biggest challenges PMO leaders faced in 2020? The survey results revealed that 37% of project practitioners agree resource management is the biggest challenge to their PMO, 30% say that prioritizing which projects should be invested in, while 21% responded visibility and reporting of the portfolio, and finally 12% reported project financial management as the biggest challenge to their PMO.

While these results are not so different from those we have seen in the past, it reinforces the notion that what the PMO is doing is helping the business – they just need to do more of it.  This is evidenced by the results of the question, “What is the biggest challenge you face today with managing your portfolio of projects” –and 45% cited capacity planning, followed by resource allocation (28%), utilization (13%), skills tracking (8%) and managing contractors (5%) as top challenges. Capacity planning is a very mature practice that organizations, especially in times of uncertainty and risk, benefit greatly from the information and services of the PMO that are able to provide this level of planning.

What is the biggest challenge you face today with managing your portfolio of projects?	Resource Management
Capacity Planning	45%
Managing Contractors	5%
Resource Allocation	28%
Resource Utilization	13%
Tracking Resource Skill	8%

Another key finding that provides insight into PMOs of 2020 and beyond is how they define and measure success. This survey was a first-of-its-kind so it will be interesting to see if this data changes in the coming year, but this year the highest reported metric of success for PMOs was based on delivering on-time and on-budget (30%). This was higher than those delivering the most valuable projects (20%), achieving or exceeding stakeholder expectations (12%), achieving agreed upon “soft” benefits (12%) and driving the business forward (27%).

What was interesting about this piece of information was the disparity between responses from different levels of the organization. While 45% of executive level cited driving business forward as the metric of success and an additional 27% said delivering the most valuable projects with only 18% reporting success defined as delivering on-time and on-budget; PMO leaders were more split on responses with 27% reporting driving business forward as their metric of success, followed by delivering on-time and on-budget (25%) and delivering the most valuable projects (25%). As we look at the project manager level, most respondents (41%) report they are measured based on delivering on-time and on-budget, while few (16%) reported driving business forward as their metric of success. This tells us that many project managers likely focused on delivering projects rather than the impact they had on the overall business.

Executive

Achieving/exceeding stakeholder expectations	9%
Delivering on-time and on-budget	18%
Delivering the most valuable projects	27%
Driving business forward (e.g. revenue growth, cost cutting, etc.)	45%

PMO/Portfolio Leader

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Achieving agreed-upon “soft” benefits (user feedback, improved efficiency, etc.)	10%
Achieving/exceeding stakeholder expectations	8%
Delivering on-time and on-budget	25%
Delivering the most valuable projects	25%
Driving business forward (e.g. revenue growth, cost cutting, etc.)	27%
(blank)	3%

Project Manager

Achieving agreed-upon “soft” benefits (user feedback, improved efficiency, etc.)	3%
Achieving/exceeding stakeholder expectations	19%
Delivering on-time and on-budget	41%
Delivering the most valuable projects	19%
Driving business forward (e.g. revenue growth, cost cutting, etc.)	16%
(blank)	3%

One final indicator from the survey of the “state of PMO” can be gleaned from how projects are being prioritized today. As we saw over the last year, the need to have a prioritized list of projects and workload, that can change and be reprioritized quickly, was a strong indicator of success. The agility to pivot when business needs change and contract or expand the number of projects in flight based on changing resource capacity was a high demand for PMO leaders. While in concept this sounds fairly simple, in practice it is very difficult to execute as there are a number of moving pieces and gathering this level of data is not easy, especially for those that had previously operated on a reactive or as needed basis. This level of intel takes months to gather, of course rendering it useless by the time it is ready to be acted on. 

The survey also polled what the common methods of scoring are within PMOs learning that the biggest determining factor of what is most important to work on was — executive order (39% of responses) followed by a basic scoring model (27% of responses), then no official prioritization at all (19%).  For 16% of organizations, a sophisticated scoring model was deployed. When cross referenced with the percentage of projects within the portfolio are failing, there are some interesting trends.  For those that responded that less than 50% of their portfolio was failing, and then their prioritization method evaluated, the results show that those with better scoring models have a greater chance of having more than half of their portfolio considered successful.

Basic high, medium, low priority	89%
In no official capacity – just what needs to get done	52%
Mostly by executive order	77%
We have a sophisticated prioritization method with value-based scoring	96%

The PPM Impact

While the responses of this survey were anonymous and based on PMO leaders of the industry and not KeyedIn customers, we did want to evaluate what the impact a PPM solution might have on some of these organizations. Majority of the responses came from companies that have a formal PMO established (57%) and we were able to evaluate responses based on whether they reported having a PPM solution in place or not. Here are the few critical areas we saw PPM makes a significant impact:

Taking a look as some of the areas that the PMO can make an impact on the business at large, does having a solution can significantly move any levers? Those with a PPM solution report significantly higher levels of alignment of their projects and portfolio with strategic business objectives – 56% to 80% as noted above. The failure at the portfolio level also decreases significantly with the use of a PPM solution from 43% to 14%. 

When looking at prioritization, even with the implementation of a basic model, there was a significant impact on success rates (from 51% reporting success on at least half of the portfolio to 84%), and a higher number of PMOs using scoring among the respondents that have a formal PPM solution. When evaluating how PMOs measured success, organizations that seek to drive business objectives or those delivering on benefits (as opposed to simply delivering on-time and on-budget) was more prevalent among those organizations with a PPM solution present – assuming it is easier to define those business driving metrics and capture data to support those key milestones with a system in place. 

The last key area that was compared was around project failure, taking a look at not just how many projects fail (from 49% reporting less than half of the portfolio is failing with those using anything but formal PPM, up to 78% with less than half failing for those with PPM), but also the reason for project failure which reduced the projects reporting failure due to no clear objectives, no executive support, and not enough resources (common project problems that can be avoided with proper solutions in place) from 68% to 53% among those without PPM and those with it.

2021 and Beyond

As we head into a new year with new outlook and learnings, there is a lot at stake for portfolio leaders and a great opportunity as business is both relying on their services and the impact has never been greater. The full report on the survey findings can be accessed here: https://go.keyedin.com/projects/the-2021-pmo-outlook-report