This week I attended a PMO Roundtable Discussion at my local PMI chapter to discover which project portfolio metrics are commonly shared by PMOs from a variety of organizations and industries. Most of the participants were PMO Directors at global and large local enterprises, and could be divided into two distinct groups: those who serve (are driven by) internal customers, and those who bill external customers.
The application of metrics we discussed, were: project selection (doing the right things), and project execution (doing things right).
During the 90-minute discussion, the actual metrics discussed were: resource allocation, ROI, % complete, business value, exceptions (as in “ManageByException”), and RED, GREEN, and YELLOW. The problem with using available resources as a metric for either project selection or project execution is its inherent volatility and integrity. As for ROI, that works for external-facing PMOs and projects associated with producing products but not so well with internal-facing PMOs.
Business value is too hard to define in a measurable way (not always equivalent to ROI), and it’s assumed that nobody is dumb enough to propose a project lacking business value in the first place. Some participants felt strongly that exceptions are the only metrics worth a manager’s attention, although everyone seemed to agree this metric wasn’t timely enough to take remedial action.
RED, YELLOW, and GREEN are not really metrics – but because we were discussing metrics AND dashboards – they became the end product for decision-makers too busy to analyze the underlying metrics. From a PM perspective, GREEN means “all is well – don’t need help”, YELLOW means “there are issues but don’t need help yet”, and RED means “We need help”. One justification given for dumbing down the metrics is that nobody wants to spend time reading about what is going right because that’s a baseline assumption. Some participants disagreed with this approach for a variety of reasons, but underlying these objections, my intuition tells me that project managers want to sell their successes when GREEN and time their project status transitions to get help when YELLOW so they don’t go RED.
Is there a conflict of interest when Project Managers or PMO Directors self-report? When I put on my auditor’s hat, I question whether there is sufficient separation of duties to provide management with objective status reports. I think this is more problematic for inward-facing PMOs, where people fight for resources and protect themselves and their fellow employees from undue criticism. I think that external-facing PMOs, and organizations producing tangible products, have an advantage with projects which are based on contracts, not initiatives: contracts contain better metrics for performance, service-levels, and specific requirements. Contract management also enjoys better processes for vetting, has greater flexibility with regard to alternatives, and is more enforceable through legally-binding contracts with monetary incentives and penalties.
Would projects be better managed through contracts rather than through traditional charters and project plans? Would assigned resources get additional scrutiny? Would projects have greater accountability? And, to my main point, would project managers as contracted vendors define and collect their own metrics, monitor and report on their own compliance status? Or would it be best to have a control framework based on metrics all parties can agree on, and evaluated by an independent auditor?
Don’t forget to leave your comments below.