Author: Thomas Flynn

Validating Project Management ROI

Looking Beyond Skill Sets and Competencies

The objective of this article is to illustrate methods that can be used to validate a Return on Investment (ROI), looking beyond skill sets and competencies.

Generally, organizations that engage in a formal Project Management Training Program will look to validate their investment by initially assessing a marked improvement in individual participant skill set and competency advancement. This is, however, only an initial benchmark of effective project management training and the integration of raised personal attributes and cognizance.

The real test of the validity of a program lies in the participants’ ability to return to the project management environment and make a day-to-day difference in their actual project assignments. This can be measured, stratified and sold by utilizing two different mindsets/methods.

The first mindset/method, best used by an organization that is employing a definitive and mature methodology (defined as a methodology in operation and successfully in use for more than two years), would be to target the areas that comprise their key process indicators (KPIs). These areas would be determined by tracking actual project data over the methodology maturity life cycle, i.e., bolstering the skill and competencies that would make the most positive difference in day-to-day implementation of the definitive methodology.

The second mindset/method would be to utilize the training program content (driven by pre-training interviews) to highlight areas in which the organization is currently taking the most hits on projects. This would include the full range of time, cost, human resource and management issues. The training, in this case Advanced Training, should target specific solutions to these hot spots and, in effect, create the initial benchmark or key

process indicator (KPI) targets against which to track. In doing so, the training would go beyond advanced general topic training to customized course(s) for implementation of the required process steps espoused by the organization.

This would serve as the beginning of a continuous improvement mechanism (the methodology) that can be owned by the project management resources.

Typically, organizations categorized as Level 1 or 2 in a PM-Capability Maturity Model (CMM) schema (either formal or informal), usually have not been tracking projects to a sufficient depth to create any form of accurate and meaningful benchmark/baseline data. The training program development schema, as designed above, would help to establish the initial target baseline that should be monitored at intervals determined prior to the training.

A few scenarios may arise from this approach:

  • Minimal improvement is detected at the first few milestone/review intervals across a wide range of pilot projects, and the participants are at a loss to explain the situation (no increase in cognizance). This would require an examination of the program goals developed from the participant and management anecdotal experience. The current day-to-day situation on the projects would also be reviewed (i.e.,are the scenarios/hot buttons accurate and in alignment with those utilized as course drivers? Did we utilize the wrong targets or the wrong opinions/input?)
  • Improvement has been detected at the first few milestone/review intervals across a wide range of pilot projects. The participants have additional information as to where there are “roadblocks” (process or organizational) to further applying the skills the program targeted and transferred (increase in cognizance). This situation, although not exhibiting marked or substantial improvement, is very favorable, as the participants have been active in the implementation of the program’s information. Through a level of raised cognizance, they can identify improvement opportunities ahead of them.
  • That being said, one must then analyze the improvement opportunities for real and substantive issues versus the possibility of identifying further excuses for lackluster performance. If you are working with an outside entity to assist your efforts, it is important that you are involved in this process, as you know your folks best.
  • An important piece to mention is that once the real and substantive issues have been identified, the organization should develop a positive response and implementation strategy, including a timeline, to clear them up. If not, the effort will be unsuccessful as the participants may feel as if “they [management] were trying to fix us rather than educate us to recognize what is and is not working.”
  • The last scenario is that marked and substantial improvement is detected at the first few milestone/review intervals across a wide range of pilot projects and the participants have additional information as to where other improvement opportunities are available (increase in cognizance). As stated above, we would then analyze these areas of possible improvement for cost of implementation and value of return. This is slightly different from above due to the fact that in this scenario the “bleeding” has stopped, and the project is in far better shape. We therefore could be more deliberate in our approach to the improvement opportunity planning and implementation.

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Tom Flynn, P.E., PMP is a founding partner and Vice President of Consulting Services at Advanced Management Services, Inc., Tom has initiated and spearheaded the development of the Project and Program Management Division which helped transform AMS into its current position as a leader in the Project Management Consulting and Training industry. In addition to his technical project management competencies, he also utilizes his extensive training and experience in conflict management-resolution, change management and human development to successfully coach and mentor senior executives, project managers and project team personnel. To contact Tom, send an e-mail to [email protected] This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 781-828-8210.

The Maturing of the PMO

Typically, an organization begins the methodology/maturity progression process.

with the formation of a small Project Management Office (PMO) whose first task is to formulate the organization’s PM methodology and associated tools, forms and templates. In the engineering/capital project management industry, the methodology typically will be a Stage Gated or Phased model. Typical phases are:

Phase 1 – Feasibility or Business Planning
Phase 2 – Conceptual Engineering or Facility Planning
Phase 3 – Schematic Engineering or Front End Engineering
Phase 4 – Execution or Detailed Design/Construction
Phase 5 – Closeout or Start-up/Transfer of Care, Custody & Control

The methodology development process generally begins with organization-wide structured interviews. These interviews are used to ascertain cross-functional requirements for all project types, sizes, and current organizational best

management practices. Therefore, the methodology becomes a business model, not just a PM process. This task is imperative as the methodology must integrate strategies and policies regarding critical deliverables, mandated project reviews, and financial procedures (estimate accuracy per phase, budget development, contingency procedures and the project approval process).

Generally, once the methodology is developed, the PMO begins to expand its ranks and begins an initiative to roll out training for the methodology. The PMO will also identify pilot projects for the new methodology and procedures. In order for the methodology to be accepted, a congruent stance from key senior executives must be achieved. This mandating of the methodology will generally receive a fair level of compliance; especially if the project’s financial approvals are directly tied to methodology compliance.

The financial policies must be in harmony with timely and realistic approval of projects and the establishment of estimating accuracy and contingency practices (lean contingency). This lean contingency is predicated on the methodology requiring scope-based solid Front End Loading (FEL) deliverables which allow for the contingency levels to be on the lean side.

Typically, FEL costs are 4-6% of the total project cost, or engineering costs of 25-30% have been expended by the end of the FEL phases in order to reach a control estimate (generally +/- 10%). This is consistent with current benchmarking data.

Commitment to the methodology is another matter entirely and is dependent on the level of service that the PMO exhibits. The new PMO must consistently show up as a “customer-focused entity” if it is to assist in the necessary task of culture shifting (from ad hoc to more formal processes). The PMO is generally the steward of the methodology and the training program.

Eight Steps in the Maturity of the PMO

The following steps are common (basic) in the progression of the PMO’s maturity, which typically occurs over a two to three year period:

  1. Form the PMO and develop the methodology (web based).
  2. Develop the PMO website to house the methodology and initial tools, templates, project review procedures, approval processes, etc.
  3. Develop and roll out the methodology training program or utilize the methodology on a chosen pilot project first. (Most organizations don’t have the luxury to do this ahead of the methodology training).
  4. Establish PMO controls function (estimating, scheduling and project controls). These folks will generally participate in the FEL phases and then transition the function over to the project team as the execution phase begins.
  5. Control folks begin to gather project data and develop Key Process Indicators (KPIs) for utilization in benchmarking efforts.
  6. PMO develops a relationship with a benchmarking entity and a third party estimating entity for project reviews and validation of the project methodology.
  7. PMO members coach and mentor junior project resources. PM skills training programs are developed for PM progression and competency advancement.
  8. Leverage current PM technologies (web based, document management, PM enterprise tools, databases [estimating, risk, lessons learned, etc.]) to streamline the management and data gathering functions which will assist in real time continuous improvement.

These steps are general in nature and each can be broken down to definitive elements that are required to develop a level of PM and PMO maturity. These steps may vary based on the requirements of the specific business/industry.


Tom Flynn, P.E., PMP, is a founding partner and Vice President of Consulting Services at Advanced Management Services, Inc. Tom has initiated and spearheaded the development of the Project and Program Management Division which helped transform AMS into its current position as a leader in the Project Management Consulting and Training industry. In addition to his technical project management competencies, he also utilizes his extensive training and experience in conflict management-resolution, change management and human development to successfully coach and mentor senior executives, project managers and project team personnel. To contact Tom, send an e-mail to [email protected] This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call 781-828-8210.