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Performance Management for the Project
Management Office
Craig McQueen
A project is a planned undertaking to achieve a given
goal. Within the context of a business this goal typically
supports a strategic objective such as increasing revenue,
launching a new product or streamlining operations. Since the
achievement of the strategic objectives is dependent on these
projects, there is a direct correlation between project success
and an organization’s success.
Implementation of a project yields the anticipated benefits to
an organization and is delivered according to stakeholder
expectations (schedule, budget and quality).
Projects are often complicated and involve many people with
various roles. What is required is a way to align these roles so
that their efforts are directed at achieving the project goals.
Performance Management is a framework that can make this happen.
This article discusses a Performance Management
framework for running projects within an organization. Most
large organizations would center this responsibility in a
Project Management Office (PMO) responsible for establishing
shared methodologies and processes, training and support of
project teams and overall project governance
Roles in a Project
The figure to the right provides a typical overview of the stakeholders related
to a project. The Customer is the Business Project Sponsor and
the
Business Portfolio Manager. The Delivery team is responsible
for making the project a reality.
The Senior Management Team ultimately has responsibility for
ensuring the project delivers business goals.
Table 1, below, provides a summary of the roles
along with sample goals, the frequency that they require
information and the level of detail that they need it.
Balanced Scorecard
A
performance management framework is required to align and manage
all the roles contributing to project success. The Balanced
Scorecard methodology is the framework we use to incorporate
Performance Management into project management. Balanced
Scorecards are used as a measurement system, a communication
tool and for strategy management.
The Balanced Scorecard is a performance management framework
with demonstrated success for aligning business
strategy
with job function. It considers both tangible and intangible
areas required for success across four perspectives: Financial,
Customer, Internal and Learning/Growth.
Financial Perspective
The Financial perspective tells whether the strategy execution
is leading to bottom-line results. It is focused on traditional
measures such as profitability, revenue growth and asset
utilization.
The Financial Perspective shows the end result of an
organization’s effort. The other perspectives need to be
considered in order to tell where we are headed.
Customer Perspective
The Customer Perspective deals with knowing if the customer is
getting the value that they were promised. For an organization,
typical questions are:
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Who are the target customers?
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What is the value proposition in serving them?
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What do these customers expect from the project team?
Typical measures widely used today are:
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Customer satisfaction
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Customer loyalty
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Market share
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Customer acquisition
Internal Perspective
The Internal Perspective corresponds to the business processes
required to make the organization a success. In a traditional
business this may include product development, production,
manufacturing, delivery and support service.
Learning and Growth Perspective
Learning and Growth (also sometimes known as Learning and
Innovation) feed an organization to make it better for the
future. The objectives and measures in this perspective are the
enablers of the other three perspectives.
Traditional measures include:
Projects are often very self-centred in that they only care
about their own success. By measuring the learning and growth
during the execution of a project, visibility is given to the
improvements made to the organization.
Strategic Objectives
The four
perspectives address the areas an organization needs to perform
well to be a success. The next step is to determine the
strategic objectives within each perspective which will move us
towards our Mission or Vision.
Each organization will have different strategic
objectives. There are common themes with respect to project
delivery from which we can derive sample strategic objectives.
The graphic below, forms a starting point from
which an organization can derive their own specific strategic
objectives with respect to the PMO.
Metrics
In order to provide feedback and drive behaviour in each role in
a project, we need to provide metrics about project performance
that are tied to the strategic objectives. As a guiding
principle, we will provide people only the information that will
impact their behaviour and their decision making.
Once the metrics are decided target values are
required. Open ended targets such as “make as much money as
possible” make it difficult to direct behaviour. A target
requires a specific value with some tolerance around it. An
example target would is “deliver the project within 5% of the
original budget.”
Bringing It All Together
Pulling these concepts together shows the roles, the strategic
objectives they would care about and metrics supporting those
strategic objectives. This is done for each role, but we’ll look
at the Project Manager as an example.
The Project Manager will have the most metrics with respect to a
project. The project manager typically monitors the metrics on a
weekly basis although some metrics may be looked at daily to
initiate change as quickly as possible.
In the table above we have shown sample metrics
for the Project Manager with one drawn from each project
perspective.
Dashboards and Scorecards
To be useful, metrics need to be consolidated and presented in a
way that is meaningful to the user. Metrics are consolidated
into a scorecard which categorizes metrics by Perspectives and
Strategic Objectives. Each user group has metrics in their
scorecard that are applicable to them.
Metrics that indicate an exception require a way for the user to
determine the root cause of the issue (or more optimistically,
what is causing something to go really
well). This analysis is supported by linking the metrics to
tables and graphs related to that metric. For instance, if the
metric was the number of projects currently over budget, the
metric could link to a list with the names of all the current
over budget projects.
Together a scorecard and the associated reports form a
dashboard. The dashboard is the single place that the user group
would go to for the information representing their portion of
the business. The figure below, shows an example of a dashboard
for a Project Management Office. The scorecard is depicted on
the left with further analysis through graphs on the right.
Deploying to the Team
Some of the data will be easily available in an organization and
some will not be available at all. Building the scorecards is an
ongoing process which starts with the data that is easily
available, usually results based financial information.
Predictive metrics based on intangibles in the organization may
not be available at all. If information is not available, there
is a cost to obtaining it. Assessing the business value of the
information vs. the cost provides a way to prioritize the
collection of new information.
Undertaking a performance management initiative within a Project
Office clarifies what factors are important to each of the
groups participating in the delivery of projects. It allows
those factors to be measured and tracked. This provides insight
not only about how to improve the organization but also what
needs to change to ensure the projects are heading in the right
direction.
Successfully delivering projects ultimately leads to the overall
success of an organization.
Click here to access a full whitepaper on this
subject.
Craig McQueen is head of Business Intelligence and
Performance Management at Agora.
He can be reached at
cmcqueen@agorainc.com
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