The Business-Driven PMO

Apr 9 2012   3:52PM GMT

The Top 10 Metrics to Track PMO Performance

Smiler66 Profile: Smiler66

The role of the PMO has become more critical than ever in supporting strategic business priorities. As PMOs become more successful, they also need to be more accountable and prove their value. In this blog post we outline our top 10 metrics to track PMO performance. Although a PMO may not be able to track all these metrics immediately, as a PMO grows and matures, it should be able to track the majority of these metrics on a quarterly performance scorecard.

We’ve organized the ten metrics to map to four business drivers of a PMO: (1) Strategic Alignment, (2) Operational Efficiency, (3) Execution and (4) Business Value Delivered.

Strategic Alignment
1) % of Projects Aligned with Strategic Objectives. The number of projects, or weighted cost of projects, that are aligned with at least one strategic objective over the total of projects.

2) Investment Class Targets ($). Set investment targets for Run, Grow, and Transform type of projects and analyze spend variance against these. A simpler alternative is to report the percent of effort/cost going toward ‘Keeping the Lights On’ (KLO) activities for IT.

3) Business Unit Investment Targets ($). Set investment targets for cost and effort devoted to each business unit and analyze spend variance against these.

Operational Efficiency
4) % Resource Utilization. The percentage of time spent on productive activities such as project work, ticket resolution, etc.

5) % Project Effort. For IT PMOs, the percentage of time spent working on projects, as opposed to maintenance, enhancements and tickets. This should be measured against a target to show delivery of new business/technology investments.

6) % Project Churn. The number of projects put on hold or cancelled over the total number of projects in a given period.

7) % Increase in Project Success Rate (or % Decrease in Failure Rate). This assumes success is defined not just by time and budget, but by delivering the business requirements (based on satisfaction surveys of the business stakeholders post-delivery).

8.) Variance to Budget ($). Cost savings measured by positive variances to budget. This assumes project costs are accurately estimated during planning. Earned Value can also be used for this, for instance looking at the % of projects with a Cost Performance Index (CPI) over 1. CPI = Budgeted Cost of Work Performed (BCWP)/Actual Cost of Work Performed(ACWP). BCWP is Earned Value (this is the PMI definition). PMO will need to monitor CPI on a per project basis.

Business Value Delivered
9) Customer Satisfaction (%). A measure of stakeholder/customer satisfaction of business value delivered based on surveys post-delivery.

10) Business Value Realized. Business value is realized when the right projects are selected and executed at the right time. Selecting the right projects involves estimating Economic Value Add from a project. This is best if based on actual benefits measurements post-project, but in reality the estimated benefits are simpler to calculate tied back to the project delivery date. This can be measured in cost savings, additional revenue, increased customer satisfaction etc. A standard scoring model can be used to normalize across different benefits, and business value points used to demonstrate value delivered.

In future blog posts, we’ll dig into some of these metrics in more detail. Are there metrics you use that you’d elevate to the top 10?

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