How the PMO Can Understand, Measure and Report the Business Impact of Projects

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1 How the PMO Can Understand, Measure and Report the Business Impact of Projects ARTICLE Introduction Measuring the business impact of projects, initiatives and launches is complicated. Since project management offices (PMOs) offer a broad spectrum of services to various parts of an organisation, calculating return on investment (ROI) is often a challenge. That said, it doesn t matter if an initiative was on time and under budget if it was doomed for failure from the start. The best project leads don t limit measurement to on-time and on-budget metrics for that very reason. If you are unable to prove beyond a reasonable doubt that your efforts generate more value than they cost, you risk losing your programme. Exploring the Complexities of ROI Calculation Most project leads measure time, cost and scope as part of tracking the success of their initiatives. The project whats are measurements taken after the fact and answer these questions: Was the work completed? Was it on time? What resources were spent to complete it? Was the customer satisfied? All references to Strategy Execution are to TwentyEighty Strategy Execution (UK) Ltd, a company registered under the laws of England and Wales

2 The project hows are tied to the risk, resources and quality associated with the initiative. While these factors are a bit harder to measure and communicate, it s important for project leads to do so as initiatives grow in complexity. Organisations are increasingly competing on a global scale and dealing with projects involving dispersed team members from different cultures and backgrounds. As a result, how initiatives are managed is critical to success. The complexity theory helps guide what to measure in this type of environment, focusing not on what gets done but how it gets done. Two organisations that have done this well are Google and The LEGO Group. Google famously allowed employees to spend 0% of their time on any project of their choosing. And this 0% time led to some of the company s biggest product successes, including Gmail, AdSense, and Google Talk. To ensure its workplace is highly motivating and engaging, The LEGO Group measures employee motivation and satisfaction and sees higher levels than industry benchmarks. To adopt a similar mindset, the PMO must consider and understand the project hows as well as the whys. Why is the organisation doing this? How does it fit into the company s overall strategy and help deliver on the strategy? How are we going to implement this initiative?

3 This multi-dimensional approach encourages the PMO and project lead to think about the vision and mission for the initiative. It also paves the way for measuring, not only the project what, but also the project how. How did we go about the project? How does it fit into the company s overall strategy and help deliver on the strategy? How does employee satisfaction rate when it comes to that collaboration? By incorporating this added dimension into the initiative, PMOs can ensure they are building and cultivating environments in which it is acceptable to ask for help and that is critical to completing projects efficiently and effectively. Consider the example of creative firm IDEO s designers, who are coached to expect that they will need help and they should ask for it. The company s leaders model this behaviour by asking for and giving help. This cultural mentality helps IDEO design and deliver products that its clients love. Here s the formula for this multi-dimensional approach: Once told what the project is, ask meaningful questions, including why this project? Determine why the project is being pursued (and why the organisation is dedicating resources to it). Leverage the project team as a resource for scoping and planning how the initiative will be delivered.

4 Equipping Project Teams to Deliver Measurable Impact To ensure the project team delivers measurable impact, PMOs can embrace the concept of PAM, which helps tie the team s everyday work back to the organisational strategy. PAM stands for Purpose-Autonomy-Mastery and provides a framework for empowering project members to succeed. Let s explore. Purpose. The project lead needs to understand how each team member s role contributes to the overall success of the initiative. The LEGO Group grasps the importance of giving employees a sense of purpose, saying: We see a need to continuously communicate and involve all employees in the unique LEGO culture and LEGO strategy to understand the reasoning behind it and their specific role in it. 4 To that end, the PMO must be able to answer these questions: Why does our business or organisation exist? What is its purpose? Why are we creating or did create the PMO? How does our organisation make money or generate value? The goal is to equip project managers to adopt a business mindset and understand what it takes to run an initiative as a strategic business endeavor with appropriate measures. Autonomy. The second part of the framework is about giving team members the space to do their jobs. While each person needs something different in this regard, the key is to stop focusing on what people do or deliver, and shift to how people do their jobs. Yet, it s the what that the PMO and project leads most often track and measure. Because the PMO and project-based workers want to avoid surprises, they tend to dictate how work should get done. As General Patton said, Never tell people how to do things. Tell them what to do and they will surprise you In most implementations, a PMO is created to help project managers perform their roles better. If the primary audience for whom the PMO was created fails to see the value in its work, it s highly likely that others in the organisation will fail to see it as well. with their ingenuity. 5 4

5 A better and more meaningful measurement focuses on how team members interact with others in the course of the initiative. Are they competing or collaborating? When relationships have an impact on productivity, cooperation and collaboration are far better than competition in projects and generate greater value and vital partnerships in the long term. Mastery. When the PMO is focused on the what of a project, it s difficult to justify budget for training. But if the focus shifts to how the project will get done, it s easier to make the case for training. In the end, the ROI for training is not about the money spent, but about identifying and defining success. When team members are trained to be valuable project contributors, the PMO can better assess and select the right projects and ensure more repeatable and predictable project processes. Adopting this multi-dimensional approach is a proven way to take initiatives to a new level, and it provides organisations with further insight into the attributes, skills and behaviors that contribute to the highest levels of success. By defining these differentiators at an individual and team level, organisations can also take steps to reward employees accordingly, and upskill when necessary. Focus on Meaningful Metrics Questions to ask before project: Does it align with our strategic goals? Does everyone involved understand the goals of the project and how it aligns with our strategic goals? Questions to ask after project: Was there good communication and collaboration throughout the project? Were issues and red flags identified early enough to handle them? Did the project output meet the executive team s expectations? PMO: People + Motivation = Opportunity References HRZone, Why did Google abandon 0% time for innovation?, June, 05 The Lego Group, About Us Our Mission: To Inspire and Develop the Builders of Tomorrow, Harvard Business Review, 5 Ways to Get Better at Asking for Help, December 8, The LEGO Group, We want all employees to be inspired by our purpose and engaged in the LEGO Strategy., responsiblebusiness/employees 5 The Official Website of General George S. Patton Jr., 06 TwentyEighty Strategy Execution,Inc. All Rights Reserved. 5