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Project Expert: How to Identify ROI in Your Project Management Office

We have a few investigative techniques for identifying ROI in your project management office.

Let's talk about something we all love: ROI.

Let's talk about return on investment in the context of something we all need: project management (PM). If you're like most CIOs, it's your job to make sure project management improves under your watch. Your performance -- and your bonus, if you get one -- may very well be tied to achieving ROI.

If yet another discussion of ROI brings on an automatic headache, we've got good news: You can tie PM to ROI, but you have to be willing to do some work to close the proverbial loop.

We suggest starting with an internal "investigation" of sorts. One way to determine if PM is alive and well at your company is to ask these kinds of questions:

  • Has PM education and training helped?
  • Is it easy for the whole team to understand what gets produced, by whom and when?
  • What's the turnover rate among PM leaders?
  • How many staff members have PM certifications?

The idea is to evaluate PM as you would an employee. Is your project management office (PMO) meeting its goals?

You also have to be willing to open up the debate by asking team members what's wrong with the system and how PM could improve it. Reach out to your business sponsors. Schedule a meeting or send them a survey. Ask whether you've improved at defining their objectives. Are PM best practices prominent and apparent to them?

Then venture outside. Ask your customers if they have noticed specific improvements that can be tied directly to a PM initiative (i.e., better deadlines and improved products).

Customer satisfaction is sometimes referred to as a "soft" benefit. But as you know, happy customers often translate into cold, hard cash. After you finish your investigation, you should have data that indicates your PM success.

Where's the ROI?

Right about now, you're probably wondering if we can get closer to ROI in terms of identifying benefits in dollars and cents. In our practice, we've learned that smart CIOs can determine the ROI of a PMO almost as they would a new software implementation. So when in doubt, chase the data. There are a couple of ways to measure and link PMO performance with ROI:

  • Compare the number of change requests before your PM improvements with those afterward.
  • Determine whether overtime has been reduced as a result of having clearly defined roles and responsibilities.

Good project management is about more than technology, so it stands to reason that some benefits are tough to measure. Yes, with good PM your highly valued people are less stressed and now free to try innovative things rather than fix mistakes that previously slipped through the system.

But there's nothing like presenting solid data to your CFO and CEO so they know that the PMO is clearly justifiable and worthy of its place in the organization -- just like you.

Michael Vinje and Michelle Burke are principals at Trissential, a management consulting firm based in Minneapolis. Write to them at ProjectExpert@ciodecisions.com.

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