AI in Project and Portfolio Management Today

This image was, of course, generated by AI

We look into the current role of artificial intelligence (AI) in project management, highlighting some tools and services available today (Q4 2023) to project and portfolio managers.

Although AI has significantly advanced in many sectors, its incorporation into project management is still developing.

For a better perspective, let's discuss the difference between two primary types of AI: generative AI, especially Large Language Models (LLMs) such as GPT, Llama, or Bard, and AI models designed for specific applications, such as project management.

Generative AI models, trained on extensive datasets, are proficient in conversation and content creation—tasks reserved for humans until last year. Some models can interact with non-AI tools, such as calculators or code interpreters.

On the flip side, deterministic AI are custom-trained and are consistent and reliable, making them ideal for automating tasks in project management since they offer the same output for a given input. Familiar deterministic examples include chess engines and grammar checkers.

So, why does this distinction matter? Your experience with AI and the value it can deliver for you and your team significantly depends on grasping this difference. For instance, while AI platforms like DALL·E are exceptional at generating art or text, analyzing niche areas like project budgeting or risk assessment requires the specialized approach of a custom-trained model.

Existing project management tools can utilize generative pre-trained models such as the GPT API or open-source LLMs like Llama from Meta by interacting with them similarly to human conversation: they present a textual prompt to the model and subsequently use the model's response within the tool.

Developing custom-trained models is more complex but might yield better results. Now, training a model requires large datasets, computational resources, and deep AI expertise. This is why fine-tuned models to a specific dataset are still rare in many AI solutions.

In short, being aware of the distinction between pre-trained models offered as a service and custom-trained to specific needs will give you clear expectations about the options accessible to you and your team.

With this out of the way, let's explore a selection of AI applications in project management, highlighting which are available today and still in development or their early stages. Remember, we're just taking a quick peek at some AI tools in project management. This isn't a full list, and since AI changes so fast, some of these might already be old news!

Peace Treaty Between Waterfall and Agile

Waterfall and Agile have struggled to get along, dividing project managers who would adopt one or the other methodologies out of the deep belief that one is wrong and the other is right.

We are all familiar with the pitfalls of the Waterfall approach: its need to forecast everything at the outset and its inflexibility in adjusting to emerging needs.

Agile methodologies opened up a new way to understand project management for many, but somehow, along the way, they have been frequently misunderstood.

AI may improve each methodology, making them better at what they do and providing a clearer roadmap to using one, the other, or hybrid solutions.

AI Solutions

AI can mitigate the constraints of the Waterfall method. It can help project managers optimize resource allocation and enhance the precision of duration/effort estimations. This AI application still needs to be fully operational for the abovementioned reasons related to training models. Still, its potential is significant as it counteracts the limitations and biases inherent in human data processing. We will have to wait to see this functioning.
Assessing User Stories: AI's capability extends to evaluating user stories and requirements for clarity and coherence. Tools like GPT are accessible for checking the alignment of a user story structure with industry best practices, saving hours of back and forths. This is available for immediate use.

Human Bias in Project Management

Every one of us brings a set of biases to the table, often influencing independent decision-making. Take project justification, for example: despite relying on standardized ROI templates, project sponsors can, either intentionally or unintentionally, skew data to favor their preferred outcomes.

AI Solutions

Objective Decision Making: AI promises decisions free from emotional biases. Is this project aligned with the company strategy? Should I raise concerns or even kill my project? Well-trained models can answer these types of questions without hesitation.

However, while AI eliminates emotional biases, it can still reflect biases in its training data. For instance, the AI might tilt toward Western perspectives if the data predominantly originates from Western cultures. But one clear advantage is that AI is immune to external pressures or motivations. There are no out-of-the-box models available yet.

Risk Identification Across Methodologies: Identifying risks is an area where AI can bring significant value. The challenge, again, lies in the maturity of the technology. Effective risk identification requires comprehensive training data, including historical risks, team member performance histories, task categories, budgets, and even factors like holiday schedules. Many businesses today don't have such extensive datasets, making this an area of ongoing development. AI's applications in this domain are promising, but we will need more time for effective implementation.
Sentiment Analysis: One of the immediate applications of AI in project management is to gauge the mood of a team by examining their interactions and comments on project management platforms and collaboration tools like Slack or MS Teams. This capability is readily available and can be utilized by project managers today.

Transparency in Project Management

Possibly our favorite. Projects engage participants from diverse backgrounds within an organization and outside of it. The responsibility for effective communication largely falls on the Project Manager, who frequently finds it challenging to ensure that every stakeholder is reached and is exposed to the information in a way they will understand.

These communication challenges persist even at higher levels, such as program and portfolio management. And yes, dashboards provide good visual representations, but genuinely understanding them for informed decision-making can still be an obstacle for many.

AI Solutions

Data Transformation for Stakeholders: Generative AI is great at interpreting and summarizing complex data into recipient-adapted information. If you have consolidated your project data on a project management platform, AI can adeptly restructure it, making it accessible and understandable for all stakeholders. This capability is in active use today.

Let’s see how a PPM tool like ITM Platform makes this possible:

When your organization manages projects with different incumbents, such as project managers, team members, and other participants, PPM tools are indispensable for handling, consolidating, and providing grouped information. It functions like a working pyramid, where the most distilled information originates from the data at the base, offering dashboards that present overall information in a structured manner.

AI brings to the table the interpretation of all this data in a more human-readable and adapted way. Don’t know how to read an Earned Value chart or a Cumulative Flow diagram? No problem. All the underlying data, including financials, time estimates, reports, issues, and risks, are fed into the AI, which in turn delivers a human-readable report for you.

AI can interpret massive amounts of project and portfolio data.

AI will determine which information is relevant and which is not, providing a high-level summary and highlighting the details you should focus on.

Communication Augmentation: Tools such as chatGPT currently support project managers in enhancing the efficiency of their communication, especially in multi-language environments. To make good use of this, basic “prompt engineering” training can make it even better. Coursera and Udemy offer excellent courses on this topic for users.

AI Capabilities in Project and Portfolio Management: Now and in the Future

Here are the main points we've seen as a quick recap of what is widely available today and what is emerging on the horizon. Remember, these are just a handful of them used to illustrate our path in adapting AI in project portfolio management.

AI Solutions for Project and Portfolio Managers

Language Model Assistance: Draft clear and concise messages, emails, and reports using AI language models.
Team Morale Analysis: Analyze team comments on platforms like Slack and MS Teams to understand team sentiment.
Customized Data Presentations: AI transforms complex data into presentations tailored for different stakeholders.
User Story Analysis: Use AI to review user stories for clarity and compliance with industry standards.
Automating Tasks: AI helps create, edit, summarize, train, and utilize tool-specific features to improve efficiency.

Future AI Applications in Project and Portfolio Management

Predictive Project Forecasting: AI could offer more precise estimates of project parameters and early identification of potential obstacles.
Automated Risk Analysis: AI might be capable of predicting project risks by analyzing historical data across multiple projects.
Proactive Decision-Making Assistance: AI could suggest optimal actions in real-time, aiding project managers in keeping projects focused and aligned with objectives as they evolve.

A Note on Security and AI Usage

When using AI models with your data, be aware of potential privacy exposures. If you're training your own models, privacy concerns are less prominent. However, with third-party AI services, particularly AI-as-a-service, choose providers that guarantee your data won't be stored. Additionally, avoid sharing any information that could disclose details about your company, its employees, or other sensitive data.

How to integrate project management into your organization

Some 84% of Project Management Offices fail within four years because of the disconnect with the business.

Solid integration is the solution.

When you install a PMO or any other form of project portfolio management structure, your number one task is to connect with the rest of the company, its processes, and people.

Why it matters?

Project portfolio management can’t survive by itself. The PMO must receive and provide information.
Solid integration avoids data duplication and errors.
Project portfolio management must be aware of the reality of the company. It is not an island but an active participant.
Embedding project portfolio management into the business will provide the PMO with a strategic perspective.

To do so, identify the business areas your PPM (Project Portfolio Management) needs to connect with, the potential benefits of integrating information systems, the stakeholders involved, and how to transform integration into value.

The next task is implementation: connect data sources and transform them into actionable information. This is where your PPM tool and all other systems, such as ERP, CRM, and HRM, need to talk.

This article describes the most common functional areas of the organization and the information traditionally exchanged. It will serve as a roadmap to meaningful integration of project portfolio management and how to create a solid and sustainable PMO.

As a guiding principle, we will use the concept of a “single source of truth”: the information can reside in several places, but only one is the origin.

This article will not focus on master data such as users, providers, etc. Instead, we will focus on the “living data” related to ongoing projects.

Budget

Budget allocation for projects can be fixed or flexible, with guardrails based on time or milestones.

In either case, the project budget usually belongs to another one with more resources linked to the program, portfolio, department, or business goals.

The budget is generally made up of figures representing the main items, such as the cost of labor, purchases, expenses, or revenue.

Typically this information resides in the ERP (Enterprise Resource Planning, such as SAP), although the source can be the PPM tool.

Purchasing

If your projects require the consumption of goods or services, they are typically organized around budget accounts that include their purchases. Purchases are planned under the auspices of the project, but a third-party system carries out the procurement process.

For example, the construction project manager will detail all the materials and services required to complete a milestone, configuring the purchase planning. This plan goes to the procurement system or ERP, which handles the purchase status and financial flow. Then the PPM system is informed about the status of each purchase, most importantly, when it is executed.

This way, both the PPM and the procurement system or the ERP remain up-to-date on the overall purchasing status of the project.

Revenue. Revenue recognition

Similar to purchases, if your projects generate revenue, they are typically budgeted in the company’s accounting system and managed within the PPM or the ERP, creating synchronization.

In the case of advanced revenue recognition management, revenue is managed within the PPM since it is fundamental to the working of the project. For example, suppose revenue is recognized based on the project progress or milestone delivery. In that case, the progress of the project determines the amount recognized as revenue for each period.

Actual or forecasted values should be synchronized with the accounting system to reflect the project status accurately.

Stock

Projects using stocked and consumed materials can also benefit from integrating the Stock Management System.

Consumption will typically affect the budget, forecast, and actuals.

Effort estimates

Estimating effort is one of a project manager's most challenging and essential tasks. Often an accurate estimate will determine project expectations in terms of schedule and cost.

A frequent setup is

The resource management department makes initial effort estimates based on professional profiles. For example, 250 hours of analysts and 1,250 hours of engineers. You can also estimate based on the complexity of the tasks.
The project manager will make a more nuanced estimation, probably by tasks, assigning time to specific resources.
These estimated hours are translated into cost and revenue estimates using standard costs and rates, transforming hours into money.

Time and materials estimates become the most accurate way of forecasting the cost of a project, later allowing for regular comparisons with the initial budget. Depending on how accurate you need your ERP to be at a given time, the synchronization of PPM → ERP can be done regularly at the beginning and end of the project.

Time estimates can be done outside the PPM solution. However, it's not recommended since the distribution of hours is tied to working days, calendars, and other variables related to the project.

Time entries

Similar to the effort estimates, the time logged by team members will impact the money spent.

If the PPM is not the source of the time entries, it needs to collect them from any timesheets you use. This data is vital for effort and budget control because it represents the time and money invested. Once the PPM ascertains the actual hours spent per project, it translates them into actual costs, which can be fed to the ERP or accounting system.

Clients

If you execute projects for clients, it is likely that you have a CRM tool (Customer Relationship Management, such as Salesforce).

The sales and marketing teams will benefit from having an accurate real-time picture of how projects for clients are progressing, the revenue they are generating, and the risks identified by the project manager.

This is probably the best way to get your sales area excited about PPM!

Workflow

Organizations that have a project workflow in place, a gating system, or an authorization mechanism will typically use their PPM solution for this if it has these capabilities.

In complex environments where the workflow also depends on other external factors or areas unrelated to the project management discipline, a Workflow Management System may be required to interact with project statuses and gates.

Project intake

Organizations tend to use the PPM tool to create the idea-to-project cycle within the definition of a strategic plan. After all, project portfolio planning is one of the pillars of PPM.

When demand for projects is not created at a specific moment in time or the flow of ideas and proposals is significantly high or inherently decentralized, there should be a system to gather all project proposals from across the organization, together with the essential information required to evaluate them.

This flow can be achieved using forms, spreadsheets, documents, or any collaboration system that allows information gathering in a structured fashion.

Planning/schedule/tasks/sprints

More often than not, planning can be done within a PPM system since they specialize in offering you the tools to do just that. In some cases, planning can be done in one tool (for example, MS Project), then imported into the PPM.

Project and portfolio schedules can flow from the PPM tool to third-party systems.

Risks and Issues

One of the fundamental jobs of a project manager is managing risks. Because of it, risk and issue management are typically performed within the PPM tool, with the exception of organizations with strong risk management that goes beyond projects.

In a typical scenario, risks – and any subsequent issues – will be managed within the PPM, with tasks created to handle the risks and calculate the costs.

Documents

Most PPM tools offer ways to store or reference essential documentation (specs, contracts, etc.) Although the document management business itself usually relies on integrations with third-party systems.

Social, collaboration, work management

A project is an orchestrated set of human interactions. This is why most PPM tools provide a collaboration system or integrate with a specialized tool –such as Slack or MS Teams.

Some PPM tools allow projects to be managed, or at least nourished, via a collaboration tool. This way, users can not only interact among themselves but also report progress or time spent without leaving the collaboration tool.

[Link to Slack inttegration]

Reporting/Dashboards

Last, and probably the most frequent integration, is the one that feeds data from the PPM tool to a Business Intelligence system.

Even though most PPM tools have robust reporting capabilities, the truth is that projects don’t exist in isolation from the rest of the organization. Business dashboards require an integrated view of all the organization’s activity, including projects, production, operations, marketing, and sales.

To get there, it is crucial for the PMO to be able to provide accurate real-time information that will seamlessly integrate with the information coming from the rest of the company’s areas.

How can ITM Platform help integrate your PMO into the organization?

Glad you asked.

There are three main ways, to a different degree of complexity and performance, that will allow you to do so.

Manual imports and exports

The simple way. All data can be exported from different lists within ITM Platform or the reports.

In addition, you can import from several sources such as CSV or MSP.

Extensions

Extensions enhance the standard functionality of ITM Platform.

The standard extensions available in your environment are developed by ITM Platform or a certified partner.

With the help of custom extensions, you can create additional functions, alter standard behavior, and connect ITM Platform with other applications.

They allow you to respond to events, such as updating tasks or purchase amounts and respond with actions like sending an email or requesting more information from users.

You can also program recurring actions using the scheduler and synchronize ITM Platform with your ERP, CRM, or any other application used in your organization.

Creating an extension doesn’t require advanced programming skills and can be done within ITM Platform, without any programming language or tool.

If you want to know more about extensions, read the docs on GitHub or the help center.

API

With the ITM Platform API, you can quickly and easily integrate your existing company applications, build your own, or synchronize data with your favorite data analysis tools such as MS Excel, Tableau, or Power BI.

ITM Platform’s API is built using the REST architecture, so you should be up and running swiftly if you are familiar with REST APIs.

Programming with the API is the most powerful and flexible way to integrate ITM Platform, and requires programming skills.

Building in custom integrations is going to bring powerful benefits to the smooth running of your PMO. ITM Platform will help you with any method you chose.

Conclusion

A resilient value-driven project portfolio management must implement effective information integrations with the business’ value chain. In this article, we have explored best practices and the most common cases.

A guide to revenue recognition and project management

How we count revenue really, really matters. After all, it’s one of the key indicators of a company’s health. The revenue recorded on our balance sheet tells shareholders that their money’s safe, assures customers of our competence and allows us to reinvest confidently for a thriving business.

It’s surprising then, that revenue recognition, the process by which businesses decide which transactions qualify as revenue, is not generally understood outside accounts departments. Cash doesn’t count as revenue until you’ve earned every single penny of it. This is especially true in industries such as consulting and construction, which typically involve long, complex projects.

This is why revenue recognition should be on the radar of PMOs and project managers, as well as CFOs. What’s the point of bringing in a project on budget and on time, if we aren’t keeping track of the revenue that it’s adding to our books?

While there are numerous methods for recognizing revenue, we’re going to cover the most common ones, giving pointers on how to choose the right one for your project. Read on to learn more about the following:

What is revenue recognition?
The difference between cash flow and revenue
5 golden rules that set the standard for revenue recognition
Methods for calculating revenue recognition

What is revenue recognition?

With long-term projects or those involving B2B, the structure of payments can be tricky. Should the client pay upfront, in the middle of the project or when all deliverables have been received? The answer to this question lies in the generally accepted accounting principle (GAAP) of revenue recognition, which holds that we only count revenue once the money has actually been earned.

Payment on provision of service

In day-to-day life billing is a fairly straightforward affair. Let’s say a customer tries out a fashionable new restaurant; she’s served a delicious meal and happily pays up. This is what we call payment immediately on provision of service. Our restauranteur can record the revenue.

Payment before service

Now imagine the customer is so delighted with the meal that she decides to celebrate her 40th birthday in the same establishment, six months from now. This time it will be a blow out affair, with a guest list of 60 well-wishers. Planning to close off a large section just for her, the restaurant asks for payment before the party. This is what we call deferred revenue. We won’t record it as revenue until the cash has been earned, that is when the birthday girl is blowing out the candles on the cake.

Payment after service

In another scenario, the happy customer recommends the restaurant as caterers for her workplace’s corporate entertaining. The company can order a fully catered meal any time they have guests and pay on account at the end of each month. This is accrued revenue. The restaurant can record the cash as earned from a meal served on the 1st – even if they don’t get paid till the 30^th.

For a PPM tool with integrated revenue recognition, trust ITM Platform. Start your free trial today.

Cash flow and revenue are different

The most important principle to understand here is that cash and revenue aren’t the same thing. Just because the cash is in the bank doesn’t mean that we can recognize it. If the buyer cancels the order or the goods or services are not delivered, we can refund them.

This principle becomes even more important in situations involving complex projects. Different industries use different models to calculate revenue recognition. Before we look at these various methods, it’s worth understanding the basic framework which underpins any contract based on revenue recognition.

5 golden rules of revenue recognition

Before work starts, an organization can decide which transactions count as revenue using globally accepted standards. In line with this international framework you must:

Draw up a contract with the customer.
Identify contractual performance obligations (those pesky promises made by the sales team).
Determine the transaction price.
Link the transaction price to the contractual obligations (define the point at which the client will hand over the cash).
Recognize revenue when the performing party satisfies the performance obligation.

What these five steps mean is that you need to have a contract with a customer, a product or service to deliver, clear pricing, and delivery terms. When the delivery terms are met, you can recognize the revenue.

Methods for calculating revenue recognition

Now it’s time to see how this works in practice with some examples.

Percentage-of-completion

Using this method, we calculate revenue recognition by multiplying the progress of the project during set periods by the total revenue budget. Complete 10% of the project and you can recognize 10% of the revenue. Periods are typically monthly, quarterly or by trimester.

Example: The railway

Your company, Silver Railway, wins a two-year contract to build a 1,300-mile railway. The total budget is $100 million, invoiced in eight separate equal payments every quarter.

You apply the percentage-of-completion method which corresponds to the miles built every month (as a percentage of the total).

Silver Railway warns the client that progress won’t be the same every month. The number of miles you can build each month will depend on the difficulty of the terrain, whether you have to build a station along the way and so on.

So, let's now see how revenue recognition and progress unfold over time.

Notice that because you chose the percentage-of-completion method, revenue recognition – the vertical blue bars – is equal to the miles built.

Now, let's compare revenue recognition with the actual revenue (when you invoice the client).

In the first quarter to March 2021, Silver Railway builds 4% out of the 1,300 miles. That allows you to recognize 4% of revenue ($4million), although you present the client with an invoice for $12.5 million as agreed. Revenue of $8.5 million has been deferred.

Linear Distribution by Milestones

Next, let’s turn to revenue milestones. The value of each milestone is the proportion of estimated hours needed to perform it, multiplied by the total revenue budget. Unlike the percentage-of-completion approach, the pace of progress isn’t the key factor. What matters is hitting the milestones.

Example: The software project

You’re developing a medium-sized software for a retail company, Rain Forest, which includes four modules: Inventory, Orders, Purchasing, and Shipping. The total revenue budget is $100,000, with an estimated delivery time of six months for all four modules.

Payments are agreed as follows: 30% at the beginning, 30% after the order module is done – estimated by the third month – and 40% at the end.

You opt for the milestones method, assigning each module to a milestone, knowing that the two first milestones are more labor intensive than the last two.

There are four milestones, each one recognizes revenue based on the effort involved.

Because the method is linear by milestone, each milestone recognizes the same amount every month: Inventory $14,400/mo, Orders $16,000/mo, Purchases $10,400/mo, and Shipping $14,400/mo. (See the table). On the graph, amounts represent accumulated revenue.

Now let’s track the revenue recognition and cash flow.

Notice that we billed $30,000 before having worked a single hour, which counts as deferred revenue. By the second invoice, we’ve completed $75,200 worth of work, but only billed $60,000, leaving us with $15,200 of accrued revenue. This is money we’ve earned but not yet billed.

Fixed Price per Period

This is the simplest method because it divides the total revenue budget by the number of periods within the project, applying the same revenue recognition amount per period.

Example: Software as a Service

Your company, Sales Muscle, develops and distributes software as a service (SaaS) using a yearly subscription. Clients pay 12 months upfront (deferred revenue).

Under the fixed price per period model Sales Muscle has the money sitting in the bank, even though it has yet to earn it. If the customer cancels the service during the year or has any complaints, you can refund them using the remaining balance.

You’ll recognize the same amount each month until you reach the end of the year when all deferred revenue is finally recognized.

Clients pay $24,000 for the service. So, Sales Muscle can recognize $2,000 every month until the end of the year, when the deferred revenue becomes zero.

For a PPM tool with integrated revenue recognition, trust ITM Platform. Start your free trial today.

Bill rate per estimated hours

Here you multiply the bill rate per professional category by the estimated hours of each task, by the progress made per period (Rate x Estimated hours x Progress). The beauty of this approach is that you can bill customers the estimated – rather than actual – hours.

Example: The professional services

Your consultancy company, The Fifth Big, has bagged a significant contract to transform the financial processes of a big client.

To calculate the total price, you estimate the hours by consultant profile – partner, senior, junior – over time. The final price is $100,000, divided into two payments. One on signature of the contract and the other 50% at the project's sign-off.

Because hours are the driver of costs and revenues, The Fifth Big uses the bill rate per estimated hours method.

Because we billed $50,000 at start of the project, every month until July our accounts show deferred revenue that decreases as revenue recognition progresses. From August to the end of the project, we are working but not billing, which generates accrued revenue until December (see full table).

Direct Revenue Recognition

This method recognizes all revenue, regardless of status.

Example: The reseller service

Your company, SureStart, runs value-added projects for clients, but some of your clients want to centralize the acquisition of goods and services, such as software licenses and small acquisitions, through yours.

Every month, your client tells SureStart which goods and services they require, so you apply the direct revenue recognition method to recognize revenue as it happens.

Conclusion

With so many PMOs adopting the revenue recognition approach, it’s not a case of one size fits all. Our brief overview has revealed the many different methods available across industries. Whichever you settle on, there’s no doubt that tracking every penny of income has never been more important.

You can’t spend on salaries, record profits or invest without a good idea of what’s actually yours to spend. The rewards for understanding and applying revenue recognition criteria to projects are not just greater financial control but also the ability to embed your project management practice into the overall business strategy. And the PMOs who get that will strengthen the long-term resilience of their companies.

Tracking Projects Based on Agile Methodology

Unlike with Waterfall-managed projects (Gantt), a schedule is not required for projects based on agile methodology since they are not predictive. Therefore, the method for tracking progress differs significantly.

The following article explains how to track progress in projects managed using agile methodology, with special focus on the Burndown Chart and Cumulative Flow Diagram (CFD).

Likewise, tracking progress will differ depending on whether the project is managed using Scrum or Kanban. These techniques have similarities, but also significant differences in purpose.

Burndown Chart

Represents the dynamics of tasks completed.

The Burndown chart is generally used when all tasks are determined from the beginning.
Let’s look at an example:

Notice that the backlog shows tasks that are created on the same day. Let’s see what happens if we move one to “Completed” status and another to “In Progress”.

If we follow the completion rate of tasks, we will eventually leave the work column pending to zero.
However, if we add “To Do” tasks as the project or sprint continues, we will notice anomalies in the trend because instead of reducing the backlog, it will increase.

Expected line of progress

This is a straight line that connects the number of tasks in the “To Do” status on the Y-axis to the beginning of the interval on the X-axis. By the end, there should be no pending tasks (Y-axis =0), so the line is steadily declining.

If the tasks are of similar size, the number of pending tasks at any point in time should follow the expected progress line.

Actual line of progress

Represents the actual number of tasks pending by intervals. That is, the overall pending tasks at the start minus those completed. We’ve explained this concept before with a bar chart example.

The slope of the progress line indicates the “velocity” and determines the number of tasks completed per time block (usually a sprint).

How to interpret a Burndown chart

On-track: The expected and actual line of progress are together. If it keeps this pace, the project will end in time.

Behind schedule: If the actual progress line is above the expected line, it means that the team is delayed and should have completed more work at this point.

Ahead of schedule: If the actual line of progress is below expected, it is progressing at a faster pace than expected. You can finish earlier than expected or add tasks. These interpretations are valid as long as the tasks are the same size, i.e. the time to solve them is similar.

Burndown Diagram Limitations

The Burndown diagram only represents the completed work. It reports the pending work, but it doesn’t reflect what is in progress.

Burndown works best on sprints or short projects and makes less sense with long-term projects. In long-term projects, pending work goes through many changes in order for the estimates to make any sense. That is the main reason why Burndown is not recommended for the Kanban technique.

The Burndown diagram does not represent scope changes, as changes in the backlog are not displayed effectively. These limitations are overcome by the Cumulative Flow Diagram.

Cumulative Flow Diagram (CFD)

A Cumulative Flow diagram is a stacked area chart that shows, for each time interval, the number of tasks per status.

Reading the Cumulative Flow Diagram

As you go along, the diagram shows the flow of tasks by status. It is called ‘cumulative’ because it does not measure increments between intervals but counts all the tasks for each status, regardless of whether or not that was their status before.

This solves the main problem with Burndown, as it reflects situations in which not all to-dos are created on the first day.

The CFD provides two fundamental pieces of information in agile management: Work in Progress (WIP) and Cycle Time (CT).

The ‘In Progress’ bandwidth represents work in progress (WIP).

The space between time intervals represents the average time it takes a task to move from one status to another, the Cycle Time (CT).

Limitations of the Cumulative Flow Diagram

Despite solving the main limitations of the Burndown chart, the CFD has its own limitations.

It does not reflect whether any task is not progressing
Nor does it indicate the individual cycle time, that is the amount of time that a particular task has remained at a single stage.

Tracking Tasks by Status

This way of tracking progress is the simplest because it reflects the percentage of tasks in each status at any given time.

The standard status types – ‘To Do’, ‘In Progress’ and ‘Completed’ – are independent of the number of columns on the Agile board because each column is based on one of these three types.

Tasks per status can be seen in either the group or swimlane view.

You can also eliminate one of the statuses and in turn the chart will be recalculated based on 100 and display the remaining statuses.

Here we have removed the ‘Completed’ status and now you are left with ‘To Do’ and ‘In Progress’.

Implementation of a PMO: people, organization and documentation

The users are the ones that bring a project management system to life, either as collaborators or external consultants. It is imperative that the PMO believes, manages and offers support to all of them.

Collaborators or suppliers, everyone is a source of talent.

Responsibilities

A good PMO provides a framework that helps project managers allocate resources correctly because:

Projects frequently borrow resources from other business units.
Assigning responsibilities haphazardly normally leads to management problems down the line.

A PPM software tool offers various options to help you define the roles in each project from configuring access permissions to the specific function of every project member. You can also assign a ‘task manager’ to each task. This task is now converted into a sub-project and the assigned task manager can follow up on it.

Organization

Integrating the company org chart into a PMO tool is a useful way to classify and identify projects/people/activities etc. within the functional hierarchy. Later on, you can also use it to analyze outcomes.

Capacity: Planning and Follow-up

Managing capacity is a task requiring the utmost efficiency. It is crucial for the PMO to find the balance between:

Efficient management that avoids both over-allocation of resources and non-productive time.
The competing demands of business units and cross-unit projects vying for a limited pool of resources.

Managing capacity should be linked to demand management. Frequently, over-allocation of resources is a sign that you cannot keep up with demand. The PMO should have the means to identify this situation and the power to fix it.

The following example offers an excellent module that allows the PMO to plan globally, while analyzing individual capacity and availability.

Whatever its responsibilities are, at the very least the PMO should offer a long-term view of the demand on resources and raise a red flag when imbalances are detected.

Communication

If people are the beating heart of project management then communication between them makes project management possible.

The PMO’s role is to set up formal communication channels, and to promote and facilitate informal communication between collaborators.

Formal communication is related to following up on tasks; it involves specific channels to help team members learn the status of projects and tasks.

The PMO must define key moments when relevant information will be delivered to stakeholders, with the PPM system as the backbone of this process.

Formal communication ensures that the required information is delivered to the relevant people in a timely fashion.
Informal communication enhances efficiency, enabling team members to discuss and deliver information with all the background at their fingertips.

Documentation

Whether it is a task, risk or purchase, every element of every project can generate its own support documentation.

The PMO has several roles when it comes to documentation. The main priority is to reinforce clear management, standardize procedures and ensure that information is properly used.

Defining which documents are indispensable, when they should be created and to what entity they should be assigned.
Defining documentation formats, in coordination with other business units.
Offering an access system to templates and supporting documents, as well as the procedures to use them.

Depending on the responsibilities, the PMO may use some features or other benefits of its PPM tool. For example, the role of project templates can associate documentation models in the different sections of the project.

PPM Maturity Level: What Is It and Next Steps Towards Growth

Here at ITM Platform we often hear PMO professionals say, “our maturity level is too low for PPM” or “we are not ready yet for project management”. In this article, we delve and explore into what project management maturity actually means and how a PPM solution is a bridge and not a roadblock to increasing your maturity level.

Truth is project portfolio management is not just for big corporations or businesses with complex processes.

Regardless of the size or maturity of your operation, it is possible to implement simple and effective project portfolio management. Different maturity levels require different features.

What is “Project Portfolio Management Maturity” anyway?

Project Portfolio Management Maturity refers to how ready your company is to smoothly execute a project, program and portfolio management strategy.

This can be assessed on a wide spectrum, ranging from an individual assessment to applying a formal maturity model assessment.

Identifying your company’s maturity level, yourself

In most cases, companies identify their own maturity levels on their own without any formal assessment. If you´ve ever caught yourself saying, ¨my company isn´t at that maturity level yet¨ then perhaps your own expertise and experience at work has led you to this conclusion. Have you ever had this conversation at the office?

- Hey, how do you keep track of projects here?
- We ask the project manager.
- I see. And do they use any formal or standardized way to do it?
- Well, so and so do, but not really.
- Then, how do you know how your portfolio is performing?
- Eh, we just focus on the projects that are causing problems now.

… Say no more. You´ve already pictured your company as having a low maturity level and reckon a PPM software solution will do nothing more than create confusion and frustration. However, it doesn´t have to be so challenging. Even if you found that the maturity level is low, you can still help your company grow in maturity with the right set of functionalities when applied at the right time.

Applying a maturity model assessment

A maturity model assessment is a specific set of criteria defined for each level and categorizes companies to their respective project portfolio management´s maturity levels.

Some models have six levels, others have four or five. But what’s most interesting are the category axes or dimensions that are used for classification. These are the most relevant, explained with basic examples:

Processes: Consider this the train tracks over which work flows. In our hypothetical conversation above, the fictional you asked about the processes in place. Other examples can be whether the company has formal resource management, risk management, cost management, program management or strategic alignment processes.
You get the idea. If you’re a PMI fan, you already know them all.
People: Maturity models tend to put people first and assess questions like: does the staff understand and embrace project management? Do they know the processes of which they are involved in? Are they use to working on a project-oriented organization rather than a functional organization?
People are vital to any organization and it`s important to consider human resistance when assessing the maturity model of your organization.
Organization: This is where processes and people come together. Some questions about the organizational model usually are: Does your company have a solid PMO (or a PMO at all)? Is Human Resources integrated in the portfolio management? Is top-level management on it? Is it a project-based organization?

Depending on the model, you will commonly come across these axes plus others such as technology or competitive landscape.

The takeaway here is that there are models out there that can help you objectively measure what you already suspected.

You can also use this online PMO & Organization Self-Assessment that measures three categories: Organization, Talent and Conditions and in return, providing a set of recommendations based on the results.

Our own findings

Most companies we´ve talked to find themselves somewhere in the medium-low / medium range spectrum. They tend to assess their company as having a lower maturity level than they actually have.

This happens in all countries we operate in even though there are clear market maturity differences among them. In most cases, this is because companies measure themselves against their own market/countries and not globally.

Furthermore, dealing with leaders across the world, we´ve noticed there is no strong correlation between the company size and its maturity. The general assumption seems to be that big companies are more likely to have a solid PPM methodology in place. However, it’s more related to the nature of the business rather than the size. The more project-oriented the business is, the more mature those organizations tend to be.

How is all this relevant to the decision of implementing a PPM software?

Project portfolio management solutions should be flexible and scalable enough to start small, grow gradually and add processes over time. This will allow you to create a consistent and sustainable project portfolio management ecosystem sans big initial investments and blows to your company.

Logical reasoning would presume: “if my company has a low PPM maturity level, first I need to increase it and then implement the tool”. This obviously happens to those who are aware that there is such a thing as PPM maturity. This persona is usually someone who has either used or has knowledge of complex PPM systems in the past.

And it’s true, six to twelve-month implementations and significant amounts of money are enough to set off any initiative, especially if the organization is not ready. Many would wisely argue that spending more on tools than the ROI they have on their projects is a poor move.

Processes and tools go hand in hand. Implementing one without the other is not ideal, since the tool enables the process and the process is transmitted through the tool. You just need to find the tool that can grow with you and adapt itself on that journey.

Pro tip: Changing from Excel and email to MS Project, then to a collaborative project management solution and finally to a PPM solution is not really growing. It’s breaking and recomposing processes, people and organization at every step of the way.

How ITM Platform supports every level of maturity?

The key is to identify the PPM solution that can provide the features according to your needs. Sound simple? The reality is that optimizing your company´s maturity levels need to take multiple factors into account and is anything but simple. And, like anything else that´s really complicated, most of us are looking for better tools to achieve tasks. Companies need a solution that in tandem adapts to your maturity level and enables you to add or remove features according to your needs.

ITM Platform gently increases maturities with the least possible hassle. It is equipped with easily adaptable features that grow with you no matter the stage. It’s comprehensive, intuitive and its seamlessly easy learning curve is just what you need to get your PMO up and running.

It´s possible to start on the right foot even though you know there’s a low project portfolio management maturity level in your company. And turns out, this is an excellent starting point!

Take the first step and try this free trial now! Experience first-hand what ITM Platform can do for you.