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.

Tracking expenditure and revenue flows answers one of the burning ques­tions of every board: “How much are we actually investing in our projects?”. This question often crops up when we are talking about internal, IT or transforma­tive projects. The planning and follow-up model should be agreed with the finance di­rectorate and business units, so that project managers understand the pa­rameters for action, how they should monitor budgets and use of resources.

The PMO should issue clear instruc­tions on:

  1. Which cost elements to monitor, especially in terms of hours and pur­chasing.
  2. How to incorporate external su­ppliers: hours or deliverables.
  3. Which metrics to use: hours, cost, profit, earned value, progress etc.
  4. How frequently to measure each parameter.
  5. Standardized periods for reporting working hours.
  6. Measuring income and profit mar­gins.

In the following sections we analyze these topics in greater depth, highli­ghting their integration into ITM Plat­form whenever possible.


Cost of working hours

If you require oversight of the esti­mated hours, actual hours worked and their cost, the module of stan­dard costs and provider rates must be defined. Carrying out the definition in collaboration with the finance and HR departments will ensure that the project’s financial management is line with the organization’s policies and procedures. ITM Platform offers a module to establi­sh the standard cost from an abstract level down to the most detailed one:

      • General: hourly cost of any task. Useful in the conceptual phase of the project.
      • Internal and external: whether you use your own people or out­side contractors this allows you to define the hourly cost in a generic fashion.
      • Cost per professional profile: allows you to define the standard cost of the internal personnel for each profile, within different time­frame.
      • Provider rates: similarly, provider rates can be fed into the system, allowing you to compare costs per person and per provider.


Purchases and acquisitions

Purchasing is one of the key activities in any company. When managed properly it enables easier planning and follow up of cash flow. Normally, purchase management is in­corporated in the early stages of matu­rity, typically before monitoring working hours. Nonetheless, it is important that projects synchronize their purchasing with the organization’s financial mana­gement, so that both are in agreement. The purchase flow is a kind of workflow and it must be linked to a procedure pre­viously agreed with the financial and purchasing directorates, ensuring that each project’s purchasing is in line with purchasing practices in general.In addition, budget accounts grouping purchases must be used homoge­neously.


Revenue

Similarly to purchasing, the classification and time management of the project revenues should be synchronized with the organization´s regular financial procedures. The system will then be able to create reliable margins and client profitablity.

Choosing which projects to invest in is a strategic decision to be taken based on objective data. In this article, we explore the problem of subjectivity and analyze the solution that allows management to make decisions based on a business plan, in a rigorous and transparent way.

 

The Problem

In businesses where the source of income comes from making projects for clients, it is easy to decide which ones are to be put in place: (usually) those of greater profitability. And in some cases, all, if sufficient resources are available.

However, internal projects, such as those of transformation, tend to not offer such an obvious criterion as their value to the business is less evident and often more subjective to anticipate.

The fact that an expected value is subjective does not mean that its effects are not going to be real. It means that the benefits are hard to predict, and investment decisions can be based on perceptions.

This is a challenge that managing directors have always tried to address. The most used resource as a solution has been that of the "business case", which requires promoters to express the profitability or value contribution of their initiative in measurable terms, either in sales increase or in cost reduction.

The main difficulty presented by the business case is the human factor: a promoter of an initiative that has a strong motivation to give positive figures and show that their idea is profitable. Though it is desirable to have intrapreneurs on your team it is essential to validate their figures through a homogenous and and objective process.

The second difficulty of requesting profitability to internal projects arises from each promoter having limited vision to their area of competence, defending their plot without considering the overall vision. In turn, management considers these business cases as if they had been generated with the same criteria, which is not usually the case. Each promoter applies with different degree of ingenuity the data to the same template.

The issue at hand is knowing when to recognize, in an objective fashion, what initiatives will bring more value to the business when the projects deliver their expected benefits.

 

 

The Approach

When it comes to value, it is not always possible to apply a purely financial standard via project profitability based on forecasts in isolation and in comparison of each other.

  • The value contribution of a project to a strategic plan may be broader than profitability, even if the savings or earnings have been realistically calculated. For example, a process automation project can throw modest savings, but positively influence a priority target of customer quality perception.
  • Strategic project planning should not consider initiatives in isolation, as the result of the set may be greater than the sum of the parties. It is common for the result of some projects to enable others, and its set to offer strategic value. This is why program and portfolio management exceeds project management.

The strategic management of projects lies in the competence of the management and must be facilitated by the Project Management Office (PMO) to the extent that their objectives are the maximization of value and not only the transversal coordination.

Thus, the strategic planning approach to the composition of the project portfolio should consider two main elements:

  1. A strategic plan that exposes the objectives of the Organization
  2. A list of project proposals (initiatives)

With these two elements, we can prioritize initiatives that will order them from higher to lower value, generating an orderly list of approved projects (portfolio backlog).

Strategic management of project portfolios

A great advantage that offers prioritization of projects by value is that it supports applying resource constraints as a cut-line to its output. If we have a list ordered by value and – for example-a budgetary limitation, we will be able to establish the approval of projects based on those that contribute more value and that are within the available budget.

 

The Process

Once we have the two main elements (objectives and demand), we can start two classification processes that can run in parallel or go in sequence. What is important is to isolate each other to ensure objectivity and ease of adaptation to the general standard.

Process 1: Prioritization of Objectives

Participants: Board of Directors
Objective: To put some objectives in front of others, with specific weight of each one on the total.

Sometimes strategic plans already specify priorities, but in others they do not give explicit weight by objective. For example, how much more important is "to grow in sales by 20%" than "to increase operating efficiency by 15%"?

There are several techniques that can be employed to achieve a table like the one above. From something as simple as an agreement amongst the Board of Directors to the most sophisticated such as an Analytic Hierarchy Process (AHP). The latter could be considered more rigourous, though its execution could be simple if you have a Pairwise Comparison Tool, like the one provided by ITM Platform.

This simple table will generate an orderly and quantified list of objectives.

As an added feature, ITM Platform calculates a "consistency ratio" that indicates how logical and objective the prioritization is. In this article, you will find an explanation of how this index is calculated.

It is possible to make different sets of the same objectives through scenarios, and even use different objectives for different programs. The reality is complex and there is not always a single combination or scenario.

Process 2: Contribution of project value to objectives

Participants: The Project committee and promoters

Objective: To determine how much each project contributes to each objective


Ignoring for now the relevance of each objective on the strategic plan, this step will assign a weight to the contribution of each initiative to each objective. This weight will be translated to a number base on 100, but if you use ITM Platform you can also use the comparison by pairs previously used or use a qualitative methodology based on ideograms such as the image (Harvey balls), providing a visual support.

Process 3: Analysis of the optimal selection of the Portfolio

The two previous phases provide the necessary parameters for the system to calculate the value of each project, based on 100 and depending on the value of each objective.

List of initiatives orders by value

If money wasn't a problem, then we would probably carry out all “reasonable" projects. But in a real organization, the resources available are finite and the previous list of initiatives is not enough to make a good selection of project portfolios.

Thus, it is not only enough to select the most valuable projects, but it is also necessary to filter those that fall within the constraints, be it economic, technical and human resources, or temporary.

In this article, we will use the available budget as an example of a main constraint because this is the most frequent case. Imagine that we should select a portfolio of projects that does not exceed $900.000. Taking the previous list into account, the "New Star Product" ($ 1.5 M) exceeds that amount and also provides a similar value to other more economical projects.

So, with the data we have, we choose the combination of projects that are closer to the available budget: a total of $885.400 and a value of 61% accumulated in three projects.

With this selection achieve the given criteria. But note that the efficient central border graph is indicating the selection is not optimal (value/cost) and that there are better combinations: similar value for less money or greater value for the same sum.

And, indeed, with a portfolio of a total of $528.840 we achieved a contribution of value very similar for 35% less in cost.

If you are interested in understanding how the calculation scheme is made,

Download the guide here.

Conclusion

It is possible to apply rigorous standards in the selection of a portfolio of projects, basing the selection on the value they bring to the business strategy.
Key points to consider:

  • A separation of work between the management team that defines and prioritizes objectives, and the teams that analyze the benefits by project.
  • A process sponsored by management requiring rigorous standards when making investment decisions and implementing transparency between teams.
  • An integrative platform that combines information and exposes the results.

If you want to know more about the management of organizations by projects, download the white paper, where you will learn to:
- Connect management of your Organization with that of projects
- Manage portfolio of projects to create competitive advantage
- Agile Portfolio Management

 

Everyone´s starting point is different, but we can all agree you need a steady foundation when building anything and your PMO´s framework is no exception. It should be clear and shared by the entire organization. We’ll guide you through planning, implementing and disseminating your PMO. Whether you´re familiar with ITM Platform or not, our examples are a ¨one-size-fits-all¨. This design assists in  highlighting situations that you may encounter along the way and applicable to most cases.

So, let´s dive in to the 6 essential elements you need to consider in order launch your PMO framework.

 

Download the eBook: How to set up a sustainable PMO with ITM Platform

 

1. Project types

First, decide what kind of projects you’re running; the type of project will also govern its lifespan.
As you implement (or relaunch) the PMO it’s a good moment to reflect on the variety of projects in the portfolio and possibly take time to redesign them. A PMO can also manage operations if they consist of specific tasks that are assigned to different teams. Managing projects and operations together from the PMO is especially useful when the resources and clients involved are the same.

This is the case with software development projects, or products that require maintenance by the same team that developed the original project. The Kanban methodology is useful for managing services because it offers an organized structure in which you can see the status of tasks at a glance. More importantly it allows you to limit the flow of work according to your resources.

The service concept is also incorporated into ITM Platform – you can create entities for the sole purpose of managing operations.

 

2. Workflows

A workflow allows you to map out all the possible statuses that a project goes through. Make sure it is based on the business’s procedures – don’t be tempted to invent statuses that do not reflect the reality of the company.
The workflow is defined by two main components:

  1. The changing status of a project
    For example, we can decide that when the status of a project is designated as ‘draft’ that can only be changed to ‘started’ or ‘discarded’.
  2. The conditions for changing the status and who is authorized to grant permission for that change.
    Make the conditions for changing statuses as simple as possible; you can always increase the complexity later, and you may even find that there is no need to do so.

A word of advice: do not replace the work of defining organizational procedures with a workflow. The workflow should be a conveyor belt, not a control mechanism.

 

3. Priorities

It's very easy to configure the different degrees of priority, but the work of a PMO starts way before this: you have to agree what each priority means. It should be extremely clear what “high priority” or “medium priority” means. Obviously, medium is higher than high, but does that mean that you shouldn’t start with the medium priority ones until the high priority ones are finished? Should we put twice as many resources into high priority versus medium priority?

The PMO should know the actions associated with each priority and make this clear to everyone else so that the organization makes homogenous decisions.

 

4. Risks

Good project management is in essence risk management and a PMO ensures that this function happens consistently throughout the decision-making process.
The formula impact x probability = exposure level is only useful if it leads to consistent decisions by project managers.

Identifying risks is a tricky business as it’s often subjective and affected by personal bias. The PMO standardizes procedures using criteria and tools approved by the board, backed by the project managers.

 

5. Waterfall or agile methodologies?

Both of these methodologies can co-exist in one integrated portfolio as long as the PMO establishes criteria to decide on the appropriate methodology for each project.
Some organizations make all decisions – waterfall or agile – based on politics. This kind of decision making can lead to patchy results.
If your organization decides on agile methodologies for all projects – while at the same time demanding medium and long-term deadlines – the methodology probably hasn't been chosen on the basis of solid criteria.

To determine which methodology to use the PMO should ask:

  •  Is the result of the project relatively uncertain or are we well aware of the outcomes?
  •  Is the project subject to deadlines which govern the date of deliverables or is a short-term vision of all the tasks enough?
  • Are sponsors and clients willing to have continual involvement in the project without knowing the final outcome? Or will they happy to be less involved and just accept the final outcome?

 

If your organization decides on agile methodologies for all projects – while at the same time demanding medium and long-term deadlines – the methodology probably hasn’t been chosen based on solid criteria.

 

6. Project templates

One of the major benefits of a PMO is that it allows you to capitalize on knowledge accumulated from previous projects. Be sure to put mechanisms in place to recover the lessons that have been learned. That way the know how isn’t lost when the project ends but can be applied later on.
Creating project-specific templates means the contents can be re-used in future projects. Another benefit of templates is to re-use frequently used structures just by changing dates and figures. It’s similar to those cooking programs when the chef says ‘here’s one I prepared earlier’.

A good PMO ensures that the knowledge stays within an organization, and not only at the level of the individuals involved.

This online PMO & Organization Self-Assessment can help you get started and analyze your organization.

Planning and implementing a PMO has a rhythm of its own. Don’t be tempted to rush. You risk chaos if the process rushes ahead of the organization’s own maturity by trying to tackle all the stages at once.

Download our new eBook: How to set up a sustainable PMO with ITM Platform

So what can businesses and project managers do to ensure essential components of  projects are being completed in time and on budget? In this article we develop the 5 main keys of success.

 

Keys to success

A good plan is only useful if it can be implemented in the field. For that you need adequate resources and a favorable environment. Before creating a PMO:

1. Make sure you have the right skill set

Ensure that your people have the right skill set. If you have neither the team nor the required skill set, it’s a good idea to limit the scope of the PMO so that it can be set up without the risk of failure. Embarking on a PMO without the appropriate know how is like setting sail on a ship without skilled sailors, the enterprise will unravel at the first ill wind.

2. Start with high-visibility, high-impact projects

Like every other business unit, the PMO must prove its worth from the very beginning to win over naysayers. A smart PMO manager will look to deliver early wins on to the scoreboard.  This is not always easy because of its cross-functional – and according to detractors – unnecessary nature. Tackle the most widely acknowledged problems first.

3. Identify the needs of the business clearly

The organization and the business have needs that may or may not have been explicitly identified. Meeting these needs should be your starting point. That way you’ll start off on the right foot, giving you enormous leverage when it comes to defending your decisions in the future. Do your research.

For example, as a PMO expert you may consider it vital to set up a document template repository. But maybe what your stakeholders actually need is a way to decide how progress on projects is measured.

4. Have a solid framework

And which is integrated into the business. A PMO that acts as a lone wolf is destined to fail. It is important that there are simple, fluid communication channels to ensure that everyone is working in the right direction. Put these in place from the outset.

5. Draw up clear key performance indicators

Having a lot of indicators does not necessarily mean having lots of information. Make sure that you not only have the right tools but also that the KPIs are relevant to your business.

 

What to consider for a consistent roadmap

To create a consistent roadmap, you should take into account:

  • The maturity of the organization.
  • The goals suggested by the Board of Directors.
  • The available resources.
  • Positive and negative environmental factors.

With these parameters, we know our start and end points, the resources available and the pace at which we should go.

An example of a roadmap

Let’s take as an example Booksy360, a mid-sized publishing company. This is their  roadmap divided into four stages, starting from a tactical PMO and moving towards a strategic one.

Period 1

Booksy360’s PMO steering group decides to establish a basic communication system, using a common language. In this system planning is based only on timeframes and deliverables. Document templates are created for each project type. Stakeholders will receive reports about the status of their individual projects and Booksy360’s board will be kept up to date via a regular portfolio report.

Period 2

All communication channels are now established. The PMO encourages collaboration between units and projects. Inventory and purchasing are added as extra elements to plan, manage and control. Resource management is now based on professional profiles, such as editors, writers and production engineers.

Period 3

Formal risk management starts, agreed by all departments. Alongside this Booksy360 initiates change and quality management. Even if these were taking place informally before, now they are at the heart of the process.

Period 4

The final stage is when the actual strategic contribution starts. But it is long way down the line so for now Booksy360’s steering committee predicts it will include portfolio planning, benefit realization management and governance

The online PMO & Organization Self-Assessment may help you analyze your organization.

When you have limited visibility, limited resources and capacity planning, or when you are missing a consistent methodology, you usually start building a PMO. However, it is necessary to ask yourself the relevant questions that will assure its success and meeting the objectives. In fact, only 40% of projects met schedule, budget and quality goals (IBM Change Management Survey of 1500 execs). In this article, we are going to see the key characteristics of those 40% and the important questions to ask to make sure you’re going in the right direction.

 

 

Download our new eBook: how to set up a sustainable PMO with ITM Platform

How do you define a good PMO?

Regardless of the PMO you choose, there are four universal parameters that are markers of quality and excellence:

1. Provides clarity
Because of its objective and unbiased audits, the PMO is a source of transparency and intelligent analysis. It doesn't just throw data at you.

2.Facilitates decision-making
Gives senior management oversight of the portfolio allowing them to make coherent decisions. Imagine your company is a car, the PMO provides the headlights that allow you to decide whether you need to turn left or right or even to stop. And how quickly to do so.

3.Enhances accountability
The PMO defines roles and responsibilities, motivating and empowering people; ultimately this will also allow them to be held accountable.

4.Encourages shared ownership of goals
The biggest challenge for a PMO is to be accepted within the organization. Sharing the vision and expected benefits is a good way to get stakeholders on board.

4 questions to help you plan the future of our PMO

These four questions might help to plan the future of our PMO:

1. Which projects should we pursue?
Or, which are the projects that meet our organization’s goals in the most efficient way?

2. Which projects should we start?
Out of all the project proposals in front of us, which should we prioritize? What’s the best way to plan ahead and optimize resource allocation?

3. Which projects should we continue?
Looking at the projects already in place, which of them are accomplishing what's expected of them? Which of the non-performers should continue?

4. Which projects should we kill?
Following on from the previous question, which projects aren’t worth continuing because the resources would be better employed elsewhere?

To answer these questions, the PMO should align its PPM (project portfolio management) processes with your company goals. Managing the portfolio of projects means asking every day: how are the projects, programs and portfolios facilitating the achievement of my company’s goals? If you can offer real-time information about on-going projects that help with decision-making the PMO will quickly win supporters.

Define the value that you expect a PMO to add

1. Governance
2. Organization
3. Planning
4. Cost Management
5. Asset Management
6. Risk Management
7. Information
8. Quality Management
9. Change Managment
10. Resource Management
11. Communication Management
12. Procurement
13. Document Management

Depending on the type of PMO on the table you will need to stress some aspects more than others. A strategic PMO will focus more on Governance, Organization and Planning, whereas a process-focused (tactical/operational) PMO should concentrate on Quality Management, Change Management and Document Management.

You cannot design a PMO without working out which model suits both the business and its clients.

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