Is it risky being PMO leader?
There’s an old joke about CIO standing for “Career Is Over”. This joke was doubtless crafted in the forge of poisoned-projects, blown budgets and detonating deadlines.
Just like in the TV show, the Apprentice, project failure can end the CIO’s tenure (there certainly are cases where that’s happened). Imagine what it will do to a PMO leader… Perhaps the PMO might, one day, become a joke of its own… an acronym for someone likely to be Pre-Maturely Ousted, perhaps?
So, in an environment where 72% of PMOs are being called into question, it seems appropriate to ask, “What can be done to reduce the risk?”
The elephant in the room
Most organizations define success and failure in rather odd terms, when you think about it. It’s all about projects delivered on time and on budget. “Scope creep” is the enemy.
But I’m not convinced by this mentality, and one of my colleagues, Steve Beaumont, wrote about this a few months ago. In his article, he suggested that business value should be the metric for measuring a PMO.
But let’s be honest… “on time, on budget” is the level of maturity for 90+% of organizations. In fact, many would be happy to be able measure project completion to time and budget! So rather than fighting the traditional definition, let’s use it and in-so-doing park the discussion about whether or not it’s the right measure of success and risk.
So, reducing risk is about ensuring more projects finish on time and on budget.
Where does risk come from?
There is a lot of analysis on why projects fail. The following table sets out some of the more common reasons cited. I am, however, a little worried about stopping there. It seems too easy to blame scope creep without asking why scope creep happens. So I’ve also made a stab at some of the root causes of the different failure modes.
It’s important to think about the root causes — and I don’t pretend to have discussed all of them — because understanding the root causes can help you identify the solution.
One approach to reducing risk
We recently did a couple of webinars with Mike Hannan of Fortezza Consulting. Mike has a track record of massively increasing project throughput for his clients.
His big thing is about “unlimited upside” for a PMO leader and their organization. This is the opposite of risk. Mike’s point is that if you make the delivery of projects predictable, and if you treat your project portfolio like an investment (well it IS an investment portfolio), then you get massive increases in value.
You can get an idea of how Fortezza achieves this from the webinar, but it boils down to 3 things:
1. Treat your portfolio like a major investment by putting in place a robust project prioritization process. When you do that, you have real clarity about which projects are important and why they are important. Ultimately, this helps you address the lack of exec sponsorship, the scope creep, over-allocation of resources and the communication issues. Clarity around what the project is for gives everyone a common language, common goals and helps keep everyone focused when making decisions about scope, etc.
2. Think about scheduling to deliver value quickly. Taking the project prioritization information and using it to stagger projects so they fit within the portfolio’s capacity to execute helps you get as many high-priority projects completed as possible.
3. Reduce risk in execution by maximizing throughput and by leveraging “critical chain” ideas of resource management, planning and risk management. This helps you address risk management, over-allocation of resources, estimation and a whole bunch more as well.
You can learn more about Mike’s approach here, but that’s not — point of this blog. No, the point of this whole blog is this…
A risk shared is a risk halved
What if a real expert, a PMO consultant, offered to share risk with you? What if he made his fees contingent on success? Well, that’s exactly what Mike Hannan has just done. He launched a shared-risk model for PMO engagements which he calls it his “30:30” offer which, as I understand it, guarantees to deliver a 30% increase in task throughput in 30 days or less. By directly addressing task throughput, Mike and his colleagues are really reducing project risk.
This is the first time I’ve seer a vendor in this space step up and put real skin in the game. It shows real confidence on their part and the act of sharing risk gets the consultant and the PMO leadership on the same team.
I see this as a step in the right direction and as another example of how PMO Land is changing. I recently wrote about innovative PMO-AS-A-SERVICE offerings and what I find interesting is that both these “products” are not only “packaged consulting,” which reduces the perceived risk of taking on a consultant, but are both also about reducing risk for the PMO.
I’d love to hear from you if you’ve seen other similar initiatives. It feels like the PMO landscape is undergoing a real change, in places, and I like this so much that it’s got me wondering how we might do something similar at TransparentChoice in the area of portfolio management (though we’re a product company, not a consulting company — let me know if you have suggestions).
If vendors keep innovating like this, PMO may one day stand for Perfectly Managed Operation.
A bit of fun….
What do you think PMO might stand for? Add your suggestion as a comment and I’ll add my favourites to this post for future generations to enjoy.
Mike Hannan — PMO = Profit Maximization Office