Would you approve a loan knowing that it had a projected loss rate of 36%? Research conducted by the Project Management Institute reveals that 35.9% of projects fail and the investment is completely lost. By the time companies hire outside help on a project, they are already trying to recover the lost time and money invested. Client discussions about Program/Project Offices normally revolve around tactical issues regarding project performance. There is a laser focus on the project management triple constraint (cost, time and scope) which tracks tactical execution. While these details are important, they do not address the reasoning behind doing the work in the first place. Projects need to be rationalized and approved based on the value or benefits that they bring to the bank (e.g. self- service adoption and approval speed) and should have specific measurable targets.
A successful PMO is focused on managing business value. Business value management concentrates on two things, driving bank-wide benefits (strategic value) and benefit realization of specific projects.
- Driving strategic value- A best practice PMO will prioritize projects based on their alignment with business drivers linked to the banks’ business strategy. Projects are evaluated using quantitative techniques and ranked based on value delivery. Initiatives that show the greatest degree of strategic value are executed first.
- Benefit realization – Project execution is managed to accelerate and capture benefits articulated during the project approval process. This involves execution related methods that close potential benefit gaps that may arise during the life cycle of a project.
In conclusion, PMO’s should be deployed to maximize business value. This involves alignment of projects to the banks’ strategy and realization of that project benefits. In this 5 part series, we will talk about how to drive value from projects using a PMO to keep projects on course and avoid costly project failures. In my next installment, I will discuss how to effectively initiate PMO deployment.