Outstanding project portfolio managers have a set of PMO KPIs they track to showcase the business value of their office.
The work of the project management office is messy, complicated and, hard to track. Although most business leaders are supportive of their PMO, few can succinctly describe the results it’s directly responsible for.
In this article, we offer a list of worthy KPIs to track and a few guidelines on how to report them to your stakeholders. Specifically, we discuss:
- Why do PMO leaders need a unique set of KPIs?
- The 10 PMO KPIs outstanding project portfolio managers track
- How to track PMO KPIs without losing focus
- How to build a no-fluff report for your stakeholders that they’ll want to read
Why do PMO leaders need a unique set of KPIs?
To prove their worth, the necessity of their existence.
Nearly every project portfolio manager has experienced the soul-crushing reality of having to prove the value of the PMO, the return on investment (ROI) of his/her work. To prove that their office is a good investment whose valuable job increases productivity and profitability. And the best, if not the only, way to persuade business leaders of the value of any particular investment is with numbers. Good numbers.
Thus, if you want to be a PMO leader with a long tenure, make sure you keep track, and in good shape, of relevant and unique to your office KPIs.
The number 1 priority of every PMO leader
PMO leaders that face existential threats should focus on one thing:
Survival.
This is not a “never give up” sentiment. It’s the best measure of effectiveness. Research shows that the longer the PMO offers its services, the more effective it is. Thus, the more valuable it is and the easier it is to prove the value it brings.
The project management office should not be considered a short-term solution to emergency scenarios nor an innovation factory (though it’s possible for the PMO to give birth to priceless innovation).
No, the PMO should be considered as a long-term investment into improving operational execution and the company’s adaptive capabilities. When the PMO is working well, projects are completed faster, products are delivered on time and within specifications, sales increase, and the competitive advantage is managed much smoother.
The longer the project management office runs, the higher its effectiveness.
The 10 PMO KPIs outstanding project portfolio managers track
Proving the office’s value is easier said than done.
Let’s see some PMO KPIs examples the best project portfolio managers track separated into three big categories.
Strategic alignment & ROI KPIs
One of the best ways the project management office can showcase its business value is by connecting its effort with the company’s strategic plan.
Specifically, how the work of the PMO has resulted in increased revenue, reduced cost, respected deadlines, and a smoother execution of the plan. In other words, connect the work of the office with what the stakeholders care for. This is sales 101, sell the benefits. Good or bad, PMO leaders are required to sell the value of their work to senior leadership.
So, the following KPIs are a bit loosely defined because certain terms like “strategically aligned” projects are determined differently in each company. Here are the questions you want to keep in mind when defining the following KPIs:
- What are the right projects we should be working on?
- What are our top 3 priorities? Ideally, you have one single top priority, but if you don't, then go up to 3. If you end up with more than 3, go back to strategic planning.
- How do we eliminate distractions and focus our resources on the projects that truly matter?
Here are some KPIs that help you align people’s daily work with the business’s plan:
Percentage of projects aligned to strategy
Number of active projects aligned to strategy to total number of projects.
This is a simple measure to track, as long as you’ve clearly defined “aligned.” Here’s an example: a project is aligned to strategy when it contributes directly to a certain KPI or initiative. There are many definitions, choose the one that fits your particular business and industry.
Strategic alignment is your first filter for choosing the important projects from the rest.
The genius of this percentage is that you can take historical data (if they’re available) to demonstrate the improvement of focused work, better utilization of resources, and the overall efficiency that your office has brought. The tenet behind this key performance indicator is that the actual cost of a misaligned project is much higher than the resources allocated to it due to opportunity loss.
The trick here is to establish a formal project closure process that includes the date of completion and applies to most, if not all, projects.
Percentage of projects with validated business cases
Number of projects that have approved business cases to total number of projects.
It’s important to track the currently active projects with validated business cases because it’s a strong indicator of strategic alignment and planned value. It also helps to determine the return of investment in each project and the whole portfolio, as well. When making a case for the ROI of the office, an increase in this KPI is a powerful arrow in your quiver.
But to avoid spending too much time on gathering data, you need a management system for your documentation that is accessible and consistent company-wide.
Percentage of benefits delivered per year
The value of delivered business-case benefits to planned business-case benefits in a given period, e.g., a fiscal year.
This measure takes you a step further from the previous vanity metric — it’s vain because the business cases are projected, not realized — and proves the earned value of strategic alignment and the project management office’s efficiency. The best way to measure the “value” of the benefits is with dollars. Calculating this number is like drawing a circle. It sounds simple, but it’s incredibly hard to do it well.
The “incredibly hard” part lies in the coordinated effort it requires. It’s impossible to calculate the value of business-case benefits without the voluntary cooperation of other areas of the business. A simple, but consistent system to measure ROI, though, makes the job a little easier.
PMO performance KPIs
Strategic alignment is a great compass to guide resource allocation and direct the focus of the organization’s concentrated effort.
However, it’s only the first step in demonstrating the PMO’s value. Here are some performance metrics that get you a little deeper in the weeds:
Percentage of completed projects VS canceled projects within a given period
Number of completed projects to total number of planned projects versus the number of canceled or on-hold projects to the total number of planned projects in the last X months.
Pick a specific period that makes sense for your business, e.g., 12 months, and calculate these two numbers. Pair it with the percentage of successful projects, however you define that (your definition has to be clear). Highlight the ones that were delivered within their deadlines and within budget to emphasize efficiency. Reinforce the KPIs’ importance by comparing them to previous periods.
Just make sure there is a formal process of activating and canceling projects to make tracking effortless.
Percentage of project status reports older than X number of days
Number of project status reports older than X days to number of projects in the portfolio.
Determine the number of days that makes sense to your business. Don’t try to guess it, use data to evaluate on which day a project status report is too old to provide an accurate picture of the project’s current state. Use that as a baseline to assess report timeliness. Standardize status reports as much as possible and make sure it includes all essential information. If you want to know what goes into great project status reports, read our guide.
There is one important concern, though. Tracking this number could take huge amounts of time when reporting happens in static tools like spreadsheets and slides. These tools require a manual approach that renders them time-consuming and highly inefficient.
Time gap between project proposal and project activation
Average number of elapsed days since project conception and project activation (counting only activated projects).
In large organizations, it’s tough to improve time to market due to rigid processes. Tracking it is a good practice, but rigid business structures don't leave a lot of room for improvement.
You’ll need established processes for project proposal and reviewing to be accurate with this KPI.
Time gap between project conception and project completion
Calculated in days, like the previous KPI.
This is a much more meaningful metric to keep track of since its decrease strengthens your business case for the PMO. Contrast this number to previous periods to highlight progress made.
Again, you need an established process for project proposals.
# of project dependencies being resolved
Number of dependencies and single points of failure you eliminated.
Rarely do people celebrate or even take into account catastrophes averted. The best project management professionals (PMOs) don’t just resolve crises, they prevent them. And that’s virtually impossible to attribute. That’s what this KPI tries to alleviate.
The highest risk in a project portfolio is clusters of projects that are dependent on a single project’s success/completion. Managing these dependencies early prevents irreversible catastrophes and saves project teams from extremely unpleasant scenarios. There are many strategies to manage dependencies, but eliminating them tops the list of the most impactful ones.
Map project dependencies when formulating your strategy and map them again later when you have eliminated the biggest threats.
Adapting KPIs
Most of the PMO’s work takes place during the execution of the strategic plan.
That’s when he is called to resolve resource conflicts, reevaluate project budgets and scope changes, remind strategic priorities and business goals, assess project performance, report, and perform so many other PMO functions.
It’s when the most important trade-off decisions are made.
These tough decisions are what generate actual business value, and with the following KPIs, you can generate perceived value as well.
Percentage of on-time completed projects with approved scope changes
Number of on-time completed projects with approved scope changes to the total number of projects in the portfolio in a given period, e.g., a fiscal year.
Few projects retain their initial scope. It’s a natural part of project management. However, changing the scope of a project and delivering within the initial deadline is often nothing sort of a miracle. Doing it multiple times shows a fierce dedication to execution and immense respect for the deadlines. These are qualities a project portfolio manager can capitalize on.
Tracking completed project milestones is a good practice if you want to be more granular.
Establish a formal process of scope change to acquire this data. Needless to say, you’ll need to track active projects with scope changes, another useful metric.
Percentage of projects delivered within budget
Number of completed projects within budget to total number of projects in the portfolio.
This is one of those KPIs that should not be tracked on its own. It’s NOT a north star metric. It helps tell a holistic story only when it’s accompanied by some of the aforementioned metrics.
Focus too much on budget restrictions, and you’ll sacrifice the quality of the deliverables.
How to track PMO KPIs without losing focus
The truth is that the most impactful KPIs demand a lot of effort to be accurate.
And without the proper processes, tracking these key performance indicators is time-consuming.
In the PMO KPIs list above, we mention the necessary processes that you need to have in place to save time and energy when collecting data. It’s important to remember, though, that it’s hard to change people’s behavior and make a new process stick in every single department. Let alone multiple processes. Unfortunately, there is no magic formula or solution that you can implement and have instant results. People don’t work like that.
But there are a couple of things you can do today that will have a massive impact on your efforts.
Be strategic and strategy-oriented
Strategic in your choice of PMO metrics you track and focused on delivering (and showcasing) strategic value.
Being strategy-oriented precedes being strategic. That’s why the strategic alignment KPIs are the most important set to determine. It’s also the hardest because of the heavily subjective nature of the term “strategic alignment.” As a PMO, you need to start by defining that term and then educating the rest of the company to follow that definition if they want their project to align with the business’s strategy and be approved.
Then, being strategic is a matter of experimenting. Track multiple metrics until you find the set with no redundant information. Don’t track numbers for the sake of tracking. Every metric should inform the decision-making process.
If you find yourself consulting only a small set of KPIs when making decisions, ditch the rest of them and congratulate yourself with a cocktail for the resources you saved.
Choose the right tools
A Google sheet, or any kind of a spreadsheet, isn’t a good place to track these KPIs.
Because these are static tools, and even though they encourage collaboration, they are messy, massive, and hard to navigate. They create too much informational noise and introduce various practical problems. “Is the Strategy final FINAL.xlsx the latest version?”
A far better choice is a dynamic digital platform like Cascade that is accessible by everyone and is a single source of truth for your project portfolio. You can monitor the health of your portfolio easily and create targeted reports for each stakeholder group.
Monitoring and reporting are maybe the two most time-consuming aspects of project portfolio management, so the more processes you automate, the more time you have to focus on improvement and following through.
Make the first with our KPI template and create in-depth reports effortlessly.
How to build a no-fluff report for your stakeholders that they’ll want to read
Adjust each report to the stakeholder you’re addressing
Not every stakeholder group cares for the same things.
Jeremy, your COO, cares about project deadlines and whether they’re on track, not whether project managers use the Agile or the Waterfall method. Laura, on the other hand, is a customer success manager and cares more about customer satisfaction than the projects that were canceled due to unrealistic expectations.
Leave out the information and metrics your target audience pays no attention to and doesn’t inform their decisions.
For a proactive approach, ask each stakeholder group what they’re most interested to learn about. Frame the question as the benefits they want to see and not what they want you to tell them. If you feel it’s a tough ask because you might come off as inexperienced or insecure, frame it as a best-to-be-prepared and leave-nothing-to-chance question.
Nullify any doubts by delivering a killer report with all the requested and relevant KPIs.
Change the order of the information
Engaging and retaining your stakeholders’ attention is no easy task.
The traditional way of reporting starts at the beginning. You provide the context, recount the decision-making process, present the data that informed your decisions, mention the mistak.. ahem, lessons along the way, and finally, you announce your decisions. The problem with the traditional way of reporting is that you’ve probably lost your audience’s attention somewhere between the context and the Lessons Learned.
So, how can you tell the same story but make it engaging and memorable?
You flip the script on its head.
Start the reporting presentation by announcing your decisions. “For the next quarter, we decided to do X, Y, and Z.” That way, you hit the road with the information your audience wants most to hear, and you force them to ask the “Why?” question, keeping them engaged. Then you refer to the lessons learned, the data, your decision-making process, and finally, the context. You start with the decisions and close with the objectives your office or business aims to achieve.
That way, you keep the stakeholders engaged and include all relevant information while connecting everything together neatly. Make sure you refer to every trade-off you made and the reasons you did so.
Are you ready to automate the tracking of your KPIs? See how Cascade can help with a free demo today.
