Standards and Metrics Function Model

The PMO's "standards and metrics" function presents the means by which the PMO can introduce the preferred ways of doing business within the project management environment. The primary activities of the PMO's "standards and metrics" function model are depicted in Figure 3.1. Each activity is described in the following subsections.

Figure 3.1: "Standards and Metrics" Function Model

Implement Project Management Standards

Project management has advanced as a professional discipline because, to one extent or another, scholars, innovative thinkers, and experienced project managers have formulated, implemented, evaluated, and conveyed to others the concepts and practices that have demonstrated value in the project management environment. This value contributes to achieving individual success in project management and associated organizational business goals. Time-tested methods have evolved into the widely accepted project management precepts that project managers use across industries and around the world. Many of these precepts are implemented without change across industries, whereas others are modified and adapted for specific industry use. Over time, new, innovative approaches will continually emerge to provide more complete and comprehensive solutions in the project management environment.

The PMO is responsible for sorting out all of these pending solutions and for selecting those that best fit the needs of the relevant organization. Solutions become standards for the organization only when they are approved and implemented for use in the project management environment. Implementation involves a series of steps that the PMO can use to introduce standards into its project management environment.

Examine Standards Sources

The primary purpose of introducing standards is to improve project, technical, and business performance. The PMO begins this work by examining the various sources of standards that are available for consideration. Ideally, the PMO has sufficient staff experience and insight to uncover the relevant sources that need to be addressed. The following five subsections identify a few general sources of standards that the PMO can examine when initiating this effort.

Project Management Practices

The PMO should determine what standards are needed to guide the performance of project management. This includes an examination of prominent project management processes, tools, and techniques that can be introduced as standards within the project management environment. Ideally, the project management practice standards that the PMO selects will facilitate development and implementation of a complete project management life cycle methodology. However, standards introduced to assist the organization in developing and implementing component processes that are critical to its project management efforts are normally an excellent investment.

The Project Management Institute, Inc. (PMI), publishes A Guide to the Project Management Body of Knowledge or PMBOK , a widely accepted and well-known project management standards reference. A small number of other project management associations also provide project management process and performance guidance. Similarly, some professional organizations have developed industry-specific project management guidance, and academia is a consistent source for new and emerging project management concepts and considerations. In some cases, business organizations have compiled and implemented best practices in project management from various sources, including their own experience. However, access to these "standards" is normally limited to participants in business or industry forums or by some other affiliation with the source organization.

Finally, a multitude of commercial vendors can provide structured project management process and procedural guidance in conjunction with the delivery of their products and services. Many of these commercial sources incorporate industry-accepted standards. However, some tend to focus on the specific purpose of their product or service and may not provide complete and comprehensive project management coverage. For that reason, the PMO should weigh its near-term and long-term needs when selecting between consultants or vendors that offer specific-focus products and services and those that provide guidance and support for the entire project management life cycle.

Project Management Maturity

The PMO should determine what standards are needed to guide its efforts to create a professional project management organization. This responsibility raises the concept of project management maturity and includes an examination of available project management maturity models that can be used within the relevant organization.

The various project management maturity models available today take a somewhat common approach that carries the organization through steps of assessment, analysis, and improvement planning. The assessment process usually involves a sample of the organization's project management population and, at times, other stakeholders within the organization. The PMO should recognize that most viable maturity assessments will delve into the "nooks and crannies" of the project management environment, i.e., project and business practices, management support, PMO guidance and support capability, project manager competency, and so forth. This enables the organization to gain an accurate and comprehensive picture of its project management maturity based on the selected standard.

Project management maturity models are also available from several of the professional organizations and commercial vendors identified in the previous section. Some models are more inquisitive and complex and require extended periods of time in their performance. Others are more cursory in scope but can be completed within a short time span. The PMO's responsibility for introducing project management maturity standards deals with the selection of a preferred model and its associated assessment process. These are used to identify the current maturity level and to construct a strategy or "roadmap" for advancing the organization's maturity in project management. Although there is no proven maturity standard or consensus of its universal application, the concept and use of a particular project management maturity model can nevertheless be meaningful for continuous improvement efforts within the relevant organization. The PMO should give serious consideration to deciding what is the appropriate level or combination of maturity level elements for its business needs. Then it can select a project management maturity model that will help achieve the desired capability.

Technical Capability

In most project management environments, the PMO will inherently have responsibility for helping to establish the technical standards associated with project work. Usually, PMOs will only need to focus on the core business and the primary technical discipline of the relevant organization, especially when that organization is a homogeneous division or business unit. In that case, the nature of work that the division or business unit performs defines the technical focus. Conversely, PMOs that have cross-functional responsibility or those that serve the entire enterprise may have to establish standards for more than one technical discipline. To that end, it is not uncommon for a PMO to begin its work in one technical department and then expand its scope of authority and responsibility into other business areas as it demonstrates success. It is for this reason that this PMO function model treats technical standards separately. Every PMO must recognize that technical standards should be integrated with the project management process or methodology to ensure a seamless approach to project management.

Industry-specific professional organizations and associations, including some that have a project management focus, are prevalent sources for technical standards and best practices, as are educational institutions. The Software Engineering Institute's Capability Maturity Model (SEI CMM) is a prime example of a technical maturity model and provider. Of course, there also are consultants and vendors who work in virtually all industry niches that can provide excellent insight (not to mention some products and services) for industry-specific technical needs. The PMO should collaborate with the relevant organization's technical professionals, including engineers, scientists, administrators, consultants, and instructors, among others, to help determine the preferred sources of technical standards.

The PMO should ensure that technical standards are properly integrated and that users do not misconstrue them as project management standards. Technical standards, processes, and best practices should guide the project participants in achieving the desired technical solution — the resulting product or service. Project management standards, however, verify that the prescribed steps are performed to manage the project. Although technical and project management standards should be duly integrated to optimize project performance, technical capability is not inherently a project management capability.

Project Management Competency

The PMO should play a major role in determining competency and skill standards for its project managers, project team members, and other relevant project participants. It should work with the human resources department and resource managers to define appropriate project management competency standards.

Whether or not the relevant organization has a formal project management career path has direct bearing on the introduction of competency standards. If a professional career progression program exists within the relevant organization, then distinct involvement of the human resources department is necessary to ensure that related compensation and employment considerations are handled properly and are aligned with the prescribed standards. In the absence of a formal career path, project management competency standards can be identified relative to a generic list of project management responsibilities rather than presented in a formal position description.

Once again, professional organizations and associations may be the prevalent source of standards for project management competency. As always, consultants and vendors are readily available to provide assistance in establishing project management competency models and standards.

Organizational Certification

Organizational certification represents achieving compliance with standards for performance across the enterprise. While such standards may be industry specific, they also may have cross-industry application. The pursuit of International Standards Organization (ISO) standards is a prime example of an organizational certification. As well, the pursuit of standards associated with government and industry awards, such as the Malcolm Baldrige National Quality Award, can be managed along the lines of organizational certification.

The extent of the PMO's responsibility within the relevant organization will guide the PMO's involvement in selecting standards for organizational certification. Most PMOs will not have to manage this type of standards implementation unless they are functioning at an advanced level. It is more likely, however, that the PMO will be called upon to participate in an organizationwide certification effort rather than take a lead role. Nevertheless, the PMO should influence or recommend pursuing organizational standards certification with regard to the interests of the project management environment. To that end, it is important that the PMO understands where project management in various organizational certification programs intersects, and how or whether project management capability is important to the certification effort.

When involved in an examination of organizational certifications, the PMO should focus on those certifications that will provide some business advantage when standards are met. Standards that facilitate added customer value and satisfaction, improved operational effectiveness, or increased revenue are good indicators of such business advantage.

Sources of organizational certification standards are likely to be prominent in the organization's base industry, or they may be well recognized by a business segment within the organization. Moreover, the industry certifying body is usually also the developer of the associated standards to be examined. Therefore, any examination of standards is easily accomplished through contact with the certifying organization.

Identify Applicable Standards

After examining the sources of standards available to the project management environment, the PMO will make or otherwise facilitate or influence decisions about the specific standards that are preferred within the relevant organization. The following six subsections describe some of the more common standards that the PMO may consider and select for use within its project management environment.

Project Methods and Procedures

The PMO should facilitate selection of a preferred project management methodology that provides a consistent and repeatable life cycle process approach to project management. If developing a comprehensive methodology is premature for the current environment, the PMO should consider beginning with simpler processes for accomplishing its most critical project management activities. This standard should guide all project managers in performing the essential activities of project management that the relevant organization requires. This standard also will serve as a reference to all other stakeholders within the project management environment — project team members, project executives, functional managers, customers, and vendors — who need either to apply or simply understand the processes of project management.

Project Management Tools

Next, the PMO should facilitate selection of the preferred project management tools used in the project management environment. This particularly represents the specification of a cross-project management information system that is used by all projects to capture pertinent project information. It also includes oversight for selection of all tools being used in the project management environment and distinguishes standard tools from those having limited use by selected individuals. This selection of standard tools should ensure that project management and business interests in project data collection, reporting, aggregation, and sharing are well served. All in all, the PMO also should ensure that the selected tools will not overly burden project managers and other users but will expedite timely and accurate project information management.

Project Performance

The PMO should facilitate the selection of performance standards for project management. This means defining when a project starts and ends, what constitutes satisfactory progress, what constitutes a successful project, and what status or conditions warrant some level of additional management intervention. Project performance standards also reach into the specification of project selection (and termination) criteria, which is normally contained in project portfolio management guidance. In some cases, performance standards are industry- or market-driven; in others, business processes of the relevant organization are the predominant influence. The PMO will want to select standards that produce project outcomes that help achieve strategic business objectives.

Technical Performance

The PMO may facilitate or otherwise assist in the selection of technical performance standards. The caveat to this standards selection effort is the consideration of whether the PMO is also the technical leader in the primary discipline used on projects. Sometimes it is, and in such cases, the PMO has a primary role to define the accompanying technical performance standards. However, in cases where the PMO has purview over multiple disciplines, it can still facilitate technical standards selection, but it then relies on the technical leaders in each discipline to recommend and substantiate the preferred technical performance standards.

Individual Performance

The PMO should facilitate the selection of individual performance standards. This usually focuses on performance of the project manager but may also include performance of project team members. Selected performance standards can be incorporated into position descriptions, particularly if a professional project manager career path has been established. Otherwise, more general standards for individual skill and experience can be applied at the time of project assignment.

Product/Service Quality

The PMO may facilitate the selection of product/service quality standards. Again, the consideration of primary versus multiple technical disciplines comes to bear. In either case, the PMO should ensure that appropriate quality management standards are in place in the project management environment. An added point to consider is organizationwide quality certification. The PMO must ensure that any certification standards being pursued or achieved are clearly integrated into project, technical, and individual performance guidance.

Introduce Preferred Standards

Although the process for introducing preferred project and business management standards into the project management environment is not particularly complex, it does warrant discussion to ensure proper positioning for users and effective implementation within the organization. The PMO will know how to work within the nuances of its environment and can follow the following general steps when introducing standards.

Stakeholder Concurrence

It is essential that key stakeholders within the project management environment — project sponsors, project managers, project team members, and business unit managers — acknowledge and accept the standards that the PMO introduces. Moreover, the final decision to implement new standards normally resides at the executive level. Not only should the PMO be able to demonstrate benefits of a standard for executive consideration, but the PMO also should be able to win endorsement from the user community. Consequently, the list of key stakeholders should be expanded to include technical experts for technical standards and functional managers for standards having heavy business impacts.

Key stakeholders can be included at various junctures in the standards identification, review, and deliberation process. The various stakeholders may have differing interests and levels of influence in the selection of standards. However, successful standards implementation requires all stakeholder groups to be represented in the standards selection process.

Standards Implementation Planning

The PMO can either conduct or facilitate standards implementation planning. The extent of planning required depends on the impact that standards introduction will have on the business of the relevant organization and activities within the project management environment. In some cases, standards implementation planning may be as simple as a page change or as complex as a new approach to business. Whereas one takes less than a few hours to complete, the other may take more than a few days just to get planning underway.

In general the PMO will want to consider the following planning elements for standards implementation:

• Identify the standards "owner": Identify who will be responsible for managing the implementation and monitoring the use and effectiveness of the preferred standard. This may be someone either aligned with the PMO or external to it. Include and assist the "owner," as appropriate, in preparing the remaining elements of the standards implementation plan.

• Specify the standard: Prepare a brief description of the standard to be implemented for use in notifications.

• Notify of decision to implement: Determine the timing, method, and content of the notification of new standards to stakeholders and any other relevant internal or external audience. Identify whether any special promotions and advertising need to be included in the notification.

• Check current practices and guidance: Conclude whether any current standards are being modified or replaced by the introduction of the new standard. Include planning to address any impacts.

• Identify the standards reference locations: Resolve where the new standards will reside (for example, in documents, in electronic files, on Web pages, on a big sign at the entryway, and so forth). Plan for incorporating changes or adding the new standard to these media locations.

• Identify the standards implementation team: Determine if this is a simple standards introduction or one requiring more than one person to implement. Specify the activities that will identify (and form, if necessary) the implementation team.

• Prepare the standards implementation work plan: Ascertain what activities will be performed to implement the standard, and incorporate cost, schedule, and resource requirements. Assign or facilitate the standards implementation team to perform primary planning.

• Specify any necessary standards training: Decide whether implementation of a new standard warrants any significant training for those individuals who will be tasked to implement it, as well as those who will apply it.

• Obtain final decision to proceed: Determine whether a final decision is required to proceed with implementation of the standard. Specify who makes that decision and when it is made.

Standards Implementation

The PMO will perform or monitor standards implementation in the project management environment. This task can be performed for a distinct project management standard or a technical or business-related standard that must be integrated into the project management approach.

If an authority outside the PMO is conducting the implementation, the PMO should be a collaborative partner for that portion of standards implementation that affects the project management environment. In such a case, the PMO should accomplish the following:

• Review the standards implementation plan for the PMO's required implementation actions to include identifying the need to assign one or more resources to the implementation effort.

• Determine when standards implementation begins and ends, noting that implementation could be a simple and immediate event. Manage PMO involvement in the implementation effort.

• Identify what standards monitoring requirements will be required during and after implementation. Assign one or more resources to the monitoring effort.

• Report the achievement of standards implementation to the vested authority.

If, however, the PMO is implementing a standard within the purview of its own authority, it can conduct its own planning (treating a complex effort as a project) and monitor and manage implementation from that perspective.

Conduct Benchmarking

Implementing standards in the project management environment is a business decision that warrants monitoring and measuring. Benchmarking provides for initial and subsequent measurements to verify whether applicable standards are being achieved. It provides a comparison between the current state — of practices, procedures, policies, products, tools, people skills, and other bases for measuring effective project performance — and what should or could be. In the project management environment, assessments often represent benchmarking based on the inherent standards of the assessment model used.

There is another prevalent context in which benchmarking is conducted relative to industry and specifically relative to other organizations in the industry, either competitors or business leaders believed to use best practices. However, this type of benchmarking, at the very least, suggests an informal acceptance of the competitor or business leader as having a "standard" that warrants comparison. This is a valid benchmarking endeavor for the PMO to pursue, particularly when the organizations examined are known to be top performers that justify the "standard" reference. It is similarly a bona fide effort when performing benchmarking against several organizations in an industry to indicate the standing of the PMO and its relevant organization relative to the rest of the industry. In contrast, cross-industry benchmarking has been selectively attempted and can be an enormous challenge when pursued independently. In that regard, the PMO may want to seek out industry partners to conduct collaborative benchmarking activities that provide mutual benefit — at a minimum a learning experience, at best a solid industry performance indicator — for each participating organization.

Many areas of the project management environment can be benchmarked. The PMO may simply consider focusing its benchmarking efforts on the more prominent standards it has introduced into the project management environment.

Benchmarking identifies the difference or "gap" between the current state and the preferred standard. Benchmarking allows the PMO to establish or quantify the position of its current state as a reference for future measurements that indicate advancements toward achievement of results associated with the preferred standard.

The following are suggested simple steps for the PMO to consider and expand further when conducting benchmarking activities within the project management environment:

• Identify the standard (including best practices or organizations) to be examined.

• Specify the capability and resources required for the benchmarking effort.

• Plan the benchmarking approach and activities.

• Conduct benchmarking data collection.

• Perform benchmarking comparison analyses.

• Reset the benchmark point by recalibrating from any previous benchmarking of the standard.

These steps are designed to focus the PMO on establishing benchmark points. It is presumed that additional planning to achieve the standard will be conducted, but that can be done within the context of implementing the preferred standard. It is possible, however, that the PMO could use benchmarking simply to evaluate its own position against a preferred standard and then decide not to further pursue actions to achieve that standard. Of course, this is not the practice when the PMO is benchmarking to establish a baseline or recalibrate its position for a formally selected standard. In that case, planning or replanning associated with introducing the standard should be carried out.

Benchmarking acts like a bridge between standards and metrics. In many ways, benchmarking is the measurement that links standards and metrics. The concepts and considerations of using metrics in the project management environment are presented in the next section.

Determine Project Metrics Requirements

The PMO will be involved in determining which metrics are used in the project management environment. In many cases, it will have responsibility for identifying the metrics that are applied to project, technical, and business performance or are captured from measurements, such as tracking efforts, assessments, and audits. To that end, the PMO is responsible for metrics comprising the various sets of data that represent and quantify either its prescriptive practice guidance or result from its directed measurements.

As in the business environment, metrics have a wide variety of uses in the project management environment. In general, metrics can be used in the project management environment to:

• Facilitate decisions (for example, go/no-go criteria, project selection/continuation, and so forth)

• Specify project classification

• Provide common understanding of project and activity status

• Manage project performance

• Convey a concept or model

• Monitor consistency and improvement

• Determine trends

• Ensure compliance

• Ascertain capability

• Identify performance goals

Although this list offers a few primary uses of metrics, PMOs can likely identify more uses relative to their business interests. Recognizing how metrics can be used permits the PMO to determine which metrics are required within its project management environment.

This PMO function model focuses on three metrics requirement areas: process improvement metrics, project performance metrics, and business management metrics. A discussion of each follows.

Identify Process Improvement Metrics

The PMO will likely have responsibility for a number of interrelated processes that are relevant to project management. It needs to develop guidance and measurement metrics for these processes. A high level perspective on process improvement metrics is provided for the following prevalent processes that are integral to the project management environment.

Project Management Methodology

The PMO should develop and capture metrics for using the methodology and for determining its effectiveness (and thus the extent of need for improvement). This task includes identifying such factors as:

• Frequency of activities (reporting, auditing, plan reviewing, risk monitoring, etc.)

• Levels of activity participation (such as project manager, team members, project executives, customer, etc.)

• Process scalability (i.e., conditions of process element use/nonuse)

• Extent of project management information collection (required forms and template use, required data items, data entry timing, etc.)

• Process review frequency (quarterly, annually, for each project, etc.)

Normally, most metrics are embedded during development and implementation of project management methodology, making them manageable in that context.

Technical Processes

Technical processes are ideally integrated within the project management methodology and are based on the specific nature of technical work performed. To ensure proper alignment with project objectives, however, technical process standards will likely warrant a separate set of metrics. The PMO will need to collaborate with its technical experts to define any process metrics within a technical discipline or industry. It also can examine some general metrics considerations, such as particular technical process applicability to the type of project, specification of preferred technical tools and models, and technical information management. Again, presuming that there is close alignment with the project management methodology, technical process metrics can be introduced in conjunction with methodology development and implementation and managed accordingly.

Business Processes

Business processes also should be integrated with the project management methodology, depending on the organization's operating requirements. However, these processes may contain some unique standards that must be addressed, particularly if they are not fully integrated into the project management methodology. Because individuals within the project management environment may not always themselves perform the business processes, the PMO is responsible for extending its collaboration with functional managers to create any necessary business process metrics. This usually involves factors of when, where, and how the business aspects of project management will be performed, as well as who will perform them. Some business process metrics to consider include providing for timing and responsibility for transition from "sales" to project management; scope and contract-acceptance criteria and change management criteria; customer interface and issues management protocols; vendor and contractor selection criteria; and project financial and contractual close out requirements. Although business processes and associated metrics can be incorporated into the project management methodology, the PMO must ensure that business unit managers at least concur with, if not endorse, the business processes to which the methodology and the associated metrics are aligned.

Resource Management Processes

Because it has a responsibility for resource integration, the PMO should establish close communication and collaboration with the human resources department when it defines metrics for resource management processes within the project management environment. Some resource management process metrics that the PMO might consider establishing include resource assignment responsibility and criteria; performance review responsibility; content and timing criteria; project management and technical training eligibility criteria; management protocols for resource performance issues; and resource sourcing criteria (such as internal resources versus external contractors). Where appropriate, resource management process metrics can be incorporated into the project management methodology.

PMO Support Processes

The PMO should define the necessary metrics that constitute how it conducts its own support activities within the project management environment, i.e., the functions of the PMO. The PMO may develop operating processes to help achieve its prominent functions, which would justify considering metrics. In general, the PMO can evaluate the effectiveness and efficiency of each PMO function it implements. This would include establishing metrics in such areas as PMO staff workload coverage; criteria and guidance for project support priorities; reporting frequency, content, and criteria; and level of process redundancy within the relevant organization. Individual PMO functions, however, may warrant a more detailed examination of metrics needs and requirements.

Identify Project Performance Metrics

PMOs at all stages will have a vested interest in project performance. Indeed, in some cases, project performance oversight is a primary purpose for the PMO's existence. In that respect, it needs to develop guidance and measurement metrics for such performance. In discussing project performance metrics in this section, much of the metrics implementation can be associated with the development and implementation of the project, technical, and business processes with which these metrics are aligned. Thus, many of these metrics will be incorporated into the project management methodology or technical and business processes that the PMO constructs. In other cases, the PMO will develop metrics for internal use in its functional processes. This section highlights the metrics that should be considered in several process areas.

A high level perspective on project performance metrics is presented for the following five key project performance elements.

Budget

The PMO should provide metrics for developing and managing a project budget to include both guidance metrics and measurement metrics. Beginning in the planning effort, the PMO can offer a list of standard cost estimates for common activities. In some instances, this is derived from internal lessons learned, or the PMO can validate and implement industry-standard budget estimates. The PMO should prepare funding authorization guidance that explains what routine funding limits can be considered, as well as the criteria for elevating budget authority. This might include metrics for standard funding of each project phase based on project classification. The PMO also can specify metrics for contingency funding stipulated as a percentage of the project budget. As a project approaches the implementation phase, the PMO should supply budget metrics that guide project cost management and reporting. This includes metrics for using earned-value cost concepts, cost variance models, and budget trend analyses and forecasting indicators. The use of budget performance metrics ensures that every project remains within cost or that corrective actions are taken in response to indicators that identify when a project budget is experiencing difficulties. In addition, the PMO can use budget metrics to compile aggregate project cost and budget results, plus indicators for all projects within its purview.

Schedule

The PMO should provide metrics that aid in managing and controlling the project schedule. Guidance metrics are applicable in such areas as: suggested duration estimates for common activities examined during the early project planning phases; preferred depth of activity coverage within a work breakdown structure (WBS); and identification of the number and types of activities that can be concurrently scheduled based on project classification. Similarly, schedule measurement metrics are essential in tracking schedule performance during project implementation. The PMO will want to consider those metrics that are applied to earned-value schedule concepts, schedule variance models, and schedule management analyses. Using schedule performance metrics ensures that every project remains on schedule or that corrective actions are taken in response to indicators that identify when a project schedule is experiencing difficulties. Again, the PMO can use schedule metrics to compile aggregate project schedule results and indicators for all projects within its purview.

Resource Management

The PMO will want to consider the use of metrics that help ascertain the performance of resource management on projects. At the outset, there are comparable guidance and measurement metrics for resource management on projects similar to those for budget and schedule. These include such metrics as the suggested number and type of resources for common activities, learning-curve diagrams for resource estimating, and resource-acquisition timing indicators. The PMO should examine these metrics plus any others that contribute to effective project planning and expedite the assignment of necessary project resources. Later, during project implementation, the PMO should consider metrics such as resource-utilization trends and variances, assignment completion rates, and resource availability. Similar to the previously mentioned metrics for budget and schedule performance, resource performance metrics also allow the monitoring of planned and current status of resource utilization and, if necessary, the application of enabled corrective actions when indications of resource performance difficulties surface during a project. In the case of resource performance, the PMO also gains effective oversight of resource utilization across projects when appropriate metrics are introduced.

Another aspect of resource performance — the acquisition, assignment, and management of the human facet of project management — warrants PMO attention for metrics. With the help of guidance and measurement metrics, project managers and the PMO will be able to properly staff projects and manage individual performance. Metrics in this area include focusing on resource pool or other internal source availability rates, hiring needs versus use of external contractors, resource manager participation in preparing and assigning resources, individual performance trends and analyses, and team cohesion and performance indicators. The PMO should devise the metrics necessary to properly integrate resources into the project management environment, consistent with the resource allocation and assignment processes of the relevant organization.

Risk Management

Risk management is an inherent component of project management, and virtually all effective PMOs and project managers acknowledge the need to manage project and business risks. The PMO needs to confirm that perspective by developing the necessary guidance and measurement metrics to facilitate effective project and business risk management.

The common risk management process calls for identifying, prioritizing, and responding to risks that could affect projects. In some project management environments, risk is distinguished between events having potential adverse impact and those having potential positive opportunities. In that regard, the PMO should develop and implement metrics that address the relevant organization's process and business approach to risk.

Metrics guidance for risk management can include such items as specification of standard risk events and responses; preferred response strategies for major types of risks; frequency of risk examination and analysis; frequency and type of risks encountered on common projects, along with the preferred solution that can be incorporated in the project planning phase; common risk impacts on project performance; costs of proactive versus reactive risk response strategies; and ranges of risk fund allowances per the project classification. The PMO needs to ensure that project managers and risk managers have sufficient guidance to deal with the risks that are identified and the risk events that are encountered.

Metrics measurements assist the PMO in oversight of projects, but measurement results also contribute to the development of metrics guidance that can be used on subsequent projects. The PMO will want to consider such metrics as the average number of risks identified on each project (by project classification), the number of risk events that actually occurred (whether identified or not in advance), the number of risk events (identified and actual) associated with project teams and individual project managers, and the cost of responding to risk events (on average and by project). Moreover, one of the more underappreciated aspects to risk management involves managing the value of the project, as outlined in the business case. Metrics should track the reliability and validity of the business case value calculations during the project. Together, this collection of metrics should enable the PMO to identify and assist the project manager in responding to potential risk impacts on a real-time basis or in analyzing overall risk management performance and improving practices and individual competency on future projects.

Quality Assurance

Quality assurance performance tends to be aligned with the technical aspects of the work performed. The extent of PMO involvement in technical oversight determines the nature of the quality assurance metrics that the PMO introduces into the project management environment. However, every PMO has inherent responsibility for quality on all projects, regardless of its technical oversight and alignment. Quality assurance metrics remain, therefore, within the PMO purview.

Quality assurance guidance metrics can include such considerations as identification of quality standards criteria (as may be influenced by organizational quality certifications or internal policies); frequency of customer deliverable specification and project scope reviews; allowable variations in product/service quality; and content and frequency of quality assurance reporting, including criteria for special reporting or elevation of quality issues.

Quality assurance measurement metrics should include such items as quality variance values at interim checkpoints, number of project/contract scope changes requested and approved affecting deliverable specifications, quality difficulties or defects associated with particular project teams and individual project managers, average customer acceptance rates and timing, and contribution of lessons learned from quality performance. Quality assurance also applies to the project management aspects of performing the project work and producing its prescribed deliverables — products and services.

A PMO that is heavily involved in the technical aspects of the project will want to convene its senior technical experts to define more detailed metrics for use in performing technical activities and in achieving customer product and service specifications.

Identify Business Management Metrics

In its role as business integrator, the PMO will want to (a) ensure that applicable business management metrics are introduced into the project management environment and (b) provide applicable project information to project stakeholders having direct responsibility for business management. The PMO should introduce metrics that provide for this mutual exchange. It should attempt to build these metrics gradually, leveraging commonly supported elements first and then demonstrating the success of early metrics before increasing the range of business management metrics that are implemented in the project management environment.

A high level perspective on business management metrics is presented for the following four key project elements.

Contract and Agreement Metrics

The PMO should provide metrics to ensure that contract formats and content are achieving strategic business objectives. This includes metrics for pricing strategies, customer payment management, invoice distribution, and customer prequalification. Of course, the PMO should also adopt metrics for contract change management to maximize and control the legal aspects of project management.

Customer Satisfaction Metrics

The PMO should develop and implement metrics that enable the relevant organization to ascertain customer and customer-group satisfaction with project deliverables and to identify the opportunities for long-term customer relationships. In particular, the PMO should apply metrics that help identify and rectify customer problem areas with minimal impact on marketplace perceptions of project performance.

Project Portfolio Management Metrics

The PMO is ideally positioned to convey project information between senior management and the project management environment. It should use this advantage to construct metrics that facilitate project portfolio management. This includes defining metrics that assist in formulating decisions about project selection, continuation, and termination. It also includes developing metrics that help to review aggregate project performance, identify strong and weak project performance areas, and assess ongoing alignment with strategic business objectives.

Financial Metrics

Although the consideration of financial performance metrics may be a part of any of the previous business management areas, it is often aligned with project portfolio management. It is highlighted separately here to enable examination of such factors as revenue generation, expense trends, and bottom-line analyses. A separate examination of financial metrics also may be expanded to provide the PMO with the analysis and insight to implement or recommend improvements in areas of project cost estimating, project pricing strategies, project expenditure allowances, vendor and contractor cost qualification criteria, and project staffing costs.

Introduce and Use Metrics

Once it has developed the necessary metrics for the project management environment, the PMO must ensure their integration into appropriate processes and their use according to design. The latter is particularly important to the PMO because it normally designs the use of metrics to guide and measure results across a collective set of projects within its purview, and it should ensure that metrics are applied consistently to all projects.

Because the PMO will predominantly seek a big-picture view of all projects, it should introduce metrics to serve project managers while also fulfilling its purposes of oversight, control, and support, based on its charter. To that end, there are three primary activities that should be accomplished to introduce metrics into the project management environment: preparation of a metrics measurements plan, comparison of metrics performance, and establishment of corrective actions. Each is discussed in the following subsections.

Establish Metrics Measurements Plan

When the PMO designates a metric, it should be prepared to monitor and manage it at a higher, aggregate level of examination. Therefore, the PMO should be cognizant of and track all of the metrics it has constructed — both guidance metrics and measurement metrics — for use within the project management environment.

The focus of the metrics measurements plan is on measurement metrics, which are used to track project, technical, and business performance, and to provide timely indications about project conditions or status. Measurements that use prescribed guidance metrics also enable the PMO to examine and enhance its guidance metrics.

The PMO should actively monitor and manage metrics that it prescribes in the project management environment. This can be accomplished by developing a metrics measurements plan for the project management environment. This plan will help the PMO organize and manage the prescribed metrics plus their individual and collective values to the relevant organization.

The following are suggested elements of a metrics measurements plan for the project management environment:

• Measurement sources: Prepare a brief description of the metric and its intended use; identify what project data are used to measure the metric.

• Measurement levels: Specify the level of detail and type of data to be obtained from the metric to be used; identify any special competencies or authority needed to obtain measurements for the metric.

• Measurement frequency: Indicate how often metric measurements are needed and used, e.g., the time frames for each project phase.

• Measurement performers: Identify who is responsible for conducting measurements relative to each prescribed metric. (This may be integrated into the project management methodology, or into the technical and business process, or identified separately when there is no associated process.)

• Measurement consumers: Designate who should receive data or reports containing project management environment measurements based on prescribed metrics; clarify when further measurement analyses are needed.

In essence, the measurement plan for the project management environment compiles all prominent metrics for which the PMO is responsible. It allows the PMO to consider how and when the metrics are applied, and it enables ongoing examination of the values of the metrics that are implemented. The PMO can refine or adapt the contents of this measurement plan to fit the needs of the relevant organization.

Compare Metrics Performance

The metrics measurements accomplished per the measurements plan should provide appropriate and sufficient data to evaluate each metric or set of metrics used in the project management environment. This enables the PMO to perform comparative analyses on project, technical, and business performance in areas in which metrics have been installed.

Beginning with an analysis of metrics from specific project efforts, this activity can include both in-progress analyses and postproject analyses. Thereafter, aggregate analyses of metrics across all projects are conducted. These analyses examine the application of guidance metrics and the results of measurement metrics to identify how well projects are achieving specified objectives. In conjunction with the real-time project oversight that it performs, the PMO also examines project performance trends resulting from the introduction of particular metrics.

A metrics review is then conducted at intervals (specified by the PMO) to ascertain how well-chosen metrics are benefiting project efforts and the organization's business interests. This includes examining how consistently metrics are being applied to projects and the reasons why they are not being applied according to prescribed procedures. This review also closes the circle of this PMO function in that it identifies what progress has been made toward achieving any associated standards in the project management environment.

Establish Corrective Actions

Like standards, metrics are applied to improve performance in the project management environment. The PMO has a vantage point in its examination of cross-project results of standards and metrics implementation. Thus, it can provide remedies — on projects immediately and in the total practice over time — as described below.

Project Corrective Action

The PMO should examine metrics from project status reports and other sources to determine whether there are any troubled projects that warrant its intervention. If any adverse indicators are discovered, the normal PMO response is merely to confirm that the project manager is attending to the problem. If, however, indicators are more severe, the PMO may want to delve into the details with the project manager at a regular or special meeting and provide recommended corrective actions.

Along with this immediate response to a specific project, the PMO can also use its cross-project perspective to evaluate the preferred corrective action responses to the variety of metrics indicators it reviews. The PMO can then incorporate these corrective actions into the project management methodology as a reference for future use by all project managers.

Practice Corrective Action

The PMO, in its examination of metrics, will be able to discern where strengths and weaknesses exist in processes and procedures used within the project management environment. Similarly, it will be able to determine when metrics are appropriately applied or bypassed in favor of individual solutions. The PMO can take corrective actions at the practice level to bolster preferred metrics application within the project management environment. This type of corrective action could also be achieved through adjustments to the project management methodology. However, rather than being a simple effort, methodology modification might affect processes, which would then have to be adapted to ensure the proper use of metrics.