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How PMOs Save Money
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How PMOs Save Money


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    • 1. How PMOs Save Money And you thought they were just a cost center?
    • 2. David Blumhorst
      • Founder of the EffectiveIT™ Group
        • Specializing in IT Governance and PMO Management
        • Over 100 PMO clients served!
        • Fortune 1000 clients
      • PeopleSoft Sr. Director, IT-PMO
        • Managed 50+ Million Project Portfolio
        • Managed PPM, Resource Mgmt, Project Methodologies, Value Mgmt
      • Clarent Corporation CIO
        • Deployed IT services for global VoIP firm
      • Former CFO and CIO for multiple companies
    • 3. Life without a PMO Project Intake Analysis Execution Results Prioritization
    • 4. Step 1: Eliminate Waste with Portfolio Management
      • Creating a consolidated list of projects reveals
        • Duplicate projects
        • Rogue projects
      • Which can be eliminated to save $$$
      • Client example: How many projects do we have?
        • Initial estimate: 35
        • Actual count: 70
        • Duplicates: 5 (not listed twice – actual duplicate teams working toward the same goal!)
        • Multiple “rogue” projects
      $$ +
    • 5. Step 2: Avoid “Paralysis by Analysis”
      • Without a PMO, project intake is single-threaded
      • Each project requires analysis before approval
      • Example: How many projects requests are being analyzed?
        • Requests per quarter: 120
        • Average time to estimate: 16 hours
        • Total effort required: 1920 hours – 240 days!
      • Result: Paralysis by Analysis!
    • 6. Step 2: Avoid “Paralysis by Analysis”
      • With a PMO, project intake is a portfolio process
      • Scorecards save time!
      • Example: How many projects requests are being analyzed?
        • Requests per quarter: 120
        • Average time to estimate: 16 hours
        • Average time to score: 30 minutes
        • Total effort saved: 1860 hours – 232 days!
      • Result: 90% savings!
      $$ Scorecard
    • 7. Step 3: Fund projects in stages
      • Typical project funding is all or nothing
      • Problems with total funding: What if the estimate is way off?
      • Solution: staged funding
        • Funds approved at the end of each phase for the next phase
        • Forces re-evaluation after each stage
      • Projects that are no longer business worthy can be killed – saving $$
      Deploy Close Develop Plan Initiate Initial Funding Plan Funding Execution Funding
    • 8. Step 3: Fund projects in stages
      • Questions to ask at each stage:
      • Will the project still hit the business target?
      • Are the costs in-line with the business target?
      • Is the project still worth doing?
      • Is the project proceeding according to plan?
      • Example: Custom configurator
        • Target: Create a web-based system configuration tool
        • Initial solution (1998): Perl-based web design
        • Results
          • Killed the project and started over
          • New project delivered better functionality for less time and money
          • Perl programmer not happy 
    • 9. Step 4: Monitor Portfolio Performance
      • Monitoring performance of projects in the portfolio
        • Reports highlighting the performance of projects should be reviewed regularly by a cross-functional steering committee
        • Metrics to include vary by industry and company
      • Key benefits of monitoring
        • Laggards are quickly identified, and can be fixed or culled
        • The mix of projects within can be tuned
        • If the portfolio is too large, it’s easier to re-prioritize
        • Using a cross-functional committee to make decisions provides cover!
      • Result: Low-hanging fruit gets priority, and bad apples get discarded!
    • 10. Caution: Don’t throw good money after bad
      • Reality: Projects gain momentum
      • Sometimes, things go wrong
      • But no one wants to kill the project!
      • Reality check: Don’t throw good money after bad
    • 11. Step 5: Increase productivity with Capacity Planning
      • Most organizations make these classic resource management mistakes
        • Resource planning is first done during project planning
        • Resources are planned serially (one project at a time)
        • Organization capacity to execute projects is looked at anecdotally (ask the managers!)
      • Result: Resources can’t be found or are overwhelmed!
      Incoming Demand Org Capacity Churn
    • 12. Step 5: Match supply to demand Intake Capacity Planning (overall supply/demand) Planning Role Scheduling (role-based supply/demand) Launch Resource Assignment (named resource availability) Execute Utilization (hours worked by resource and role) Funding Match the project and resource lifecycles to improve productivity!
    • 13. The Strategic PMO: A Well-Oiled Machine Resource Management Deploy Close Develop Plan Initiate Project Delivery - Resource Assignment - Resource Utilization PPM Qtr Planning Portfolio Mgmt and PMM Review
      • Cap Planning
      • Qtr Planning
      • Resource Scheduling
      • Utilization
      • Project Intake funnels requests . Reduced analysis time saves $$
      • Planning cycles select the best projects. Not starting low-priority projects saves $$.
      • Resource supply is aligned with project demand. Greater productivity = $$
      • Portfolio monitoring identifies laggards . Culling bad projects saves $$
    • 14. Questions?
      • David Blumhorst
      • CEO EffectiveIT Group
      • [email_address]
      • http:// /PMO
      Visit our blog: Lessons from 100 PMOs (and counting)