IT Project Prioritization and PMO Organization Structure

How Most PMO’s Function….

Most PMO’s fall into one of two models – either 1) they only provide overall guidance and governance (they define the process and make sure everyone follows the process) or 2) in addition to providing overall guidance and governance, they also serve as the resource pool for all PM’s.  For the purposes of this writing, I will assume the later.

In a typical PMO, there is a pool of project managers which are provided to the various projects IT engages in who report to a director or Sr. Project Manager who runs the PMO.  Projects requests come and are logged in some form of a tracking sheet (typically an Excel spreadsheet, although some organizations may have a database and/or software packages they utilize).  Because PMO’s typically do not have analyst resources, these activities are done a Project Manager.

As PM’s become available, either via completed projects or projects that are placed on hold, they are re-allocated to the next available project.  Typically the process to determine what project is next is rather arbitrary.  Very little analysis goes into the prioritization effort, sometimes it may be based on which project has been on the list the longest, other times it may be based upon the technology platforms involved while other times it may be based upon a rudimentary cost-benefit analysis (please note this is not a true valuation of the project).

So basically there is no real prioritization process.  Many times the next project is determined more by political factors rather than what is truly in the best interest of the company.  Because there was no effective analysis done, there are no effective benchmarks available against which to measure the project.

 

Here is how I would do it instead….

Organization

Obviously this varies based upon the size of an organization, but in general here is the organization structure I would implement in a PMO:

 

• Director: Owns the overall strategy, vision and direction of the PMO
• Program Manager (Sr. Project Manager): Manages a portfolio of related projects, typically these projects have individual project managers.
• Project Manager:  Manages individual projects
• Portfolio Analyst:  Performs up front analysis for project prioritization, grouped by line of business, depending upon the workload each analyst may support one or multiple lines of business. 

Program Manager would be aligned with each line of business (as well as one for IT).  Under each Program Manager will be a portfolio analyst (in some cases shared among multiple program directors) as well as individual project managers.

Prioritization

As project requests come in, they are evaluated by the appropriate portfolio analyst to determine the priority of the project. All requests are stored in Sharepoint or a similar repository, providing a master inventory of all outstanding project requests. The first step in the process is to evaluate the project request against a core set of criteria.  I would use the following factors:

• Project Valuation (not a simple Cost Benefit Analysis)
• Strategic Goals
• Complexity

Project Valuation is much more than a simple cost-benefit analysis.  A true project valuation will factor the project costs and anticipated savings over a period of time (3-5 years), convert this to present day dollars and evaluate it against the return that would be provided if the funds were not used for the project.

Strategic goal mapping analyzes the level of support each high level strategic goal (both corporate and IT) which is applicable to this project.  These are ranked on positive-negative scale with zero being neutral.

Complexity is the critical factor in analyzing the effort involved with the project.  Based upon the complexity, you can estimate the resources required to complete the project and the expected duration.

Now rather than just making an arbitrary assessment for the prioritization of the project -  one that is usually based upon who yells the loudest - the prioritization is based upon a couple of core factors which directly correlate to the goals of the organization, of which the primary goal is always to make money.  All projects are prioritized within the line of business rather than across the company.  When projects are prioritized across the company, the larger, more profitable business units get all the resources, leaving the smaller, less profitable business units to struggle.  This sets up an environment for the larger/more profitable units to continue growing while the smaller/less profitable business units are basically put in survival mode without the resources necessary to grow or expand.

Now we have a portfolio of possible applications by line of business with a true valuation as well as an alignment with the organizations strategic goals.

Doing the work

Now that we have a core set of factors that the project has been evaluated against, we can evaluate project progress against those factors.  This opens up a wide range of tracking and reporting, such as:

• Ability to show progress against strategic goals based upon project progress
• At a resource level, you can show the “strategic value” of a specific resource
• At review time, a resource can easily show how they contributed to the overall strategic goals of the organization