If there is one constant in technology professional services (PS), it is the desire to improve project performance. With few exceptions, that is the one motivation all PS executives share. The reason for this is simple: the vast majority of PS delivery occurs in the form of projects, rather than as a continuous service. It stands to reason that PS managers are constantly seeking to understand and enhance project performance.
The Key Criteria for Improving Project Performance
In the first half of 2014, TSIA conducted its bi-annual PS Project Performance Study to get a read on the current state of the industry. This is the fifth study of its kind since 2008. The scope of the data analysis was extensive and included:
472 PS projects x 60 + metrics/results submitted directly from respondents
472 PS projects x 30 + metrics/results calculated from direct entry
Yielding a total of 40,000 + data items documenting project performance
Right away, I want to dispel the myth that the only relevant measure of project performance is profitability. The fact is that for every PS business, there is a different PS business model. PS executives are not all equally focused on project margin. Don’t get me wrong, it’s an important thing, it’s just not the only thing. That is why we’ve developed a concept of “Best in Class” projects that is actually defined by not one, but seven key criteria:
- At or above industry average project margin (35%).
- Actual margin at or above planned margin.
- Project starts ahead of time or on time.
- Project is completed ahead of time or on time.
- Actual revenue at or below planned.
- Actual billable hours at or below planned.
- C-Sat rating at "satisfied" or better.
Yet as the following chart shows, only a very small percentage of projects actually satisfy all seven of the best in class project criteria.
Creating a Best in Class Project With a PMO
So what does it take to be part of that elite 5% of best in class project performance? The reality is that it takes a lot, but as our study has shown, one of the most important drivers of project performance is having a Project Management Office, or PMO, in place.
How do you build a best in class PMO? Based on more than 40 hands-on audits of PS operations, TSIA has established a charter definition for PMOs that documents eight key activities:
- Define and document project management best practice standards for use throughout the organization.
- Monitor project controls (schedule, costs, risks, milestone attainment).
- Provide delivery assurance through performing project audits and ensure firm-wide project management standards are being followed.
- Maintain a large program team with senior-level project and program managers responsible for delivering global engagements.
- Assist delivery teams in turning around “at-risk” projects.
- Participate in project kick-offs, milestone reviews, and/or project close-outs.
- Mine project work product archives for best practice examples.
- Define project manager training and mentoring requirements/programs.
The impact of PMOs in controlling things like going over planned project hours, completing projects on schedule, and hitting targeted project margins is detailed in the full study report that is available to TSIA PS discipline members.
Once your PMO is established and by following these strategies and criteria, we'll believe you'll have a real chance to move more of your projects to that "Best in Class" category. Do you have any thoughts on what it takes to improve project performance? Leave a comment or send me an email. I'm interested in hearing how your organization has improved its project performance.
About the Author
Bo Di Muccio is vice president of professional services research for TSIA. He is also the chairperson of the TSIA Professional Services Advisory Board. Previously he served as the senior director of research and advisory services for TPSA.Keep the conversation going with Bo. He may be reached at email@example.com.