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Still Justifying Project Management in Your Organization? This Will Help!

June 22, 2016 | by Deborah Bigelow Crawford

A balanced family of measures can evolve into a powerful system for executing strategy.

Companies are demanding to know the long-range benefits of building and implementing a project management culture. Simple financial measurements are not enough; a balanced family of measures is needed to get an overall picture of the health of your organization and its project management practices. A balanced family of measures can evolve into a powerful system for executing strategy. The measures help to define the strategy, communicate it to the organization, and direct its implementation at every rung of the hierarchy, from the corporate level to the individual. They also keep everyone's efforts aligned, because they link strategy to budgets, to resource-allocation systems, and to pay programs. Demonstrating how project management initiatives measure up using this balanced family of measures is critical to any business justification for a project management investment.

The kinds of measures that make up a balanced family of measures include a mix of financial, operational, and social measures that show value to stakeholders. Measures in these categories should also be a balanced mix of inputs (money and people put into a process), outputs (results achieved), and processes (performance of the systems that deliver the output). For example, a project management input measure could be R&D spending, the output measure could be the number of new products, and the process measure could be the number of change orders per product during development. The ultimate output measure is the contribution of these new products to corporate profitability.

A balanced family of measures might include the following, derived from the work of Kotter and Heskett  (the exact measures would vary with each organization, depending on its strategy):

  • For Shareholders: economic value added, earnings-per-share growth, cash flow per share, economic profit, total factor productivity, percentage of new-product sales, return on management
  • For Customers: customer satisfaction, product quality index, repair incidence, customer loyalty
  • For Employees: employee satisfaction, employee turnover, productivity, diversity in management, training time per year
  • For Community: index of environmental impacts, safety record, community satisfaction, charitable and community contributions

A subset of measures that focus on operational issues only would include the following:

• For Shareholders: productivity, cost reductions, defect level, cycle time, customer retention, employee turnover, percentage of new product sales, process errors

• For Customers: project success (time, cost, quality), repair incidence, product quality index, on-time shipping, customer satisfaction, customer retention, customer loyalty, new product inventions, share of wallet, market share

• For Employees: OSHA recordables, employee satisfaction, absenteeism, employee turnover, empowerment index, grievances, training time per year, competence levels, salary levels, benefit levels, family-support services, percentage of flexible schedules

• For Community: safety record, salary levels, community satisfaction, legal actions

Effective metrics are leading indicators; they forecast future trends inside and outside the organization. They're objective and unbiased, and they're normalized so they can be benchmarked against other companies. They need to be inexpensive to collect as well as unobtrusive -- they shouldn't disrupt work or the trust of your employees. And they need to discriminate meaningful small changes. They should be appropriate (measure the right things) and efficient (so you can draw many conclusions out of your data set). They need to be comprehensive, showing all the significant features of the organization's status. And of course they need to be quantifiable and statistically reliable. A balanced set of measures that follow these criteria would be the perfect measurement system to judge your project management effectiveness.

How do you justify the value of project management in your organization?  Do you measure … and what do you measure?  Help others by sharing your experiences!

About the Author

Deborah Bigelow Crawford

Deborah Bigelow Crawford has more than 20 years of experience in business management and handles the operational and administrative functions of PM Solutions. Ms. Bigelow Crawford also serves as President of the PM College®, PM Solutions' training division, where she is responsible for the fiscal management and quality assurance of all training and professional development programs. Prior to joining PM Solutions, she served as the Executive Director of the Project Management Institute (PMI), and was instrumental in providing the foundation and infrastructure for the exponential growth that the Institute has maintained over the last 10 years. In addition, she served as the Executive Director of the PMI Educational Foundation. Over the last decade, she has authored numerous articles in PM Network, Chief Project Officer, and Optimize magazines. Ms. Bigelow Crawford is also co-author of the book Project Management Essentials. She has presented a variety of papers as a speaker at international symposia and conferences, and is a member of the National Association of Female Executives and the Project Management Institute.

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Deborah Bigelow Crawford

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