Four Criteria to Satisfy Project Portfolio Management’s Standards for Metrics

One of the primary purposes of project portfolio management (PPM) is to evaluate all of the great ideas of the firm and to prioritize projects in light of limited resources.  PPM measures are wide-ranging, and generally, are industry specific and company dependent.

PPM measures should satisfy four criteria.

1.  Metrics should be contextual.
2.  Portfolio changes should be based on a set of complementary metrics.
3.  Organizational changes are substantiated, not driven by, metrics.
4.  Fewer metrics are better.

Let’s take a look at each of these in turn.

1.  Metrics should be contextual.  In the first instance, a number that represents the project portfolio may have no meaning without context or trendline data.  For example, being able to reduce the lines of code in a software program has no meaning unless the program already had extraneous coding or inefficient programming.

2.  Portfolio metrics should be complementary.  Next, many firms make the mistake of changing the mix and balance of projects in the portfolio based upon a single metric, normally related to cost or potential returns.  A single metric to evaluate the entire portfolio can be misleading and not address the strategic needs of the organization in full.  So, the best PPM decisions reflect a set of complementary metrics that examine cost, revenue, resources, technology, and market conditions.

3.  Changes should be substantiated by metrics.  Organizational changes should be substantiated, not driven by, PPM metrics.  However, some firms become entranced by metrics and will engage in operational changes just to improve the numbers.  Changing operations or updating projects in the portfolio simply to make the numbers look better can actually be disadvantageous and hurt the strategic growth initiatives of the firm.  Healthy PPM systems will instead balance the set of metrics with the organization’s strategic objectives by utilizing the information that measures provide for better decision-making.

4.  Fewer metrics are better.  Finally, fewer metrics are normally easier to manage than too many measures.  Too many PPM metrics result in conflicting numbers and mixed messages.  Concentrating on just a handful of PPM metrics allows executive decision-makers to align the portfolio with strategic goals.

PPM metrics are helpful to all decision-makers and employees at the firm.  Contact us to learn more about compiling a set of PPM metrics to help you reach your business goals.

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