Gaining Financial Visibility & Control
PMOs traditionally focused on execution must now become CFO of all portfolios

Historically, PPM tools have specialized in project execution, scheduling and resource management. But they have failed to provide capabilities that address the strategic importance of the initiatives being managed. Specifically, they fail to elevate financial data – both cost and benefit – to the appropriate level. As the execution of these initiatives is more and more explicitly linked with accelerating business transformation, it is more critical than ever to treat all projects and programs as the strategic business investments they are.

One size doesn’t fit all

Progressive PMOs are now making a transition away from the traditional execution-oriented mindset of simply managing projects toward actually orchestrating business transformation. They’re doing this by recognizing that, in addition to taking responsibility for managing execution, they also need to take responsibility for maximizing value and optimizing project and program spend. There are several key capabilities that enable this transformation.

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More effective budgeting

Establishing and integrating top-down budgeting controls into the PPM system to remain connected with enterprise finance. This requires a strong connection with finance throughout the project and portfolio lifecycle. The key here is that both the finance and the project management teams must provide each other with the information they need without hamstringing either group.

More effective performance measurement

Organizations must find better ways to automate and streamline project and program performance measurement, to provide:

  1. Better estimating and forecasting
  2. Governance controls and approvals
  3. ERP Integration for actuals
  4. Variance analysis and change control

Adopt more dynamic approach to managing work

Taking a more agile approach to managing portfolios allows you to control all work – regardless of how it is executed – throughout the year, with the ability to make changes as variables change. A dynamic planning approach enables organizations to proactively manage inflight portfolios, quickly gauge the economic impact of investment decisions and easily take the appropriate action to reallocate funds. Automated project status and variance reports provide timely updates, informed by stronger and more accurate forecasting. Enhanced visibility encourages quick approval of redirects and budget releases, increasing budget utilization and maximizing portfolio value.

More effective benefits realization

Even though there is a fair bit of focus on cost management in PPM, cost estimating is still inaccurate. With very little focus placed on tracking benefits, we should assume that benefit estimating is completely inaccurate. If project and programs are about business transformation, then we have to do a better job of managing the outcomes and the benefits they deliver. Establishing a more robust benefit realization framework is key, and requires more focus on these areas:

  1. Go beyond Excel, making benefit information available within the PPM system so that it is governable and reportable.
  2. Integrate benefit target and goals with top-down planning approach, and map all underlying execution back to the corresponding outcome.
  3. Establish more effective benefit estimating.
  4. Make sure to re-visit initial benefit estimates periodically, and establish the controls to reforecast throughout the lifecycle.
  5. Up-level the ability to track benefits to determine if you’ve delivered the expected results.