Laura: We started talking about investments a little and I want to just make it super clear for everyone what the role of the PMO is and what the role of the project is. I’m often saying to my students in my IMPACT Engine PMO program that they must ensure they’re creating the highest possible return on investment for the organization. Let’s talk a little bit about this ROI or return on investment thing. I want to go deep and be thorough here because I feel like this is so important and one of the most critical mindset shifts that PMO leaders must embrace.
Andy: I mentioned, organizations have a limited amount of money to spend, right? They have to generate the best possible return on that. Just as we all do as individuals, we have a limited amount of money to spend. With that money there’s some things we have to do. We have to buy groceries, we have to pay the utility bills, we have to pay a mortgage or rent, whatever it might be. And then we’ve got a little bit of money that we can choose to spend in other areas, but we still want to get a return from that money. It may not be a financial return. Yes. Some of it will go into our retirement savings, which will generate hopefully a return for us down the road. Some of it may go into a savings account to pay for the next vacation. Then we start thinking about how we spend that discretionary funds. Do we go out for a meal or do we put a bit more money away for a vacation? Both the vacation and the meal creates personal value. The same thing happens in organizations. Organizations invest in projects sometimes to make money or frequently to make money, especially in the private sector, but sometimes that’s an indirect value return. Sometimes it’s because it increases customer loyalty or it attracts new customers, which then drive longer term value.
Laura: That’s the important part it’s still a return. It is of value to the organization.
Andy: They are spending a fixed amount of money to generate a return, a value that is more than the amount spent. Easy to measure that in purely financial terms. Life’s not always that simple, and some industries are not driven by money, right? We’ve got the not for profit sector where in fact, not for profit. A really good example, you’ve got very limited amount of money coming in. You want to spend as little as possible, but you want to do as much good as possible. Whatever it is that your trying to add value to, whether it’s Third World Development, medical research, animal care, or whatever it might be. You’re trying to spend as little as possible to do as much good as possible. That’s a return on your investment. Back to the PMO. The PMO is in charge of is delivering, is driving the process of making sure project related work aligns with the kind of return that we have to get. The organization says these are our goals, these are the areas we’re gonna focus on. This is the kind of area where we want to drive value. If the PMO is not making sure that happens, i.e. that the work is generating the right kind of value and that the best possible return is being created. It’s failing the organization. At the end of the day, the currency of the world is, is financial. That’s how all of us exist. I don’t do this kind of thing because I absolutely love project management alone. Yes, I love project management, pmo, and portfolio management, but at the end of the day, it’s an investment of my time and effort in return for some kind of financial reward. If that doesn’t happen, then you can’t afford to live. You can’t afford to maintain the equipment that allows it to happen. There has to be some kind of financial benefit no matter how valuable or how worthwhile the work that you do is. If a PMO doesn’t recognize that, then it’s not going to have its eye on the ball. It’s not going to be delivering the kind of benefits that it needs to for its employer.