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  • Writer's pictureBill Holmes

Standing up the Portfolio Management Office (PfMO) Part 10 – Measures (Part 3)

Project, program and portfolio management
Many will resist establishing a cost baseline!

“Lots of folks confuse bad management with destiny.” Kin Hubbard

“Management by objective works - if you know the objectives. Ninety percent of the time you don't.” Peter F Drucker

The management genius Peter Drucker certainly has this right! How many times do we begin an activity without knowing what we are actually doing, what it will cost or how long it will take?

In my last post I discussed measures as they relate to the PfMO. I stated that developing measures should be one of the easiest tasks from a technical perspective, but one of the most difficult politically. I then made the point that those measures should be based on the triple constraints and we discussed how you can begin that discussion by asking these simple questions:

What is the work you are doing? How much money do you need to do it? What does your schedule look like?

We then discussed the importance of getting precision in defining scope and schedule, and the resistance you will encounter in doing so.

You will likely encounter the same challenges in determining "cost". Most project managers will be familiar with the triple constraints and will at least pretend to develop and monitor the project baseline. A portfolio presents a different challenge because you will be enforcing measures on different activities, many of which may not be traditional projects. This means that you will be dealing with managers that may not be familiar with basic project principles.

As I stated in an earlier post, politics will be a huge challenge in standing up the PfMO.

I have found that asking the simple question “If you can’t tell us what it is going to cost, how can we possibly approve the activity?” a very simple way to drive home the necessity of establishing a cost baseline.

As with scope and schedule, your goal is to establish a repeatable process for subordinate activities to follow in developing their cost estimates.

For projects in the portfolio, make sure that the project managers are adhering to good project management principles and establishing a measurable cost baseline. It is very important that the cost baseline is tied to the schedule so that any unusual expenditures are documented and included in your analysis. For example, if an activity has a 1 year lifecycle and a $1.2M budget, one would expect that each month approximately $100K would be spent. However, there may be large capitol expenditures at some point in the project that would skew this analysis. If there were a planned $600K expenditure in month “2”, then the expected budget spent after month 2 would be $700K, not $200K. You need to know these things!

For programs in the portfolio, develop a repeatable process that establishes a schedule for tracking the annual activities with discrete timelines, then tie the cost to the schedule. Every program has a lifecycle, and you can time box the activities and expenses based on that lifecycle and track against them at the portfolio level.

For sub portfolios, ensure that they develop a standardized “lifecycle” for every activity they are responsible for by following the same protocols as above.

If you follow the methods I described in the last three posts, you will have a standardized way to compare the relative performance of every activity you are tracking in your portfolio!

Next, bringing measures together.


Process always matters. Sometimes it cuts for you, and sometimes against, but it must be followed. As I write this, the news is reporting the scheduling hearing of General Flynn, a 33 year veteran and a distinguished war hero. He is in trouble because he misspoke while speaking to law enforcement. There were many irregularities in how he was questioned. For example, normal protocols weren’t followed by notifying the White House Counsel, he was lulled into believing it was a "friendly" visit, he was discouraged from having private counsel and he wasn’t advised of his rights. Even more amazingly, there was no underlying crime! And yet there he stood, 33 years of distinguished service wiped away in a single interview. And yet there are numerous documented cases where other people clearly lied while under oath, and they continue to be featured as guests on certain cable news networks. Where are the consistent standards? If you are gleeful when misfortune befalls your political adversaries, remember that we are all imperfect and mis-remember things. It is much better to have consistent standards that are applied to everyone consistently, and that is enshrined in the US concept of "equal justice under the law".


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