The aim of most business is to be profitable, but not all project management offices (PMOs) are tasked with turning a profit. If your office does have an eye on the bottom line, then you need to know how to drive profits for your PMO.
The profit motive isn’t suitable for all PMOs – you may have set up the office to focus on governance and compliance, for example. While these activities should have long-term financial benefits, profit isn’t a suitable key performance indicator (KPI).
We’ve already looked at when you PMO should be driving profits. Once you know your PMO is ready to focus on profit, you need to understand how to do that. To that end, we’re going to look at:
The types of PMO that are suitable for profitability
Ways you can drive profit in your PMO
Whether profits will be direct or indirect based on these methods
What type of PMO can be profitable?
Whether your PMO needs to be profitable will depend on why it was set up and what the business wants you to achieve. For example, if projects were running over, going over budget, and wasting resources, your PMO might need to demonstrate financial deliverables.
The reasons for your PMO being set up will be directly linked to the type of PMO you chose to set up. Broadly, there are three types of office that can realistically drive profit:
An enterprise PMO is focusses on strategic delivery of business goals. This type of office tends to choose the types of projects it takes on and makes sure they align with the business and office goals. Using one of the assessment criteria for project selection as potential for profit will allow your PMO to have space to make profit.
A delivery PMO is there to drive projects over the line. Your office will be focussed on projects that are on-time and on-budget, ensuring that the business makes money when handing projects over to clients, for example. This type of PMO can reduce costs and maximise margins.
A directive PMO controls and directs project resources. You’ll be working to make sure the right people are directed to the right tasks, increasing efficiencies and making sure capacity is properly managed. Profits can come from deploying resources effectively so less money is spent and more projects can be worked on.
How to drive profit in a PMO?
A PMO is all about getting processes right. By removing duplication and streamlining the work of your project teams, you will be able to deliver more. The time spent on Whether you can have one admin role in your PMO take over small tasks from each project or move to computer-based reporting, there are opportunities to drive profits through project efficiencies in the long-term.
You can also make sure that project planning is optimised. At the planning stage, a project can determine the profit it can derive, e.g. the price the customer is paying for the piece of software and how much it will cost to produce. With strong planning and resource allocation, your PMO can help projects maximise margins. Good planning will deliver short-term returns per project.
By making workflows more efficient and project workers highly skilled, you can return billable hours to the company. Even in a project that isn’t being paid for by a client, if seconded workers can return to their team earlier, there is more profit potential for the business. This will give you short-term results to deliver to the business.
How to make a profitable PMO
If you want your PMO to be profitable, you need to know how to drive profits in your office. Make sure your PMO has the right set up and focus then look at ways you can increase the money you pull in for the business.
