Do you know how much damage a poor organizational project management maturity can do to your company? Let’s take a very simple example ignoring other parameters to understand this. An organization with yearly a billion dollar investment into projects, programs and portfolios is achieving an overall 25% return on investment. This means this company converts 1 billion dollars into 1.25 billion dollars with 25% business value growth. Executives and board of directors are happy seeing company grow. What if there was a way to elevate the returns of investment to 30% considering elevated successes, improved resource utilization, minimized risks and issues impacts, consistent successes and reducing failed investment. This to our experience is conservative growth based on current organizational project management maturity. And still you can see the company will achieve 1.3 billion dollars instead of 1.25 billion dollars with 4% improvement. Still number looks small to you? Well, in this example, the company saved yearly 50 million dollars extra that was lost before due to inefficient project management. There must be some catch, right?

You would argue, what about operational costs of project management infrastructure? Let’s continue with simplistic example again ignoring details to keep it simple. Let’s say company only runs projects and no programs. One billion dollar investment is consumed by 200 or so projects with average investment of 5 million each. Or 100 projects with average investment of 10 million each. Let’s consider 200 for our example and assume that these 200 projects are run into 5 regions, where each region runs 40 projects a year. Let’s say you setup PMO office in each of these 5 regions with initial staff of 5 professionals in each region and they report to regional head to start with, with inter PMO office interfaces in place. You are looking at 25 professionals with total rough yearly investment of 3.75 million dollars. And on top you could have developed an EPMO software suite with about 1 Million dollar investment. But for sake of simplicity let’s say you have procured already available project, program and portfolio software suite with per user monthly subscription license for 250 of your managers. Let’s assume the annual subscription cost of 3,00,000 dollars. So 3.75 million for staff, 3,00,000 dollars for software and about a million dollar of your one time PMO investment setup cost that will also help you with all branded artifacts, processes, systems, structure etc.. ready set to go to hit the ground running. That’s it. So total first year investment of about 5 million dollars and if PMO setup well with proper organizational project management maturity elevation targeted and if you gain 4% increase in ROI due to this change then you will be saving 50 million dollars in returns from project deliveries from the organizational project management investment of about 5 million dollars in first year and then recurring investment of about 4 million dollars with upward ROI trajectory. Here company had benefits to cost ratio of 10 in first year and 12.5 in subsequent years. An EPMO setup right will also have robust structure and the roadmap to further enhance your company’s project management maturity giving you better results year on year with ever improvising structure to attain near saturation soon ahead. In first year this company in this hypothetical example achieved net profit of 45 million dollars and subsequent years net profit of 46 million dollars of increase compared to either no EPMO or an inefficient EPMO in place.

Because we have the leverage to see different organizations before and after efficient PMO setup and the numbers speak themselves justifying the cost of PMO. In fact you can’t find better organizational investment such as the investment into the efficient EPMO. Thus the EPMO costs justify itself especially when it is deployed carefully tuning exactly to the business dynamics and aligning with organizational strategic plan.

If you would like to know more then check out our other blog posts. Or simply you can chat with our highly trained chat support team and they can help you determine whether your EPMO is in good shape or what kind of EPMO you should have or what organizational changes you should plan at what scales to achieve desired results.

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