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Project Portfolio Management

How to Use ROI to Evaluate PM Training

Published By Team AdaptiveWork

Ask anyone involved in project management and they’re sure to be very well aware of the value of project management training. That may be a given, but at an executive level, the people who would be signing off on the expenditure for such training may need more convincing.

The advantages of project management itself have been proven time and again, with 95% of billion-dollar-plus enterprises having Project Management Offices (PMOs). This is no surprise, as the same source shows that project management delivers a 25% increase in productivity, a third improvement in projects coming in under budget and savings of $175k per project on average.

However, the state of project management training is not nearly so rosy. As ever, executives enjoy the benefits of project management but are more reticent about paying for training. Even though “poorly trained project managers” is cited as the biggest project management issue facing organizations, with only 48% of businesses investing in accredited project management training.

How to Push the Business Case for PM Training

The best way to get executive buy-in to increase the budget for project management training is to present a business case that clearly outlines the benefits to the company. While these gains can be made in various areas, such as improved consumer satisfaction or employee loyalty, here we are going to focus on the big one that is inescapable in pretty much all business decisions: the return on investment.

Creating a PMP ROI Formula

Evaluating the impact project management has on a business is relatively simple to explain conceptually but reasonably difficult in practice. Basically, it involves estimating the success variables of a project, then calculating how it would be projected to perform with a PMO, minus the costs of the PMO.

This PMP ROI formula for assessing the benefits of project management training can be performed through the following steps (this is an adapted version of the general PMP ROI formula as advised by the Project Management Institute):

Stage 1. Create a portfolio of regular projects, affecting all levels of the enterprise that may take place over the next one to two years.

Stage 2. Calculate the financial returns expected from the projects in the portfolio.

Stage 3. Categorize the projects and assign each an Optimistic/Most Likely/Pessimistic rating for scheduling, investment and results.

Stage 4. Simulate the outcomes of the portfolio of projects.

Stage 5. Identify what gains in terms of scheduling, investment and results would be realized through the addition of a PMO.

Stage 6. Project the different outcomes for Stage 5 assuming that the suggested training interventions had been implied.

Stage 7. Calculate the investment and costs for project management, both with and without training.

Stage 8. Work out how project results over the time period would be influenced by a PMO, with and without suggested training.

Stage 9. With these three figures (i.e. Results without PMO, Results with PMO without Training, Results with PMO with Training), you can calculate the ROI of both the PMO and further project management training.

Increase your business agility with Planview AdaptiveWork’s project management software

Project management as an area still remains relatively underappreciated and underfunded. Having solid statistics to prove the benefit and increased ROI of having a PMO, as well as how training can be evaluated, can prove an excellent foundation upon which to build a business case for bolstering all of your project management. This includes investment in project management software such as Planview AdaptiveWork, which can automate workflows, give immediate project insight and improve collaboration. To find out more, get in touch with our team to organize a free demo.

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Written by Team AdaptiveWork