The role of Project Management Offices, or PMOs, is always a hot topic amongst project managers. Either their organisation already has one, and they are facing challenges in making it work, or they desperately need one but cannot convince the executive team of the value it can bring. If your organisation falls into neither category because you have a fully functioning and successful PMO with full C-level support, then well done!
At Asq Projects, we work with a range of companies and projects; some within a PMO framework, and some not. Where there is a well-established PMO, with a clear vision, fully supported by the executive team, we know that the project has a much better chance of succeeding. Unfortunately, still too few companies are recognising the benefits a well-oiled PMO can bring their organisation.
But the blame cannot just lay at the feet of such companies. As an industry, we are still struggling to put defined parameters in place for what makes a good PMO, and even what the P stands for – Project or Programme?
In their Transforming the Programme Management Office into a Results Management Office report, Deloitte notes that “despite the perceived need for PMOs, their ambiguous role and often incomplete implementation limit their effectiveness. Traditional PMOs have become paper tigers, ineffective at managing programmes to achieve results.”
So the question is, should companies have a PMO, and if so, when should they be established?
One thing the majority of us in the industry are agreed on is that a good PMO provides a better chance for project success, or at least a better look at the risk factors within a project. The time when you implement one can vary between companies, and depends on project size and scope.
While there’s no defined formula to determine when your organisation needs PMO, most do so when they are managing multiple projects with interdependencies and resources or when a complex project with high visibility needs to be executed, usually with a C-level sponsor.
What value do PMOs bring?
Justifying the value of a PMO can be tough for many companies, as the ROI is often intangible in terms of how the success was perceived by the end user or customer, even though we should be considering these factors.
When we can measure it effectively, there are clear signs that PMOs are capable of delivering:
PMOs completed an average of US$100 million worth of projects in 2012 and they delivered around US$71 million in value measured by revenue increases and/or cost reductions. Firms risk US$135 million for every US$1 billion spent on projects.
What types of PMO exist?
If you get the green light for a PMO, there are a few things to consider before setting up; first on the list is to define what type of PMO your organisation needs.
Some of the most common types of PMO and their attributes include:
Business Unit PMO
- The most common type
- Provides project-related services to a business unit
- 54% of companies in the PMI survey have this type of PMO in their organisation
Project Support PMO
- Provides process support for services and controls within projects
- 44% of companies in the PMI survey have this type of PMO in their organisation
- The highest level of PMO, responsible for aligning projects to the organisation’s strategy
- Includes strategic planning and portfolio management.
- 39% of companies in the PMI survey have this type of PMO in their organisation
Centre of Excellence PMO
- Ensuring project competency, methodologies, standards and tools are adhered to
- 35% of companies in the PMI survey have this type of PMO in their organisation
Project specific PMO
- A temporary entity established for a specific project
- 31% of companies in the PMI survey have this type of PMO in their organisation
How do you establish a successful PMO?
There are differing opinions out there amongst experts about what a PMO should do and what its success should look like. Each organisation, too, will have different needs and expectations.
We have gathered some of the top sources and their insights into what to do to set up a PMO for the long-haul.
What the experts say…
- Prepare yourself – it will be a busy time, particularly for the person in charge of setting everything up.
- Define the type of PMO you need, e.g. governing projects, overseeing programs of work or strategically planning and implementing.
- See the PMO setup as a project in itself – identify and influence stakeholders, create a communications plan, complete a project charter etc.
- Obtain long-term buy in from all areas, particularly C-level.
- Celebrate the early wins to create momentum (but be careful not to oversell the project).
- Stay positive, even when the novelty wears off with employees.
- Obtain closure of the ‘launch’ of the PMO so it can move into an established mode of operating.
- Define a mission. What does your PMO do?
- Define a vision. How do you want it to grow?
- Identify key stakeholders. Who are your clients?
- Select core functions and services. How does your PMO add value to stakeholders?
- Create proper metrics and key performance indicators (KPIs). How do you know your PMO is doing OK?
- Continuous improvement. Develop action plans based on metrics and KPIs
- Focus and value. Keep it lean. It is common for PMOs to start adding more services, processes and features. Sometimes they are only wasting resources because the organisation doesn’t need that.
Forrester Research commissioned by PMI goes on further to suggest four success metrics to ensure the longevity and value of a PMO:
- Have a seat at the executive table. Ensure the PMO representatives are regarded as peers in executive committees. Maintain high visibility C-level sponsorship.
- Play a vital part in the organisation’s strategic planning team. Provide feedback and insights that contribute to the overall strategy.
- Embrace core competencies. Strive for excellence in project managers and invest in training and development for their roles.
- Use consistent objectives across industries and regions.
What is the main challenge a PMO will face?
Operational challenges aside (because they are inevitable), the major risk to the ongoing viability of a PMO is the perceived value it can bring to an organisation. This is not always necessarily in financial outcomes, although this of course helps, but also in the input to organisational strategy based on solid, best practise planning.
According to the Forrester study, it’s vital that PMOs are not simply reporting functions but establish themselves as leaders, able to develop and implement strategies that drive better business outcomes.
The report demonstrates that regardless of PMO type selected, the alignment of the PMO to the goals of the organisation is key to driving strategy implementation.
What’s your take on the PMO topic? Are they an invaluable element of any innovative organisation or another operational silo to navigate?
What PMO set-up lessons would you share with someone embarking on the same journey?
If you would like more help to understand the value of a PMO within your organisation, let’s meet for a coffee.