Seven Secrets of Successful PMOs
by Kiron D. Bondale, PMP
Seven Secrets of Successful PMOs
Summary
Establishing a PMO is a popular approach taken by many organizations to facilitate project portfolio management or project management capability improvements. Despite the value that a PMO can provide, most are shut down within three years of their being established. In order to be successful, a PMO must have an actively involved executive sponsor, it must fit the culture and structure of the organization, it should have a formally approved and communicated mandate, its setup needs to have been planned and executed like any other strategic organization change project, it should track and communicate the tangible value it is delivering and it needs to leverage supporting technology to reduce administrative effort and to increase the likelihood of compliance. Eclipse Project Portfolio Management can help support a PMO in the delivery of its services through a centralized project and resource data repository as well as through a template-based approach to project planning and management.
PMO 101
At the most basic level, a PMO is an organization entity that is responsible for providing oversight over a portfolio of projects. There are a number of variants on the PMO theme: • Portfolio Management Office: Usually common in organizations that have adopted Project Portfolio Management (PPM) practices. A significant part of this type of PMO’s time is spent in facilitating executive management decision making. • Program Management Office: This term is used in organizations that run very large collections of interrelated projects. There may be more than one such PMO within an organization, and each PMO may be a temporary entity that is disbanded once the program has been completed. • Project Management Office: This term is common in organizations who are mainly interested in improving project success rates – PPM practices are a future consideration. The focus of these types of PMOs is on coaching and mentoring project managers and on providing project delivery assurance audits.
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Seven Secrets of Successful PMOs
Organizations establish PMOs for a variety of reasons as illustrated in the following table: Communicated Reason
To improve project success rates To streamline & focus communications To improve the consistency of project planning & execution To support a career path for project management staff To support project portfolio management or enterprise resource planning improvement initiatives
Un-stated Reason
To centralize accountability (with little authority) To reduce administrative effort across the organization To create a “watchdog” to keep an eye on distributed project teams To provide a place to “dump” project management staff To make it easy to shutdown these initiatives if they don’t appear to be succeeding by reducing the organization impacts of the termination
PMOs can provide a variety of useful services, these being the most common: • Providing different levels of management with centralized visibility into project status and decision-support data for resource supply and demand • Providing resources to either manage projects directly, or to provide consultative advice to project teams • Development, ongoing maintenance, and training on PPM or project management methodologies • Providing delivery assurance services for active projects – these could be built-into the organization’s PM methodology as defined steps or could be performed as spot audits
Common Causes for PMO Failure
Based on the previous list, one would assume that PMOs must generally be very successful. Unfortunately, a survey conducted in 2005 of 750 organizations worldwide revealed that 75% of these organizations had shut their PMOs down within three years of their inception because they could not demonstrate any added value. The following list covers the most common factors that can lead to PMO failures: • • Lack or loss of executive sponsorship – Establishing a PMO is a strategic organization change project, and like any such project, requires a strong sponsor that can champion the cause of the PMO. Change management or organization culture fit issues – PMOs are often initiated to address cultural issues around accountability and project success rates. If the PMO rolls out project management processes that are too much of a shift from existing practices, or does not employ proper change management practices while making these changes, it can encounter strong resistance. This
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resistance will reduce the perceived benefits of the PMO and if combined with other factors could make it easy to shut the PMO down. PMO setup issues – if the PMO was setup without a clear mandate or scope, or if insufficient stakeholder involvement occurred, expectation gaps or resistance could reduced its perceived value. Additionally, if an organization entity that is supposed to improve project delivery consistency was launched in an ad hoc fashion, the overall credibility of the initiative will be impacted. As PMOs often have to satisfy the needs of multiple stakeholders with different objectives, another common issue is trying to do too much, too soon. This can compound the organization change management issue from the previous point. Lack of a tangible value proposition – given the costs involved with setting up and running a PMO, if there be no metrics to demonstrate that the value generated outweighed these costs, there is little justification to support the PMO if any of the previously stated issues are also present. Even if the PMO does demonstrate some benefits, if the administrative effort required to achieve these is greater than the perceived value of the benefits, the PMO is likely to fail.
Avoiding PMO Failure
The following seven factors address the previously stated issues and hence, should reduce the probability of PMO failure. 1. Active involvement of a sponsor that is at the right level of the organization for the PMO. If the PMO has enterprise-wide project responsibility, it should report to the COO or CEO. 2. The PMO and its services need to fit the culture and structure of the organization. If the culture of the organization is relaxed, any changes that the PMO rolls out should take this into account. The role of the PMO itself in such an organization is likely to be focused on coaching, mentoring and reporting as opposed to auditing. 3. The PMO should be initiated as the approved outcome of a business case that quantifies expected benefits and considers alternatives to establishing the PMO. As part of the launch, the PMO needs to define key metrics that will measure its success and should capture a baseline for these as soon as possible so that improvement rates can be demonstrated in a reasonable timeframe. Examples of such metrics could be: number of projects that were delayed by more than 25% of their original duration, number of projects that went over budget by more than 10%, or number of projects that were cancelled due to poor project management. 4. The scope and authority of the PMO needs to be formally defined, approved and communicated to the organization. The scope needs to define the services provided by the PMO as well as the projects and resources that will be under the PMOs influence. The authority
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Seven Secrets of Successful PMOs
of the PMO needs to be defined in terms of specific scenarios and roles. For example, in some organizations, the PMO has the authority to place a project on hold based on a defined set of criteria. It is critical to communicate the scope and authority to the organization to reduce expectation gaps. 5. Changes made by the PMO need to follow proper organization change management practices. To reduce resistance to the changes, the PMO project team (during its inception) or the PMO staff (once it is operational) should involve user groups that will be impacted by the changes in the development of the changes, and may want to work with Human Resources to develop appropriate communication messages and training collateral supporting the need for these changes. It is also crucial that the PMO’s sponsor regularly communicate the need for these changes to the organization. 6. The PMO needs to be implemented in a similar fashion to any other strategic project. A project manager should be assigned, a charter should be developed and approved, a project plan should be created and approved (including schedule, cost, scope, risk and resource details), all key stakeholders need to be involved and managed, and proper tracking procedures should be followed to monitor the health of the project. 7. The PMO needs to utilize technology effectively to reduce the administrative effort of gathering and reporting on project data and to increase the likelihood of compliance with the changes it rolls out. It is possible to manage a handful of projects and resources on paper or using MS Office templates, the value that a true PPM solution can provide will rapidly outweigh its costs once the portfolio grows. Another approach that is taken by some organizations to avoid the issues of establishing a PMO while still benefiting from some of its services is to create a virtual PMO. A virtual PMO provides most of the services that a normal PMO can, but does it without the creation of a formal organization entity. There is usually a single senior manager that has indirect reporting responsibility over a departmentally-distributed team of resources who deliver the PMO’s services. Given the distributed (both organizational and geographic) nature of the PMO’s “staff”, the need for a supporting PPM technology is even greater than for a normal PMO.
How Eclipse Supports a PMO
Eclipse Project Portfolio Management provides a number of functions to aid PMOs in the delivery of their services. Some of these are illustrated in the following screenshots.
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Seven Secrets of Successful PMOs
Eclipse can provide visibility into key performance metrics across a subset of the project portfolio:
Eclipse can also provide a graphical view of overall schedule and key milestone status across a number of projects:
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Seven Secrets of Successful PMOs
Eclipse can help with resource allocation and capacity planning decision making by providing visibility into “who is working on what” and helping to identify which resources are over allocated:
Finally, Eclipse’s template capabilities reduce the effort required for project teams to plan and manage projects, while increasing planning consistency:
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