How to establish a PMO in a mid sized organization?

Abstract

The paper explores how a Project Management Office (PMO) was established in a mid-sized service provider organization. It opens with a review of factors that led to the PMO's birth, the PMO Goals and objectives. Then it outlines the steps taken to roll the process after assessing the needs of the organization. Triumphs and challenges encountered on the way are also discussed.

Introduction

Research shows that companies have difficulty completing projects on time and within cost. Taimour (2005) refers to the Standish Group's study of 30,000 IT application projects in US companies (The Standish Group International, 2001). The data on project outcomes are shown on Exhibit: 1

Project outcomes history (1994-2000)

Exhibit 1: Project outcomes history (1994-2000)

The category definitions for the Standish Group research (The Standish Group International, 1999) are as follows:

  • Successful projects: These were completed on time and on budget, with all the features and functions that were initially specified.
  • Failed projects: These were cancelled before completion or never implemented.
  • Challenged project: These were completed and operational, but over-budget, over the time estimate, and with fewer features.

Companies that need to improve project outcomes, provide critical project information for executives and institute a standard project management methodology are turning to the Project Management Office (PMO) as the change agent. Though mostly used for IT projects the PMO can help with projects in all functional areas by establishing the organizational frameworks for better decision-making and improving project execution.

The PMO was originally conceived as a means of capturing and promulgating good project management practices throughout the organization. But nowadays the role of the PMO has been expanded to include organizational change management, project portfolio analysis, communication, and decision support. The PMO has become not only the center of excellence for project execution, but management's lead for viewing project performance and the platform for initiating project portfolio management in the future (Walton, 2007).

Organization background

Life before having a PMO was chaotic. Projects started in departments for the strangest reasons. The number of projects being worked on simultaneously was beyond capacity, interdependencies often overlooked, and any attempt to get discipline around project execution never succeeded. Project costs sky rocketed and resources continued to work harder and harder. The situation was very similar to what the CFO of a multi-billion-dollar company reflected sadly in the International Institute for Learning White Paper: “How to Get Value Out of a PMO” by Gerald I. Kendall………..“We could have taken every dollar of capital investment and earned more by putting that money in the bank at the lowest rate of interest,”…..“Our managers keep pushing for new projects and new investment, but somehow we don't get the returns.” (Kendall, 2002, p. 1)

PMO birth

Upper management for many years knew the value of the Project Management, but the strong need to establish one was not felt until the last few years. In addition, the market place was changing quickly and becoming more competitive. The need to have a formal project management process to deliver projects within budget and time with an agreed upon level of quality, became imminent. An attempt was made to introduce project management principles in the organization 3 years ago. Training classes were conducted, a web site developed – and an informal process was introduced to the organization. This attempt did not go very far as each department continued to have its own way of completing projects with time and cost overruns. The need to have dedicated resources to own the project management framework and functions of the organization became compelling last year and a PMO was established within 3 months in August 2006.

Needs Analysis

With the initial set up completed, a current state assessment was conducted by the PMO using the following techniques in order to add significant value to the organization quickly:

  • Interviews with the Executive Team
  • 1 on 1 sessions with senior management team
  • Participation in team meetings in the various departments
  • Review of existing practices and documentation

The assessment report revealed that:

  • Timelines were not meet for many projects
  • Accountability was not clear
  • Projects were started 2-3 years after approval
  • A standard project management methodology was absent
  • No enterprise tracking of project progress was done
  • Lack of a formal project approval process
  • Unwillingness to spend time in the planning phase

Vision, Goals & Objectives of the PMO

The next step in the process was to develop a future vision with an improvement plan recommending short-term, mid-term and long-term solutions. The goal was to quickly introduce useful project management with techniques being practical and efficient. The new process had to be accepted quickly and used showing fast results, and making sense to the team members. (Voegtli, 2002) In addition the PMO would help identify and complete projects that brought maximum return on investment within cost and schedule adhering to the strategic goals of the organization and the project management methodology that was being rolled out.

A phased approach (short-term, mid-term and long-term) that encompassed the following was used during rollout:

(a) Framework development

(b) Tools selection

(c) Plan execution

Short-term goals: These were laid out to take care of imminent needs and demonstrate the value of having a PMO. This was successfully implemented in the first 3 months of start-up using existing infrastructure. They were:

  • PMO awareness: The entire organization was made aware of the newly established department and its vision
  • Process Acceptance: The new concept was introduced in phases and acceptance sought at every step
  • PMO Staffing: A team was built using people within the organization who showed an inclination to be a part of the new department
  • Project initiation process establishment: A workflow was developed by which all projects had to be funneled through the PMO and could not be worked upon without approval
  • Projects Dashboard Creation: This was a consolidated view of all the projects in the organization. The dashboard was divided into several sub-sections showing projects at different stages of the life cycle.

Mid-term Goals: After the first 3 months of establishing the PMO when the short term goals were accomplished successfully the mid-term ones were put in place to complete projects with more consistency and efficiency: These included:

  • Strategic Planning: This involved integrating the Projects Dashboard with the company's mission, values, goals and strategies.
  • Organizational Change Management: A concerted effort was made to understand the corporate culture and minimize apprehension among employees.
  • Process Governance: Compliance to the process was mandatory. Deviations and approval of exceptions reviewed and approved as needed.
  • Standard project management methodology: A standard project management methodology was developed which outlined the course a project took from initiation to closure and rolled out across the organization. Existing templates were modified wherever possible, new flowcharts and documentation developed. On going projects were reviewed and fit into the process as appropriate. All new projects that were initiated followed the methodology.
  • PM mentoring: The PMO mentored the Executive team, the Project Manager(s) and teams through the new process.

Long Term goals: These will be developed as the organization embraces the change and matures in project management. They will comprise of:

  • Introducing Program Management concepts
  • Establishing a Project Management Competence training program
  • Defining Project Management as a career path with the organization
  • Addressing Change Management problems as they arise
  • Growing the PMO team

Triumphs & Challenges

In its short time of existence the PMO could claim many triumphs. All new projects were initiated through the process. Standard documents were used which made tracking easy. The Projects Dashboard provided the visibility needed to cancel, defer or scale back less strategic projects or projects that were approved but no longer needed. The key to the early victory (What Worked) was:

  • A deliberate attempt to keep the process simple
  • Explain the benefits of following the process, to Project Managers
  • Mentor teams as the project moved through different life cycle stages
  • Seek out and elicit feedback from all stakeholders
  • Prompt follow up by the PMO
  • A flexible “Give & Take” approach depending on the need of the project

While the successes called for celebration the challenges were aplenty. In “Why You Need a Project Management Office” by Megan Santosus, 2003: Project Management Officer John Kocon said “You have to really understand the culture, look at industry standards and best practices, and tailor them to the organization,”……“There's some give and take with project stakeholders who may resist doing things in a prescribed way.” (Santosus, 2003, p 4 ¶1)This is no easy task. The fear of change grips all layers of the organization and there is a learning curve while getting used to the new process.

While the successes called for celebration the challenges were aplenty. In “Why You Need a Project Management Office” by Megan Santosus, 2003: Project Management Officer John Kocon said “You have to really understand the culture, look at industry standards and best practices, and tailor them to the organization,”……“There's some give and take with project stakeholders who may resist doing things in a prescribed way.” (Santosus, 2003, p 4 ¶1)This is no easy task. The fear of change grips all layers of the organization and there is a learning curve while getting used to the new process.

Conclusion

Developing a PMO for an organization is no small a task. The emphasis was to introduce these changes through out the organization in a painless manner and as quickly as possible. Support from Executive Management and successful completion of “pilot” projects helped ease the heartache. Concurrence from Project Managers and the teams was and will be eagerly sought after. The new structured way of completing projects was used across the board, exceptions made as appropriate. Continuous customization and improvement, based on need, will be carried out to ensure the process adds value to the organization, when adhered to.

“Building a successful PMO has structural components similar to any other construction project: a strong foundation and floor, solid structural supports, and a strong exterior are essential components………..” (Walton, 2007, p 4 ¶1)

Crawford, K & Bridges, D. (2000) Expert Series: How to Start up and Roll out a Project Office, Retrieved February 22, 2007 from http://www.pmsolutions.com/articles/pdfs/project_office/startup.pdf

Kendall, G. I. (2002)How to Get Value Out of a PMO: International Institute for Learning Retrieved on March 28, 2007 http://www.projectconnections.com/pc/knowhow/member/papers_files/HowtoGetValuefromaPMO.pdf

Neimat, A. (2006, October 24) Why IT Projects Fail. Retrieved on February 18, 2007 http://www.projectperfect.com.au/downloads/Info/info_it_projects_fail.pdf

Nikols, F (2006) Change management 101: A Primer: Retrieved on March 5, 2007 http://home.att.net/~nickols/change.htm.

Oakton. Retrieved on March 5, 2007 http://www.oakton.com.au/services/promgt/sl_pmo.htm

Robert Francis Group (2002, January 1) Business Advisors to IT Executives. Retrieved on February 18, 2007 http://www.rfgonline.com/subsforum/archive/daily/011402/011802nt.PDF

Roberts, M. H. (2007) Project Management humor. Retrieved on February 28, 2007 http://www.project-training-uk.freeserve.co.uk

Santosus, M. (2003) Why You Need a Project Management Office Retrieved on March 28, 2007 http://www.cio.com/archive/070103/office.html

Walton, J (2007) Creating a Project Management Office. Retrieved on March 19, 2007 http://www.serena.com/docs/Repository/products/Mariner/creating-a-pmo.pdf

From 0 - 60 in Project Management - Fast, Practical PM for Teams that Just Need to Get it Done by Cinda Voegtli. 2002 Retrieved February 22, 2007 http://www.projectconnections.com/knowhow/papers_list/PW_SC_Dec02_0to60_PM.ppt

© 2007, Charanya Girish
Originally published as a part of 2007 PMI Global Congress Proceedings – Atlanta, Georgia

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