PMOs and project managers--friends or foes?

Abstract

In May 2007, PM Solutions’ Center for Business Practices (CBP) conducted survey research that, in part, analyzed how organizations are integrating project managers into the PMO. With 2006 CBP research indicating 46% of Project Offices are overseeing or managing project managers (Center for Business Practices, 2006, p. 5), we expected this new study to show the role of the project manager is shifting dramatically. And, indeed, in 2007, 60% of the responding organizations now have PMOs that manage a staff of project managers. The study also showed an uptick in the numbers of supporting roles that report within the PMO, including planners, controllers, and business relationship managers. In addition, it revealed some correspondences between organizational performance and the structuring of project management roles (Center for Business Practices, 2007, p. 7)

Introduction

More and more project managers are reporting to organizational Project Offices. Our research indicates that this has become an increasing trend over the past five years. This trend is part of the natural evolution of the project management discipline, as the power of project management becomes more and more widely disseminated throughout the organization, and the expertise of professional project managers begins to make them valued organizational leaders. Let’s explore how this trend developed, and what our recent research tells us about where project managers and the PMO are headed next.

Project Management: A History of Change

The concept of the project as a management specialty with its own techniques, tools, and vocabulary had its beginnings in the 20th-century military. These military origins help explain why the initial focus in projects was on planning and controlling. In fact, control was the raison d’etre for project management: control of schedules, costs, and scope on endeavors that otherwise might careen over budget, over time, and/or fail to meet specifications.

When project management’s early tools (Gantt charts, network diagrams, PERT) began to be used in private industry, the new project managers found themselves in another environment based on the command-and-control model. Putting together an interdisciplinary team was a process fraught with bureaucratic roadblocks. The earliest uses of project management—in capital construction, civil engineering, and R&D—imposed the project on an existing organizational structure that was very rigid. Without a departmental home or a functional silo of its own, a project was often the organizational stepchild—even though it may have been, in terms of dollars or prestige, the most important thing going on. Thus was born the concept of the “matrix organization”—a stopgap way of defining how projects were supposed to get done within an organizational structure unsuitable to project work. It was a “patch,” to use a software development term—not a new version of the organization.

In the matrix organization, if a project is lucky to have a “project office,” it may be nothing more than a “war room” with some Gantt charts on the walls and perhaps a scheduler or two. This simple single-project control office is what we call a Type One Project Office and was once the most common form.

The next evolutionary step was the Type 2, or “divisional-level,” Project Office. This organization’s primary challenge is to integrate multiple projects of varying sizes within a division. While the Type 2 project office most often an IT office, organizing around projects is not “an IT thing.” Project Offices have arisen first in IT, one of our primary drivers of economic prosperity, because of the competitive pressure to make IT projects work.

In 2001, PM Solutions began to advocate for enterprise-level Project Offices—the Type 3 Strategic Project Office (SPO), because, like the matrix organization, lower-level project offices are simply an important waystation in organizational project management maturity. Each year we have seen the number of organizations with Type 3 SPOs grow, until today, the majority of organizations include SPOs at the enterprise level, as shown in Exhibit 1. (Center for Business Practices, 2007, p. 4).

Exhibit 1. Distribution of types of project office.

This is good news for project management, because an enterprise-level SPO allows the organization to manage its entire collection of projects as one or more interrelated portfolios. Executive management can get the big picture of all project activity across the enterprise from a central source—the Project Office; organizational project priority can be judged according to a standard set of criteria, and projects can at last fulfill their promise as agents of enterprise strategy. A Project Office can play several key roles, all of which are most effectively carried out as Type 3, and all of which include important implications for “people management,” not only within the Project Office, but across the enterprise:

In a Type 3 SPO, the following persistent management problems that plague projects can be ameliorated:

Many of the best practices for preventing failures are also directly related to SPOs:

But the greatest area of promise for the SPO lies in its effect on the management of project personnel. Competent and experienced project managers are grown in an environment that trains, mentors, and rewards them based on performance in projects. Research studies allow us to paint a picture of the organization that has demonstrated competence in managing projects, and managing by projects:

• Effective training programs are in place.
• Clear project management systems and processes have been established.
• There is improved coordination of inter-group activities.
• There is an enhanced goal focus on the part of employees.
• Project expertise is centralized (Crawford, 2001, p. 16).

A study published in the Project Management Journal focused on the ways that project-centered companies build the organizational capability (and of course, concurrently, individual capability) to perform projects and manage by projects. In particular, they found that training and development practices differed in that project managers are graduated through a sequence of projects of increasing complexity and difficulty. Since much of this apprenticeship takes place “just in time,” it happens not under the purview of HR-based trainers, but within the community of project managers. In addition, project managers have significant input, compared to functional managers, in staff appraisal (Sauer, Liu, and Johnston, 2001, pp. 31-37).

The italics in the above paragraphs show us that, across the board, research on the structure of project management in organizations tells us that giving project managers an organizational home within the SPO is the mark of a mature and successful organization. And yet …

PMs and the PMO: The Pros and Cons

Any shift in organizational structure takes some getting used to, and project managers are no exception to this rule. When a PMO is implemented, whether at the divisional or enterprise level, there is frequently some grousing about “the methodology police,” or the burden of additional paperwork, or the way having to adhere to standards interferes with creativity. Such conflicts arise from the varying perspectives of project managers, who focus on delivering results on today’s project, and the PMO director, who wants to optimize the system by ensuring that all projects, present and future, are delivered according to a common project management process. When a battle of “project versus process” ensues, the PMO can be perceived as bureaucratic by project managers, while PMO leaders may see the project managers as non-compliant.

The Project Manager’s Perspective

One frequently-stated concern of technically-oriented project leads is that they will lose their technical “edge” when they become project managers, due to the increased focus on so-called “soft” skills. The PMO’s focus on optimizing the portfolio as a system, rather than on the specific technical aspects of a single project, or type of project, is often suspect to the technologist. As a person becomes a project manager, and moves up the PMO career path, rather than remaining technologists themselves, they rely on the technologists more for technology decisions. Moving up to program manager, specific technology skills must be converted to “technology oversight” skills. Most of a program manager’s focus should be on managing, directing, and facilitating. This evolution is good for those individuals who desire to rise in the corporate hierarchy; what’s also positive, for the technically-oriented person is that, within a mature PMO, there is room for numerous positions that focus on the science of project management. A fully staffed, mature PMO has room in it for professional growth for both the technologist and project managers with a desire to become organizational leaders.

Another issue that is sometimes raised by project managers is that communication between the project manager and the team is adversely affected by the need to funnel all information, reports, and communications through the Project Office “police.” While it’s true that project managers share authority with the PMO, in reality, this actually makes for a stronger role for the project manager. Instead of acting in isolation, the project manager operates within the context of an organizational culture that supports consistency, methodology, time-keeping, reporting and controls. Thus, having a PMO should actually increase communication frequency, reliability, and standardization.

When functional managers continue to own the resources needed to form project teams, the old issue of conflicting authority remains, even with an enterprise PMO. However, since a PMO provides project managers with an authoritative mechanism for requesting resources, forecasting resource requirements, and managing those resources, it should make their jobs easier. While the technical manager still “owns” the resources, the project manager is the matrixed gatekeeper while the resources are on his or her project. Again, instead of acting in isolation to negotiate with functional managers, project managers have the organizational clout of the PMO behind them. And, as the PMO matures, CBP research shows that more and more project staff reside within the PMO, reporting directly to PMO managers, thus simplifying the resource battle. The PMO’s role in establishing project portfolio management also contributes to a rational allocation of resources for projects, and takes the onus of creating arguments for resource allocation off the project manager.

Tips for the PMO to Establish “Harmony”

A recent article posted on Projects@Work offered the following best practices for improving the “harmony” between the PMO and project managers and team members:

1. Reuse project status reports. Processes become overbearing when the same information is requested multiple times and needs to be populated in different formats. Organizations can develop scorecard templates that allow data to be extracted and integrated into a PMO-level summary report.

2. Actively participate in project delivery. A PMO doesn’t need to confine itself to staff roles. Financials, portfolio reviews, resource management, and milestone tracking are administrative; however, the PMO adds more value to the project when it understands the projects within the portfolio. Understanding a project’s key issues and risks adds value.

3. Proactively respond to process requests. Project managers are usually willing to follow the process as long as the process is responsive and timely. If the PMO takes two to three weeks for a new project request to be processed, the process becomes a roadblock, rather than a catalyst.

4. Champion a community of practice. While the PMO must still implement process with a top-down approach, by incorporating standards and practices into the community of practice (a group of project managers who share lessons learned and best practices), change management and process adoption become easier.

5. Staff the PMO with experience. Effective PMOs are staffed with resources who are experts in both process and delivery. Rotating experienced project managers into PMO roles helps transfer project management experience across the organization (Makar, 2007).

To this last practice, we would add that staffing the PMO with a variety of specialized roles that reflect the complexity of the project environment also makes for productivity, by splitting the “kitchen sink” role of the project manager into administrative, leadership, technical, and other roles.

New Roles in the PMO

While most of the focus in the project management literature is on the project manager role, in the new PMO, this role is splitting into many related project management positions, offering far more opportunities for professional growth as well as improved efficiency. In a fully-staffed enterprise PMO, there is room to grow for all the various personalities and skills that are attracted to project management as a career. Some of the roles we see include:

Project portfolio manager (Other titles that may be descriptive of this role: director of strategic project management, director of enterprise project management, chief project officer). The project portfolio manager’s responsibility is ideally enterprise-wide, but may be limited to a particular division, such as IT or R&D. This position manages the corporate or divisional project portfolio by managing the process for identifying, selecting, and prioritizing projects that support corporate business strategy. The portfolio manager (or project office director) facilitates decisions with the leadership team by providing data, inputs, analysis and facilitative assistance so the executives can prioritize. Portfolio managers, along with a team of project stakeholders from all levels of the organization, are responsible for developing formal criteria for identifying, evaluating, prioritizing, selecting, and approving the set of projects that form the corporate (or division) project portfolio. With senior executives from the finance function, the portfolio manager works to establish a system for quantifying project benefits so that project approval decisions can be made objectively. Portfolio managers need higher-level business skills such as strategic business knowledge; a long-term focus; and the ability to make recommendations regarding complex strategic decisions. According to the State of the PMO 2007, 65.4% of PMOs now perform portfolio selection/prioritization process development.

Manager of project support (Other titles that may be descriptive of this role: project controls manager, Project support manager). A second tier of management within a large corporate SPO might include this position, which provides line management oversight. This manager reports to the enterprise SPO director and manages the day-to-day project controls operations in the implementation of SPO objectives. He or she:

• Ensures adherence to enterprise policies and procedures and SPO methodologies, guidelines, and practices
• Oversees maintenance of enterprise program/project controls tools, methodologies, processes, and procedures
• Manages integration of enterprise project controls tools with corporate financial, procurement, quality, and reporting systems
• Establishes communication plans and rollout strategies for implementation and continuous improvement of processes, based on metrics and feedback from SPO members.
• Maintains the enterprise program/project portfolio information database
• Coordinates development of the annual enterprise program/project budget
• Integrates divisional project controls reporting for enterprise reporting and analysis
• Ensures consistent application of an effective project management methodology and tools across the enterprise.
• Performs corporate dashboard reporting with regard to resources: resource leveling, utilization forecasts, and integrated program/project analysis.

Project management mentors. A project management mentor is a project management practitioner with extensive project and program experience who is skilled at teaching and coaching project participants. They specialize in helping to put in place the processes, skills and support structure in place to effectively establish and manage projects. Typically, mentors provide consulting services to program managers, project managers, program/project teams and corporate managers. Mentors play an important role in standardizing the practice of the agreed-upon methodology, in building a project management culture, and in spreading the project management “gospel” throughout the organization by troubleshooting projects in functional areas enterprise-wide. This role is for experienced and highly skilled senior project or program managers with superior or advanced interpersonal skills. project management mentors:

• Serve as a subject matter expert for project management processes and tools
• Work closely with or supervise methodologists in the development of project management methodology and tools.
• Offer consulting support to new and ongoing initiatives
• Serve as a senior advisor on project management issues enterprise-wide.

Project controller (Other titles that may be descriptive of this role: project controls manager, controls manager, project controls specialist). Project controllers have the primary responsibility of tracking enterprise or divisional program and project performance against budgets, plans and schedules. Their primary area of responsibility is managing the integration of multiple programs and/or projects, and providing data, analysis, and reporting to project managers and various levels of management. Project controllers may have responsibility to integrate data from hundreds of programs and projects to provide many types of information and reporting, including trend analysis, earned value analysis, divisional or enterprise resource forecasts, resource modeling, resource leveling, cost profiling, project prioritization, divisional or enterprise budgeting, and periodic status reports for departments, divisions, and enterprise executives. They are also responsible for control of costs and schedule and associated documents, especially those concerned with changes. Working with other departments, implementation contractors and consultants, they support multiple project teams through the implementation of project management controls, assisting project managers in conducting variance analysis, performing assessments, project forecasting and projections, managing changes, and producing a variety of management reports. Project controllers in large and complex organizations (or project planner/controllers in smaller organizations) may have an assistant/administrative position, the issue resolution and change control coordinator, with a subset of the responsibilities related to administration, data entry, and communication reporting to that person.

Project planner. Planners assist project managers and systems analysts by developing, analyzing, and managing project plans, schedules, and resource forecasts. In organizations that run many projects concurrently, Planners focus on the project planning phases while working closely with schedulers, controllers and analysts to create schedules and keep the plan current and meaningful. In smaller organizations or project offices, the Planner role may include elements of the roles described as project analyst, controller, estimator, and scheduler; for this reason, the planner role is often subject to overload. In this situation, individual and organizational needs should be carefully weighed (engaging the services of the organizational development analyst) to create and fill Planner roles that both reflect the requirements of projects, and the varying attributes (such as business acumen, technical skill, facility with analysis and figures, ability to negotiate with vendors and so on) that indicate whether a person would perform best as planner/scheduler; or planner/analyst, planner/estimator, or planner/business analyst. Planners with strong leadership, facilitative and interpersonal skills are good candidates for project manager. This is a role that could have multiple career paths depending on the personal characteristics and education of the individual. Project planners often lead small project initiatives (generally less than a month in duration with 1 – 2 people) and are skilled in reviewing project deliverables and technical documentation and are capable of leading facilitation sessions for group reviews and project charter definitions. A lead planner must have a proven track record in effectively applying project management. They may have led small-medium project initiatives (generally one-three months in duration with 3 – 6 people).

Project scheduler. The roles of planner and scheduler are frequently combined, but in large organizations running many concurrent projects, they may be separated out. The scheduler is responsible for the development and maintenance of schedules for multiple, large or complex projects and programs. Schedulers:

• Create, manage, maintain and update schedules in a complex project environment.
• Develop policy and procedures to improve the adequacy and efficiency of the scheduling processes.
• Perform critical path analysis and develop time-lines for completion of tasks, measuring the deliverable work packages of the project against the project plan. Develop work breakdown structures (WBS).
• May manage junior schedulers in multiple locations and oversee multiple projects in a distributed environment simultaneously.
• Keep project managers informed of impacts to project schedule; work with analysts to ensure that schedule data is accurately interpreted; work with Planners to ensure that schedule changes and their impacts are accurately reflected in the master plan.

Going Forward: Why the PMO is Your Friend

While fear of change may cause many project managers and team members to look askance at the implementation of enterprise PMOs, the results of the recent CBP research may help to allay those fears. Organizations identified by the study as high performers (as measured by a number of project and organizational metrics) have larger PMOs (30% more staff) and rely on more specialized roles (i.e., they have more staff performing those roles), including mentors (a 136% increase over low-performing organizations), team leads (467% increase), planners (147% increase), controllers (116% increase) and relationship managers (698% increase). And, the more mature the PMO, the more planners, schedulers, and controllers they employ: at Level 4 maturity (utilizing PM Solutions’ Project Management Maturity Model), PMOs have 70% more of these positions than Level 3 maturity PMOs (Crawford, 2006, p. 25; Center for Business Practices, 2007, p. 5), as shown in Exhibit 2.

Exhibit 2. High performing companies have more roles within the PMO,
with more personnel performing those roles. From the State of the PMO 2007, Center for Business Practices.

We can infer from this that the ability to split the project manager role along the “art/science” divide, giving dedicated planners, schedulers, and controllers command of the tracking, monitoring and controlling processes of the projects, while project managers are allowed to focus on the facilitative, relationship, team-management and business aspects of the project, yields an organization with improved project and business performance.

This inference is underscored by the fact that the most mature PMOs in the study showed the greatest improvements in performance metrics. PMOs at Level 3 maturity showed a 16% budget/schedule performance improvement compared to those with no PMO … and an 8% improvement over PMOs assessed at Level 2 maturity.

On the other hand, organizations identified as “low performing” in the study are impacted significantly more by challenges than high performing organizations, including conflicting authority (36% more), role splitting with competing authority (31% more), roles not clearly delineated (42% more), lack of a project management career path (24% more), inadequate opportunities for professional development (25% more), and inadequate project management skills (31%). Sounds like a stressful place to work!

Clearly, a PMO that acts as an organizational home not only to project management, but to the project managers and team members themselves, can be friend, rather than foe. Based on way the enterprise PMO is taking root in organizations, as demonstrated not only by the number of PMOs on the enterprise level, but the rising maturity levels of those PMOs, we predict that PMOs will continue to develop and refine the project management role. As executives come to depend more and more on the PMO to execute strategy, there will be an enhanced focus on leadership. And with opportunities for leadership comes increasing accountability, not only for project performance, but for business performance. This will necessitate a shift in our thinking, from project metrics to business metrics.

Forward-looking project managers, rather than resisting the evolution of the PMO in their organizations, will join forces with this new and evolving organizational entity. The enterprise PMO offers project managers—and project management—a way to show value to the highest levels in the organization.