Establishing the PMO value proposition
This paper considers the process of establishing and growing the value proposition for the Program Management Office (PMO) in organizations. Increasingly, business managers are demanding demonstrated value from the PMO and a success path that includes growing this value over time. When momentum or progress towards this goal fails, business leaders often begin to question the value of the PMO within the organization. The paper begins with a discussion of the current state of the PMO, challenges faced, and opportunities to enhance PMO value. The paper then presents the concept of the PMO Value Triangle (PMOVT) as a means of describing sources of PMO value. The paper concludes with a summary of several potential means of establishing an organizational value model for a PMO.
The State of the PMO Today
It is unfortunate that the PMO concept continues to face both wild praise and sharp criticism among business organizations. For some, the PMO is the savior—the great governance body that brings together project management practices and standards and provides the organization with a roadmap for process success in the project management arena. For others, the PMO is somewhat of an enigma—an entity that consumes organizational resources but which does not necessarily have a clear link to any organizational priority or objective. Or, worse, an “overhead” entity that is viewed as nothing more than a marginal contributor to organizational value. Many other possible perceptions of the PMO and its operations are common, including:
- The perception of “slow ramp-up”—the perception that it takes too long for the PMO to start to show value
- Inability to drive significant, meaningful change—the perception that the PMO is only able to achieve marginal, low-value improvements within the organization
- Inability to sustain significant, meaningful change—the perception that the PMO is limited in its ability to drive long-term culture shifts in order to “evolve” project management practices within the organization
- Issues of direction—issues relating to changing priorities that limit PMO stability
- Issues of identity—issues relating to the fundamental lack of a clear purpose for the PMO
These perceptions often serve as roadblocks to effectively positioning the PMO for long-term success and meaningful organizational value contribution. The challenge of establishing the value of the PMO is especially prevalent in organizations seeking to establish a new PMO. There are several common categories of obstacles that may stand in the way of organizations seeking to establish PMOs. Initially, a lack of understanding of the role of the PMO in the organization by management and, perhaps more importantly, a lack of understanding of the value that the PMO can provide is common. In many cases, the PMO concept is very new to organizations, and management may not understand the specific roles and benefits of the PMO. Defining a clear mission for the PMO and presenting a detailed description of the intended roles of the PMO in the organization and rationalization of the intended benefits of the PMO may help to alleviate some of these concerns.
Secondly, a perception among the project management community that the PMO will serve as an obstacle to the timely accomplishment of project management goals may initially exist. The PMO may create new processes and procedures during its lifetime that can in some cases result in either modifying the way project managers and project team members work and/or creating additional work for project managers and project team members. However, the benefits of standardization, consolidated reporting, increased organizational project knowledge, and other areas of process improvement typically outweigh the incremental costs of implementing and using revised processes. Early and consistent communication and involvement of project managers within the organization in the PMO establishment process is essential for overcoming concern regarding the role of the PMO in establishing standards as a way of bringing simplification and standardization to the organization. This early involvement also helps to ensure that the PMO, when operational, meets the needs of its primary constituents.
And lastly, concern from management regarding initial funding and ongoing operational costs to the organization is common. The initial investment in the PMO must be viewed as such—as an investment. Its initial success is largely dependent upon having sufficient monetary and human resources available to allow the PMO to commence operations at a level sufficient to meet its intended goals and to do so within a reasonable timeframe. This does not necessarily mean that large amounts of time and effort are needed in all cases. Many PMOs begin as small organizations with limited scopes and expand over time. However, the required investment and intended payback will most certainly be a topic that must be addressed with management. Having a solid plan, well defined resource needs, and a business case for success will go a long way towards ensuring that management understands the benefits of the PMO and realizes the required investment and intended return.
It is clear that the PMO has value. By definition, the PMO exists as a coordination body and as a supporter of project management processes. To quote A Guide to the Project Management Body of Knowledge, the project management office exists as, “an organizational body or entity assigned various responsibilities related to the centralized and coordinated management of those projects under its domain.” (PMI, 2004, p. 369) The difficulty in establishing and sustaining the PMO in its centralization and coordination roles lies in establishing a clear value proposition for the PMO, communicating that value proposition, and living up to the promises made within the value proposition. The PMOs that are best positioned for success are those that are clearly linked to the organization and its objectives and that can establish and grow value over time.
Sources of PMO Value
There are many opportunities for the PMO to provide value to an organization. However, fundamentally, the value of the PMO may be summarized in the form of the PMO Value Triangle (PMOVT)™. The PMOVT defines the core areas of value that may be provided by the PMO in any organization. It centers around the basic idea of the PMO as a contributor to standards, consulting, and knowledge within the project and program management domains of any organization within which the PMO resides.
These core areas of value may be defined as follows:
- Standards—establishing, maintaining, and maturing a set of policies and procedures to govern project processes within the organization
- Knowledge—executing activities associated with knowledge acquisition and dissemination for the benefit of project practitioners (including providing training as well as project knowledgebases and other relevant knowledge artifacts)
- Consulting—assisting with or directly managing the execution of projects as required in order to provide “expert guidance” on project management practices and project delivery.
Within each of the domains in the PMOVT, a particular organization may undertake different levels of focus. For some organizations, standardization will be of the highest priority. Thus, the PMO may focus extensively on standardizing processes with little or no focus on knowledge and consulting activities. Other organizations may take a more balanced view, focusing on activities in each of the three primary PMOVT domains. No two organizations will be the same and the PMOVT principle is meant to accommodate this, recognizing that the relationship between standards, knowledge, and consulting will often be in a state of flux. The importance of the PMOVT is not so much the fact that the PMO will operate within the three key domains of the PMOVT, but rather recognizing that the PMO has the potential to create value in each of the domains and understanding how creating value (even if disproportionate among the PMOVT dimensions) leads to business value. Thus, the arrows outlining the PMOVT reflect the interplay between the domains.
Establishing Organizational Value—A Mission for Success
The first step in establishing the organizational value for the PMO is to formulate a concise mission statement that summarizes the intent for establishing or evolving the PMO. The mission statement is designed to represent a desired “to be” state for the PMO and captures the essence of what the PMO is intended to achieve. The following provides a possible example:
“To create a functional Program Management Office that establishes and implements project management best practices for the benefit of the organization in a way that encourages collaboration, standardization, and overall improvement in project results across the organizational landscape.”
The mission statement should be unique to the organization and should summarize the broad mission of the PMO. The mission statement is not designed to list the specific undertakings of the PMO or the specific processes and problems that will be addressed by the PMO. Establishing the PMO mission and agreeing on the desired intent for the PMO prior to moving further forward is critical as it serves as the basis for further value definition activities.
It is important to note that this mission is a mission for transformation—the process of moving from a current state to a new state. This is very different from an operational mission for the PMO. The operational mission will guide the specific activities that the PMO will undertake once it is in operation (in the case of a new PMO) or once desired evolution or transformation is complete (in the case of an existing PMO). The transformational mission guides the process of establishment while the operational mission ensures that the PMO stays on course throughout its lifetime. Initially, the focus should be on the transformational nature of how the PMO will impact and improve the organization. For a new PMO, this transformational mission statement will serve as the guiding point for further defining the PMO, its purpose, and its goals. For an existing PMO, the transformational mission statement will help to frame the PMO's desired state of operations.
As the mission statement is formulated, think about the key challenges facing the organization that could be addressed by implementation or transformation of the PMO. The mission statement does not need to be long nor does it need to be an exhaustive list of goals. It serves as a starting a point—as a guiding statement—for creating the marketing and selling plan that will be delivered to management as part of the process for seeking approval to begin work on establishing or evolving the PMO. The key is to ensure that it captures the essence of what is intended to be achieved. If the PMO will transform the organization by establishing consistent standards for project management processes, then that should be stated. If the PMO will hire, train, and foster project managers and project management as a profession within the organization, this may be included. The PMOVT is a valuable resource for helping to determine roles and areas of focus for the PMO. If one can define how the PMO will operate within the domains of the PMOVT, one can similarly translate those focus areas into a viable PMO mission. The mission statement must be shaped to the organization. Once it is complete, it should stand on its own as a single point of reference for what is to be achieved by the PMO. (Letavec, 2006)
Beyond the Mission—Establishing Meaningful Value Measures
Beyond the mission itself, the PMO team must work to establish meaningful value measures for the PMO. The PMO Value Triangle is a valuable source for starting this exercise. The idea is to determine the potential areas where the PMO may provide value, considering the current challenges or opportunities that the organization faces. The key questions to be answered are: What are the challenges or opportunities that the PMO will address? What is the specific value that the PMO can create? This exercise may not result in defining potential contributions in each of the areas defined by the PMO Value Triangle. This is perfectly acceptable, recognizing that for a new PMO the initial scope may be small and that in general not all organizations face significant challenges within the scope of each of the dimensions. The key is to link specific challenges to specific PMO opportunities. A table such as Exhibit 2 may be used to summarize this information.
Exhibit 2—Organizational Challenges and PMO Opportunities
Once an understanding of what the PMO may do to provide value (the PMO opportunities) is obtained, the next step is to start to define how the PMO will go about making these opportunities a reality. This step involves translating the high-level of areas of focus into a concrete set of deliverables for the PMO. For this exercise, a table similar to Exhibit 3 may be useful.
Exhibit 3—PMO Objectives
A table such as Exhibit 3 accomplishes two goals. First, by summarizing the current challenges and opportunities the reader is reminded of the high-level areas of focus for the PMO. Second, the table indicates what the PMO will do as well as an approximate timeframe for accomplishment (in largely qualitative terms in the case of Exhibit 3. More concrete timelines may be appropriate if sufficient data exists to quantify the effort required to accomplish the items indicated). Combined, a PMO objectives summary such as Exhibit 3 provides a concise summary of the potential areas of focus for the PMO. Further expanding the table to include an additional column for expected returns (money saved, effort saved, process improvement, etc.) can be used to complete the picture—tying problems to solutions and solutions to benefits. Or, one may choose to repeat only certain details, such as the example in Exhibit 4.
Exhibit 4—PMO Returns
Formalizing the Value Proposition
Often, techniques such as cost/benefit analysis are used to attempt to quantify the value proposition for the PMO. This is a limiting approach as traditional cost/benefit analysis often cannot correctly account for the many intangible benefits created by the PMO. As such, more holistically describing the PMO value proposition in terms of hard benefits and costs (i.e. money) as well as soft “quality of life” benefits is more meaningful. The technique for documenting PMO challenges, opportunities, and objectives presented in this paper is a useful means to accomplish the goal of presenting both hard and soft benefits.
Formalizing the value proposition involves taking the analysis performed and presenting it to appropriate organizational leaders in a way that conveys the challenges that the PMO will address as well as the specific PMO objectives and high level costs and timelines. Establishing the value proposition is the starting point for detailed PMO planning. As such, presenting detailed plans is premature. The focus of establishing the PMO value proposition should be on ensuring that organizational decision-makers and other organizational leaders interested in the PMO have a clear understanding of what the PMO will do and how it will create value. This is a very powerful starting point for a new PMO but is also a useful exercise for a PMO that is already established and that is either focusing on a “next phase” or that is facing organizational resistance to its efforts.
Establishing the PMO value proposition requires first understanding the dimensions of value that the PMO may create within an organization. Considering the role of the PMO along the value dimensions contained in the PMO Value Triangle serves as a starting point for defining a PMO mission that can be aligned with organizational management and that serves as a cornerstone for further detailed definition of the specific role of the PMO in an organization. Without a concise PMO mission, subsequent planning has no reference point for what the PMO should achieve and thus will be limited in its effectiveness. Starting with a mission ensures that the PMO team and management understand the goals of the PMO.
Further definition of the specific objectives of the PMO may commence once the PMO mission is formulated and agreed to with organizational leaders. Focusing on standards, knowledge, and consulting as key dimensions of PMO value can serve as a starting point for defining specific objectives for the PMO. In addition to the objectives themselves, which are largely derived from current organizational challenges or opportunities that the PMO may exploit, approximate timeframes for realizing benefits as well as some statement of the level of benefit attainment may be included in order to provide a concise summary of challenges, opportunities, PMO objectives, expected returns, and a timeline for achievement of these returns. While high-level in nature, a concise statement of PMO objectives creates a viable “story” for how the PMO will benefit the organization—the value proposition that can be used to carry the PMO concept forward through formal chartering and approval for implementation if a new PMO is being chartered or a value proposition that defines the on-going, additional value that can be created by transforming or enhancing an existing PMO.
Letavec, C. (2006) The Program Management Office: Establishing, Managing, and Growing the Value of a PMO. Ft. Lauderdale, Florida: J. Ross Publishing
Project Management Institute. (2004) A Guide to the Project Management Body of Knowledge (PMBOK®Guide) (Third ed.). Newtown Square, PA: Project Management Institute.
© 2007, Craig J. Letavec
Originally published as a part of 2007 PMI Global Congress Proceedings—Atlanta, Georgia