No PMO? Know when you need one

A project management office can improve project results. But organizations must first recognize the signs that they need one.

BY SAMUEL GREENGARD

Starting a strategically oriented PMO has many benefits: Major strategic initiatives get the time and attention they need to deliver their full value—without disrupting ongoing business. Close partnerships with senior leaders allows the PMO to play an active part in strategic planning and support execution. Business outcomes improve, and core competencies and consistent objectives are used across industries and regions.

But for organizations first weighing the pros and cons of launching a PMO, the tactical benefits can also be enticing.

“Many companies are looking to create an infrastructure that helps program and project managers stay connected,” says Margot Nack, PMP, senior program manager at Adobe Systems, a PMI Global Executive Council member, San Jose, California, USA. “They want to steer clear of the idea of ‘every project team for itself.’ A PMO introduces structure to all the projects taking place within a company or agency. It creates a level of coordination and consistency that otherwise wouldn’t exist.”

PHOTO BY TAI POWER SEEFF

A PMO BY ANY OTHER NAME

Project practitioners may talk about a PMO and what it does, but in reality there is no set standard. Most organizations have at least two types.

Organization Unit PMO		Project Support Office		Enterprise PMO
Center of Excellence		Project-Specific PMO		Change Management Office

Source: PMI’s Pulse of the Profession^TM In-Depth Report: The Impact of PMOs on Strategy Implementation

“PMOs ensure good governance. They improve success rates and, in turn, boost business results and profitability.”

—Antti Kämi, PMP, Wärtsilä, Helsinki, Finland

Organizations are increasingly looking to PMOs for greater consistency, efficiencies and better management of costs. Nearly seven out of 10 organizations have a PMO, up from six out of 10 in 2006, according to PMI’s 2013 Pulse of the Profession^TM.

“PMOs ensure good governance,” says Antti Kämi, PMP, vice president of project management at Wärtsilä, a Helsinki, Finland-based provider of power solutions for the energy and marine markets and a PMI Global Executive Council member. “They improve success rates and, in turn, boost business results and profitability.”

But just creating a PMO doesn’t achieve those goals. About one-third of all PMOs fail to accomplish their desired results, according to PwC. To capitalize on the PMO promise, an organization must first determine whether and when it needs one.

“If a company is not a project-oriented organization, there’s less of a need for a PMO,” says Mary Hubbard, PMP, director of the PMO at Siemens Government Technologies Inc., Arlington, Virginia, USA, a PMI Global Executive Council member. “If they’re project-focused, though, they should have one. Otherwise, who’s driving the delivery of their projects? Who’s establishing their methodology? How are they managing resources efficiently? It’s hard to answer those questions unless you have a central location.”

Revenue and head count are less important factors than the number of projects in an organization’s portfolio, says James Gradisher, PMP, PMO manager of the U.K. Ministry of Defense, West Sussex, England. “Any company that does more than a handful of projects should look into the possible value of a PMO,” he says. “When you get beyond a certain point with the number of projects that are underway, there starts to be the need to get a little control over them.”

Picking Up on Cues

A lack of project transparency. Significant discrepancies in project results. Poor customer-satisfaction rates. An inability to cost projects accurately. A high percentage of delayed or canceled projects. High failure rates.

These are all telltale signs it may be time to establish a PMO, says Mr. Kämi, whose company, Wärtsilä, has had a PMO since 2007.

Often, he says, projects lacking PMO oversight “are started without real ownership, there’s not a clear business case, and there’s a lack of visibility into which projects are ongoing and how projects are performing.”

A project management maturity assessment can compare internal metrics and key performance indicators with industry averages or compare a project’s performance with that of other departments or divisions within a company. That sort of internal audit may inform the decision of whether or not to start a PMO, says Mr. Kämi.

The PMO’s potential structure and place on the organizational chart are other weighty factors to consider. PMOs that complete 80 percent of projects on time, on budget, and meeting original goals and business intent are nearly twice as likely to report directly to the CEO, according to PMI’s Pulse of the Profession^TM In-Depth Report: The Impact of PMOs on Strategy Implementation.

A PMO may mean shifting roles and responsibilities—at least for functions that intersect with the new office. A PMO team may need to consult with a range of departments, including human resources, finance, legal and operations, to build workflows and incentives that address organizational challenges and create a governance structure. Without that structure, organizations likely will encounter the very same problems faced by projects handled on an ad hoc, one-off basis.

Gathering Momentum

“ Project management is right at the tipping point for PMOs. Sure, I run into people who didn’t have a good experience with a PMO at their company and they disbanded it for any number of reasons. I cringe every time I hear that, but it’s a reality. Now we’re in this forward movement where we’re having more positive results and sharing best practices. More research is occurring and we’re figuring out how to best build and leverage a PMO, and that’s really exciting to see.

An important goal of Siemens Government Technologies’ PMOs is synergy: Bring all of the project managers under one umbrella to do internal training together and share lessons learned among ourselves. By doing those things, we’re taking a step forward in how we view ourselves and our expectations. Project managers are no longer little islands; we’re sharing, talking, collaborating. Were we completing our projects just fine beforehand? Absolutely. But can we always do better? Yeah. If an organization truly wants to deliver exceptional projects, it needs to act that way. Developing a PMO is about transforming project management so that we can do more—more collaborating, more sharing of knowledge and skills and tasks, more developing of teams. When is the right time for a company to invest in a PMO? Yesterday. If they’re a project-focused organization, they should already have one.”

Mary Hubbard, PMP, is PMO director at Siemens Government Technologies, a PMI Global
Executive Council member, Arlington, Virginia, USA.

Banding Together

As projects multiply within an organization, so do the chances of project polyglot: each speaking its own language, doing its own thing. A PMO helps break down silos and departmental boundaries.

“It’s a place where you’re actually pulling people together from different functional groups to achieve a single objective,” says Natalie Dance, PMP, managing director, Excel in Change Consulting Inc., Toronto, Ontario, Canada. “It helps eliminate turf battles.”

Adobe’s PMOs are testament to that benefit: “Before establishing PMOs, it was often a case of ‘every product team for itself,’” Ms. Nack says. Now Adobe operates dozens of PMOs across the enterprise, using them to create a more agile and integrated development environment. “When you have program and project managers working together and staying coordinated about what they’re doing with their products and what features they’re developing, it’s possible to build qualitatively better products.”

Texas Health Resources had similar experiences pre-and post-PMO. The not-for-profit organization operates a network of hospitals and other health facilities in the North Texas region of the United States. Prior to 2008, it didn’t have a project management office.

“Before creating a PMO, each team managed projects independently. Too often, customers didn’t know what to expect, and issues weren’t being addressed uniformly across teams,” says Joel Verinder, PMP, director of project management.

Now the PMO at Texas Health Resources has a staff of 26 managing about 80 active IT projects. “A PMO allows us to view all projects through the same keyhole and adopt a far more strategic and transparent approach,” Mr. Verinder says. “We now have a level of analysis and prioritization that wasn’t possible in the past. We’re able to track spending and employee hours far more effectively. We’re focused on strategic projects rather than tactical projects and operational activities.”

That improved transparency allows an understanding of how staffing and resources are used across the entire portfolio of active IT projects, including implementation and ongoing support. “We’re able to see how a group of projects is consuming resources and whether or not the staffing is fully committed over the next several months,” says Mr. Verinder. “This opens the door to discussions about priorities and understanding where a project fits in and whether it’s something that should be addressed by the PMO.”

Likewise, at Excel in Change Consulting Inc., the PMO lets “people know where to go with questions, issues and tasks,” Ms. Dance says. “It becomes much clearer what’s required in terms of resources and skills to make a project work.”

When used effectively, a PMO can help an organization optimize staffing levels and ensure that human, IT and other resources better match the demands of projects.

TIME TO UNPLUG

While some organizations require a permanent PMO, others may find it’s a temporary need. Here are five tip-offs that it’s time to shut down a PMO:

“It adds a dimension beyond giving sponsors a better view of how their projects are doing,” says Ms. Dance. “It also can bring objectivity to the environment and hold everyone accountable by the same measures and standards.”

Leading the Way

While PMOs can provide substantial benefits, they can’t do so without leadership buy-in. Thirty percent of PMO directors feel that one of the top reasons that the PMO’s value isn’t realized is a lack of understanding by business executives as to the best use of the PMO, according to PMI’s Pulse of the Profession^TM In-Depth Report: The Impact of PMOs on Strategy Implementation. “Senior management from the board down should be involved in the PMO’s strategic development,” says Petra Tyers, strategic PMO manager for the Victorian Government in Sydney, Australia.

Executives at Adobe examine projects and groups of projects to determine whether a new PMO is desirable—or required, Ms. Nack says. “It’s important to constantly examine and analyze projects and organizational requirements in order to build an optimal project management environment,” she says.

Senior-level executives must understand why a PMO exists and how it changes the overall framework for project management, Ms. Tyers says. If they aren’t able or willing to fully support the PMO, then it might be wise to focus on improving basic project management performance and cost structures, she explains.

But if they do offer support, a PMO can transform their organization—boosting efficiency, speeding project completion and trimming costs. “It creates a level of coordination that is difficult to achieve on an ad hoc project management basis,” concludes Ms. Nack. “There’s more clarity, there’s greater strategic focus, and there’s a greater ability to coordinate projects efficiently.” PM