Next generation PMO

the secret of a successful PMO

Managing Principal, Projectize Group LLC

Introduction

While the Project/Program Management Office (PMO) has continued to be a growing trend, the overall success rate of PMOs has not increased in parallel. A number of recent surveys reveal a success rate of 50% or less, and show that many PMOs never take off, garner acceptance or gain a foothold in the organization. Many ultimately suffer a reduced role or disband altogether. The good news is that there is now plenty of insight on what does not work when planning a PMO implementation, and emerging insight on several important keys to success.

Why is implementing a successful PMO so challenging? Managers involved in PMO implementations continue to struggle with key questions. How do you articulate the role and purpose of the PMO? Should the PMO focus be strategic or tactical? How do you integrate the PMO into the organization to help achieve business objectives? How do you overcome resistance and get stakeholders to embrace PMO methods, processes and tools? How do you demonstrate and quantify PMO value? Is there a secret to a successful PMO implementation?

For the last seven years, the Projectize Group (Connecticut, USA) has been on a quest to find answers to the above questions. Projectize has worked with companies worldwide in a variety of environments which have embarked on establishing PMOs. In the author’s view, there are many PMOs with marginal success but few that achieve their full potential. This paper addresses several of the questions that most commonly surface when organizations search for the secrets of success for PMOs. We begin with an examination of what constitutes success in the PMO environment, what factors most commonly lead to failure, and several keys to supporting the establishment and operation of an effective PMO. The concepts and suggestions in this paper build on an earlier paper , Building the Next Generation PMO (PMI, 2001) that distinguished traditional PMO techniques from Next Generation approaches, and also highlight observations obtained through a five-year survey by Projectize Group, which looked at organizations worldwide that have been struggling with PMO implementation efforts.

Why PMOs Fail

PMOs have a hard time gaining ground and achieving their full potential due to a number of factors. Exhibit 1 lists ten of the top reasons, that PMOs do not succeed, based on a worldwide survey of organizations involved in implementing PMOs over five years, from 2000-2005 conducted by the Projectize Group, USA.

Top Ten Reasons Why PMOs Fail

Exhibit 1: Top Ten Reasons Why PMOs Fail

There are many factors that contribute to the above reasons. This paper will focus on three important factors - a) lack of clarity in the role and purpose of the PMO; b) underestimating organizational change implications; c) and a machine-oriented approach to PMO implementation.

Lack of Clarity in the Role and Purpose of the PMO

Misperceptions about the role and purpose of the PMO create much confusion and misaligned expectations among PMO stakeholders. It is essential to clarify and agree upon the purpose of the PMO early in the planning stages. Many PMO implementations fail because the purpose is not well stated and the focus is fuzzy, leading to frustration among stakeholders and increasing the potential for unmet needs.

One of the common areas of discussion is whether the PMO should provide a tactical or a strategic role in the organization. Over the last few years the role of the PMO has evolved from a tactical to a more strategic focus. Traditionally the implementers of PMOs have maintained a tactical view of the PMO however some executives and stakeholders expect strategic applications of PMOs. In the author’s experience, it is not an either/or situation, but rather a pair of complementary views and approaches that successful PMOs incorporate. Many PMO implementations fail because the purpose is not clear and focus is fuzzy leading to differing expectations among key PMO customers and stakeholders. The first step is to clarify and agree on the purpose of the PMO. While helping organizations in many different industries establish their PMOs, Projectize has found that the primary purpose of a PMO, as illustrated in Exhibit 2, is twofold:

  • Increase capability to execute and deliver successful projects (tactical)
  • Provide better decision-making capability (strategic).
The Role of the PMO

Exhibit 2: The Role of the PMO

The PMO achieves its objectives by focusing on the integration of People, Process and Tools (PPT) – the three main gears of effective execution (Exhibit 2). The PMO needs to identify the gaps and collaborate with its customers and stakeholders to provide the appropriate level of leadership, support, coaching, mentoring training, monitoring and information in each of the people, process and tools aspects. The PMO is the facilitating and enabling engine that helps realize business objectives, by translating strategies into a portfolio of projects/programs, and increase the capacity to improve project performance (cost, schedule, quality). On the other hand, in a more strategic role, the PMO can help provide vital information for better decision-making regarding the projects/programs in the portfolio – their strategic fit; business alignment; relative risk, capacity to execute, etc. Exhibit 3 (below) illustrates a PMO Framework that links the strategic and tactical dimensions that are critical to effectiveness. This diagram highlights the connections between the core functions of a PMO and the related enabling functions of governance, performance monitoring, and communication and relationship management. This framework has been applied in the planning and implementation of a number of PMOs in diverse organizations.

This view also aligns with the role of the PMO in the context of Organizational Project Management (OPM) espoused by the Project Management Institute (PMI). OPM is the systematic management of projects, programs, and portfolios in alignment with the achievement of strategic goals (PMI OPM3 Standard, 2004).

PMO Framework: Need for a Holistic Framework to Link the Strategic and Tactical Dimensions

The dichotomy between the tactical and strategic aspects causes mis-aligned expectations in the focus of the PMO. The current literature on PMOs further emphasizes the dichotomy rather than focusing on integrating the strategic with the tactical. This causes a disconnect between strategy and execution. The PMOs role, in many ways, is to be the link between strategy and tactics and to bring the two closer; unfortunately the traditional view of a PMO continues to separate the two. It should be stressed that both aspects need to be integrated and are two sides of the same coin; one cannot be effectively implemented without the other. To deliver successful projects, the right decision-support, priority, alignment and strategic view is necessary, and vice versa. Often there is emphasis on one aspect without attention to the other, which creates gaps in effective PMO implementation. The more the strategic aspects are linked to the tactical the better chances of effective execution of the strategies. There are many examples of PMOs in information technology (IT) environments where the PMO becomes the bridge builder between IT and business and contributes towards bridging the primordial chasm. In these instances the IT PMO is often elevated to an enterprise level PMO or management sees a need to replicate the success of the IT PMO in other areas.

To build a holistic view of the PMO an integrated PMO Framework is necessary that connects the vital PMO functions along with the enabling functions. Exhibit 3 outlines a PMO Framework that connects the strategic with the tactical and balances it with the enabling functions of governance, performance monitoring, and communication and relationship management. This framework has been developed and applied in the planning and implementation of a number of PMOs in different organizations. This framework can be used to better communicate and articulate a holistic view of the PMO areas of focus.

PMO Framework: Areas of Focus

Exhibit 3 – PMO Framework: Areas of Focus

Key Components of a Holistic PMO

(1) Improving program/project execution and performance. Traditional PMOs focused on tactical aspects of projects, providing standardized processes, methodologies, tools, templates and training. In other words, improving the capacity to deliver and focusing on doing the projects ‘right.’

(2) Providing decision-support to prioritize, align and balance the project portfolio. Recently, there is an increased focus on strategic aspects of portfolio management, inventorying, selecting, evaluating and prioritizing projects. In other words, balancing the portfolio of projects and programs to realize business strategies, by providing decision-support to focus on selecting and doing the ‘right’ projects at the right time

(3) A governance structure to link the strategic with the tactical, and facilitate and escalate key project/program decisions. This includes setting standards and processes, as well as establishing governance mechanisms like stage-gates to ensure the project/program remains critical to the organization, and facilitates adjustments or realignments as necessary.

(4) Performance monitoring, information and reporting to provide consolidated information that helps in tracking and monitoring project health and progress, to the right individuals up and down the organization, as well as across the organization.

(5) A platform for communications and relationship management to relieve bottlenecks and resolve communications and interface issues among various stakeholders – customers, partners, contractors, vendors and internal resources.

A balanced approach to implementation is recommended that effectively integrates all of the above PMO framework focus areas. Which area is emphasized initially and the priority of functions the PMO will assume, depends upon the current business needs of the organization. Focusing on the business needs and measuring the business value are the first two keys towards understanding the secret of a successful PMO.

Underestimating the Organizational Change Implications

Effective PMOs inevitably lead to significant organizational change, and successful efforts anticipate the full spectrum of issues related to such changes upfront. It involves the complexities of changing behaviors, perceptions and beliefs within the reality of organizational politics, power and prevailing culture. Unfortunately the organizational change aspects are not well understood or taken seriously and paid mere lip-service. Many PMO managers fail to assess or underestimate the change readiness both at an organizational or individual level. They simply focus on change management with the traditional view as it relates to managing change associated with schedule, cost and scope. Implementing a PMO is hard because it involves a myriad of complexities associated with changing behaviors. For the most part people don’t like change, even if the difference is life and death. For patients with heart disease who have gone through bypass surgery, it is critical to adapt healthier eating habits and exercise. Recent studies find that only one in nine people change their habits after surgery, even though they see value in it and their life depends on it. So what chance does the PMO have in implementing organizational change? The poor record clearly points out that it is a challenging aspiration at best. This also makes you think that the question is not just whether the PMO provides value, but points out the challenge that people may not want to change even if they see value in the PMO!

Attempts to force top-down change in a command and control environment bring about minimal compliance to forced standards. People adhere to PMO standards and templates in the letter, but not the spirit, just because they have to and not because they want to. This results in half-hearted sub-standard quality of outputs and deliverables. On the other hand the carrot and stick approach based on rewards and threats only produce short-lived changes and do not stick in the long run. Rewards any kind of reward, actually reduce intrinsic motivation, thus reducing effectiveness! (Kohn 1995). When a reward is put in place, it basically says, “Do THIS and I will give you THAT.” While that sounds harmless, the underlying message is that THAT is not worth doing for itself and that THIS is more valuable than THAT, and that I have the power because I can give you something you might want. Finding ways to increase the intrinsic motivation of work means finding out what is important to people, what they people want to do, what they’re good at and building the PMO around those needs. The third key of collaboration illustrates how engaging the PMO customers and stakeholders having them self-discover the value considerable increases the chances of behavioral change and voluntary compliance.

Machine-oriented Mechanical View of the PMO

Too often, PMO initiatives are implemented with a machine-oriented view as if the organization was a complex machine that needed to be fixed, and the parties and processes involved were purely mechanical. A machine-oriented approach emphasizes tools and processes with pre-defined inputs and outputs in a step-by-step linear model. This approach tends to focus narrowly on the content rather than the current context and the big picture. For example, the PMO may continue to mandate extensively detailed reports on every project even when they are irrelevant and do not provide any actionable information for the current context. To fix a machine you need tools and processes, but if you think about it, organizations are far from machines. It is important to understand the distinction between a complex machine and a complex ecology. They are living, breathing, ecologies comprised of people thriving and surviving in their unique organizational culture, politics and personal agendas. Emphasis on process alone can be suffocating; it limits people to focus on the outputs instead of vital outcomes. What is necessary is an organic approach that takes into account the prevailing organizational context and focuses on behavioral aspects. Instead of a rigid PMO structure with forced standards, a PMO that is more responsive to emergent and dynamic realities is required. The opportunity for the PMO is to move from a traditional “process-focus” which is relatively easier compared to a “behavior-focus” which is much harder to deal with. While formal structures and standard processes are definitely important, the question is how do you get the rigor without the rigidity? The challenge is in finding the sweet-spot of a PMO that balances both. Think about it, if you were to build a PMO organically with an ecological view, how would you do it differently? The fourth key of a successful PMO of an inside-out approach addresses this challenge.

Five Keys to Unlock the Secret of PMO Success

The above factors can provide important groundwork for building a successful PMO. Applying the following keys can further enhance the success of a PMO implementation.

1) WITGBRFDI?

Every aspect of the PMO has to address the WITGBRFDI? – What is the good business reason for doing it? Creating a business-focused PMO sounds like an overused cliché and yet it is often overlooked and lost under the pressure of other PMO priorities. The underlying purpose of a PMO is to support and enable the business objectives. What keeps executives up at night are the challenges of running, growing and/or transforming the business. They are less concerned with the details of how many project managers are certified, or that people are complying with PMO processes. The PMO has to show how it can support, facilitate and enhance project delivery and how it can impact the bottom-line with lower costs or increased revenue and ROI. Every PMO initiative has to show a clear linkage and justify the good business reason for doing it. If it is difficult to articulate the business reason, it is a waste of PMO time and the PMO is destined to be mired in low-value initiatives. To start with the PMO has to learn to use more of the business language and create a viable business plan for the PMO.

2) Measuring Hidden Value

One of the common challenges for the PMO is demonstrating value. The ‘O’ in the PMO is sometimes referred to tongue-in-cheek as the project management ‘overhead.’ PMO value is hidden, buried in improvements and intangibles that are hard to quantify. PMO value means different things to different stakeholders depending upon their perspective. Value creation cannot be an afterthought or taken for granted; it must be planned from the beginning and outlined in the PMO business case.

To start with it is important to know where to look for value and what to look for. Ask the key stakeholders and the customers of the PMO as to what is important to them and what areas of the PMO can help them. The metrics should cover both tangible and intangible value. Examples of tangible value include increasing revenue, reducing cost, increasing productivity, reducing errors, etc. Intangible value includes increased customer satisfaction, increased morale, improved quality, enhanced effectiveness, etc.

Each deliverable or service of the PMO should have a payoff that should be quantified and linked to the stakeholder/s showing a logical cause-and-effect relationship. The payoff and related metrics will have a greater degree of acceptability if developed collaboratively with the stakeholders. The measurement criteria and metrics for each PMO can be customized depending on the focus, functions and mandate of the PMO.

3) Building an Inviting Sandbox

One traditional view of the PMO is that of a control-oriented entity which is dreaded. A more positive PMO metaphor that can be cultivated is that of a sandbox where everybody wants to come and play. To foster this environment, the PMO needs to engage its stakeholders and collaborate on standards, processes, information exchanges, etc. One of the top ten contributors to PMO failure is insufficient buy-in from important stakeholders. Buy-in is directly proportional to involvement. The secret of overcoming resistance and getting the stakeholders to adapt PMO methods, processes and tool is to engage them in the creation of these processes.

If people are involved in the creation of the process, it provides intellectual and emotional recognition, which generates trust and commitment that leads to voluntary compliance and cooperation (Kim and Mauborgne 2005). On the other hand if there is no involvement it constitutes a violation of fair process, which leads to intellectual and emotional indignation, causing distrust and resentment and the refusal to comply with the process. Engaging stakeholders does not mean endless consensus building; it is more of creating a productive culture based on genuine dialogue, debate and discussion to solve common problems. A sandbox does not mean, no structure or discipline, instead it helps in creating the necessary rigor without the rigidity, by creating a more open and inviting culture within boundaries.

4) Practicing Role Reversal - Guru becomes the Follower

Typically PMOs are built upon an outside-in approach where the PMO is presumed to be the guru and determine what’s best for the organization. This approach relies on bringing in best practice methodologies, templates and tools from the outside – other companies, books, training seminars, etc. The organization attempts to replicate these practices and lessons learned, but are disappointed to find that they cannot be readily transplanted, and do not apply or work well in their environment. In many instances, outside-in practices are either rejected or derailed. The Next Generation PMO model uses a role reversal, where the PMO follows the lead of the true gurus – the core stakeholders, project managers in the trenches, and other customers of the PMO. Substantive project knowledge generally is hard-won and resides in the trenches. The PMO’s role increasingly is to identify and evaluate what’s working well internally, and amplify and show-case it from the inside-out. The community of practitioners themselves is intricately involved in the development and maturity of the PMO; the role of the PMO is to enable, facilitate and provide support for the community to thrive.

5) Creating a Department of Simplicity!

One of the most common complaints about PMOs is that they tend to make things more complicated than necessary. For example, many will require even simple projects to follow an excruciating detailed methodology or file a monthly report that takes longer than a month to produce! Unclear, complicated processes are costly in terms of time, reduced compliance, rework and frustration. The PMO should be the Department of Simplicity and dedicate itself to identifying and reducing unnecessary overhead and complexity. One of the valuable services the PMO can provide is to inventory and review current processes and find ways to eliminate redundancies and further simplify them. The PMO can begin by identifying ways to slim, trim, cut, combine, chunk and modularize existing methods and processes. Pick the top three processes and see how they could be streamlined. PMO methodologies and tools should be scalable – fewer steps for simple projects and more detailed steps for complex projects. A one-page-fit should be the rule of thumb for most PMO reporting and documentation requirements.

The simplified processes should be explained and communicated clearly. Simple does not mean easy. As Einstein put it, “It is a simple thing to make things complex, but a complex thing to make things simple.” Simplicity is perhaps the hardest key to apply, but if the PMO adopts the simplicity principle in everything it does, it is sure to increase its potential for success and attract a more solid following.

Summary

PMO success begins with a thorough understanding of the key reasons that many PMOs fail, avoiding those pitfalls, and leveraging the keys to success: promoting a business- focused PMO; measuring hidden PMO value; collaborating with and engaging the PMO stakeholders; creating an inside-out PMO by identifying what is working and amplifying it; and reducing complexity and simplifying things in every PMO initiative. The secrets to building and maintaining a successful PMO are incorporated in the Next Generation PMO approach. Being a secret, the revelation of the code shall be unveiled during the formal paper presentation at the Global Congress, and will also be available as an epilogue following the session.!

References

Business Improvement Architects.(2005). The Impact of Implementing a Project Management Office – Report on the Results of Online Global Survey

Duggal, J.S. (2001). Building the Next Generation Project Management Office. Proceedings of the PMI Conference, Nashville, TN

Hobbs, Brian and Aubry, Monique, (2005). A Realistic Portrait of PMOs. Proceedings of the North America PMI Congress, Toronto, Canada

Kim, C. & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested marketspace and make competition irrelevant. Boston, MA: Harvard Business School Publishing

Kohn, A. (1995). Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes. Boston. MA: Houghton Mifflin Company

Projectize Group, LLC, USA. 2000-2005. Project/Program Management Office Survey

Project Management Institute. 2004. Organizational Project Management Maturity Model (OPM3®) Newtown Square, PA: Project Management Institute

© 2006, Jack S. Duggal - jduggal@projectize.com
Originally published as a part of 2006 PMI Global Congress Proceedings – Seattle Washington

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