Project management office in a non-project organization as a virus or an evolution driver?
a case study of Nordea Bank Russia
Sberbank of Russia
The mere presence of a project management office (PMO) neither guarantees the efficiency of a project management system in an organization nor contributes to its overall value. Project management activities should become naturally embedded in everyday business practices. Project management methodologies, trainings, and software are standard, but they are not always the most efficient tools. They can even be perceived as alien in some structures.
The solution lies in correctly defining the needs of project stakeholders, which are reflected in the stakeholders’ map and aligned governance model outlined in Powers to Act and the Stage-Gate Model. Gaining a clear understanding of stakeholders’ stands on project management through analysis of their needs, expectations, and personal beliefs is a significant step toward the correctly aligned governance model.
The role assignment function begins with specification of responsibilities for all the roles involved in project management. It is reflected in a RACI matrix, which will allow for better rollout of project management in any organization.
In most cases, the conventional approaches to the organization of work must be changed.
Project management initialization should be consistent with overall logic of business processes and specifics of corporate culture in a non-project organization. There are no unique schedules for such procedures; however, learning from successful cases can provide valuable insights for building project management thinking in the framework of an organization.
Keywords: project management office (PMO), stakeholders’ interests, corporate culture, governance model, RACI matrix
Insanity: doing the same thing over and over again and expecting different results.
- Albert Einstein, 1879–1955
Every project manager is asked the following question about the value of a project management office at least once: “What value do you generate for our organization?” In a way, it is a reasonable question, as all project work can be executed without a project management office (PMO) as a separate unit. Therefore, despite the presence of an immediate interest in project management in an organization, you should always be able to answer such a question.
A PMO generates two types of values. For project sponsors and project teams, it relates to decreasing time to market (Kahn, 2004): time spent from the moment of a project initiation until introducing the product to the market. For top managers, it usually means gaining an investment view: namely, portfolio prioritization, strategy alignment, and benefit realization tracking.
However, in many cases the question about the value of a project management office may remain unanswered because it actually becomes difficult to trace the value as such. Why? First, very often the answer lies in the sphere of goal setting. Sponsors of a PMO perceive a project management office as a three-component model: methodology, project management software, and project management-related training. They do not see project management activities as a change driver for its corporate culture and its governance model. Second, and surprisingly, the reason could be found in the short careers of many heads of PMOs. According to a poll of club members conducted by PMO CLUB in Moscow, Russia (http://www.pmoclub.ru), every third head of a PMO keeps his or her position in one company for an average of less than three years. Only 5% of heads of PMOs keep their positions for more than seven years. This trend can be explained by the fact that instilling the appropriate project management principles prevents them from making changes in their organizations. All new initiatives that they manage to introduce in fact increase excessive bureaucracy, thus increasing time to market, which is in opposition to major project management values.
Therefore, in order to answer a question about the value that a PMO generates in an organization, all project management activities actually have to be implemented correctly. A new dress does not change us; it changes the way we look. To change from within, we have to alter customary ways of doing things. A correctly defined stakeholders’ map for the better understanding of the true needs of project stakeholders, an aligned governance model outlined in Powers to Act and the Stage-Gate Model, and proper role assignment in a RACI matrix will allow for better rollout of project management in any organization.
PEEKING INTO STAKEHOLDERS’ HEADS
Very often project management fails to reach its goals and increase its value due to a misunderstanding of stakeholders’ interests, needs, and vision. Moreover, we may lose the support of some key persons in an organization by being unaware of their actual involvement in project management implementation and overlooking the fact that they can be ambassadors of our initiatives and be included in the stakeholders’ pool.
In order to avoid this mishap, we should properly identify and compile a list of all stakeholders so that we can identify the key players for a PMO and find the most suitable communication strategy for them. The second step is to build a stakeholders’ prioritization grid (see Exhibit 1), which consists of four areas depending on the stakeholders’ interest and influence.
Exhibit 1: Stakeholders’ prioritization grid.
The purpose of these activities is to identify all stakeholders and manage their expectations according to the change management goals in an organization.
MAKING RULES OF THE GAME
Not much change can be expected if the same people with the same set of responsibilities and mindset make the decisions regarding project management in an organization. Creating a separate decision-making body allows for a more acute focus on project and portfolio management and project/program-related issues. Other decision-making bodies (e.g., Risk Committee, Sourcing and Procurement committee, or Human Resources and Remuneration Committee) should expand or alter their powers regarding project management (see Exhibit 2).
Exhibit 2: Extract from the Nordea Bank Russia governance model.
All these points should be reflected in a decision-making legal structure and Powers to Act. Powers to Act specifies responsibilities, authority, and limitations on investment, motivation, and procurement as well as risk management decisions (see Exhibit 3).
Exhibit 3: Extract from the Nordea Bank Russia Powers to Act.
All the information specified in this document should correlate to the Stage-Gate Model (see Exhibit 4).
Exhibit 4: Extract from the Nordea Bank Russia Stage-Gate Model.
Robert Cooper defined a Stage-Gate Model as “a value-creating business process and risk model designed to quickly and profitably” implement new ideas and products (Cooper, 2011, p. 83). Each stage is designed to collect specific information to help move the project to the next stage or decision point. Preceding each stage, a project passes through a gate where a decision is made whether or not to continue investing in the project (a go/kill decision). These serve as quality-control checkpoints with three goals: to ensure quality of execution, to evaluate business rationale, and to approve the project plan and resources (Stage-Gate International, 2000–2016).
TAILORING BUSINESS AS USUAL
How can we decrease time to market in order to increase value? We should simplify bureaucratic procedures and alter supporting units’ attitudes toward PMOs. One of the ways to do this is by introducing a RACI matrix (Jacka & Keller, 2009, p. 257), also known as a responsibility assignment matrix (RAM) (PMI, 2013, p. 262).
A RACI matrix is a useful tool in clarifying roles and responsibilities in cross-functional/departmental projects and processes. The acronym RACI stands for responsible, accountable, consulted, and informed (see Exhibit 5).
Exhibit 5. Extract from the Nordea Bank Russia RACI matrix.
A RACI matrix also enables one to specify the responsibilities for the head of the PMO and the sponsor of the PMO. Describing roles for managing projects is the next step. However, the main challenge here lies in the smart balance of the existing interests, responsibilities, and project management-related workload. All the supporting units should be involved in the RACI matrix development, and their responsibilities should be adjusted to meet the value-chain goal. Additionally, a resources owner's position should be introduced. The tools that are helpful at this stage are project management-related changes in job descriptions and implementation of an updated key performance indicator (KPI) and bonus scheme for people who will be involved in the project management activities.
THE INVISIBLE HAND OF CULTURE
In order for the above-described parameters to be successfully implemented, one needs to look at how the culture interferes in the project management processes. The Hofstede Centre's cultural dimensions are very handy for this analysis (Hofstede Centre, n.d.). In particular, if we look at individualism/collectivism, power distance, and uncertainty avoidance indexes, we will see how different they can be for several Western European and American cultures (see Exhibit 6).
Exhibit 6: Hofstede's cultural dimensions.
The Hofstede Centre's data show that Russians are very team-oriented but have no shared responsibility, only individual. High power distance suggests a very big communication gap between a project sponsor and a project manager. Sometimes they never have a chance to meet to discuss project goals, risks, and challenges. High uncertainty avoidance explains red tape and the-way-we-do-things-here complications. Culture explains a lot of difficulties of instilling project management thinking in an organization of any kind.
If asked about the value of a PMO for an organization, after appropriately implementing the above-described tools, you will surely find many words to say. However, it is easier said than done. The transformation of an organization with a PMO is so radical that it demands full commitment of the key stakeholders and the top management. And if such exists, no question about the value of a PMO will ever be asked, because it will be visible in actions, results, and benefits.
ABOUT THE AUTHOR
Alina Grossman has more than 15 years of experience in PMO and project portfolio management, with an extensive record of accomplishment in banking and electro-technical industries. She currently leads the PMO at Sberbank of Russia and promotes the use of lean tools for project management at the bank. She is a co-founder of the Heads of PMO Club, an expert panel member of the annual International Project Management conference, an assessor of the Project Olympus competition, and a team member of the Reconstruction of Triumph Arch of Tsetsarevich Nikola in Vladivostok. She is the author of many publications and presentations on creation and development of PMOs and the introduction of portfolio management and lean methodologies.
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Cooper J. R. (2011). Winning at new products: creating value through innovation (4th ed.). New York: Basic Books-Persius.
Hofstede Centre. (n .d.). Cultural dimensions. Retrieved from http://geert-hofstede.com/cultural-dimensions.html
Jacka, J. M., & Keller, P. J. (2009). Business process mapping: Improving customer satisfaction. Hoboken, NJ: John Wiley & Sons.
Kahn, K. B. (Ed.). (2004). The PDMA handbook of new product development (2nd ed.). Hoboken, NJ: John Wiley & Sons.
Project Management Institute. (2013). A guide to the project management body of knowledge (PMBOK® guide) – Fifth edition. Newtown Square, PA: Author.
Project Management Officers’ Club. (Moscow, Russia). Retrieved from http://www.pmoclub.ru
Stage-Gate International. (2000-2016). Retrieved from http://www.stage-gate.com/resources_stage-gate_full.php
© 2016, Alina Grossman
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain