Real-life examples of how to ensure PMO alignment with organisational needs
The article presents two case studies of the implementation of project management offices (PMOs) in practice. Although each example has its own history, they both show how important it is for a PMO to present added value to the organisation. Moreover, when serving different functions, it should be clearly identified what the top priorities are for the PMO in the area of project management. Both case studies present the non-IT approach and demonstrate how important it is to evolve, both in the long and in the short terms from the PMO's formation. For the first stage of its evolution, it is crucial for a PMO to very quickly react when any signs that the PMO sponsors are not satisfied regarding the added value the PMO should report. When undergoing this tough period of time, the PMO should focus on a new kind of relationship with the top management of the company. The prospective areas of PMO development should be outlined, supporting the company's long-term strategy. Those areas could be, but should not be limited to, endorsing methods/tools and standards, project portfolio management, and project knowledge management. When you make all of the above happen, your PMO will most likely survive more than a year from its inception.
Keywords: Project Management Office, PMO, real-life example, case study, organisation
The importance of Project Management Offices (PMOs) has been noticed since the 1990s (Kerzner, 2004). From that time, the number of projects run by companies has grown significantly, along with their level of complexity. Moreover, project management started to spread out to industries beyond just IT. However, despite the time that has elapsed, there is still not so much practical evidence of successfully operating PMOs (Canonico & Soderlund, 2010). The reasons for that are still not clearly recognised. As Brian Hobbs and Monique Aubry (2008) state, there is still a huge variety of PMOs and a lack of common understanding on the value they should generate. While investigating the value of PMOs, some authors assigned different roles (Artto, Kulvik, Poskela, & Turkulainen, 2011; Pemsel & Wiewiora, 2013) and organisational structures to them (Aubry, Richer, Lavoie-Tremblay, & Cyr, 2011).
The variety of the approaches does not help practitioners in the successful implementation of PMOs within their organisations. We believe that by giving real-life examples and case studies, professionals and society can better understand how the PMO can contribute to the success of the company and align itself with business needs and support the main strategy.
PERFORM OR DIE
Some authors argue that PMOs are very often disassembled within the first couple of years of their existence (Aubry, Müller, Hobbs, & Blomquist, 2010). The main reason which is cited is the lack of demonstrable added value to the company (Spalek, 2014). That means that in the eyes of the CEO, PMOs are just another burdensome cost and, for the workers, just another unnecessary bureaucratic entity in the organisation. Therefore, it is crucial for effective PMO functioning that it performs as a contributor to the outcomes of the company (Aubry & Hobbs, 2011). This can be done on different levels of company operations (see Exhibit 1).
Exhibit 1. Different types of PMO (Binder, J., 2007; Project Management Institute PMO SIG, 2008).
Moreover, according to the Project Management Institute (PMI, 2013), the PMOs may work under the following frameworks:
- Organisational Unit PMO/Business Unit PMO/Divisional PMO/Departmental PMO
- Project-Specific PMO/Project Office/Programme Office
- Project Support/Services/Controls Office or PMO
- Enterprise/Organisation-wide/Strategic/Corporate/Portfolio/Global PMO
- Centre of Excellence/Centre of Competency
In his study, Yong (2006) investigated the PMO's functions in practice in IT companies. He categorised those functions under the following functionalities:
- Manage portfolio of IT projects
- Prioritize IT projects
- Terminate IT projects
- Monitor IT projects
- Allocate resources to project teams
- Provide project management consulting or mentoring
- Train and hire project managers
- Collect and provide past project records for reference
- Provide project management tools and templates
- Provide project management standards and policies
However, regardless of the type of PMO you have in your organisation, there are some pointers you can glean from their practical application which will allow you to grow your PMO and make it a successfully operating one. Therefore, in our article, we focus on the description of two PMOs. One being at its initial stage of evolution and the second one being much more mature, having more than ten years of operational history. Both are from different companies and their stories are described by real-life examples and a case study.
The following case study shares an example of a non-IT PMO during its initial formation and the first few years of existence. As this new PMO was formed within the salesforce division, it was imperative to quickly articulate the value-add and demonstrate how the PMO supported the efficient and effective execution of the business’ strategic goals.
Inception: Before the PMO could be established, almost an entire year was spent putting a business case together for senior leaders. This involved addressing how organisational structure was working against the effective deployment of project management. Most of the skilled project management was housed within the instructional design area of the business division but was being asked to conduct projects of larger scale and complexity that spanned technology, process management, as well as learning. Demonstrated value was continually being proven through the effective project management techniques and this played into the realization of a need for a PMO.
First year: Once the approval for a PMO was granted, there was an apparent need to quickly understand and set expectations around the value add. We were tasked to provide the following: Best practices and support for projects, standardised processes, tracking and reporting, and division-wide prioritisation.
Accomplishing all three of these would take substantial time and resources. It was critical to meet with key senior leaders to understand which of these was the top priority—or said another way—would add the most value to the organisation. This was a critical step because where you see the value may be different from the leaders who are your advocates. Those advocates might also not clearly articulate the root issue/problem that they see a PMO addressing without multiple conversations and evolutions of mission and vision statements.
Our initial understanding was that it was division prioritisation. But what they really wanted was things being prioritised and for the PMO to lead all strategic projects. Many leaders didn't realize that accomplishing both was impossible with the staffing we currently had on-hand and few understood how effective prioritisation could help to ensure the list of strategic projects was feasible. Additionally, senior leaders were seeing projects not being led efficiently and effectively and that led to wanting to move towards the PMO leading all projects.
Nine months after our inception, we halted most work around prioritisation (evolving our framework, timelines, and processes) and moved to leading projects. While we weren't given time to evolve prioritisation because we got thrown into leading projects, we ended up growing the PMO because leaders were seeing that efficiencies and relationships with business owners were very strong. Relationship-building was key to growing and helping to build-out the strategic direction for the PMO as well as managing expectations.
Now, a year later, we have a fair-sized team of 15 associates in various project leadership roles and we need standardised processes and templates because we have grown and consistency is needed. So, we are starting to fulfil the original task from our leadership, but it took us three years and we still have a pretty long run-way for evolving our division-wide prioritisation. We also now have more data to clearly articulate our pain points around evolving prioritisation. Currently, we don't have an easy way to understand our resource constraints and we know we need this to effectively sequence projects and programmes across the division.
Overall, we learned you have to evolve from your original target or scope in order to meet the evolving needs of the business. If you fail to understand how you can most add value, then your PMO will lose credibility and will not receive the staffing and advocacy needed to stay an integral part of your organisation.
The following case study describes the twelve-year history of a PMO. At the very beginning, it was designed to fulfil a basic need of the company, which was to effectively manage a significant increase in the number of projects. Before the PMO was set up, the key objectives were established (i.e., to reduce the time-to-market and operational costs, and to increase the quality of delivered products). To achieve those goals, a strong need for standardisation was determined. At that time, different scenarios to help fulfil that need were considered, and finally, the decision was made that the PMO should be formed in the company. However, before the PMO was officially established, it had to receive the full support of the entire top management, including the CEO, who was strongly convinced of the need to do it. In the next step, a detailed plan of the PMO's establishment was created, including predicted costs and the benefits the PMO should bring in order to shorten the time and reduce the costs of ongoing and future projects on an annual basis. Then, the first area of activities of the new PMO was to establish the standards, tools, and techniques which should be used in the company. As a dependable base, the PMI standards (PMI, 2013) were chosen and, building on them, some tailor-made methods were developed. In parallel, the in-house IT solution was developed to support PMO activities. The decision to create the dedicated application appeared to be the right one as, in the future, it could follow the development of the company and the PMO as a result. The simplified process of creating the PMO is shown in Exhibit 2.
Once the PMO was created, it never stopped changing in tandem with the development of the company. As the company came to expand its business and develop new products for the segments of the market, the PMO was constantly adapting to the new business needs. It stayed in-line with the company strategy and, as a consequence, developed new areas of expertise.
Exhibit 2: The simplified process of creating the PMO.
Project portfolio management (PPM) was introduced to the PMO's responsibilities after about three years of its initialisation. This move helped the company to reorient its activities and allocate limited resources to the core projects, which were crucial from the standpoint of the entire company.
Exhibit 3. The step-by-step development of the PMO's areas of expertise.
The latest area of focus—which is under PMO activities and still in the developmental phase—is project knowledge management responsibility. This newly-built concept should help the company to identify tacit knowledge (which is very often in the possession of individuals), and transform it into an explicit form, which can then be widely used in new projects.
The chronological development of the PMO's area of focus is shown in Exhibit 3.
Despite the passing of two decades since the emergence of the PMO concept, there is no single, common, or easy understanding of those entities. Furthermore, there is no single manual on how to successfully establish and run a PMO in your organisation. PMOs are being founded and closed. They differ in size from single person “departments” to entities managing hundreds of people. There can be just one or several PMOs in different places in a company's organisational structures, supporting business, operational, or strategic activities. Moreover, the power of authority of PMOs may vary a lot, from just reporting and control purposes to a full range of managerial responsibilities, including hiring people, assigning budgets to the projects, deciding on the staffing in projects, taking care of career paths and appraisal systems, and, finally, project cancellation.
There is evidence of PMOs supporting the companies’ innovations (Artto, Kulvik, Poskela, & Turkulainen, 2011). They can act as centralised or decentralised entities (Curlee, 2008); be a knowledge management broker (Pemsel & Wiewiora, 2013); support efforts to shorten the duration of projects (Spalek, 2014b); or be a key player in the company transformation process (Aubry, et al., 2011). The authors of articles very often argue over what the key success factors of successfully operating PMOs in different industries are according to the PMO's scope of work. However, they are far from clear on that matter and, therefore, examining the best practices of PMOs seems to be the best approach for practitioners, as learning by example can help you to develop your own success story by building on the experience of your colleagues.
Moreover, despite the plethora of academic work on examining the nature of PMOs (Ha & Lv, 2006) and its dynamics, there is still a significant gap between theory and practice (Taylor, Artman, & Woelfer, 2012). We believe that the best way to bridge this gap is to examine real-life examples and case studies of successfully-implemented PMOs. However, in order to achieve that success, many challenges had to be overcome and pitfalls avoided, which are the best source of knowledge for lessons learned. Therefore, based on our experience, we can issue recommendations—whatever the current state of your PMO may be—whether it's a consideration for the distant future or it's just starting out or has operated for some time already, you should keep in mind that it should always be in-line with your company's needs. Therefore, it is crucial to identify those needs first and then try to find the best solution which should be put under the PMO's set of responsibilities. We believe that the real-life examples and case study shown will help you to understand this process and will be a source of inspiration for PMOs in your companies.
ABOUT THE AUTHOR
Since 1994, Seweryn Spalek, PhD, has managed several IT projects in industrial companies and healthcare organisations, and in multicultural and multinational environments. He has managed an organisational change project centred on redesigning the functional organisation to be a project -oriented organisation with a PMO. He is also the author or co-author of several publications in project management.
Terry Kuhn has more than 20 years of experience in project management and people leadership. He has spent the past 16 years leading projects and coaching and developing project leaders through functional work for intranet design, training programme development, and strategic initiatives within the financial services industry. Within each function, he helped create and shape the work. He was the first formal contributor to the corporate Intranet and grew the team to 10. He then worked in various training areas contributing to the initial release of rich media online training, helping shape a blended learning strategy, and partnering with others to create a business unit PMO. He is a Project Management Professional (PMP)® certification holder with a bachelor's degree in communications, and a bachelor's degree in information systems.
Sarah Dayton is a senior project leader and leads a team of project practitioners with Edward Jones. Currently, she is the programme manager for a large-scale, strategic initiative aimed at evolving the onboarding and development of the firm's more than 10,000 financial advisors. She holds a master's degree in business administration from Washington University in St. Louis and is Project Management Professional (PMP)® certification holder.
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© 2016, Seweryn Spalek, Terry Kuhn, Sarah Dayton
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain