PMO evolution

from the origin to the future

Luca Giraudo, Prince2, P3O, PMP

Project Management Consultant, Accenture UK

Advisor, European School of Project Management

Emmanuele Monaldi, PMP

Business Consultant, Sytel Reply UK

Project management offices (PMOs) are evolving. Shifting from purely administrative to incorporate the strategic, PMOs are performing a wider range of activities; they are supporting projects and programs outside Information Technology such as product launches and post-merger integrations, while at the enterprise level, they are helping organizations to invest in the right set of initiatives to achieve maximum return in terms of value and benefits.

PMO practitioners are expanding their role from pure execution to full accountability on budgets and resources. They are re-thinking the way PMOs operate, embracing new technologies and introducing new project management operating models in order to increase their added value to the organization. PMOs’ stakeholder set is broadening to include senior executives such as chief operating officers (COOs) and chief executive officers (CEOs), business partners, and external resources.

A new PMO model is emerging: the evolved PMO. An innovative, strategically aligned, and flexible PMO, designed to support modern organizations to face the turbulence of current market conditions.

Introduction

This paper will start by examining PMO history and evolution and elaborating on what a PMO is and how it may be categorized based on its influence and position within an organization.

It will then analyze the impact of the digital revolution in the creation of a new PMO model: the evolved PMO. An innovative, strategically aligned, and flexible PMO, designed to support modern organizations to face the turbulence of current market conditions.

Finally, the last section of the paper will describe some of the key challenges faced by evolved PMOs and PMO practitioners.

PMO History

The origins of the PMO are linked to the implementation of the scientific management method, first introduced by Frederick Taylor about a century ago, and the increase in the number and complexity of projects managed by single organizations.

In the 1930s, the U.S. Air Corps developed a Project Office function to monitor aircraft development. This is probably the first recorded use of the project office expression (Crawford & Cabanis-Brewin, 2010).

The structures underlying the traditional PMO can be dated back to the U.S. military's development of complex missile systems in the 1950s. Each weapon system was composed of a several sub-projects grouped together in system program offices (SPOs). They oversaw not only entire project systems (e.g. the missile), but also its warhead, support equipment, launcher, and training and logistics support. The key benefits of this project office were to centralize funding into work packages instead of separate components, improve budget predictions, facilitate a standard phased planning approach, and identify non-strategic initiatives before fund allocation.

During the 1980s, the project office concept was exported to construction, IT, and other sectors, thanks in part to the boost of computer technology.

Project management diffusion gained a lot of momentum in the 1990s, with professional associations and project management certifications becoming recognized industry standards; the UK's Office of Government Commerce Projects In Controlled Environment 2 (PRINCE2) diffusing outside the IT sector, and associations such as the Project Management Institute (PMI), and the International Project Management Association (IPMA) gaining prominence with associates and practitioners.

Organizations started to search for more efficient ways to manage their increased number of projects and resulting compromised performance (e.g., delays, cost overruns, and falling short of quality and specifications), and to question if their projects should be run in isolation, or managed in a coordinated way to improve resource utilization and to avoid cross-projects’ conflicts.

This need for a coordinated and standardized approach to manage projects within the organization has been a key factor for the diffusion of modern PMOs.

As the PMO concept was introduced across the globe, different “flavors of PMO” started to proliferate. The use of a single, simple acronym for multiple purposes has become increasingly confusing and inappropriate given the breadth of contexts. It is therefore important to clarify what a PMO is, what it is supposed to do, and where it should be positioned within an organization.

There's No One-Size-Fits-All PMO Description

In different organizations, the definition of PMO may vary in name and by function, but it is essentially an organizational structure that centralizes, coordinates, and oversees the management of projects and programs.

According to A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, the project management office (PMO) is an organizational structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools and techniques. The responsibilities of a PMO can range from providing project management support to being responsible for the direct management of one or more projects (PMI, 2013, p. 10).

PMOs can be categorized based on their (a) influence and (b) position within the organization.

(a) Based on the influence and degree of control they have on projects within the organization, PMOs can be categorized as:

  • Supportive: Supportive PMOs provide a consultative role to projects by supplying templates, best practices, training, access to information and lessons learned from other projects. This type of PMO serves as a project repository. The degree of control provided by the PMO is low.
  • Controlling: Controlling PMOs provide support and require compliance through various means. Compliance may involve adopting project management frameworks or methodologies, using specific templates, forms, and tools, or conformance to governance. The degree of control provided by the PMO is moderate.
  • Directive: Directive PMOs take control of projects by directly managing them. The degree of control provided by the PMO is high.

(b) Based on the position they have within the organization, PMOs can be categorized as:

  • Individual PMO or “Project Management Office”: Individual PMOs typically provide functional support (e.g., infrastructure, document management, training, etc.) to a single complex project or program. They set basic standards and oversee planning and control activities for a single project.
  • Departmental PMO or “Business Unit PMO”: Departmental PMOs provide support for multiple projects at a department or business unit level. Their primary challenge is to integrate projects of different sizes within a division (e.g., IT, Finance) from small, short term initiatives to multi-year programs with multiple resources and complex integration of technologies.
  • Corporate PMO or “Enterprise PMO”: Corporate PMOs create standards, processes, and methodologies to improve project performance within an organization. They are typically responsible for allocating resources to different projects across the organization.
img

Exhibit 1: Individual, departmental, and corporate PMOs.

The Three Functional Areas of a PMO Model

For the purpose of this paper, we will define a PMO model as the total structure put in place to deliver projects and services across an organization or enterprise through a single or multiple offices. It can be seen as a decision-enabling/delivery support model for all business change within an organization (OGC, 2013).

This may be provided through a single permanent office (e.g., Project Management Office), or through a linked series of offices (Portfolio Offices, Program Offices, and Project Offices); both permanent and temporary, providing a mix of both centralized and localized services.

According to the Portfolio, Programme and Project Offices: P3O (OGC, 2013, pp. 39-40), the functional areas of a PMO model can be categorized in three functional areas:

  • Strategic planning or portfolio support functions/services – these focus on supporting management decisions and may include alignment with strategy, prioritization, benefits realization management, reporting through management dashboards, and so forth.
  • Delivery support functions/services – these focus on supporting the delivery of change and may be provided through a central flexible resource pool of delivery staff, with capacity planning, and HR management processes.
  • Centre of Excellence functions of services – these focus on the development of standard methods and processes, developing consistent working practices, and ensuring they are deployed appropriately.

The next section of this paper describes how the scope and functions of a PMO typically evolve over time.

PMOs Evolve Over Time

A PMO is usually created to address a specific issue. It focuses on implementing basic project management processes, introducing basic tools, and aiding the professional growth of competent project managers. As it evolves, a PMO starts to perform a wider spectrum of activities.

The PMO competency continuum is a simple model to describe the PMO evolution. This model, created by Gerard M. Hill and described in Exhibit 2, defines a series of evolution stages for a PMO in an organization. Each PMO stage suggests a particular level of functional capability that the PMO will have achieved if functions are fully implemented.

The five PMO stages are also indicative of an organization's maturity in project management, with the PMO's role and responsibilities advancing from project management oversight and control at the lower end of the competency continuum to strategic business alignment at the higher competency stages.

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Exhibit 2: PMO competency continuum (Hill, 2004).

The Impact of the Digital Revolution

The Digital Revolution, also called Third Industrial Revolution, refers to the advancement of technology from analog, electronic, and mechanical devices to the digital technology available today. This era started during the 1980s and is still ongoing.

It continues to introduce new technologies and communication paradigms such as software defined networks, unified communication, cloud computing, big data, internet of things, web 2.0, and social media to name a few that are having a revolutionary impact on the PMOs and on the organizations they serve.

Currently, every organization, in whatever industry it operates, has to have an information technology layer with a strong focus on innovative and creative technologies.

Therefore an organization has to be a Digital / IT enabled organization

Organizations are diverting resources from business-as-usual and functional activities to project and programs that need to be properly prioritized and fully aligned with the organization's strategy. As a result, projects and programs have more relevance than in the past.

Therefore projects and programs need to be strictly aligned to the organization's strategy

In today's fast-paced business environment, organizations are constantly pressured to adapt to changing market conditions and consequent changing business priorities.

Therefore an organization needs to be quick to respond to changing business priorities

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Exhibit 3: From the digital revolution to the “evolved” PMO.

Exhibit 3 shows the impact of the digital revolution on the PMO evolution. PMOs have been stimulated to develop new capabilities to remain relevant and expand their influence within the organization.

The Evolved PMO

The evolved PMO is a PMO that is actively seeking ways to improve overall organizational performance as well as ways to communicate performance improvements across the enterprise through the use of new technologies and flexible operating models.

The evolved PMO concept has been anticipated by a number of publications: in 2006, Plainview coined the term “PMO 2.0” to describe a “full-service PMO that supports and aligns strategic, tactical, and operational considerations” (Doercher, 2011). This version of an enterprise entity that could optimize scarce resources also emerged as the “Investment Opportunity PMO” in a February 2011 article on TechRepublic.com (Gray, 2011) as well as in a Forrester Research white paper cited in an April 12, 2011 article on CIO.com as the “Transformational PMO” (Levinson, 2011).

Exhibit 4 compares the key capabilities of the evolved PMO with other PMO models.

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Exhibit 4: Evolved PMO capabilities.

According to the classification proposed in this paper, digital PMOs, enterprise PMOs, and agile PMOs are evolved PMOs classified by their dominant capability.

The Digital PMO

The Digital PMO is a PMO that has the capability to provide projects’ information to any relevant stakeholder, at any time, on any device. It is real-time data processing, made available in a web and mobile-friendly format.

As the speed and complexity of our operating environments continue to steadily accelerate, a consistent point for coordination, collaboration, and sourcing information becomes essential. Digital PMOs use new technologies to facilitate collaboration and information sharing inside and outside project teams.

From a strategic point of view, digital PMOs enable business executives to retrieve project data at anytime from anywhere. From a day-by-day point of view, they enable project teams to monitor physical (servers, applications, etc.) and human resources in real time.

The key challenge in adopting a digital PMO is the integration of new and legacy platforms that requires careful thought and planning, especially for the integration itself, protection, and security of data.

The Enterprise PMO

Enterprise program management is the centralized and coordinated management of programs and/or projects to achieve strategic benefits and objectives. It exists at the enterprise/strategic level and has the authority to initiate/prioritize projects from a corporate perspective.

An enterprise PMO is a PMO that is able to operate at the corporate side of the business, hold a strategic position within the organization, and ensure that projects are aligned with the strategic objectives of the organization. By having executive support, enterprise PMOs influence strategy, drive key initiatives, and control changes across the organization.

Compared to traditional PMOs, enterprise PMOs operate with a strategic mission within an organization and are an integral part of the annual budgeting process and ongoing cost management. They report to the highest levels of the organization, often to the COO.

In order to be successful, the role, responsibilities, and defined authority of an enterprise PMO must be clearly communicated and periodically validated by their sponsor; management support is essential to the success of any PMO, however, for an enterprise PMO, it is absolutely crucial. Furthermore, an enterprise PMO must have a mission aligned with the business objectives of an organization and have functions aligned to their strategic mission (e.g. portfolio management, benefit realization, and program dependency alignment).

Enterprise PMOs work in a harmonious manner with other PMOs and often share a common reporting layer.

The Agile PMO

The Agile Manifesto emphasizes collaboration, results, and adaptability over process, documentation, and adherence to plans. In principle, any process whose day-to-day execution reflects these principles is, by definition, an agile process.

An agile PMO is a PMO that uses flexible reporting tools and proactive governance models to support agile projects within an organization.

The impact of an agile mindset goes beyond the definition of specific tactical practices, agile PMOs are more willing to quickly adapt to changes in business needs and project/program requirements than traditional PMOs.

Key attributes of an agile PMO are:

  • to quickly respond to change in order to retain focus on outcome and benefits in a turbulent economy;
  • to balance flexibility and stability; and
  • to track and monitor project performances based on agile metrics.

Agile practitioners encourage project teams to continually revalidate their activities and efficiently respond to change, as opposing to executing a pre-set longer term plan.

“Evolved” PMOs Face Evolved PMO Challenges

With the constant increase of agile projects within an organization, evolved PMOs need to set the right balance between governance and flexibility. They need to identify the right tools to track, monitor, and report project performances for the benefit of senior executives required to make informed decisions on the basis of performance metrics.

In order to be successful, evolved PMOs need to obtain and maintain buy-in from senior executives, not accustomed to dealing with governance structures. A shift in mentality is necessary to accept the empowerment of the PMO function, which historically is delegated to a supportive role.

Finally, a key challenge of the evolved PMO relates to the integration of new and legacy platforms. The “digitalization” of the PMO environment requires careful analysis and planning, especially around the technology integration, protection, and security of data.

Conclusion

The history and evolution of the PMO are now experiencing the latest consequences of the digital revolution. This has introduced a new PMO model: the evolved PMO. The evolved PMO is an innovative, strategically aligned, and flexible PMO designed to support modern organizations as they face the turbulence of current market conditions.

The evolved PMO can be defined as a PMO that is actively seeking ways to improve overall organizational performance as well as ways to communicate performance improvements across the enterprise through the use of new technologies and flexible operating models.

Evolved PMOs face new challenges such as data security and integration. In order to remain relevant, PMOs need to be inventive, innovative, flexible, and strategically aligned. PMO practitioners need to be ready to drive the change and the adoption of new tools, methodologies, and technologies.

References

Agile Manifesto. Retrieved from http://agilemanifesto.org/.

Crawford, J.K. & Cabanis-Brewin, J. (2011). The strategic project office (2nd ed.). Boca Raton, FL: CRC Press.

Doerscher, T. (2011, October). PMO 2.0: The evolution of the PMO as an enabling agent of change. PMI Global Congress 2011, North America, Dallas, TX.

Duggal, J. S. (2011, October). Reinventing the PMO. PMI Global Congress 2011, North America, Dallas, TX.

Gray, P. (2011). A tale of two PMOs. Retrieved from http://www.techrepublic.com/forum/discussions/102-341274.Hill, G. M. (2004). Evolving the project management office: A competency continuum. Information Systems Management, Fall, 45–51.

Levinson, M. (2011). Five characteristics of transformational PMOs. Retrieved from http://www.cio.com/article/2409234/project-management/project-management--5-characteristics-of--transformational--pmos.html.

Mustafa, A. (2014, May). Creating a digital PMO. PM Network. Retrieved from http://www.pmi.org/learning/pm-network/2014/creating-a-digital-pmo.aspx.

Office of Government Commerce. (2013). Portfolio, Programme and Project Offices: P3O. London, UK: Office of Government Commerce.

Project Management Institute. (2013). A guide to the project management body of knowledge (PMBOK® guide) – Fifth edition. Newtown Square, PA: Author.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2015, Luca Giraudo, PMP, Prince2, P30, & Emmanuele Monaldi, PMP
Originally published as a part of the 2015 PMI Global Congress Proceedings – London, UK

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