The PMO

Abstract

The Project Management Office (PMO) has become a prominent feature of project management practice. Many organizations are searching for an answer to the question, “How should our PMO be organized?” There is much opinion on this question, but authoritative responses are difficult to find. This question may be unanswerable and an entirely different approach to PMOs may need to be taken. The paper is based on an extensive investigation of PMOs that shows why the question is so difficult to answer and proposes an alternative approach.

Introduction

Despite the importance of PMOs to project management as it is practiced in many organizations, there have been very few solid empirical investigations of this important topic. The paper is based on an on-going extensive investigation of PMOs that is financed in part by a grant from the Project Management Institute Research Department (Hobbs, 2007; Hobbs and Aubry, 2007). The investigation includes both a survey of 500 PMOs and 11 case studies of PMOs drawn from intensive case studies in four organizations. The aim is to arrive at a better understanding of PMOs in order to provide guidelines for practice.

The Great Variety of Form and Function

There are many options as to form and function when setting up or reconfiguring a PMO. The variety seems almost infinite. In designing the form or structure of the PMO, several questions including the following will need to be answered:

• Will project managers be included in the PMO, and, if so, which ones?
• Which projects and programs will be included within the PMO's mandate?
• Will the PMO have decision-making authority? If so, how much and on what issues?

A survey of 500 PMOs worldwide showed that organizations are making very different choices when answering each of these questions (Hobbs, 2007; Hobbs and Aubry, 2007). Of course, when structuring a PMO, many other questions will need to be addressed, but with just these three questions, it is possible to identify a large number of PMO structures, all of which do exist in organizations as validated by the survey results.

With regard to the roles or functions that are included within the mandate of PMOs, the variety is as great. A review of the relevant literature identified 75 functions. The authors reduced this list to 27 functions for inclusion in the survey. Factor analysis of the survey results identified groups of functions that form the fundamental underlying structure behind the myriad of functions observed in reality. Organizations choose from among several groups of roles or functions when deciding upon the PMO's mandate. These include functions related to:

• Monitoring and controlling of project / program performance
• Project management methods, tools and standards
• Developing the competency of project personnel
• Organizational learning
• Multi-project management
• Strategic management
• Executing specialized tasks for project managers
• Managing the customer interface
• Recruitment, selection, evaluation and remuneration of project management personnel

From this list it is clear that many options are available when determining the mandate of a PMO and each of these groups contains several more detailed functions. The survey results show that all of these are chosen by significant numbers of organizations. Combining the options for form with the options for function creates the vast array of models of PMOs found in organizations.

No Systematic Variation by Industry or by Region

If PMO structures were similar in each industry or each region the choice for a particular company would be made easier. Unfortunately, the survey results indicate that the same variability in PMOs can be found in each industry and region. Exhibit 1 shows the percentage of project managers that are located within the PMO for six economic sectors.

Exhibit 1 - Project Managers Located within the PMO by Economic Sector

The same variability was found when comparing PMOs in the United States, Canada and Europe (Hobbs, 2007, pp. 36-37). If the PMOs of several firms operating in the same industry and the same region were compared, it is likely that very different PMOs would be found.

The PMO as a Temporary Arrangement

When establishing a new PMO or restructuring an existing PMO it is natural to ask the question “How should our PMO be organized?” as if the answer would be stable over time. In most situations, this implicit assumption is inappropriate because most PMOs stay in one particular form for only a few years before they are either restructured or dismantled. Exhibit 2 shows the age distribution of PMOs from the survey results.

Exhibit 2 - The Age Distribution of PMOs

The investigation of PMOs in four organizations also illustrated the ever-changing nature of PMOs. Two of the organizations studied have had PMOs for over a decade. Each has changed their PMOs several times. The rhythm of change is approximately 3 to 4 different forms of PMO per decade, which is consistent with the survey results.

The Search for Contingency Factors

Organizations trying to decide “How should our PMO be organized?” are faced with a dilemma. Given the great variety of form and function found in other organizations and the temporary nature of any particular PMO structure, what should guide the organization in making these choices? If contingency factors that indicate that in such and such a situation the PMO should be organized in a particular way could be identified, the problem would be much easier to solve. Unfortunately, analysis of the survey data failed to identify systematic differences among PMOs in different organizational contexts. This is to not to say that they do not exist, but that they were not found. Further research may find them in the future.

The Search for Best Practices

Among the great variety of practice related to PMOs, some practices must be better than others. If these could be identified, they could serve as guidelines for organizations designing PMOs. One way to identify best practices is to identify practices that are associated with better results. Analysis of the survey data did identify the following characteristics as being associated with better performance:

• PMO structural characteristics associated with PMO performance
  • Percentage of projects within the mandate of the PMO
  • Percentage of project managers located in the PMO
  • Decision-making authority of the PMO
• Characteristics of the organizational context associated with PMO performance
  • Supportive organizational culture
  • Project management maturity of the organization

These statistical associations with performance may help organizations to make choices related to PMO structure. However, caution must be exercised when doing so, for at least three reasons. First, the statistical association is not a perfect predictor of performance. Many PMOs with these characteristics perform poorly, and inversely, many without these characteristics perform well. Second, the relationships among these characteristics and with performance tend to be mutually re-enforcing. For example, project management and the PMO will tend to be highly valued in a more mature organization. The causal-effect relationship may be circular. Third, organizational culture and the level of project management maturity are not easily changed. If these are necessary conditions for implementing PMOs, then many organizations may not be able to so.

An Alternative Approach

PMOs have a history in their organizational context. In order to capture this historical context, the evolution of both the PMO and the host organization were tracked from before the introduction of the first PMO through several transformations of the organization and the PMO or PMOs to the present day, in each of the four organizations under investigation. The analysis shows that PMOs and their organizations evolve together. The form that the PMO takes on at each major organizational change can best be understood by examining the previous state of both the PMO and the organization, and the opportunities, threats and organizational tensions that are present at the time of the transformation.

The detailed investigation of the four case-study organizations revealed periods of relative stability punctuated by periods of change. The changes in PMOs did not occur in isolation, but were accompanied by other changes in the organizations. One should look, therefore, to the internal dynamics of the organization during the period of change in order to make sense of the changes made to PMOs. The object of interest should not be the PMO structure itself, but the organizational transformation process that produced changes in both the organization and its PMO or PMOs. Exhibit 3 provides a graphic representation of periods of relative stability punctuated by periods of change as an organization and its PMOs evolve over time.

Exhibit 3 – Episodes of Stability and Change

Each of the episodes of change can be modeled as in Exhibit 4, which shows how the future state of the organization and its PMO are influenced by 1) the history and present state of the organization and its PMO if it has any, 2) drivers that are internal to the organization and 3) events and conditions that are external to the organization. The changes in the organizations and their PMOs were driven to some extent by external forces such as competitive market conditions. However, the case studies showed that the primary drivers of change were internal to the organizations.

A Case Illustration

Examples of each of these drivers can be found in one of the transformations undergone by the R&D center of a telecommunication company that was part in this study. The R&D center was organized into several autonomous business units each of which had its own PMO. Each unit functioned as a small entrepreneurial firm. This organization was designed to foster entrepreneurship and innovation.

The major turbulence caused by the bursting of the dotcom bubble provides an illustration of external market and competitive conditions that had a profound influence on the company and the whole industry. Interestingly, major turbulence in this industry did not immediately impact the R&D center. This company maintained its long-term development perspective and long-term R&D objectives while cutting into the operations side of the business. It was only three years later that the program aimed at increasing organizational efficiency impacted the R&D center.

The center was delivering products with considerable delay, causing significant tensions within the company. Under the auspices of the organizational efficiency program, one central PMO bringing together all the project managers in the center was created. All the other PMOs were dismantled. The business units remained in place. The focus of the organization and the PMO was control of projects. This center had to prove its capacity to compete with the other centers and, more important, to regain the trust of the head office in its ability to deliver on schedule.

Management Philosophy

In all of our 11 transformations observed in this study, changes in the structure corresponded to changes in the senior management team and their management philosophy. This expression management philosophy was used by several people in the organizations studied. It can be defined as a general principles on which system foundations and execution can be built. The concept of management philosophy is used here to group together the set of values and elements of a cultural nature that form a global entity capable of orienting decisions and actions of people in the organization. The management philosophy can be that of one individual, of the top management team or of the whole organization. A new management philosophy usually initiates a new restructuring process, the current structure not being coherent with the new management philosophy. Continuing with the example above in the telecommunication company, the philosophy changed from one supporting entrepreneurship to one supporting tight controls and improved performance, particularly with regard to schedule. The PMO manager that was put in place had a vision of the PMO as exercising strong centralized control. This approach had an influence on the role and the mandate of this PMO, as project management was completely centralized in one PMO. A high value was placed on transparency. Any deviation from plans was supposed to be reported and corrective action immediately identified and applied. The personal incentives of the PMO manager were linked to this, as no project was allowed to pass directly from green to red!

Exhibit 4 – Drivers of Change in Organizations and PMOs

Unresolved Tensions

Tensions (between individuals, between sub-structures, etc.) emerge generally from discomforts that are constructed over time within a specific structure. The word tension is used here to describe a difficult situation that threatens to break apart. In the context of project management organizational structures, tensions often build up slowly until a breaking point is reached, at which time, a change in the structure will take place, modifying or eliminating the source of tension. From the previous example, one of the consequences of the implementation of the new centralized PMO was the creation of tension related to transparency and the information provided by the product line manager:

Another tension relates to the trade-offs between quality and schedule. Project managers push to implement as planned even if quality problems persist. Once the project is completed, problem solving is under the responsibility of the product manager. As can be seen from these examples, tensions bring the political dimension of organizations into play.

A Typology of Organizational Tensions

An analysis of the 11 transformations revealed that the organizational tensions contribute the most to making sense of the transformations. Five categories of tensions have been identified: economic, political, customer relationship, standardization versus flexibility, and controlling the project machine.

Economic Tensions

The source of economic tension is double: project performance and PMO cost. Project performance is often questioned inside organizations. Tensions emerge when projects do not meet their objectives. This is true with or without the presence of a PMO, but when a PMO exists it is often recognized as having a role to play in project performance. The performance of projects is often used as a key performance indicator for PMOs (Kendall and Rollins, 2003). Several scenarios have been observed. In some cases, project performance remains poor. bringing the PMO's legitimacy into question. In other cases, project performance is seen as improving independently of the efforts by PMOs. In yet other cases, a cycle was observed under which an organization implemented a PMO to improve performance and when performance improved, the PMO was no longer seen as useful. Following the dismantlement of the PMO performance declined and a new PMO was created in order to improve project performance once again. More generally, those responsible for PMOs are often under pressure to show value for money. This leads to both efforts to document the value of PMOs and to PMOs being the victims of frequent attacks on their legitimacy.

Political Tensions

Political tensions emerge around issues of power and control. The power to manage projects seems to be the most important tension, the one that gives rise to the most important issues and the one that has the greatest influence on decisions related to organizational structure. Who is going to manage projects? Answering this question determines the location of project managers. Accountability is closely related to the issue of control. Who in the organization will be accountable for project management results? If the attainment of business objectives relies to a large extent on projects, the key to power and influence in the organization relates to having power and influence on projects. If senior managers are to be accountable for business results, they want to have the means to attain them--they want to have control over project management.

Tension emerges naturally on the issue of control of projects. In some organizations, a distinctions is introduced between monitoring and controlling. Many PMOs monitor project progress and performance. Some are limited to the monitoring function while others have a role to play in controlling projects. Tensions emerge when PMOs exert control over projects for which they do not have primary responsibility. In some situations, PMOs are allowed to report information on projects, to ask questions, or to integrate information by portfolio, but are not allowed to make judgments and even less to dictate actions on projects. This leads to a paradox where a PMO cannot take action while at the same time is criticized for its inability to effect project performance.

Many PMOs have in their mandate to control projects either managed internally or managed by other entities. The situation is more conflicting when a project is in difficulty; nobody appreciates diffusion of bad news on his or her project. Judgment on the project's health depends upon the perception and the position of the individual. People from the PMO or from the business unit do not have the same point of view as they are not pursuing the same objectives and do not have the same incentives. Each may have his or her own criteria for reporting the project status as green, yellow or red. Discussion on the color of project status is a widespread phenomenon and involves much debate and negotiation among people at all levels of the organization. These discussions come back periodically, often monthly. They provide an opportunity to observe the tensions that emerge around the management of the project and its status.

Another source of tension related to control of projects is the issue of transparency. Discussions on the color of the project status may be avoided by giving inaccurate or incomplete information. PMOs sometimes play a detective role to make sure that no information is hidden by other managers. In this situation, a climate of trust is difficult to establish and tensions can become very apparent.

Client Relationship Tensions

From the PMO's perspective there are two types of clients: their own clients for their deliverables and the clients of projects that are realized in the organization. The tensions are related primarily to the second type of client usually represented internally by an organizational entity. This relationship seems sensitive as it provides legitimacy. Some business and IT entities attempt to retain exclusive responsibility for customer relationships and to push the PMO outside of this relationship. Not being in a close relationship with a client can have important consequences with respect to having knowledge of the projects. A PMO can easily be discredited when it has the wrong perception of projects. In one case in the study, a PMO was dismantled because of its inability to help project managers due to a misunderstanding of projects needs.

Standardization / Flexibility Tensions or Business versus Process Orientation

The standardization of project management methodology and process are often in opposition to the flexibility needed in the execution of a project in real life. PMOs often have the responsibility for developing and standardizing methodologies. The development of these tools is very often participative with contributions from all entities involved in project deliverables. But when it is time to put the methodology into application, confrontations are rather the norm. The tension between standardization and flexibility is closely related to issues of power and control. Standards are followed or not, depending on who has the power to decide.

An opposition often emerges between a business and a process orientation in decision making. Tension is created between business managers demanding flexibility to meet business needs and those that are responsible for the project management process. In certain circumstances, business managers encourage delinquency in the pursuit of business objectives, while in others the emphasis is placed on respecting the project management process.

Tension around the Control of the Project Machine

The expression “controlling the project machine” was used by several people in the organizations under investigation. This expression is used to evoke two versions of the same tension: either the machine should be upgraded or it races out of control. Raising the organizational capacity to deliver projects brings up problems around resource allocation. But reducing this capacity is more subtle and brings tension between PMOs and functional or business units. A good example can be drawn from one of the case studies. One PMO was given the responsibility to align projects to the business strategy while project mangers were under the responsibility of business units. Managers in business units wanted their entity to succeed and flourish. One way of doing this is to initiate new projects and to increase human resources working on them, or at least to maintain them at present levels. Under good portfolio management, such behavior should not be permitted if projects are not required to reach business objectives. In this case, the PMO was at the heart of a conflict resulting from an attempt to reduce the project portfolio being opposed by business units that wanted to increase it.

In resolving one or several of these tensions, a particular structure emerges. As can be seen from the discussion above, the drivers of organizational change are tightly interwoven. It is often difficult to identify a single determinant of the ensuing change.

Conclusion

It may be impossible to answer the question “How should our PMO be organized?” if the focus is limited exclusively to establishing a PMO or reconfiguring an existing PMO. Organizations are tightly woven. The study of organizational transformations reported here showed that changes in PMOs are usually associated with other changes in the organization and that changes are driven to some extent by external events, but primarily by the internal dynamics of the organization and the tensions that exist within the organization. To understand and to intervene in the implementation of a PMO, one should first look to the host organization and the management philosophy of the top management team. Otherwise, the question “How should our PMO be organized?” may be impossible to answer.