How to make your PMO succeed, transforming experience into remarkable value
PMO TOOLS Technologies
This paper presents the PMO VALUE RING, an innovative, eight-step methodology created for implementing or redesigning project management offices (PMOs), which consolidates the results of a research program on the topic, focusing on the value of the PMOs.
As a starting point, the author presents “The PMO Service Provider,” a new mindset that reinforces the true purpose of the PMO: creating value for the organization.
Much of the traditional literature on the subject suggests that PMOs should follow pre-established types such as “Strategic,” “Support,” and “Excellence Centre,” among others. Following the latest academic research, the new mindset proposed in this paper sets aside this discussion and suggests that the success of a PMO, contrariwise, mainly depends on its capacity to be unique, fully adjusted to the needs of its stakeholders, and flexible enough to quickly adapt to the frequent changes that can happen in organizations.
Each step of the PMO VALUE RING methodology is based on a powerful database with the experience of hundreds of professionals in PMOs in different countries.
The PMO VALUE RING methodology is a contribution to the project management community and is freely available on the website, pmotools.net. It can be useful for senior managers, PMO leaders, PMO managers, PMO staff members, PMO consultants, and PMO teachers, or even just a professional interested in entering into the fantastic—and complex—world of PMOs.
Keywords: PMO, project management office, methodology, value, benchmarking.
The organizational phenomenon of the PMO has established itself as a reality in leading organizations worldwide (Dai & Wells, 2004, p. 524; Hobbs & Aubry, 2007, p.74) in the last two decades.
There is still much to understand about the behavior of PMOs in organizations and much of this complexity is explained by the diversity of structures found in different organizations (Hobbs & Aubry, 2010). PMOs differ considerably from organization to organization, moving through different configurations that make them unique in the organizational structures to which they belong (Aubry, Hobbs, & Thuillier, 2008).
A new, important mindset for PMOs proposed in this paper is the “PMO Service Provider,” based on the idea that a PMO has stakeholders in the organization to which it belongs: senior management, project managers, and team members, among others.
Each of these stakeholders has different needs and expectations of the PMO. The successful PMO must be able to understand and address those demands in order to generate perceived value for the organization.
The functions performed by a PMO are precisely what are named in this paper as “services.” Through providing services, the PMO will deliver results that meet the expectations of its stakeholders. And the better a PMO delivers its services—and only those related to their stakeholders’ needs as is identified by Thomas and Mullally (2008, p.33) by introducing the concept of “fit”—the higher the perception of the value of the PMO.
Some potential services of a PMO were identified by Hobbs and Aubry (2007), when they identified the 27 most frequent PMO functions in 500 PMOs worldwide, such as providing methodologies and tools for project management, supporting portfolio management, providing mentoring, supporting top management with executives reporting, and supporting planning and project control, among others.
Generating value for the organization is the primary objective of any PMO. When this goal is not achieved, the PMO eventually loses executive support, resulting many times on the PMO shutdown.
In this context, the research program that led to this paper aimed to create a methodology represented by a framework, which was made up of models and tools that used the experience of the community for the benefit of implementing new PMOs or re-energizing existing PMOs; thus ensuring its alignment with what is most innovative and the effective best practices with a focus on value creation.
The PMO VALUE RING methodology (Exhibit 1) has eight recommended steps to establish a PMO committed to generating value for its stakeholders and the organization. They are grounded on the experience of more than one hundred mature PMO leaders worldwide.
Exhibit 1: The PMO VALUE RING methodology.
The following will share the most important recommendations for value-oriented PMOs, considering each step of the methodology.
1 – DEFINING THE PMO SERVICES
Firstly, the benefits expected by the PMO stakeholders should be identified. Benefits are results, so instead of focusing on the potential services (functions), try to figure out what your stakeholders really expect from the PMO in terms of results.
Each service has a different probability of generating an expected benefit. After identifying those benefits, the PMO will be able to prioritize the mix of services that should be implemented to maximize the probability of meeting its stakeholders’ expectations.
And be alert to significant changes in the organization, since they may directly influence the PMO mix of services.
2 – BALANCING THE PMO MIX OF SERVICES
Generating perceived value is absolutely important for a successful PMO.
The PMO services create different perceptions of value over time. Thus, it is necessary to understand and plan how this perception of value will happen through time, contributing to obtaining and keeping the PMO stakeholders’ support.
Some potential services for a PMO may generate a perception of value in the short run, while other services may have their results and value better perceived only in the long run.
The PMO mix of services should be defined considering its capacity to generate a perception of value and a balanced mix that will maximize the probability of generating a positive and steady perception of value over time.
3 – DEFINING THE PMO PROCESSES
As a service provider, the PMO should formally establish its processes, defining, in detail, how each service will be provided.
These processes must be described and adapted according to the specific needs of the organization.
Formal processes will be useful as a reference for establishing Service Level Agreements (SLAs) with its clients, contributing to the alignment of expectations.
4 – DEFINING THE PMO KEY PERFORMANCE INDICATORS
It is impossible to demonstrate value without measuring performance and the performance of projects does not always clearly demonstrate the PMO performance.
The PMO services should be measured differently. A specific set of Key Performance Indicators (KPIs) must be established for each service.
These KPIs should be used to monitor the performance of the PMO and they should be included in the SLAs and in the PMO Services Catalogue.
5 – DEFINING PMO HEADCOUNT AND COMPETENCIES
Defining the headcount for a PMO is a complex task, which directly depends on variables such as the components of the PMO mix of services, the amount of PMO stakeholders, the quantity of projects under the PMO mandate, and their level of complexity, among others.
Additionally, the competencies of a professional working in a PMO are not necessarily the same as a project manager. These competencies—and their relevance—will depend on what services are being offered to the stakeholders.
The most appropriate professionals should be selected and assigned to the appropriate services, considering the available competencies, and if there is any gap, an action plan should be developed.
6 – IDENTIFYING PMO MATURITY AND PLANNING THE EVOLUTION
The organizational project management (OPM) maturity is a very important concept, but it differs from the concept of PMO maturity.
A PMO may be strategic or operational, but it is not a sign of its maturity, but rather a result of the PMO stakeholders’ needs.
The current level of maturity of each service offered by the PMO should be identified, as well as the level to be reached in the next evaluation cycle. If there is a gap, an action plan should be developed.
A mature PMO offers services with a high level of sophistication and, in consequence, generates more value for its clients and the organization.
7 – CALCULATE THE PMO ROI
Calculating the financial return of a PMO is a major challenge, due to variability of the phenomenon.
As a first step, we consider the assumption that PMOs exist to reduce organizations’ portfolio cost overruns, which are caused by different problems at different organizations.
Each service has a specific probability of contributing to the reduction of these cost overruns and the capacity of the PMO to mitigate them and generate financial return will depend on the selected mix of services.
8 – ESTABLISHING THE PMO BALANCED SCORECARD
The balanced scorecard (BSC) may be a useful tool for strategic planning and performance monitoring of the PMO.
The PMO strategic map will be the ultimate reference to the value generation for its stakeholders and the organization.
All traditional perspectives of a BSC can be applied to a PMO, however the PMO VALUE RING proposes replacing the Financial perspective for a Value perspective, expanding the vision of possible contributions of the PMO.
The cycle of eight steps of the PMO VALUE RING methodology should be repeated periodically, usually every twelve months. However, it is important to remember that whenever there is a significant change to the PMO, it is essential to reapply it, ensuring the realignment of the PMO to new needs.
The ultimate challenge of any PMO is creating effective value to its organization. And in hard times, this reality becomes even more critical.
The PMO VALUE RING methodology aims to support PMO professionals overcoming this challenge, realigning their PMOs in order to generate effective and noticeable value to their stakeholders and organizations.
The PMO VALUE RING methodology was developed from the experience of professionals with high maturity in PMOs and it is strongly grounded on a large benchmarking database with the experience of hundreds of experienced PMO leaders worldwide.
This innovative methodology aims to transform deep experience into effective value, based on recommendations aligned with the best practices suggested by those who live the day-to-day of well-succeeded PMOs.
The PMO VALUE RING methodology is freely available at pmotools.net and it represents a major contribution for the worldwide project management community, with more than 5,000 users in 62 different countries.
ABOUT THE AUTHOR
Americo Pinto, PMP, is an international consultant, researcher, writer, and speaker, with more than 20 years of experience in PMOs, project, programme, and portfolio management. In 2011 in Dallas, TX, USA, he received the “Distinguished Contribution Award,” from the Project Management Institute (PMI) for his contribution to the development of project management practices. Mr. Pinto is the Research Director of PMO TOOLS Technologies; Chairman of the Advisory Council of the PMO Global Alliance; and Research Director of the Noorden Group.
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Aubry, M., Hobbs, B., & Thuillier, D. (2008). Organisational project management: An historical approach to the study of PMOs. International Journal of Project Management, 26(1), 38–43.
Dai, C. X., & Wells, W. G. (2004). An exploration of project management office features and their relationship to project performance. International Journal of Project Management, 22, 523–532.
Hobbs, B., & Aubry, M. (2007). A multi-phase research program investigating project management offices (PMOs): The results of phase 1. Project Management Journal, 38(1), 74–86.
Hobbs, B., & Aubry, M. (2010). PMO: A quest for understanding. Newtown Square, PA: Project Management Institute.
Thomas, J., & Mullaly, M. (2008). Researching the value of project management. Newtown Square, PA: Project Management Institute.
© 2016, Americo Pinto
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain