Project Management Institute

A practical practice

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Program management offices are an important facet in the structure and organization of today's project-based companies. In a survey of more than 2,400 worldwide, “world-class” companies—defined by Atlanta, Ga., USA-based The Hackett Group as organizations with fine-tuned best practices that render a company both effective and efficient—50 percent of respondents managed IT projects through a formal, permanent Program Management Office (only 25 percent of median companies had PMOs).

Of course, the initial setup of a PMO can be costly. But whether the impetus is to provide project managers with more training, centralize project functions throughout the enterprise or avoid the mistakes of past projects, the consensus among the many organizations with functioning PMOs is that ROI outweighs the upfront costs.

“The hope is that the money and time invested in the PMO will be more than saved by delivering projects better, faster and cheaper across the entire organization,” reports Atlanta, Ga., USA-based TenStep Inc., the consultancy behind PMOStep.com. “The value is gained by not only helping specific projects meet their expectations but by implementing processes and practices. Most organizations will find an overall cost savings associated with implementing a PMO.” Here, four executives back up this claim and talk about the value a PMO adds to their organizations.

Brian Abeyta,

Second Vice President, Project Management Office, Aflac, Columbus, Ga., USA

Aflac is a Fortune 500 company insuring more than 40 million people worldwide. We offer worksite policies to employees at more than 312,900 payroll accounts in the United States and insure one out of four Japanese households as the largest life insurer in terms of individual policies.

In response to a recommendation by a large consulting group, Aflac established its PMO in 2000. It serves two primary functions: to staff and assign professional project managers to projects, and to administer enterprise project and portfolio support, such as portfolio management, governance, project management software tool usage and resource management. The PMO project managers work with IT management and technical staff to deliver nearly 30 large-scale strategic projects annually. In directing the PMO's activities, I have a dual reporting relationship to the chief administrative officer and the chief information officer.

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The PMO administers a training program with our corporate training and development department to certify internal project managers. To date, 60 percent of the PMO project managers have attained their Project Management Professional (PMP®) credential, and the remaining project managers are working to obtain their certifications. Project managers also receive other formal training throughout the year as part of their annual objectives, and PMO management maintains a log of the training hours received.

Since the PMO was established, it has quintupled in size, allowing Aflac to take on a significantly larger number of strategic initiatives in response to growing business needs. Our phased estimation approach gives us project estimates that are closer to actuals. Change control for scope and cost is managed through a formal, thoroughly coordinated process which gives our executives better information on which to base project investment decisions. We also have an even firmer grip on project expenses, a firmer governance structure, better trained project managers, enhanced accountability that spans the IT and Business Unit organizations, more corporate support, rigorous project management standards, thorough Standard Development Life Cycle (SDLC) standards and wider collaboration.

By reducing the number of defects that require rework and being closer to the estimated scope, time and costs, our PMO allows the company to perform more project work with the same amount of money. We intend to remain a lean organization, getting better at what we do. Our PMO is a service to the business units and the IT organization: We are a part of the partnership between the business units and IT, and that is the indispensable relationship to the company. The PMO would not exist if not to serve those needs.

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Dr. Lim Meng Soon,

Director, Johor Port Berhad, Johor, Malaysia

Johor Port Berhad (JPB) established our PMO in April 2004. The PMO manages the implementation of major information and communications technology (ICT) projects from user requirement specifications until the project is handed over to the end-user successfully. Currently, the PMO manages three to four concurrent projects throughout the year and often coordinates end-user training prior to project handover.

The PMO has helped JPB to develop and implement proper project management methodology based on PMI's standard methodologies, and by following proper methodology, we have better control over the scope, issue management, progress measurement and tracking. We recognize the important role IT plays in ensuring Johor Port stays globally competitive: The PMO is an integral part of JPB's future business plan, an important vehicle for the company to move ahead and compete globally. JPB has ICT initiatives that span the next five years, and to meet these objectives, it is crucial that all projects are delivered successfully. Hence, there's the need for JPB to have support from a PMO that will assist in the delivery of the identified projects.

The PMO is a landmark undertaking for our port in ensuring our IT projects consistently exceed our expectations.

The PMO is a landmark undertaking for our port in ensuring our IT projects consistently exceed our expectations. Our PMO will save the company money by enabling better resource management, supporting projects that offer the biggest return on investment and ensuring steadily rising profits. We are considering expanding the PMO to support our subsidiary, JP Logistics Sdn Bhd (JPL), as well.

Rommy G. Musch,

Project Management Practice Director, Equant, Wellington, New Zealand

Equant always has considered the utilization of project management concepts to be the basis of its success and growth. Four years ago we created a formal project management unit, the PM Center of Excellence (PMCOE), to take our project management into the next generation.

One of the objectives of the PMCOE was to better understand current activity through monitoring and tracking mechanisms. Equant projects are categorized according to size—globally, there can be more than 220 medium-to-large projects underway at one time. We also realized that we needed to globalize our approach and consolidate resources to ensure the maximum optimization of time and effort, because our processes varied from country to country and region to region. Consolidated efforts would allow us to deliver to industry standards and our customers’ expectations. The PMCOE gave us the mechanism to formalize the manner and processes necessary to conduct projects consistently around the globe using the repeatable and reusable concept.

Another driver behind the establishment of our PMCOE was to provide a support infrastructure for our growing community of project managers. The PMCOE provides project managers with necessary processes, support and tools, complemented by regular training opportunities. The training opportunities vary from in-house training in the corporate project management methodology to support in acquiring external industry certifications. It's necessary that our project managers understand the importance of their role and have clear and defined boundaries.

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Having the PMCOE has allowed us to focus on the development and deployment of processes and procedures which meet or exceed industry standards. We are constantly looking at ways of enhancing our project management procedures and capabilities to allow us to be more competitive in our market sector. The PMCOE maintains an initiatives register to capture and track concepts that need to be developed and implemented. Some examples of our current initiatives include implementing an internal project management certification program, developing a project management information repository and developing an internal mentoring program. Equant acknowledges the contribution the PMCOE has provided in raising the efficiency and quality in how we deliver products and services.

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Joe Eng,

Chief Information Officer, SWIFT, Manassas, Va., USA

SWIFT supplies secure, standardized financial messaging services and interface software to more than 7,650 financial institutions in 200 countries. Our customers include banks, broker/dealers and investment managers, as well as their market infrastructures in payments, treasury, securities and trade.

I am responsible for more than 1,000 staff in the Information Technology and Operations divisions worldwide. Our project management training and compliance tracking began in 1991, after a very visible overrun of a major project. SWIFT initiated its first PMO in the mid-1990s to keep track of projects that were going to be late or over-budget.

The PMO provides overall portfolio management to SWIFT's suite of projects, approximately 100 projects per year. It also provides management support for planning, budgeting, tracking and reporting that includes organizational budgeting and forecasting, project performance vs. project budget, board reporting and tracking how employees, contractors and temps are being utilized. The PMO also defines and publishes a monthly divisional scorecard, administers the company's project approval processes and organizes key training programs common across the IT and Operations organizations.

Our PMO is a group of 10 people, an appropriate investment given the level of control and transparency we desire due to our focus on the cost side of the project management equation and the balance between cost, schedule and quality. At this stage, we have no plans to increase its scope.

Over the past 10 years, message prices have dropped more than 70 percent, system availability approaches 5 x 9s reliability—99.999 percent uptime. As of the end of 2004, the entire SWIFT membership has migrated to our new IP messaging platform, SWIFTNet. Having a PMO allows us always to know what work we have in progress and what we can expect to see for the rest of the year. It also ensures that a standard set of information is available for all projects, and common processes are being used to initiate and manage those projects. While it is difficult to quantify these benefits, we clearly see the results in terms of the ease with which we can respond to audit inquiries about our project controls and justify our funding needs for future years.

Executive and management visibility is a prerequisite for any company involved in mid-size and large projects; otherwise, you are flying blind. Given the percentage of company resources dedicated to projects, prudence and transparency is mandated. The PMO provides the information we require to properly manage these resources and customer commitments.

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.

PM NETWORK | MARCH 2005 | WWW.PMI.ORG

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