Project Management Institute

The need(s) for a PMO--from a consulting company's perspective

Abstract

More and more organizations are utilizing Program Management Offices (PMOs) in leading organizational changes, promoting a project management culture, institutionalizing organizational processes, managing enterprise-level projects, programs, portfolios and in improving the organization's overall performance.

Among them, consulting companies, including Saber Corporation, realize real return on investments (ROI) from a PMO and reap huge organizational benefits.

Introduction

The program management office (PMO) is a rapidly emerging concept in project management. More and more organizations are starting a PMO, usually at enterprise level, utilizing the PMO in

  • implementing a project management methodology
  • leading organizational changes in promoting a project management culture
  • institutionalizing organizational processes and methodologies
  • managing programs and projects at enterprise-level
  • achieving the organization's financial and strategic goals.

Although mature and stable PMOs have consistently demonstrated great benefits at an organizational level, it usually takes time to realize real ROI from a PMO. Tremendous PMO implementation challenges have to be overcome to experience these benefits. This doesn't discourage organizations, from various industries, e.g., information technology, financial, public sector, pharmaceutical industry, to venture into using PMOs and embrace the PMO concept.

With the PMO appropriately positioned at an enterprise-level, major organizational-level endevors that require consolidation/restructuring of organizational processes, e.g., mergers/acquisitions, create the need for PMO. Major corporations, e.g., CSX Corporation, HP, take on transition/merger/acquisition challenges with the help of their PMOs. Saber Corporation, Inc., although not as big as CSX Corporation or HP, is not an exception.

In this paper, we present a consulting company's perspective in implementing a PMO. Saber Corporation, faced with tremendous transition challenges with an acquisition that more than doubled the company size/investment, is utilizing an enterprise-level PMO to manage the transition. It expects similar (if not worse) PMO implementation challenges. Will it experience similar organizational benefits that mature and stable PMOs bring?

The PMO Concept

The Project Management Office (PMO) is not a new concept. The PMO, also called the Project Office, Project Support Office, Program Management Office, has been used in the military & defence industry and in the construction industry, especially for highly complex, multi-year projects that present high risks and can greatly benefit from the services of a support office.

The Y2K office in the late 1990s was a form of a Project Office – a successful implementation of the PMO concept. With the Y2K Office, the IT industry “discovered” the Project Office, recognized potential benefits of having a PMO – or a project support office or project management support office (an organization supporting Project Managers or project management activities). The focus of the Y2K office was on performance of projects – cost, time, scope.

Early in this century, we saw the establishment and the growth of project management profession. By 2001, there were more than 100,000 practicing project managers PMI-certified as Project Management Professionals (PMP®). More organizations adopted management-by-objectives, an organizational approach that treats many aspects of ongoing operations as project and applies project management techniques to them. Enterprise operations are organized as projects, managed by a project lead/manager. Many organizations then started PMOs, recognizing that PMO infrastructure best supports management-by-objectives.

Many organizations created PMOs as the home of best practices in project management, as the center of excellence in project management processes, utilizing the PMO in standardizing an organizational project management methodology. The PMO concept took off.

PMOs Today

PMOs today have responsibilities that can range from providing project management support functions to actually being responsible for the direct management of a project (PMI, 2004). There is no consensus on what PMOs must entail. They can operate on a continuum from providing project management support functions in the form of training, software, standardized policies and procedures, and templates to actual direct management and results of the projects.

However, with the enormous financial investment organizations have in projects, PMOs today are seen as a viable strategy in improving project success rates, preventing/reducing cost overruns and schedule delays. With PMI's envisioned goal to have “organizations embrace, value and utilize project management and attribute their success to it,” PMOs are a promising contributor toward achieving this goal.

The need(s) for PMOs today

In a joint survey conducted by PMI and CIO Magazine in 2003 (CIO, 2003), 76% of the executives surveyed said they had created a PMO within the past three years. They described how their PMO works in the organization as follows:

  • 12% - Manages a set of projects related in some way by a common goal
  • 42% - Project Support Organization - supports multiple projects with administrative, time tracking, reporting, etc.
  • 12% - Project Services Organization - manages several unrelated projects.
  • 1% - Manages a series of consecutive projects

Approximately 44 % of the PMOs report managing 50% or more of the company's projects.

PMO Responsibilities

Responses based on the PMI/CIO Magazine survey (CIO, 2003) indicated that PMO responsibilities varied widely, as shown below.

  • 85% - Process and project reporting and tracking
  • 79% - Ensures that similar projects executed in a consistent way/process is repeatable
  • 74% - Provide training /facilitate project management mentoring
  • 74% - Conduct post-mortems/capture, communicate, and incorporate lessons learned
  • 73% - Contribute to the development of core project management competencies
  • 69% - Develop, maintain, and administer corporate project management policy
  • 63% - Ensure compliance with corporate PM policies and processes
  • 62% - Use a process to ensure that groups are aligned on project process, selection, priority, and execution
  • 54% - Provide a standard fundamentally sound methodology to managing projects
  • 51% - Provide support mechanisms for cross-functional teams
  • 44% - Provide a process for resource allocation and capacity management

Once the PMO has matured and stabilized, the PMO is expected (if not driven) to become a strategic Project Office to fulfill strategic roles, such as portfolio management. The Enterprise Portfolio Management Office is often created as an extension of the PMO.

Organizational Benefits of a PMO

Further PMI/CIO survey results (CIO, 2003) show how organizations benefit from having a PMO. Fifty percent of the responding companies indicated that project success rates (defined as projects completed on time and within budget) increased as a result of PMO, with the following project management practices helping the organization meet its financial goals

  • 56% - Providing standard methodology for managing projects
  • 38% - Having responsibility for process and project reporting and tracking
  • 37% - Ensuring that similar projects are executed in a similar way
  • 29% - Having the funding and information needed to speed up or slow down project delivery
  • 27% - Providing a process for resource allocation and capacity management

and the following project management practices helping the organization meet its strategic goals

  • 43% - Ensuring PMO projects have direct links to company's strategic
  • 40% - Providing standard methodology for managing projects
  • 37% - Having executive sponsorship/support from senior management
  • 37% - Ensuring that the PMO works only on projects that support a business goal or strategy
  • 31% - Using a process to ensure that groups are aligned on project process, selection, priority and execution

Major organizational initiatives creating the need to PMOs

Just as POs were used decades ago for highly complex, multi-year projects, PMOs are still utilized in the more recent past, when major organizational-level initiatives like major acquisitions/mergers warrant the needs for PMOs.

For example, major corporations like CSX Technology (Wodehouse, 2004) and HP (Kingsberry, 2003) went through major acquisition/mergers by utilizing Project Offices/PMOs. The success of the acquisition/mergers initiates has been attributed to the contributions from the PMO and its successful implementation.

Saber Corporation's need for a PMO

Saber acquires Covansys' state and local government practice

Saber Corporation is a privately-held company headquartered in Salem, OR, with offices in Sacramento, CA, Annapolis, MD, Mequon, WI, with deep customer relationships with state and local government organizations in the U.S. Saber provides software and services that underpin essential government functions such as voter registration, election management, public retirement programs, human services, public health services, motor vehicles, unemployment insurance, and forms and document processing. In 2005, Saber had approximately 250 employees and $25M in revenue.

In 2006, Saber acquired the assets of the state and local government practice of Covansys Corporation (NASDAQ – CVNS). Like Saber, Covansys' state and local government practice has been a leader in helping state and local governments meet their organizations' IT needs in order to gain cost savings, improved business process quality, and productivity. Covansys' state and local government practice, headquartered in Columbus, OH, had been delivering IT solutions for public retirement programs, health/human services, public health, motor vehicles, unemployment insurance, homeland security, and election reform.

The acquisition resulted in Saber's consulting presence in state and local governments in more than 45 states. Saber grew to approximately 650 by December 2006, with total revenue of approximately $100 million. This acquisition more than doubled Saber's size in resources and revenue.

Saber Corporation creates an EPMO

Around the same timeframe of the acquisition of Covansys' state and local government practice, Saber's ePMO was created in 2006 with a mission to promote a culture of project success by enabling individual and organizational project management maturity (Saber, 2006). Although the ePMO was not directly associated with negotiations and administration of the Covansys acquisition, Saber anticipated the sudden growth of the company size, work/responsibilities associated with the increase in the number of projects (contracts) could benefit from a coordinated effort in building a culture of project management excellence at an enterprise-level. At Saber, government contracts translate into projects, as contracts are managed as projects.

The ePMO objectives are to:

  • build a culture of Project Management excellence
  • serve as Saber's authority on Project Management practice
  • promote knowledge building and sharing among project managers
  • assess and promote Saber's organizational project management maturity
  • implement accurate projects monitoring procedures
  • keep Saber's management informed
  • act when needed to rectify the course of projects

Saber's ePMO Organizational Structure

Saber's ePMO is headed by the Chief Project Officer (CPO) who reports to the Chief Operations Officer (COO). The ePMO organizational structure is shown in Exhibit 1.

ePMO Organizational Structure

Exhibit 1 – ePMO Organizational Structure

Through alignment with the COO's office, the ePMO gains

  • the authority it needs to promote Saber-wide organizational change effectively
  • independence that can sustain objectivity
  • oversight that can keep its work aligned with Saber's business strategy
  • legitimacy as it fosters an effective, enterprise approach

ePMO Stakeholders

The ePMO considers the following as its key stakeholders.

ePMO Stakeholders

Exhibit 2 – ePMO Stakeholders

ePMO Staffing – the Biggest Implementation Challenge

The biggest challenge in this ePMO implementation is staffing the ePMO. While the organization has skilled and qualified project management staff, and the ePMO has the budget to hire ePMO staff from within or outside the organization, skilled and qualified project management staff are becoming increasingly hard to find. The ePMO is currently not fully staffed, relying on its existing staff to deliver committed deliverables.

When fully implemented, the ePMO expects to have the following roles:

  • Chief Project Officer
  • Director of Standards
  • Director of Training
  • Senior Project Analysts
  • Senior Project Auditor
  • Technical Writer
  • Other Admin Staff

ePMO Performance

Eight months after the acquisition, resources and projects acquired from Covansys are fully integrated with Saber. The ePMO has implemented a standard project management methodology and a standard systems development methodology throughout the enterprise.

With strong commitment for enterprise-wide communication of accurate project status information, the ePMO conducts the following meetings and delivers the following reports on a regular basis:

  • Monthly Projects Progress Report – delivered to the COO covering all projects
  • Quarterly Overall Projects Health Update – delivered to the COO and CEO
  • Annual Organizational Maturity Analysis Report – delivered to the COO and CEO
  • Lessons Learned – as received from project teams, published on the ePMO home page (also distributed by email)
  • ePMO maintains regular contact with all Line-of-Business (LOB) heads
  • CPO participates as part of the Saber executive leadership team

Predicting Saber EPMO success

While it may be too early to say how successful Saber's ePMO has been successful in its first year, it is clearly contributing the organization's success and accurately tracking to its performance metrics. Saber's ePMO is definitely on track to deliver its ROI in its first year of implementation.

References

CIO Magazine (2003, July 2). Best Practices for Project Management Offices. Retrieved 07/02/03 from http://www2.cio.com/research/surveyreport.cfm?id=58

Enterprise Project Management Office Program Charter. (2006, April 4). [Electronic Version]. Saber Corporation.

Kingsberry, D. (2003, September) Implementing a Global Program Management Office. PMI Global Congress 2003, North America, Baltimore, MD.

Project Management Institute. (2004) A guide to the project management body of knowledge (PMBOK®) (third ed.). Newtown Square, PA: Project Management Institute.

Wodehouse, C. (2004, January) Our Money's Worth. PM Network 18(1), 30-34.

© 2007, Victoria S. Kumar, PMP and Gary J. Evans, PhD, PMP
Originally published as a part of 2007 PMI Global Congress Proceedings – Hong Kong

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