Program management offices in the public sector

Abstract

As more organizations in the private sector embrace the program management office (PMO) concept, the public sector is finding out how utilizing the PMO can improve project and program management processes in government agencies and in academia. Project management communities in the public sector also find PMOs as the best avenue to sharing project/program/portfolio management processes, tools, and best practices. This paper describes the PMO’s success in facilitating project/program/portfolio coordination and management in the public sector, including some North Carolina state agencies.

The Current State of PMOs Today

With the enormous financial investment that organizations have in projects, PMOs today are seen as a viable strategy to improve project success rates, and to prevent or reduce cost overruns and schedule delays. Organizations in many industries, from the IT industry to the healthcare industry, are using PMOs in a number of different roles, including the following:

  • Implementing organizational methodologies for project/program/portfolio management
  • Leading organizational change by promoting a project management culture
  • Institutionalizing organizational processes and methodologies
  • Managing programs and projects at the enterprise level
  • Reporting and tracking project performance
  • Implementing Organizational Project Management Maturity Model Knowledge Foundation
  • Contributing to the development of core project management competencies
  • Training or coaching project managers
  • Facilitating project management mentoring
  • Conducting lessons-learned sessions: capturing, communicating, and incorporating lessons learned
  • Managing 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 and be involved with strategic roles, such as strategic planning and portfolio management. The Enterprise Portfolio Management Office is often created as an extension of the PMO.

How did it get to this? Although most PMOs have been created in the last seven years, the use of a centralized office to manage and coordinate project activities is not new project management practice. In the construction industry, traditional project offices have been used to manage construction projects. A project office is set up for every (construction) contract. The project office is disbanded when the contract is completed. In the public sector, large government programs and projects have been managed with project offices.

In the late 1990s, the Y2K office proved very useful for the information technology (IT) industry, as IT and information systems (IS) shops needed to be Y2K-compliant. The Y2K office is a successful implementation of the project office.

In 2000, Gartner Group (Roberts, 2000) proposed that “through 2004, IS organizations that established enterprise standards for project management, including a Project Office with suitable governance, would experience half as many major project overruns, delays and cancellations as those that failed to do so.” Around the same time frame, the project management profession was growing into an established and recognized profession. PMI certified record numbers of project management practitioners as the number of Project Management Professionals (PMP®) grew exponentially globally.

With a well-established project management profession, well-trained project managers serving the IT industry, and a proven methodology to implement projects, many IS and IT organizations jumped onto the PMO bandwagon. By 2003, many IS and IT organizations had established PMOs.

In 2003, a survey conducted by PMI and CIO Magazine showed that many PMOs (53%) had their own budgets; 33% were funded by business unit budgets (Ware, 2003). Of the 69% of survey respondents who had PMOs, more than 50% had their PMOs headed by a director or a vice president. About half these organizations with PMOs reported that project success rates (defined as projects completed on time and within budget) increased as a result of PMOs (by an average of 46.6%). The PMOs were performing the following functions:

  • 85% – Reporting and tracking processes and projects
  • 79% – Ensuring that similar projects are executed in a consistent way, or that the process is repeatable
  • 74% – Providing training or facilitating project management mentoring
  • 74% – Conducting post-mortems, or capturing, communicating, and incorporating lessons learned
  • 73% – Contributing to the development of core project management competencies
  • 69% – Developing, maintaining, and administering corporate project management policy
  • 63% – Ensuring compliance with corporate project management policies and processes
  • 62% – Using a process to ensure that groups are aligned on project process, selection, priority, and execution
  • 54% – Providing a standard, fundamentally sound methodology to managing projects
  • 51% – Providing support mechanisms for cross-functional teams
  • 44% – Providing a process for resource allocation and capacity management

Many PMO project management practices were most effective in 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

Other PMO project management practices that were most effective in helping the organization meet its strategic goals:

  • 43% – Ensuring PMO projects have direct links to company’s strategic goals
  • 40% – Providing standard methodology for managing projects
  • 37% – Having executive sponsorship or 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

In 2003, Hackett Group’s Research Report showed that having a chief information officer (CIO) and a PMO are two key ingredients of the best IT organizations (Surmacz, 2003). Having a CIO with a view of projects across an organization is one way companies can achieve better alignment of IT investments with the business objectives of the enterprise. A PMO can help companies justify projects before they’re rolled out, and see that those projects are finished on time, on budget, and to business specification.

It was in the early years of the 21st century that many PMOs were created, both in the private and public sectors. Many organizations that started PMO between 2000 and 2005 published their project management methodologies and templates on the Internet, accessible to other PMOs that were starting out. The accessibility of the PMO toolkit and availability of PMO training further improved the growth of PMOs in project management communities worldwide.

With exposure to both strategic planning and tactical execution, private-sector PMOs are very well-positioned in their organizations to deliver value to their executive management and to their organization. After successfully implementing a standard project management methodology and providing project management training and coaching, the PMO’s role quickly evolves into portfolio alignment and project benefit realization. PMOs today play a critical role in planning projects and portfolios; in providing structures for monitoring, reporting and analysis; and in executing projects.

PMOs in the Public Sector

By 2002, PMOs were being established in the public sector at an increasing rate. For government agencies, this was at both federal and state levels (Light, 2002). This was attributed to the following contributing factors:

  • Legislative IT project management mandates
  • Success of Y2K project planning efforts
  • Increased practicality of government enterprise resource planning(ERP) and enterprise applications
  • The rise of “e-government”

The State of Minnesota PMO and the State of Michigan PMO were created in response to legislative mandates. The City of Scottsdale, Arizona PMO, the State of New York PMO and the State of Oregon PMO were conceived by Y2K program offices.

State government agencies in New York, Minnesota, Michigan, Oregon, and Vermont have established their PMOs, and shared their project management tools, techniques, and templates by making them accessible on their Web sites:

By 2003, the PMO had become the executive-chosen infrastructure at federal and state government agencies for implementing projects. PMO functions performed by the state agency PMOs include the following:

  • Standardized methodology, and tools and repository of best practices
  • Training and certification, and coaching and mentoring
  • Project monitoring and oversight
  • Enterprise-wide project management services

NC State Agency PMOs

In 2004, as a result of North Carolina Senate Bill 991, which mandated the NC state CIO to improve IT planning and project development, the NC state government’s Enterprise PMO was created. The EPMO was staffed by project management advisors charged to implement project and to review and approve projects. The EPMO introduced and implemented a project portfolio management workflow, submitting all state agency project investments greater than $500,000 to a strict project review and approval process.

NC state agencies responded by creating the agency-level PMO. Each agency-level PMO, operating as a business unit PMO, has its own charter and budget, led by a PMO director. Most state agency PMOs start in a tactical role, such as implementing projects through enterprise program management, providing project management training and coaching, and enforcing the use of standard project management methodology, including following the state-wide use of the project portfolio management tool. PMO directors and their staffs are well-trained to lead the office into a mature and stable office quickly, then move into a strategic role, getting involved in strategic planning and in providing decision support services for executive management.

State agency PMOs, including those from the departments of Transportation, Health and Human Services, Revenue, Commerce, and Public Instruction, as well as the Employment Services Commission, participate with the NC EPMO in implementing the state-wide project portfolio management process. State agency PMOs support their project managers in utilizing the project portfolio management tool in tracking and monitoring project status and performance.

Exhibit 1 shows the NC EPMO relationship with the state agency PMOs.

NC EPMO organizational structure

Exhibit 1 – NC EPMO organizational structure

NC DOT PMO

The North Carolina Department of Transportation (DOT) was the first state agency in NC to establish a PMO. This was more than two years before the NC state government created the NC EPMO.

The NC DOT PMO organizational structure is described in Exhibit 2.

NC DOT PMO organizational structure

Exhibit 2 – NC DOT PMO organizational structure

The mission of the NC DOT PMO is to:

  • Support IT management in implementing the NC DOT business strategy.
  • Move the organization to a place where:
  • IT supports the business by successfully delivering the right projects at the right time
  • IT project teams maintain a high degree of professional discipline and use their skills to bring high value to their customers
  • IT staff are tightly focused in their use of technology to drive projects to successful conclusions
  • Critical information about every key project is available to all who need it

The success of the NC DOT PMO is derived exclusively from the success of its customers. PMO metrics measure those aspects of PMO performance that are directly related to its mission.

  • Are the organization’s IT projects more successful over time?
  • Is there evidence that NC DOT IT staff are taking a more professional approach toward management of the organization’s IT projects?
  • Are the products of the organization’s IT projects meeting their business objectives?
  • Is the organization’s project management maturity improving?

The NC DOT PMO strives to deliver value to the agency through:

  • Eliminating duplication of data and processes
  • Collaborating with organization staff to implement effective processes for managing all IT projects
  • Cultivating communication and improved levels of cooperation among IT departments
  • Instituting new operating modes with detailed definition of process, roles, and measures
  • Promoting change from the status quo, upstream and downstream from the IT mission
  • Instilling a passion for the profession of project management and its processes, practices, and tools

The NC DOT intranet has been a very useful tool for NC DOT IT project managers, not only for communication among and between departments and divisions, but also for tracking and monitoring project performance. It is also the repository for NC DOT project tools and documentation, for the more than 200 projects that NC DOT executes at any given time.

Conclusion

The PMO has come a long way, evolving from the traditional project office to the strategic program management office with enterprise-wide responsibilities. The PMO role in the organization has also evolved, from the tactical operational role – providing project management methodology, tools, and expertise in project implementation – to the strategic role of aligning project portfolios and realizing the benefits of projects and programs.

Enterprise PMOs in the public sector have provided the effective infrastructure for delivering efficient project implementation with formal standard project management processes. As with the private sector, these PMOs are expected to move into the strategic role of aligning project portfolios with government business goals and strategies.

Light, M. (2000, August 1). The Project Office: Team, Processes and Tools. Gartner Research. Retrieved July 1, 2007 from http://www.gartner.com/DisplayDocument?ref=g_search&id=308328&subref=simplesearch

Light, M. (2002, July 25). Project management office. Retrieved July 1, 2007 from http://www.myliusemarodin.com.br/admin/biblioteca/arquivos/gartner_government.pdf

Santosus, M. (2003, July 1). Why you need a project management office (PMO). Retrieved July 1, 2007 from http://www.cio.com/article/29887/Why_You_Need_a_Project_Management_Office_PMO_

Surmacz, J. (2003, May 23). Recipe for alignment. Retrieved 06/11/04 from http://www2.cio.com/metrics/2003/metric549.html (Note, no longer available online)

Ware, L. C. (2003, July 02). Best practices for project management offices. Retrieved June 11, 2004 from http://www2.cio.com/research/surveyreport.cfm?id=58 (Note, no longer available online)

© 2007, Victoria S. Kumar, PMP and Cheryl L. Ritter, PMP
Originally published as a part of 2007 PMI Global Congress Proceedings – Atlanta, GA

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