Abstract
Despite the big promise that Project Management Offices (PMOs) offer at their inception, they often fizzle and fail to deliver on that promise and at times, even fail altogether to the point that they get dissolved. In fact, 3 out of 4 PMOs will close within 3 years (Duddy & Perry, 2010). This is quite a staggering failure rate for such an important and significant undertaking, established by so many organizations. There are many possible reasons why PMOs end up failing, including being set up for the wrong reason, unrealistic expectations, and improper setup. This white paper examines a list of reasons why PMOs fail and introduces potential solutions to prevent PMO failure, or to correct the course of action of those PMOs that are heading toward failure.
Introduction
Most large organizations have a PMO. While in the year 2000 only 47% of organizations surveyed had a PMO (PM Solutions, 2012), by 2012 that rate had nearly doubled to 87%. The PMO is fast becoming a permanent fixture in many organizations that provide ongoing and significant value to the business; however, with it comes an increase in expectations and added pressure to constantly produce added business value.
It is common to expect PMOs to improve resource planning, forecasting practices and project management processes and enhance reporting, governance and performance measurement processes. However, with a constant push toward doing more with less, constant growth in the PMOs’ scopes and areas of responsibility and with tepid economic growth, PMOs increasingly struggle to meet organizations’ expectations of them and continue to fail (25% within a year of inception and 50% within 2 years) (Duddy & Perry, 2010).
Beyond the typical reasons for PMO failure, such as establishing the PMO for the wrong reason (“Our projects are failing; let's set up a PMO”), improper setup (lack of vision or planning), and mismanagement (PMOs with staff that has little project management experience), there are additional types of malaise that commonly plague PMOs:
• Insufficient authority or organizational buy-in
• Perceived as a “project police” function
• Provides limited value that is mainly tailored toward inexperienced project managers
• Turns into self-serving organizations rather than supporting functions
• Lacks a clear line of where the PMOs end and the projects begin
• Unclear focus areas or scope
• Failure to streamline processes and capture benefits across the organization
Although most of these challenges can be addressed in advance while setting up the PMO in order to improve its ability to deliver value for the organization, they often need to be dealt with when the PMO is already in place, in an attempt to improve its performance. The attempt to improve performance includes streamlining its processes, identifying inefficiencies, and defining a new set of success criteria in order to revitalize the PMO into one that is high performing.
Another common problem with PMOs is related to the state of project management and an area of growing concern and focus on its own: failing to manage stakeholder expectations. More so than in projects, PMOs often face difficulties in defining their customers and main stakeholders.
PMO Types and Perceptions
PMOs may have any combination of role (supporting, controlling, or directive), area of focus (project, programs, or portfolio) and duration. While the most common type of PMO is a permanent and controlling one (provides support and requires compliance with moderate degree of control), PMOs are commonly known for any one or more of the following functions: training, reporting, coordination, methodology and process, managing projects and portfolio management.
When established for the right reasons and managed properly, PMOs provide benefits for any of the functional areas they serve. They increase efficiency and effectiveness by managing project interdependencies, coordinating personnel, and mitigating the silo mentality.
Problems with PMO performance often start with a lack of clear definition of what the PMO is actually about. Is it a Project Management Office, a Program Management Office, or a Portfolio Management Office? There is a split view of what PMOs are about and what their primary focus is (Forrester, 2010).
Exhibit 1 – Primary focus of PMOs
Beyond the gaps in stakeholders’ views of what PMOs are all about, there is also a gap in the perception of the actual role of the PMO in many organizations by different stakeholder groups: Project Team Members
It is common that project staff members perceive the PMO as a “template police,” overloading on process that mostly produces red tape, bureaucracy and is a hindrance, rather than a help and support system, for project managers to ensure their projects deliver value to the organization.
Senior Management
Senior managers commonly view the PMO as part of the problem, rather than the solution to challenges in project management, producing information that is rich on data, but lacks value, timeliness and substance — with self-focus on project management, methodology and theory, rather than being business-driven.
Middle Management
Other managers across the organization often view the PMO as yet another layer to deal with above and beyond those “pesky” project managers, constantly asking for more resources and trying to tell the managers how to run their departments. With more authority than project managers, mid-level managers tend to view the PMO as an enhanced threat to their authority and productivity and a politically driven source of unrealistic demands and expectations.
How to Assess a PMO‘s Performance
It is fairly straightforward to assess a project's performance: Success is most often measured by identifying the “correct” mixture of the extent to which the competing demands meet the project objectives (scope, time, cost, quality, resources, and risks). When facing stakeholders who struggle to understand the concept behind the competing demands and that a change to one of the constraints/demands will necessarily trigger some sort of reaction to any one of the other demands, project managers should illustrate it to them by using the Balloon Theory (Schibi, 2013). Similar to a balloon, “pressing” on one of the competing demands will always trigger a reaction in any one or more of the other competing demands, similar to the laws of physics. An imbalance among the competing demands is equivalent to pressing on the balloon from too many sides.
Exhibit 2 – The Balloon Theory for Project Success
In contrast, it is challenging to define success for a PMO due to varying scopes, functions, and levels of involvement in projects. It is also difficult to isolate a PMO‘s influence on project performance and success and specifically, to attribute the net contribution that PMOs make on projects and on the organization. It is possible to argue that PMOs provide support, a sense of security, and insights; however, it is hard to quantify the impact of these contributions’ impacts on project success or to measure the total impact in monetary value against the cost to operate a PMO.
Furthermore, when project success rates in the organization improve, it may not be because of the PMO‘s added value and in the event that projects still fail, it could be that without the PMO, the failure rate would have been higher. Because of external factors, different customers, economic and market conditions, competition, regulations and organization process assets, it will never be possible to measure the PMO‘s value add to the organization in lab conditions, free of any extenuating circumstances.
With that said, there are still ways to measure the PMO‘s performance and there are four main areas to focus on: communications, resource management, project success rate, and quality. Organizations should set up PMOs with built-in mechanisms to measure these assessment areas and to establish benchmarks for their performance levels:
Communication
Ask whether the PMO is used as an important source of input for executive decision making for key business issues and whether it provides management reports, meaningful dashboard reports, and summaries, and detailed-level status reports.
Resource Management
Check if the PMO utilizes the right tools and methodologies, whether there is a process improvement plan and review the level of support the PMO provides to its staff, project staff and other resources in the organization. While the PMO cannot be everything to everyone, it needs to be perceived as adding value to as many organizational functions and groups as possible. In addition, the PMO‘s training function needs to be evaluated by asking if training activities are sufficient and whether there is a mechanism to ensure the PMO‘s processes are applicable and followed.
Project Success
To measure trends in project success, check whether there are more successful projects than there are failed or challenged projects and whether success rates are trending in the right direction and at a satisfactory rate, as expected. In addition, project success can also be measured from a cost effectiveness point of view by checking how much money is lost due to inefficiencies in the PMO and the amount of money saved thanks to PMO-related improvements.
Quality
The quality measurement in the PMO assessment can be broken down into two types: customer satisfaction and process improvement. For customer satisfaction, there needs to be an understanding of who the PMO‘s customers are and where the focus should be in relation to whose needs need to be fulfilled. Specifically, there is a need to measure whether the customer/sponsor satisfaction feedback indicates that the PMO is meeting their expectations. In regard to process improvement, the measurement should check if the PMO enforces the process of collecting and applying lessons learned at intervals that are beneficial to the organization and at the end of each project.
Without establishing PMO assessment measurements, it may be difficult to determine whether the PMO delivers value for the organization and the conversation can be easily swayed by subjective judgments from various stakeholders, many of which may not have the full picture or relevant information. In turn, this will distract the PMO from its focus and the organization from producing and realizing value and may lead to making the wrong decision about whether or how to proceed with the PMO.
Why PMOs Fail
PMOs are established for a variety of reasons in different types of organizations, and oversee multiple projects and attempts to deliver a variety of benefits. As such, there are many different reasons why a PMO may fail. Becoming aware of the common causes for failure can help PMO sponsors, senior management, project managers, and PMO managers extrapolate relevant information for their organizations and circumstances and combat any challenges or potential deficiencies they encounter. Defining a problem can contribute to a significant part of the solution and by not considering these causes for PMO failures, organizations may have difficulty defining and addressing the challenges they face in achieving PMO success.
The causes of PMO failure listed below appear in no particular order and each one is followed by a short explanation and suggestions on how to address it:
1. Inexperienced Project Managers
Many PMOs provide processes, coaching, and mentoring services that often benefit project managers who are less experienced, whereas the more experienced project managers do not realize any benefit from the PMO. PMOs should tailor their offerings toward all project managers and attempt to establish a perception that they are a trusted partner to all project managers and provide a collaborative environment that involves team building, cross-training and information sharing.
2. Inexperienced PMO Staff
With the role of the PMO staff often perceived as mostly administrative, supportive and reporting-based, organizations often place employees in the PMO who have insufficient project management experience. The PMO staff must have strong project management experience and they need to understand the hurdles and challenges project managers are facing. With relevant experience, PMO staff members can free up time to focus on more valuable activities for both the projects they oversee and the organization.
3. Mismanaged and Unrealistic Stakeholder Expectations
Senior stakeholders often have many misconceptions about PMOs, thanks to their lack of understanding of why the PMO is in place, along with a lack of clear objectives for the PMO. This leads to the wrong perception about what the PMO is about and the value it is intended to produce for the organization, and in turn to negative attitudes, lack of buy-in and even feelings of resentment. Common misconceptions and unrealistic expectations include:
a. Audits: they are often perceived negatively and predominantly as a means to discipline and even penalize team members for non-compliance and to look for flaws. Audits often lack specific focus and do not produce tangible recommendations, or they do not result in their findings being implemented. The notion that audits are part of continuous improvement and that their recommendations will help stakeholders in these respective areas must be communicated upfront to all relevant stakeholders as part of trust building. At times, PMOs are perceived only as “audit police,” rather than as a value-added function for projects and the organization.
b. The PMO is perceived as offering little or no value: The PMO reports to senior management and therefore is structured toward delivering value to them. As such, PMOs tend to forget that they are also intended to deliver value to project managers. When project managers perceive the PMO as representing red tape and are considered to be a liability, it is a breakdown that must be addressed by ensuring that the PMO works closely with project managers to establish and deliver value to them. Unfortunately, even when PMOs focus on producing value to senior management, it is not always viewed as value, since some members of senior management often lack a basic understanding of project management concepts. It has long been said that project management training should be provided to all levels of the organization, since it is critical that all stakeholders understand basic concepts in project management. The PMO must not forget that it has multiple customers in the organization and there is a need to manage the expectations of all stakeholders, specifically the project managers, senior management, and resource/functional managers.
c. Red tape: Processes and technology are a means to improving people's ability to perform their work, but project success is driven by people and their abilities. Technology and tools cannot replace the need for skilled people, but rather complement it. If the PMO is viewed as leaning heavily toward representing theories, tools and regulations, there will be no buy-in from stakeholders, since the latter are interested in useful ideas, practicality, improvement and streamlining opportunities. The PMO must portray itself as a value adding function and focus first and foremost on the people, their needs and their ability to work in collaboration with the PMO staff and the approaches it represents.
d. Stakeholder expectations management and gap alignment: with varying levels of stakeholder involvement in the PMO‘s operations and in understanding project management processes altogether, along with a culture of instant gratification that prevails in many organizations, it is important to set the right expectations about what the PMO can deliver from the start. This includes not only a specific, measureable, realistic and quantifiable set of benefits, but also timelines, areas of impact and non-tangible benefits to be realized. Stakeholders should not expect benefits to be realized immediately and when value is delivered, it should be attributed to the appropriate source. The expectations should also be set regarding the type of the PMO; when a PMO is established in the context of project management, it will deliver a different set of benefits than one associated with Portfolio Management. Portfolio Management PMOs take part in project selection, specific resource allocation and strategy formulation, whereas Project PMOs are much more tactical in their focus.
Exhibit 3 – The Expectations Gap (http://solutions.sukad.com/)
e. Boundaries and definitions: it is important to define the PMO‘s boundaries in relation to other functions of the organization, its overall scope (including areas it does not cover) and the expectations around roles and responsibilities between the projects and the PMO. The touch-points should be clear and defined so there is no duplication of effort and no gaps are discovered. Related to this is also the need to set up boundaries to define where the PMO ends and projects begin, so there is no false expectation that the PMO is going to serve as a safety net or a fallback plan for project managers, with project managers knowing that when things get derailed to a certain extent, the PMO will step in to save the day. This also leads to the need to define the role the PMO should play in project recovery in the event that projects reach a point where they need recovery and rescue actions.
f. Keep it simple: the most effective and efficient processes, tools, techniques, approaches and methodologies are often simple and straightforward. The PMO must ensure that following its processes is simple to do and easy to rationalize. To be motivated, people need to know what they need to do, why and what's in it for them. If processes become convoluted and difficult to follow, stakeholders’ attention will be diverted from adding value to trying to figure out how to perform the work. PMO processes should also not restrict workers, but rather focus on helping to make them easier for everyone.
4. Lack of Senior Level Support
PMOs must have a senior sponsor or champion; not having one increases the chance for PMO failure. It is also important for the sponsor to understand what project management is about and what the full set of values the PMO is set to deliver. Senior managers often think that the PMO‘s primary function is consolidated reporting, template creation and resource coordination. This viewpoint often results in the senior manager providing little support to the PMO to perform its duties, which becomes even more pronounced when there is a conflict between project managers and the PMO that is escalated to the sponsor. This will often lead to the senior manager believing that the PMO is the cause of project difficulties.
A related cause for PMO failure is its lack of authority. While there is a senior manager who serves as a sponsor, the PMO is not given the appropriate mandate and authority to perform its work and as a result, project managers often view the PMO‘s requests for information and collaboration as low priority.
5. Poor Resource Management
Whether or not resources report to the PMO, the PMO needs to develop the ability to quantify resource demand. Depending on the type of organization, the PMO needs to develop projections and forecasts for resource usage, or make recommendations to decision makers regarding the need to mobilize, allocate and reallocate resources. The PMO can help in the development of a process for time tracking while remaining cognizant of the fact that timekeeping is not the goal, but the means to achieving success and for finding opportunities to add value to the organization.
6. Poorly Defined Benefits and Value Definitions, Measurements, and Realization
There has to be a built-in mechanism used to define, measure, control and adjust the benefits the PMO is set to produce. It can be helpful to refocus the PMO‘s efforts to ensure it aligns with the organization's strategy and during times of change and reorganization, it can help represent the business case and the justification for the PMO without scrambling for information and measurements.
7. Self-serving PMOs
Over time, the PMO naturally evolves from being a supporting function to becoming a self-serving entity. Instead of focusing on adding value to the organization and to projects, the PMO begins focusing on self-preservation, where processes are driven by political considerations to justify the existence of the PMO, and no longer addresses projects’ concerns, failing to act as a trusted partner. The organization's senior leadership needs to ensure a clear and direct line of communications exists between project managers and other stakeholders and must constantly be on the lookout for informal feedback about the PMO via these channels.
8. Not Providing Real Support
Beyond its official scope, the PMO needs to constantly search for new ways to add value to projects and to other stakeholders. These include providing input on establishing communication management guidelines for projects, deploying consistent risk, change, issues and assumption management approaches, and capturing and implementing lessons learned in real time and across all projects within the PMO‘s area of responsibility. All the while, the PMO must ensure they are collaborating with project managers, while not suppressing project managers’ creativity, innovation and thinking outside the box. Although the PMO is mandated to introduce (and at times enforce) structure and process, it must leave room for project managers to excel in their respective areas of expertise.
9. Poor Capacity Management and Organizational Alignment
Most PMOs have no portfolio functions, do not take part in project selection and do not own project resources. However, the organization tends to continuously trickle more work, coverage areas, responsibilities and projects into the scope of the PMO, and the PMO finds itself having to manage more with less. With no “voice” at the senior level of the organization, the PMO slowly becomes overwhelmed and in extreme cases, loses the ability to deliver benefits outright, finding itself in an advisory and consulting capacity, with diminished ability to deliver value to projects or the organization. Similarly, PMOs often find themselves delivering their mandated value, only to realize that the organizational strategy has shifted. This misalignment will ultimately result in the perception that the PMO is failing to add value, even though it has been delivering on its intended mandate. Building in a mechanism to ensure alignment and perform checks in pre-defined intervals will help ensure that the value produced by the PMO is both meaningful and on target.
10. Establishing a PMO for the Wrong Reasons
Before setting up a PMO, the stakeholders involved should go back to the question of why establish a PMO. It is not a sufficient reason to do so just because everyone else has a PMO, or because some projects are failing. PMOs can be established for any one or more of the following reasons: desire for a an organizational entity that will facilitate continuous improvement in the area of project management, to improve accuracy of project estimates, help prioritize projects, coordinate resources, provide guidance for consistent project management, improve support from senior management for projects, skills development, or facilitation and application or lessons learned. PMOs should have clear objectives, goals, success criteria, and challenges they are trying to address; these will help define the purpose of the PMO.
PMOs can help with a variety of causes and their functions, scope, span, staffing and support levels should be determined based on the cause(s) for which they were undertaken. When setting up the PMO, we must keep in mind that no one PMO fits all organizations and even within the same organization, people, context and expectations are different from one department to the next. This notion specifically applies to organizations that already have a PMO (e.g., for IT) and are not attempting to duplicate the success to the business side. To address this, the organization can attempt to leverage success areas from an existing PMO, while keeping in mind that it may not be received in the same fashion across organizational boundaries.
11. Doing More With Less
Partially related to the capacity discussion, organizations are constantly trying to do more with less. The goal of the PMO and that of project managers is to do less with less. This is not about achieving less or completing less work; rather, it is about focusing more on time management, prioritization, urgency assessment and productivity. The PMO should become a center of excellence in helping project managers prioritize their work based on the organizational objectives and the projects’ success criteria and take on a function of helping resources manage their time more effectively. By becoming more proactive, productive and efficient, PMOs will achieve their objectives with less effort. By providing guidance about basic communications, email management, meeting management and time management, the PMO can further increase the value it produces by helping stakeholders focus on value add activities, while reducing non-value add ones.
12. Lack of Communication, People Skills, Leadership, and Interpersonal Skills Management
With the growing recognition of the importance of interpersonal skills, leadership and stakeholder expectations management in project management, PMOs should also shift more toward focusing on these areas. Without discounting the importance of resource coordination, reporting, training, consistency and process management and improvement, these soft skills turn out to have significant impact on the ability of PMOs to deliver their intended value and help the organization grow. Rapport, trust, team building, motivating, influencing, inspiring and becoming a trusted partner are skills and competencies that each member of the PMO must possess. In many organizations, the success of the PMO will in fact hinge on the rapport that is established between project managers and their PMO “representatives” and without these characteristics, little progress will be made in the areas of collaboration, innovation, taking initiative and helping each other. Focusing on “right-brain” activities also involves fewer numbers and auto-pilot thinking and more consideration for people's needs.
What to Do So That PMOs Do Not Fail
There are two main approaches to reducing the failure rate of PMOs:
- Properly set up the PMO from the start, with a clear business case, specific and articulated reasoning for establishing it, understanding of its goals and which challenges it is set to address, a vision, a charter, a clear road map, roles and responsibilities, stakeholder analysis and expectations management.
- Review the common causes for PMO failure, focusing on these areas in the setup of the PMO (as a preventive measure), as well as while running it (as a corrective measure). Understanding the reasons why PMOs fail is the first step in developing special measures so that the PMO does not fail..
How to Establish a Successful PMO
Building a successful PMO involves steps that, although not complicated to perform, are often overlooked.
Position the PMO for Success
The PMO‘s level of sophistication, structure and its funding will vary depending on the area it intends to improve. Before establishing a PMO, ensure that there is a sponsor and that senior management has a clear idea as to why they need a PMO. Merely establishing a PMO is not sufficient to ensure that the PMO delivers expected results; hence, organizational leadership should set expectations upfront, define the organizational needs and identify the desired value of the PMO to achieve this goal.
Ensure that Accountability for the PMO Comes From the Top
Whoever sets up the PMO needs to secure senior management support; establish a culture of collaboration; provide access to standardized tools and templates; set up transparent methods for selecting team members; build a knowledge library; put reporting mechanisms in place; and, allow for the implementation of lessons learned programs.
Follow Logical Steps
- Build a foundation for a successful PMO by identifying senior stakeholders and get their commitment to the PMO; write a PMO charter and a value proposition; specify the PMO funding source; identify resources; define desired results and goals; and select projects to be included.
- Identify short term objectives and initiatives, including targets for launching the PMO, acquisition of resources, tracking and reviewing projects, supporting new projects and establishing criteria for PMO support and support for projects in need.
- Specify long-term solutions: these should include the development of areas of expertise, identification of process improvement and streamlining opportunities, building a mechanism to help identify, realize, and apply lessons learned, customization of project processes and methodology, and identification of tools and techniques.
- Improvement and support: establish baselines for project reporting metrics, improving project management processes, creating a process to identify areas of potential added value to be provided by the PMO, building personnel needs assessments and training programs, and establishing governance procedures.
Conclusion
With PMOs established for a variety of reasons and with multiple scopes and mandates, it is important to define the reasons, mandate and scope of each PMO. Failing to do so is the first step toward mismanaging the PMO or the expectations of it, and both ultimately lead to PMO failure. In many organizations, PMOs face an environment that is similar to a pendulum over time — shifting from too much focus on them to too little and back, with this alone serving as a contributor to mismanaging expectations and PMO failures.
When establishing a PMO, the person heading it must act like a four year old in a way (albeit only one aspect of the behaviour of a 4 year old) and ask “why” as many times as it takes until there is a clear answer from high up in the organization regarding the reason for establishing a PMO. The answer should involve addressing real organizational requirements that are more than a set of “desires,” where the PMO is in search of a problem, instead of serving as an answer to a known issue.
With a staggering 25% of PMOs shut down after one year, 50% after two years, and 75% after three years, organizations must take care in establishing a PMO that will deliver on its promise and produce the intended value for the organization. As such, it must put an emphasis on people skills, leadership, trust building and motivation, so it becomes and is perceived to be a trusted partner to all stakeholders and project managers in particular.
This paper has introduced a set of common causes of PMO failure and by simply addressing them and following a set of straightforward steps to establish the right PMO in the right way, stakeholders can proactively take action to avoid these problems, or apply corrective action to adjust the performance of an existing PMO.
PMO success hinges on having a clear vision, strong leadership, emphasis on stakeholder expectations management, a consistent approach to project management, well-defined roles and responsibilities and strong risk management. These ingredients serve as the foundation for PMOs to deliver on their promises.
