The PMO

FOR years the project management office (PMO) has struggled to be taken seriously. In the early days, many PMOs failed due to lack of executive support, vision or expertise. And even though the model has matured and more PMOs are proving their value as critical drivers of business improvement, fighting the history of failure makes it that much harder to secure buy-in and resources from wary executives. To overcome this skepticism, PMO directors need to be certain from the start that they have the tools, resources and plan to achieve their goals.

Fifty percent of PMOs fail the first time around. To reduce that level of failure, PMOs need a business case that is underpinned by solid measures and metrics.

—Michael Cooch, PwC, London, England

“Fifty percent of PMOs fail the first time around,” says Michael Cooch, director of global project and portfolio management propositions at the consulting giant PwC in London, England.

That alarming statistic is backed up by research performed by Gartner at its 2010 ITxpo, as well as PM Solutions’ The State of the PMO 2010 report.

“To reduce that level of failure, PMOs need a business case that is underpinned by solid measures and metrics,” Mr. Cooch advises.

The best PMO business case has a clear vision for what it will accomplish, and aligns its goals with the broader goals of the business, says Raed Skaf, PMP, consulting manager at the accounting and consulting firm Deloitte in Riyadh, Saudi Arabia. “A PMO has to address specific problems that the organization is facing to be relevant,” he says.

PMOs are not one-size-fits-all, agrees Mr. Cooch. “If you don't match your mission with the objectives of the organization, the likelihood of PMO failure increases significantly.”

Whether an organization has trouble meeting schedules, staying on budget or managing unanticipated risks, these issues should set the framework for a PMO's charter and be a primary measure of progress, Mr. Skaf says. “Measuring the current situation and maturity gives the PMO a baseline for goal-setting, and helps in choosing the right PMO model and proving results.”

A baseline is just the beginning, though. PMO leaders need a plan to prove they are delivering results, says Edwin Kapinus, PMP, PMO manager for DM Petroleum Operations Company, the management and operations contractor for the U.S. Department of Energy (DOE) on the strategic petroleum reserve project headquartered in New Orleans, Louisiana, USA.

In 2008, Mr. Kapinus created a PMO for the organization, based upon the results from an enterprise-wide SWOT analysis—assessing the strengths, weaknesses, opportunities and threats in the organization.

“An emerging theme from the SWOT analysis was a need for better planning, control and execution of projects through the utilization of project management principles and techniques,” he says. “Thus, the PMO was created to begin the process of creating that vehicle towards better project and corporate performance.”

The results suggested that more rigorous project management principles on all projects would help reduce risks and unexpected costs, as well as add efficiencies to the operation through better communication and more formal processes and methodologies.

“The DOE relies on our company to have a vision for the successful integration of projects where cost, schedule, quality, safety, operability, security and environmental effectiveness are all key considerations of the project plans,” Mr. Kapinus says. “We see the PMO as a hub to establish policies and procedures, to act as a single point of contact for the planning and support of project execution, to mentor new project managers and to assist project managers with the recovery of troubled projects.”

Mr. Kapinus and his team created a more formal project management governance process, set stage gate reviews and are building a lessons-learned process for issues and best practices that arise in projects. The PMO also implemented bi-weekly team meetings on major projects to update everyone on progress, and to address any problems as soon as they arise.

“Without frequent discussions, problems might not get resolved and it could easily become chaotic, resulting with impacts to the project,” he says. “All of these processes will help create the desired disciplined approach required to effectively manage projects as well as deepen the roots of a culture change for using project management principles.”

The PMO is already seeing improved results, thanks to more formal key milestone reviews. On a current engineering project, a separate contractor was hired to create the detailed designs. First, though, the PMO and the assigned project team conducted a review of the project scope statement and discovered it contained several incomplete and non-compliant items that did not align with project objectives. These inconsistencies were then logged and tracked to resolution to avert a potentially large impact to subsequent project phases.

“If we hadn't done that review, it could have cost a lot of money in claims and procurement issues down the line,” Mr. Kapinus says. “But by being proactive, we solved the problems before we put it out to bid.”

Mr. Kapinus is currently tracking the success of that and another big project at DM Petroleum Operations, which he will use as an example to showcase the value the PMO brings to the organization.

Even when a PMO has a solid plan for success that includes quantifiable measures, though, it can falter early on without committed support from the executive team.

Having a champion is especially important if you are trying to get past the notion that PMOs tend to fail, says Terry Tanner, IT services PMO director for the City and County of Denver, Colorado, USA. Mr. Tanner joined the governmental agency in 2009 after it had tried—and failed—to implement a similar PMO a few years before.

Denver initially had small IT shops set up in every agency across the city and county, with no centralized office to oversee them. In 2003, the new CIO consolidated them all under one PMO, with the goal of creating a homogenous system and interface for IT services.

“The PMO was put in place as a response to the ‘next big thing’ syndrome,” Mr. Tanner says. “By that I mean the next solution that will fix all that ails an organization or agency, without understanding anything about the solution, what it takes to implement, the timeline before results can be expected, etc.”

As a result, the executive team had unreasonable expectations concerning the time it would take before results could be delivered, and did not understand what would be required from a leadership perspective at the PMO level as well as their own involvement and support.

“If management is not fully committed to the PMO and providing active support and guidance, then I believe it's doomed to mediocrity at best, and failure at worst,” he adds. “That PMO lasted two years.”

A couple of years later, another CIO was appointed—and this one understood the value a strong PMO could bring to the organization, he says. The office was resurrected, and Mr. Tanner was brought in to help make sure it avoided the mistakes of the past.

TIP When launching a PMO, start with the OPM3 ProductSuite^®, recommends Raed Skaf, PMP, Deloitte, Riyadh, Saudi Arabia. “Frequent assessments are essential to measure the project management processes’ maturity, the organization's improvement and alignment with business strategy.”

“When I arrived, the organization was chaotic,” he says. Though there were many professional project managers on staff, they had no repeatable processes, and every project leader measured progress in his or her own way based on personal experiences.

Mr. Tanner's team members established formal project planning and implementation processes for all IT projects, created standardized methodologies, rules and regulations, and developed a charter and road map for improvements that included key performance indicators for the coming 18 months. They also implemented tools to measure overall portfolio progress, and created a centralized database for project information, enabling the PMO staff to run reports that communicate measurable value in terms of time saved and resources used.

Today Mr. Tanner can show that 95 percent of the projects over which his staff has control meet their schedule goals; schedules controlled by third-party vendors are less consistent, he admits. He has also reined in control of scope creep and cost overruns, which, he says, enabled the IT group to deliver 30 more projects in 2010 compared to 2009—with fewer staffers and a smaller budget.

“These measures show definitively that we add value to the organization,” Mr. Tanner says.

Being able to demonstrate tangible measures of success through reports and project case studies is vital to winning over skeptical executives who question the value of the PMO. But these tools only work if those measures align with the organization's goals, says Eric Morfin, PMP, senior director of the oncology business unit at the pharmaceutical giant Pfizer in La Jolla, California, USA.

The key is determining what leadership values the most right now, and recognizing that the things it values will change along with the business.

“A lot of PMOs make the mistake of thinking time is the most important driver, when it's often more valuable to focus on resource allocation,” he says. Figuring out ways to work smarter through more efficient processes can lead to better on-time delivery while managing costs. This, in turn, creates a more appealing business case for executive leadership.

Recently, Mr. Morfin helped the National Cancer Institute develop a PMO. In his evaluation of its project management process, he found that teams working on early-phase drug-development projects start from scratch with each project plan, even though 80 percent of what they do is fairly standard: recruiting staff, developing protocols and identifying data. Mr. Morfin helped develop a work breakdown structure template to streamline this process.

In the old system, teams would participate in 16 four-hour meetings to create a project plan, he says. With the new template, it now takes only four meetings. “By focusing on resource use, we reduced the time it takes to develop a clinical plan by 75 percent.”

He's currently working on a PMO project at Pfizer, focusing on achieving similar capacity improvements across the oncology project portfolio.

If he had tried to sell resource allocation as a model for PMO success a few years ago, it would have fallen flat, he says, because at that time quality output and compliance were the driving focus. “You always have to ask yourself what it is that the executive team values today, and how you can demonstrate that value through the PMO.”

Once you have determined organizational goals and achieved results, make sure senior management knows what has been accomplished, Mr. Morfin says. Those in charge of the PMO must generate regular reports that demonstrate their successes. Those reports must be in the language of the executive suite—using simple clear measures that show the impact of the PMO to the business. Mr. Morfin confines his reports to one-page summaries with sharp graphics that tell a story at a glance. “Keep it short and simple,” he advises.

PMO directors should also encourage key stakeholders to talk up their successes to other executives, Mr. Skaf advises. “It's easier to build support for a PMO when it's championed by senior management,” he says. “People listen to those whom they trust.” PM

A lot of PMOs make the mistake of thinking time is the most important driver, when it's often more valuable to focus on resource allocation.

—Eric Morfin, PMP, Pfizer, La Jolla, California, USA