A realistic portrait of PMOs

Abstract

This paper presents the results of a survey of PMOs undertaken to allow practitioners to describe the reality of their PMOs and to thus provide a reliable image of the state of PMOs in organizations. This investigation was motivated first, by a lack of systematic investigations of PMO, and second, by a reaction to a literature dominated by those promoting universally applicable models of PMOs. The results offer individual practitioners and organizations a basis for the critical examination of existing and proposed PMOs, with the goal of supporting better decisions regarding their future development.

Introduction

In recent years, many organizations have created PMOs, modified the one they have, or shut them down. Consultants promoting the implementation of PMOs have produced most of the literature. The authors' observations of organizational reality revealed great variety in the form and the nature of PMOs, their positioning within the hierarchy and the nature of the roles they are given. The status and the legitimacy of PMOs also vary considerably from one organization to the next. Discussions on this topic tend to be characterized by diversity of opinion and even confusion. This is understandable given 1) that the PMO is a relatively recent phenomenon, 2) that comparing different PMOs is like comparing apples and oranges, and 3) that there has been a lack of systematic investigation.

This paper presents the results of an enquiry into the reality of PMOs. The results reported in this paper are based on the description of 255 PMOs, obtained using a web-based survey. Based on personal experience, one year of work on exploratory case study work, and a review of the literature, the authors developed a survey questionnaire and did a pre-test to ensure ease and clarity of interpretation. The web-based instrument gathers data on PMOs, their positioning in the organization, their structure, the roles and mandates they are given, and perceptions of their legitimacy and usefulness.

The Definition of the PMO

A Guide to the Project Management Body of Knowledge (PMBOK^® Guide) defines a PMO as:

“An organizational body or entity assigned various responsibilities related to the centralized and coordinated management of those projects under its domain. The responsibilities of the PMO can range from providing project management support functions to actually being responsible for the direct management of a project.” (PMI, 2004, p. 369)

This definition is very close to the definition used during this investigation. It highlights the features of an organizational entity and the variability in the mandates assigned to PMOs. However, the present study makes a distinction between the PMO and the “project office,” which has responsibility for the management of one large project. The authors feel that PMOs are different from entities responsible for the management of a single project. The PMOs that are the object of the present investigation are organization entities whose mandates cover many projects. The survey showed that 60% of these organizational entities are called “PMO.” The other 40% have a wide variety of names including “project support office.”

One or Several PMOs

Each respondent to the survey described one particular PMO. However, some organizations have more than one. In 55% of the cases, the respondents indicated that the PMO described is the only one in the organization. Another 25% reported that other PMOs exist, but have no relationship with their PMO or its mandate. Finally, 20% described a PMO that is related to at least one other PMO in their organization.

The Structures of PMOs

Most PMOs have two characteristics in common; they tend to be young and to have a small staff. Apart from these two points in common, PMOs vary enormously one from the other.

PMOs have been popular since the mid to late 1990s. Surprisingly, 52% of PMOs in existence today were created in the last two years. Two phenomena are at work producing this result. On the one hand, new PMOs are being created at a relatively high rate. On the other hand, PMOs are being shutdown or radically redesigned at almost as fast a rate. The result is a population dominated by PMOs that have only been in existence in their present form for a few years, as shown in Exhibit 1.

Exhibit 1: Age Distribution of PMOs

Most PMOs have very little staff. Exhibit 2 shows the staffing levels of PMOs expressed in fulltime equivalents including the person responsible for the PMO, but excluding the PMs. This staff is overhead and organizations are very reluctant to create overhead expenses. The issue of the cost of overhead is a key issue for PMOs. It creates a somewhat paradoxical situation where the PMO is asked to take on many functions but with few resources.

Exhibit 2: Personnel of PMO excluding PMs (fulltime equivalents)

Despite these few similarities, PMOs show great diversity in the way they are structured. Exhibit 3 shows the variation in the level of decision-making authority of PMOs.

Exhibit 3: Decision-making Authority of PMOs

PMOs in a supporting role, with little or no decision-making authority, make up 41% of the sample. At the other extreme, 29% have considerable or very significant authority to make decisions to allocate resources, set priorities, or initiate, change or cancel projects. These are two very different organizational roles, illustrating the great variety of roles different organizations assign to their PMOs. The distribution of decision-making authority is close to a normal distribution, but with very high variance. The variation among PMOs as to the percentage of PMs and projects found within their structures is even more extreme. These distributions, Exhibits 4 and 5 respectively, show bi-polar distributions with more PMOs at each extreme than in the middle ground.

Exhibit 4: Percentage of PMs within PMO

Exhibit 5: Percentage of projects within the mandate of the PMO

In different organizations the answer to the question “Are PMs grouped within the PMO?” receive radically different responses. 34% of organizations report that they group 100% of the PMs in the PMO, while 29% of PMOs have no PMs and 45% of PMOs have less than 25%. The percentage of projects that are within the PMO's mandate is also extremely varied. Exhibits 4 and 5 show the extreme variety in the way organizations structure their PMOs. This variety contrasts with the literature on PMOs that tends to oversimplify reality, each author reducing the description of PMOs to one or two models. Give the extreme variety of forms that PMOs take on in reality, any general statement claming to describe the authority of PMOs or the allocation of PMs or projects to PMOs should be viewed critically.

The Organizational Roles of PMOs

The PMO is often associated with particular roles or functions that are part of their mandate. The most common function is the implementation of a standardized PM methodology. Some people go as far as to define a PMO as an entity that fills this function. Reality is quite different. A list of roles or functions that are part of the mandates of PMOs was derived from preliminary investigations of a smaller sample of PMOs and from a review of the literature. A large number of different functions were identified, 27 in total. The respondents to the survey reported the importance of each of these functions for their PMO. All 27 of the functions were important for significant numbers of PMOs, illustrating again the extreme variety found among different PMOs in different organizations.

Analyzing 27 different functions is quite fastidious. Further analysis revealed patterns among the functions that organizations allocate to their PMOs. A factorial analysis was used to identify five groups of functions. The functions in each group tend to be associated with each other.

Group 1: Monitoring and Controlling Project Performance

The group of functions related to the monitoring and controlling of project performance is the most important group. This group includes both the monitoring, controlling and reporting of project performance and the management of the computer-based tools to do these tasks. PMOs with these functions are assisting management to visibility and control over the projects for which it is responsible and thus support the project governance functions. This group includes the following functions. The functions are always presented in decreasing order of importance.

• Report project status to upper management;
• Monitoring and control of project performance;
• Develop and maintain a project scoreboard;
• Implement and operate a project information system.

Group 2: Development of PM Competencies and Methodologies

The group of functions most traditionally associated with PMOs includes functions dealing with standard methodologies and competency development. This group is composed of the following functions:

• Develop and implement a standard methodology;
• Develop competency of personnel, including organize training;
• Promote project management with organization;
• Provide mentoring for project managers;
• Networking and environmental scanning.

The development and implementation of a standard methodology and the provision of PM training and mentoring are the functions most people associate with PMOs. These three functions require considerable expertise in PM practice, which is acquired, in part, through networking and environmental scanning activities. The PMO with these functions is often in role of promoting the use of the methodology, the development of competencies and project management in general. This group thus constitutes a coherent set of functions that reinforce one another. This reinforcement is the practical reality behind the statistical phenomenon identified by the factorial analysis.

Group 3: Strategic Management

There has been a tendency in recent years for project management in general, and PMOs in particular, to become more involved with issues of strategic alignment and more closely tied to upper management. The group of functions related to strategic management of the organization includes the following:

• Provide advise to upper management;
• Participate in strategic planning;
• Benefits management.

Involvement in these functions brings project management and the PMO closer to upper management. The survey showed that these functions are more typical of central PMOs.

Group 4: Multi-project Management

Some PMOs have mandates to manage whole sets of projects in a coordinated fashion. Managing whole sets of projects often involves program or portfolio management. These have become important aspects of project management, as signaled by the Project Management Institute (PMI^®) with the publication of Organizational Project Management Maturity Model (OPM3^®) in December 2003 and the publication of standards on these subjects in the near future. The role of PMOs in the management of whole sets of projects includes both coordination issues and issues of strategic alignment as can be seen from the list of functions included in the strategic management group:

• Coordinate between projects;
• Identify, select and prioritize new projects;
• Manage one or more portfolios;
• Manage one or more programs;
• Allocate resources between projects.

Group 5: Organizational Learning

Organizational learning has been a very important topic in the management literature and practice in recent years. Some PMOs are actively involved in organizational learning through the following group of functions:

• Manage archives of project documentation;
• Conduct post-project reviews;
• Conduct project audits;
• Implement and manage database of lessons learned;
• Implement and manage risk database.

These functions have been associated with project management and PMOs for some time. Each function contributes directly to organizational learning. Bringing them together highlights the importance of this role in some PMOs.

Additional Functions

The factorial analysis produced the five groups of functions presented above. Four functions not included in these groups complete the list of 27 functions identified in this study. These four functions are excluded from the groups above, not because they are not important, but because their presence is not statistically related to the presence of these groups. The remaining functions are presented here in decreasing order of importance.

Supply a set of tools without standardization. As was seen above, many PMOs develop, implement and promote the use of standardized PM tools and methods. However, some organizations have chosen to provide tools that PMs can use at their discretion. PMOs typically provide these discretionary tools via the company intra-net.

Monitor and control performance of the PMO. Tracking their own performance is considered an important function for several PMOs. PMOs are under pressure to show value for money and have data on their own performance is key to addressing this important issue.

Execute specialized tasks for PMs e.g. prepare schedules. Many PMOs provide specialized services to PMs and project teams. In order to execute these tasks, PMOs maintain specialized resources on their staff. The preparation of schedules is a common example, but such services can include many other tasks.

Manage customer interfaces. Some PMOs have the responsibility for managing customer interfaces. Responsibility for this activity depends to a great extent on the type of customer. Not all PMOs are in a position to fill this role. However, a PMO responsible for all the projects for a given customer may well have an important role to play in managing this customer interface. A PMO responsible for an outsourcing contract is an example of this.

All of the 27 functions are important for some PMOs and each PMO reports filling several of these functions. This is often done with a small staff under pressure to control costs.

Strong Points and Areas for Improvement

Most of the data from the survey is quantitative. However, respondents were asked to indicate what they felt were the strong points and the areas for improvement of their PMO. An analysis of this qualitative data reveals what issues are perceived as critical for PMOs. Three groups of issues were brought up the most often.

Many respondents mentioned different functions the PMOs fills either as a strong point or an area for improvement. The fact that some respondents feel that a particular function is a strong point for their particular PMO, while other respondents mention the same functions as an area for improvement, indicates that performance on these particular functions is seen as critical and that performance on these same functions varies from one PMO to the next. The following functions were mentioned the most often, in decreasing order of frequency: development and implementation of a standard methodology, monitoring and controlling project performance, assume coordination between projects, mentoring of PMs, and implementing project IS.

The qualitative data on strengths and areas for improvement also identified two issues relating to the competency of project personnel. The competency of the personnel of the PMO was given as a strong point for some PMOs and as an area for improvement for others. Competent personnel within the PMO certainly contribute to the PMO's ability to acquire expertise and to fill its mandate. On the other hand, several PMOs report having difficulty attracting competent people, making the issue a critical one for many PMOs.

The ability to communicate to the organization that the expense incurred by the PMO is good value for money is a problem area. The cost of setting up and operating a PMO is an overhead expense. In many cases, the expense is not seen as justified. Some even go as for as to say that PMO stands for “project management overhead.” In today's very competitive environment, an overhead function that is not seen as creating value proportional to the expense incurred is in a precarious situation.

Legitimacy and Performance of PMOs

Exhibit 6: “Has the relevance or even the existence of the PMO been seriously questioned in recent years?”

PMOs are being shutdown or radically redesigned almost as fast as they are being created. As is shown in Exhibit 6 above, in response to the question, “Has the relevance or even the existence of the PMO been seriously questioned in recent years?” 39% of the respondents answered “yes.” While the majority of PMOs are seen as legitimate within their organizational context, the existence of a very significant minority of PMOs is being questioned. The reality of PMOs in organizations is even darker than this result indicates. There is a positive bias in this survey created by the fact that organizations that have shutdown their PMO or have decided not to implement one, have not responded to the questionnaire.

The survey results confirmed that the issues of value for money and contribution to project and program performance are key to the perceived performance and ultimately to the legitimacy of the PMO. Poor performing PMOs are seen as too costly and as contributing little to project and program performance, while highly valued PMOs are seen as making significant contributions to performance. The ability to show contribution to performance at a reasonable cost is critical.

PMOs are more legitimate in organizations with higher levels of organizational project management maturity. The existence of a correlation between these two variables, organizational maturity and PMO legitimacy, does not reveal the nature of the relationship between the variables. It may well be the PMO is highly considered in an organization that is mature in project management because project management is valued in this organization. On the other hand, it may be that a high performing PMO has raised the level of PM maturity in the organization. The relation is likely to be circular and self-re-enforcing; the high performing PMO contributing to the level of PM maturity and to the organizational context in which project management and the PMO are valued. The survey also showed that an organizational culture that is supportive of the implementation of the PMO is associated with the legitimacy of the PMO. This is indicative of this circular relationship.

PMO legitimacy is also associated with several structural variables. The PMOs that have a higher proportion of PMs within their structure have their legitimacy challenged less often. Likewise, PMOs with a mandate covering a greater proportion of the organization's projects is more likely to be valued. The PMO with more decision-making authority is also more highly valued. Here again the relationship between the structure of the PMO and the perception of its value is likely to be circular. High performing PMOs are likely to acquire more PMs, projects and decision-making authority, which in turn re-enforces their position within the organization.

High performing PMOs are recognized as centers of project management expertise. The acquisition and retention of competent personnel is key. High performing PMOs are also seen as collaborating well with other project participants throughout the organization, particularly with functional departments. Even with recognized expertise and decision-making authority, the PMO must work collaboratively with other stakeholders if it is to fill its mandate effectively.

Conclusion

The organizational reality surrounding PMOs is complex and varied. Organizations establish a great variety of different PMOs to deal with their reality. Organizations may decide to include some or all of their PMs within the PMO or they may place them elsewhere in their structures. The PMO's mandate may cover all the organizations projects or only a select few. Organizations choose from among a number of possible roles or functions when deciding upon the mandate to give to a PMO. They also choose between a PMO in a support role with little or no authority and a PMO with considerable decision-making power. These organizational design choices create PMOs of varied form and function.

The literature promoting PMOs presents them as a best practice with obvious positive effects on project, program and organizational performance. The reality is quite different. Many PMOs are struggling to show value for money and some are failing, causing a very high mortality rate among PMOs. Practitioners and organizations would be well advised not to implement a PMO under naive assumptions of value for money or because PMOs are popular.