Business Driven PMO Setup and Management
39
Mark Price Perry September 30, 2015 Project Management Institute Minnesota Chapter Business Driven PMO Setup and Management
Transcript of Business Driven PMO Setup and Management
Mark Price Perry
September 30, 2015
Project Management Institute Minnesota Chapter
Business Dr iven PMO
Setup and Management
Introduction to the Business Driven PMO ◦ All too familiar PMO story
◦ Purpose of the PMO
◦ Purpose of project management
Roadmap for PMO Setup ◦ Three steps
◦ Two tips
◦ One golden rule
Summary
Slide 2
Slide 3
Leadership team decided to have a PMO
Slide 4
PMO manager was hired to start a new PMO
Slide 5
PMO manager hastily created a PMO Charter
People
Tools
Process
Training
PMO
Slide 6
One year later…
• Lack of support for the PMO
• Questioning of PMO value
• PMO given a second chance
• With a new PMO manager
Slide 7
New more professional (better dressed) PMO manager..!
Slide 8
Same old PMO, but with buzz and hype added to PMO activities
People
Tools
Process
Training
PMO
Sell the PMO
Show
Qu
ick W
ins
Obtain Executive Buy-in
Cele
bra
te S
uccess
Slide 9
Another year later…
• Still lack of support for the PMO
• Even more questioning of PMO value
• PMO given a third chance
• With a third PMO manager
Slide 10
Experienced business manager asked to head PMO
Slide 11
Let’s act like business people and speak the language of business
People
Tools
Process
Training
PMO
Sell the PMO
Show
Qu
ick W
ins
Obtain Executive Buy-in
Cele
bra
te S
uccess
Slide 12
Leadership team determined PMO mandate
“Nemawashi”
• Leadership team determined (ends)
• Top 3 project-related problems
• Vision for the PMO
• Mission of the PMO
• Goals / Objectives (how much by when)
• Assessed value to the business
• PMO determined (means)
• Business plan for the PMO
• Strategy components for each objective
• Key PMO capabilities
• Tactics to enable capabilities
• People, process, tools, training
• KPIs relative to the PMO objectives
Nemawashi – Individual Starting Position
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I. Top three problems/opportunities to be solved by the PMO 1. ……………………………………………………….
2. ……………………………………………………….
3. ……………………………………………………….
II. Vision • ………………………………………………………………………………………………………
………………………………………….
III. Mission • ………………………………………………………………………………………………………
………………………………………….
IV. Goals and objectives of the PMO (fulfillment of problem/opportunity) 1. ………………………………………….
• Objectives: ………………………………………………………….
2. ……………………………………….....
• Objectives: ………………………………………………………….
3. ……………………………………….....
• Objectives: ………………………………………………………….
V. Value to the business
• …………………………….
From Individual Perspectives to Unanimous Consensus
Nemawashi – Leadership Team Ending Position
Slide 14
I. Top three problems to be solved by the PMO I. Poor forecasting and management of project-based revenue
II. Not enough capacity to perform more projects
III. Lack of visibility of all the projects of the company
II. Vision I. To be an enabling and facilitating organization that is focused on, and accountable for, the
project-based success of the company
III. Mission I. To develop and execute annual plans and strategies that solve the major project-related
problems faced by the company
IV. Goals and objectives I. The top three goals and objectives (how much by when) of the PMO
I. Goal 1: Improve project revenue management
I. Objectives: Reduce forecasting margin of error to 5 percent by year end
II. Goal 2: Increase project capacity
I. Objectives: 100% increase by year end
III. Goal 3: Provide holistic view of all projects
I. Objectives: Effective project reporting in place within 90 days
V. Value to the business ($50m / Significant)
Business Planning vs. Cookie-Cutter PMO Chartering
Slide 15
After a year of this
• Tremendous support for the PMO
• No question of PMO value
• PMO given more to do (not another chance)
• Executive initiatives
• Strategic planning
• Portfolio management
• Organizational-wide counsel
The purpose of a PMO is not… ◦ To develop standards for the management of projects…
◦ To support, report, train, coach, and mentor…
◦ To provide PMO services…
Most folks answer “what is the purpose of a
PMO” by describing what a PMO does
Slide 16
The purpose of a PMO is… ◦ To best address the project-related issues and
opportunities of the constituent leadership team for whom the PMO was created and exists to serve and for which business as usual (sans-PMO) is not a viable option…
Slide 17
Until the ends to be achieved are first established,
there can be no sensible discussion about the means
Lots of excuses for not having a leadership team determined and unanimously agreed to PMO purpose ◦ Heard them all…
If you don’t have PMO purpose… ◦ You have missed an opportunity
Servant Leadership
Business Management
Business Value
◦ You have put the PMO at risk
Strike one - All honeymoons end
Strike two – Buzz and hype only prolong the reckoning
Strike three – If there is a third strike, you might not be the batter
Slide 18
PMO management is business unit
management, not project management
Which project manager did a better job..?
Slide 19
Project Overall Status
Schedule Status
Cost Status
Estimated Duration
Planned Duration
Actual Duration
Start Finish Planned Cost
Actual Cost
Project 1 100 days 125 days 125 days 01/06/04 07/03/04 $190,000 $190,000
Phase 1 20 days 25 days 25 days 01/06/04 02/10/04 $50,000 $50,000
Phase 2 20 days 25 days 25 days 02/11/04 03/17/04 $55,000 $55,000
Phase 3 20 days 25 days 25 days 03/18/04 04/22/04 $25,000 $25,000
Phase 4 20 days 25 days 25 days 04/23/04 05/28/04 $35,000 $35,000
Phase 5 20 days 25 days 25 days 05/29/04 07/03/04 $25,000 $25,000
Project 2 100 days 75 days 85 days 01/06/04 05/09/04 $140,000 $160,000
Phase 1 20 days 15 days 17 days 01/06/04 01/29/04 $40,000 $42,000
Phase 2 20 days 15 days 18 days 01/30/04 02/25/04 $45,000 $48,000
Phase 3 20 days 15 days 15 days 02/26/04 03/19/04 $15,000 $20,000
Phase 4 20 days 15 days 19 days 03/20/04 04/16/04 $25,000 $29,000
Phase 5 20 days 15 days 16 days 04/17/04 05/09/04 $15,000 $21,000
Gaming industry consulting firm ◦ Target Market – Casinos
Specialty – On time openings, risk management
New Engagement – Casino readiness
Product of the Project Benefit – Avoidance of fines, license loss
Estimated Project Cost - $250,000
Estimated Project Duration – 100 days
Stakeholder Bias – Time (I need a completion date I can count on..!)
Casino will commit open date to public/regulators based upon project schedule
Scope is secondary
Cost is tertiary
Slide 20
Approach Project Manager #1
Technique Employed Positive Buffering – added time to phase estimates
Why To best meet the stakeholder bias for the project
Result Finished on time, avoided penalties and loss of license
A leading manufacturer of wool yarns ◦ Target Market – Knitters and Commercial Weavers
Routes to Market – Direct Sales, Channel Sales, Telemarketing
New Initiative – Selling directly to knitters via company website
Product of the Project Benefit - $20k per day, $20m first three years
Estimated Project Cost - $250,000
Estimated Project Duration – 100 days
Stakeholder Bias – Time (I want it now..!)
Scope is secondary
Cost is tertiary by a wide margin
Overrun to meet/beat schedule to realize benefits sooner welcomed
Slide 21
Approach Project Manager #2
Technique Employed Negative Buffering – subtracted time from phase estimates
Why To best meet the stakeholder bias for the project
Result Finished earlier, cost less, recognized $1m+ in benefits
The Project Management Triangle ◦ Intended to reveal stakeholder biases for the project
◦ Never intended to be a measurement system
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The Project
Management Triangle
Time Cost
Scope
Slide 23
“If we only speak the language of
project management as in scope, time,
and cost; then project management as
a profession will fail today’s
businesses..!”
-- Mark Langley, CEO PMI
Slide 24
“To achieve and sustain PMO success,
there is a lot that must be learned and
there is even more that must be
unlearned..!”
-- Matt Light, VP of Gartner Research,
PPM Practice
Is stakeholder bias understood?
100 PMOs surveyed, random project charter picked
What percent of project charters did not show stakeholder bias for scope, time, cost and will to pay/wait..? 25% did not show stakeholder bias
50% did not show stakeholder bias
75% did not show stakeholder bias
90% did not show stakeholder bias
Slide 25
Reflect upon your own “Project Charter” perspectives regarding
the percent of project charters that did not show stakeholder
bias and will to pay/wait.
Is stakeholder bias understood?
100 PMOs surveyed, random project charter picked
What percent of project charters did not show stakeholder bias for scope, time, cost and will to pay/wait..? 25% did not show stakeholder bias
50% did not show stakeholder bias
75% did not show stakeholder bias
90% did not show stakeholder bias
Slide 26
If Stakeholder Bias is not understood (used) by the project
manager, how likely is it that stakeholders will be best
served over the course of the project..?
The purpose of project management is not… ◦ The delivery of a project on time and on budget
Most folks answer “what is the purpose of
project management” by describing a
commonly used technique
Slide 27
The purpose of project management is… ◦ The practical application of knowledge, skills, tools, and
techniques to project activities to meet the project requirements
Slide 28
Most project managers do not know the
stakeholder bias for their project and much worse,
most project managers do not know their craft..!
Post-selection, how do we talk about projects..?
Slide 29
Post-selection, how do we talk about projects..?
Slide 30
Where on our PMO dashboards do you find the stakeholder bias
for the project, the will to pay / will to wait
(drop deads) for the project, and the stakeholder
provided benefit of the project..?
Less than 5% of PMO dashboards provide
key stakeholder information..!
What kind of decisions are we facilitating..?
Appearance of good PM (achieving project measures)..?
Reality of good PM (best managing the projects)..?
Project Scope Time Cost Budget EAC Overall
Project A
$1.0m $1.3m
Consider the following project characteristics ◦ Project Duration: 6 months
◦ Project Cost: $1m
What is the overall project status..?
Slide 31
Dashboard Policy:
Green = 0-10%, Yellow = 10-25%, Red = >25%
Project Scope Time Cost Budget EAC WTP WTW BENE SH Bias Overall
Project A
$1.0m $1.3m $5.0m 12mo $60m Time
Consider the following project characteristics ◦ Stakeholder Bias: Time most important (for this project)
◦ Five Year Benefit: $60m ($1m per month after completion)
◦ Project Duration: 6 months
◦ Project Cost: $1m
◦ Stakeholder Will to Pay: $5m
◦ Stakeholder Will to Wait: 12 months
What is the overall project status..?
Slide 32
Dashboard Policy:
Green = 0-10%, Yellow = 10-25%, Red = >25%
Note: $300k budget overrun incurred, as approved by the sponsor, to avoid a potential project delay of 3
months that has a 50% risk of happening.
Three Step Process ◦ Step 1: Establish the Constituent-Determined PMO Mandate
Determine who the constituents of the PMO are
Determine technique for establishing the PMO mandate (ends)
Guidance – 6 months to complete, 3 months if you are really good
◦ Step 2: Develop the PMO Business Plan
Determine business planning approach/template (means)
Use the business planning approach that your company already has
Guidance – 1 to 3 months
◦ Step 3: Execute the PMO Business Plan
Manage the PMO like a business unit “Manage by Objective”
Phase based staffing based upon PMO business plan
Guidance – PMO review meetings are NOT the same as project review meetings and PMO success is NOT the same as project success
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Recast annually
Tip #1 – PMO Mandate ◦ Nemawashi technique
Business Driven PMO Success Stories (Chapter 5, pages 41-48)
◦ Individual sessions
PMO constituents
Leadership team
PMO steering committee
PMO advisory board
◦ Group meeting(s)
◦ Unanimous agreement on PMO purpose and value
PMO mandate progress reviewed (quarterly)
PMO mandate validated (annually)
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Tip #2 – Stakeholder Bias ◦ Project charters
◦ Project status reports
◦ Executive dashboards
If the PMO has a leadership
team determined mandate and
uses stakeholder bias in all
that it does, the PMO will find
success..!
One Golden Rule
Slide 35
It’s not your PMO..!
Don’t be driven by good intentions…
Slide 36
• Sell pre-determined PMO solution
o Pick a PMO model
o List PMO services
o Present generic PMO benefits
o Ask for management “Buy-in”
• PMO Charter (becomes purpose)
o People, process, tools
o PM training program
o Sell/defend the PMO
Quick wins
Buzz & hype
Popcorn & ice cream
Be driven by business needs…
Slide 37
• Leadership team determined (ends to be achieved)
o Report period PMO mandate
o Project-related issues / value
o Vision, mission, goals, objectives
• PMO determined (means to ends)
o Business plan for the PMO
o Strategy components for each objective
o Key PMO capabilities
o Tactics to enable capabilities
People, process, tools, training
o KPIs relative to the PMO objectives
Slide 38
Business Driven PMO Setup and Management ◦ Driven by business need, not a PMO model
◦ Managed like a business unit, not an overhead staff org
Practical application ◦ Application of the PMO in response to business needs
◦ Application of PM in response to stakeholder biases
Tangible value ◦ PMO value – fulfillment of PMO mandate, ends to be achieved
◦ PMO manager value – plans/executes the means to the ends
◦ Project manager value – performs to the business context
Always keep in mind ◦ Most do not know the purpose of the PMO
◦ Most do not know the purpose of project management
Slide 39
Thank you..!
