PMI Virtual Library© 2011 Marc Lotti

The Virtual PMO™ — Jump-starting Project Management Efficiency

It might surprise you to learn that 97% of organizations are only at a Level 2 or

below (out of 5 levels) in project management maturity and few have a formal project/program/portfolio management office (PMO). This presents a tremendous opportunity for efficiencies in the area of project management across most organizations. Often, the problem with selling a project management discipline or framework is generating the “aha” moment—the moment in which enlightenment or value is finally realized. Decision-makers want to see the value in implementing something new, and, today, more quickly than ever before. Once they have their “aha” moment, however, they become engaged and eager to learn more. Typically, at this point, the value of something isn’t yet based on a financial calculation; it’s solely driven by benefits. As with most proposals, however, decision-makers want to be convinced quickly of a return on their investment; this changes the analysis from being exclusively benefits driven to a financial calculation as well.

Return on investment (ROI), however, is no longer the only factor to consider—time and opportunity cost calculations are moving to the forefront of the decision-making process. There are few data supporting the positive ROI for investing the time, resources, and money in formal project management or a PMO; hence, it is difficult to convince managers to undertake these initiatives. How can

By Marc Lotti, PMP

97% of organizations

are only at a Level 2 or below

(out of 5 levels) in project

management maturity ”

the project management community give decision-makers their first “aha” moment? First, an assessment should be made on how mature the project management efforts are within a given environment. What exactly is project management maturity? Like most maturity models, it is a framework for knowing where an organization is (benchmarking) and measuring progress. The United Kingdom Office of Government Commerce (OGC) offers a simple

definition of a maturity model, as depicted below (Figure 1) in graphical form.

This article presumes that an organization at a Level 3 or above, by definition, already understands the

Figure 1

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merits of project management, as defined in A Guide to the Project Management Body of Knowledge (PMBOK® Guide) or a comparable framework; they’ve already had their “aha” moment, so typically, it isn’t these people we need to convince. Levels 0-2 organizations, however, need to be convinced that efficiency can be driven through proper project management. We could ask all Levels 0-2 organizations to grab a copy of the PMBOK® Guide—Fourth edition and run with it, but the process can be made simpler. To demonstrate the immediate value and usability, we’ve condensed the key Process Groups of the PMBOK® Guide and added an easy-to-understand detail framework that Levels 0-2 organizations can use, and there are many of them. According to Thomas and Mullaly, the distribution of organizations they studied was as follows: 50% at Level 0-1, 47% at Level 2, and only 3% at Level 3 (Figure 2).

Figure 2

No organizations in their study qualified for Levels 4 and 5. Presuming these statistics are representative of industries at large, there is a tremendous project management growth opportunity across many organizations that could possibly benefit from a Virtual PMO™ jump-start, or, more simply, these organizations could discover their “aha” moment!

The Virtual PMO™The simplicity of the Virtual PMO™ is its effectiveness in introducing and leveraging the best practices from the PMBOK® Guide and immediately demonstrating value to stakeholders.

The Virtual PMO™ does not employ a staff, rather it uses a basic template for governance; hence, the “Virtual” in its name. Its simplicity is deceptively effective and is extensible based on an organization’s particular needs. The template offers guidance (a description of what belongs there) in each field for the project management novice who might not know what a particular field represents or what its purpose is. So, although it is immediately useful to a Project Management Professional (PMP)®, it is also a training tool for less experienced staff and Level 0 organizations.

Where the Virtual PMO™ really shines, however, is in addressing a leap that organizations fail to make because of the perceived and often real complexity and costs of implementing a PMO. Often, this results in a delayed or unrealized “aha” moment and, consequently, little to no progress in project management maturity. Thomas and Mullaly cited that measuring organizational value is challenging for any corporate undertaking. The Virtual PMO™ addresses these challenges through a low- cost (dollars, implementation, training, etc.) framework while offering the best parts of a PMO (best-practice standards, saving time, budgetary control, risk containment, etc.) in a condensed format in which value is immediately visible.

The Virtual PMO™ template maintains sections that are often requirements or the least common denominators of most projects, irrespective of size. It focuses primarily on the Initiation, Planning, and Closing Process Groups of the PMBOK® Guide, with the expectation that the Executing and Monitoring and Controlling Process Groups are addressed using other project management tools. Just as every component of the PMBOK® Guide is typically not appropriate for every project, so are not all components of the Virtual PMO™ template appropriate for every project and sections can often be excluded without compromising project success.

Included here is a section for a project charter, as defined in the following statement:

“Drafted by the Project Sponsor to secure

project funding and communicated high-level

project purpose and objectives. Typically a

separate document and not in the project

plan, however, added here for simplicity and

centralization.”

This is followed by a table of stakeholders and their roles (Table 1), a critical component so often missed by novice project managers. The PMP knows there’s nothing quite like missing stakeholders and discovering later that they have requirements. This table specifies the stakeholder’s “name” and his or her role in the project or organization.

Table 2 lists embedded plans that can be expanded as needed; however, the basic plans of communication, quality management, resource and scheduling, and risk are included by default and detailed in the appendix of the complete Virtual PMO template.

Level 0-1

Level 2

Level 3

Level 4

Level 5

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Name Project/Organization Role

Individual primarily managing the project Project Manager

Individual who will assist the project manager or another project manager Project Management Resource

Individual providing technical assistance Engineering Resource

Individual representing business needs in the project Business Resource

Individual managing project risk as prescribed by the risk management plan Risk Manager

Individual responsible for the group within which the project will be executed Functional Manager

Person securing project funding Project Sponsor

Table 1

The Risk Management PlanThe all important Risk Management Plan tops the list of embedded plans and covers the organizational management of risk, including external vendors, client risks, and a risk-steering committee. This creates accountability for project risk and defines participants’ roles in risk management. How risk is analyzed, screened, and ranked is defined next, followed by risk tracking and a budget. Once the plan is approved, a Risk Register (Table 3) within the template acts as the repository of all identified project risks, the probability of occurrence, the effect, and the mitigating action. The Communication PlanThe embedded Communication Plan can be very brief and is often accompanied by a table for conciseness, making the plan very readable and effective. An example follows:

“All project updates will be provided to

stakeholders as per the table below. Additional

dialogue and updates will occur in weekly team

meetings after which minutes will be posted to

the project repository.”

The Quality Management Plan The Quality Management Plan is distilled in the template to:

“This plan defines the procedure and level of

quality management for this project.”

RiskProbability

0-10Effect0-10

Corrective ActionCost to Correct

Probable Cost of Inaction

Catastrophic failure 1 9 Disaster recovery plan and insurance US$5,000 US$170,000

Client backlash 3 10 Client relations to monitor changes US$3,000 US$20,000

Table 2

Project/Organization Role Distribution Medium Frequency (days) Content Requested

Project Manager E-mail 1 All updates

Project Management Resource E-mail 7 Responsibility reports/updates

Engineering Resource E-mail 10 Technical updates/tasks

Business Resource Hard-copy reports 30 Schedule and cost variances

Risk Manager Project repository Continuous Identified risk updates and new risks

Functional Manager E-mail 15 Resource variances and product changes

Project Sponsor Project dashboard 7Identified risk updates, new risks, or schedule and cost variances

Table 3

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Client Requirements: What are the limits to satisfy the •client requirements?Control Limits: What are the internal control limits •before action is taken?Out-of-control Thresholds: What limits require •immediate intervention, analysis, and a work stoppage?Quality Assurance Members: Those who will analyze the •dataQuality Control Members: Those who will collect the •data through inspection

The Resource Acquisition and Scheduling PlanThe Resource Acquisition and Scheduling Plan rounds out the embedded plans by advocating the use of standard methods for resource acquisition, vendor engagements, the RFP process, and the project scheduling approach.

Naturally, there’s a section for the all-important scope and a few sections are included as scope-creep inhibitors. The template includes the following instructions in the scope section.

“State the project’s objectives including the

objective project outcomes that can be measured.

(e.g., reduce the RFP process time by 30%) Enter

order of magnitude costs, which may be from

50% below to 100% above actual project costs.

These are very rough estimates that will be more

accurate as the project is elaborated.”

There’s also an important Assumptions/Clarifications/Exclusions or Limitations section to clarify any ambiguity and disclose as many assumptions about the project as possible to enable stakeholder feedback early on in the process. Project justification and a cost outline are also included to appease those paying the bills.

As with so many corporate undertakings, introducing too much, too quickly, and promoting something new can often be a turn-off, and decision-makers may walk away

before you’ve made your case. Consider the Virtual PMO™ the 30-second “elevator pitch” for the PMO—quickly engage, intrigue, and impress on decision-makers the value, and they’ll be convinced!

ReferenceThomas, J., & Mullaly, M. (2008). Researching the

value of project management. Newtown Square, PA: Project Management Institute.

About the AuthorMarc Lotti has worked in information technology and management consulting for over 15 years and presently provides guidance to business executives and operations management through Mandragore, a boutique consultancy firm he founded in 1996. Marc sits on several advisory boards, contributes to strategic operations direction, and mentors staff in both operations and technology. Most recently, he bootstrapped UFlexData, a turn-key technology platform for small and medium-sized businesses. In addition to Marc’s leadership role at Mandragore, he was the acting Chief Technology Officer of Trilogy Global Advisors between 2004 and 2009, where he managed technology operations and led all technology integration during their 2005 merger with BPI Global Funds. In 2003, he developed a notable strategic computing roadmap for the Corporate Travel division of American Express. From 1996 to 2002, Marc was a technology consultant for Goldman Sachs Asset Management, followed by the Investment Management Division, where he was employed in multiple capacities across many projects. Prior to founding Mandragore, Marc was the Infrastructure Manager for International Emerging Markets worldwide at Merrill Lynch and later, an Assistant Vice-President at Fuji Securities, where he led firm-wide technology infrastructure. Marc earned a BA in Economics from Stony Brook University, holds an MBA from Thunderbird School of Global Management, and is a Project Management Professional (PMP)®, with more than 15,000 hours of project/program/portfolio management experience. Marc lives in Connecticut with his wife Andrea and their children, Nicolas and Bianca.