The Value of a PMO

Organizations around the world are implementing formal project management processes and disciplines to deliver their work initiatives on time, within budget and to an agreed upon level of quality. Part of the ability to execute better, faster and cheaper comes from your ability to implement common processes and practices across your entire organization. Many organizations have attempted to deploy common processes by creating a focused Project Management Office (PMO) and giving this organization varying aspects of responsibility for projects and project management methodology.

There are many potential products and services that a PMO can be responsible for, depending on the needs of the organization and the vision of the PMO sponsor. The group is typically responsible for acquiring and deploying a common project management process to the rest of the organization. However, they can also do much more, including training and coaching, project audits, consolidated project status reporting, project management certification, portfolio management, etc.

A Project Management Office can add significant value to your projects and to your entire organization. Deploying your methodology is not a trivial affair. If you are really serious about your organization adopting the new methodology, you must structure and implement Deployment Project(s), taking a long-term, holistic view.

There should be no question that your organization will find value in good, sound project management practices. In fact, the larger the project is, the more project management becomes a requirement for success, not just a value-adding proposition.

In general, the value of a common project management process includes:

Reduced cycle time

Reduced delivery costs

Improved quality of project deliverables

Early identification and proactive management of project issues and risks

Better containment and management of project scope

More opportunities to leverage and reuse knowledge

Improved accuracy of estimates

Better communication with clients and stakeholders

Improved perceptions of your organization by your clients

Improved people and resource management

Reduced time to get up to speed on new projects

Project management processes are applied at a project level. Since we assume that the project itself has some business value, you should be able to show that project management processes have value if they help you to complete the project within expectations. On the surface, you might think that if project management is good, then there must be value associated with a group that will help implement project management processes. However, not all companies view it this way, and a PMO does not have the same value proposition for every company. For one thing, the PMO does not manage projects, and so does not have a direct project connection. It is indirect. The value proposition for a PMO is much looser and more subjective.

A PMO costs money to staff and to run. In many respects, a PMO reflects an overhead investment. The hope is that the money and time invested in the PMO will be more than saved by delivering projects better, faster and cheaper across the entire organization. In fact, the value is gained by not only helping specific projects meet their expectations, but by implementing processes and practices that allow every project within the organization to be delivered better, faster and cheaper.

Most organizations will find an overall cost savings associated with implementing a PMO (versus the cost savings associated with project work). However, some organizations may find that the savings in project delivery costs are made up for in the actual incremental cost to implement and run the PMO. In this case, the other benefits of the PMO should more than justify the value proposition. This value includes helping projects complete within their estimated deadlines and budgets, and generally delivering faster than they did in the past. If this value proposition is fine for your PMO, you will still be delivering a lot of value to the organization. However if you find that the cost savings on projects are offset by the cost of the PMO, and this is not acceptable, it may point out a need to reduce the size of the PMO to make this value proposition work.   

An organization typically needs to be of a certain size before the overhead associated with a PMO becomes beneficial. At one extreme, if you only have one project per year, you do not need a PMO since it is much less expensive to provide project management training and support to the one project manager. If you have a handful of projects every year, you may still be able to get by with the few project managers collaborating and agreeing to a certain set of common processes and templates. 

Now, let's go to the other extreme. Let's say you have a large, diverse organization that delivers hundreds (or thousands) of projects per year. In this environment, there may be dozens or hundreds of project managers, each with varying levels of skill and experience. A lack of common processes results in project managers and team members being required to learn new processes as they move from project to project. In addition, no one has any idea whether the company is successfully delivering projects in general, and no one knows what anyone else is doing. In this environment, a centralized PMO makes great sense to ensure that all project managers have a core set of project management skills, common processes and templates. The PMO also acts as the owner of the project management methodology, and the PMO acts as a support organization that project managers can utilize for

project management assistance. In addition, the PMO can serve as a place for providing an organization-wide view of the status of all projects and can report on the improvements being made to project delivery capabilities over time.

Of course, most organizations are somewhere in the middle. They have more than a couple projects per year, but not hundreds. Each organization needs to look at the number of projects executed per year and make a determination of whether the projects were completed successfully. This internal analysis starts with gaining an understanding of how you execute projects today, how you would rather execute projects in the future, and how best to get to this future state. If your future state vision is close to your current state, there may not be a reason to make any changes. However, if you are not where you want to be, a PMO may be the organizational mechanism to get to this desired state. There are many options to look at for implementing a PMO. You want to do so in a way that ensures that the group and their mission make sense for your organization.

In addition, one obvious motivating factor for implementing a PMO is the amount of pain that the organization feels over failed projects. If most projects end successfully without a PMO, there may not be a strong motivating factor to build one. However, if there is a lot of pain associated with project delivery, the organization will be much more motivated to invest resources in a PMO to turn the situation around.

At a high level, a PMO is increasingly being viewed as an essential component that enables the success of projects, and hence, the future success of the entire organization. At a more tactical level, the value provided by a PMO is summarized below. Although PMOs can be established to provide a narrow or broad set of services, this list includes many of the common responsibilities a full PMO would perform.

The PMO establishes and deploys a common set of project management processes and templates, which saves each project manager or organization from having to create these on their own. These reusable project management components help projects start-up more quickly and with much less effort.

The PMO builds the methodology and updates it as needed to account for improvements and best practices. Therefore, as new or revised processes and templates are made available, the PMO deploys them consistently to the organization. 

The PMO facilitates improved project team communication by having common processes, deliverables, and terminology. There is less misunderstanding and confusion within the organization if everyone uses the same language and terminology for project related work.

The PMO sets up and supports a common repository so that prior project management deliverables can be candidates for reuse by similar projects, further reducing project start-up time.

The PMO provides training (internal or through vendors) to build core project management competencies and a common set of experiences. If the training

is delivered by the PMO, there is a further reduction in overall training costs paid to outside vendors.

The PMO delivers project management coaching services to keep projects from getting into trouble. Projects at risk can also be coached to ensure that they do not get any worse.

The PMO tracks basic information on the current status of all projects in the organization and provides project visibility to management in a common and consistent manner.

The PMO tracks organization-wide metrics on the state of project management, project delivery and the value being provided to the business by project management in general, and the PMO specifically.

The PMO acts as the overall advocate for project management to the organization. This includes educating and selling management and team members on the value gained through the use of consistent project management processes.

Part 2

Definition

The definition process is done first. There are many kinds of PMOs, so you must first go through a process to determine what type of PMO makes most sense for your organization. This section explains the process of determining the PMO mission, vision, clients, products, services, etc. This information provides the foundation for everything that the PMO subsequently does. This process gives you the information you need to know what you should be doing, who your clients are, what your products and services will be, etc. If you have an existing PMO, but are struggling, this would also be the place to revisit. Many times, a PMO will charge off with an aggressive idea of what they need to do, even though their clients and sponsors never validated the underlying assumptions.

Roles

A successful PMO relies on people who are performing in one or more roles. Roles are useful to ensure that members of the PMO understand what is expected of them. Roles also can ensure that all of the obligations and responsibilities of the PMO are covered. This keeps the PMO from the uncomfortable position of not knowing who is covering what areas. Roles help ensure that no PMO obligations are dropped and that multiple people are not unknowingly doing the same jobs. This section describes a number of roles within the PMO. A very large PMO could end up filling most or all of these roles, although certainly one person could serve more than one role. Smaller PMOs may not need to fill all of the roles.

Deployment

This section describes how you would go about deploying project management in an organization. The larger your organization, the more structured and rigorous your deployment approach needs to be. PMOStep assumes that you are implementing project management in a large organization with multiple departments or sites. If your deployment is less complex, you may be able to use less of this process or combine some activities to do multiple things as once. Getting your organization or company to become better project managers requires more than just training. You need to take into account many other areas to successfully upgrade project management skills. Whenever you change how people do their jobs, you will find some level of resistance. Therefore, you need to use techniques that facilitate organizational change management. This section contains a holistic approach to implementing project management methodology within an organization.

Reporting

One service that is typically associated with a PMO is common, roll-up reporting on the state of all the projects being executed within the organization at that time. This service might also extend to keeping metrics on historical projects so that you can track how successfully projects are being executed over time. In the same way, the PMO may be asked to track the backlog of projects that have not begun to provide your management stakeholders with a complete, portfolio-wide view of all active, pending and historical projects. It is possible, in fact, that the main purpose of your PMO might be to provide this type of consolidated reporting, although most PMOs have other responsibilities in addition to this.

Methodology Management

Methodology refers to the processes, procedures, templates, best practices, standards, guidelines, policies, etc. that you use to perform certain aspects of work. All of these "methods" that you use to manage projects become part of your project management methodology. The methodology provides the framework that your project managers use to manage the work. It must also be adaptable to meet the changing needs of the business, and it must add value to the projects that utilize it. In addition, as new technologies and methods emerge to better the project management process, the methodology should evolve to reflect those improvements.

Project management methodology should be viewed as a product. The processes, templates, training, etc. that make up the methodology are some of the specific deliverables that are produced as a part of this “product”. These deliverables and the product in general, need to be supported and improved over time.

Training

Training is one of the premiere services offered by PMOs. In fact, in many organizations, the primary role of the PMO is to offer project management training to the staff. However, there is a lot to consider when rolling out a training program. Like many of the services offered, training must be considered holistically, along with any other services that the PMO is offering. If you have the resources, and if your pool of project managers has the need, you will want to put classes together to create an

overall curriculum. The curriculum can include internal classes, vendor classes, computer based training, etc.

Coaching

Coaching refers to working with individual project managers or project teams to transfer knowledge and teach new skills. This is usually done in-person, but can also occur over the phone or through emails. Coaching is different than training in that training implies a formal teacher-pupil relationship and the formal instruction of material. Coaching is less structured and usually involves talking through situations that affect the trainee and describing or demonstrating how project management processes and techniques can assist. In general, the coach should be a subject matter expert on project management and must be able to transfer his or her knowledge effectively to others.

Project Audits

The PMO is asked to perform the difficult job of changing the organizational culture regarding how to manage projects. This involves a holistic approach addressing people, process and technology considerations. Many of the services provided by the PMO, such as coaching and training, are designed to build capability and increase skill levels. Project audits are one way for the PMO to validate that the project teams are utilizing the appropriate project management processes. If a project manager chooses to take advantage of the audit results, the audit can be great opportunities for learning.

Repository

One of the value propositions for deploying common project management processes is the ability to reuse processes, procedures, templates, etc. This reuse also extends to the level of actually being able to reuse specific documentation from prior projects. However, the ability to reuse documentation does not come about by magic. If project managers want to see whether there might be pre-existing material that would help them, they are not going to be expected to contact every other project manager. To facilitate process and document reuse, the PMO needs to establish and manage a document repository.

Metrics Collection

The PMO must collect metrics that show how effective the PMO is at delivering services, and how well the organization is adopting the new processes. The PMO must also attempt to collect metrics that show how the organization is benefiting from the services of the PMO. If the PMO does not attempt to track and quantify some of these benefits, the organization will have no idea what value has been provided. In general, the metrics associated with project management value are also indirectly indicative of the value of the PMO. If the value of project management is unknown, then the value of the PMO will also likely be unknown. On the other hand, if

the value of project management can be proven over time, then the value of the PMO (which is building project management capability) will also have been validated. 

Organization Assessments

Despite the best-laid plans, it is not a given that new project management processes will become embedded in the organization. The people in the PMO have a lot of touch points with project managers and team members throughout the organization. They can use these touch points to gather feedback on how well the processes are being integrated. However, this is not going to provide a full picture of what is going on. The PMO should look at the organization on a periodic basis and perform an assessment as to how well the project management processes are becoming integrated into the work routine. These assessments are compared to the prior assessments to gain a sense for the progress made. This information is especially interesting to the sponsor and other management stakeholders who want to understand how the deployment is going.

Other Responsibilities

There are many other optional areas where the PMO can provide value. This section looks at a number of additional PMO services. These services can be initiated at any time during the deployment process, or they can be started once the initial deployment is complete and the PMO is in a more mature support role.