Using the Project Management Office (PMO) to Support Your Business Objectives

By Shelley Boyd, PMO Manager; contributor, Sharmi Madaboosi, Consultant

A recent article in CIO magazine quoted business advisory firm, Hackett Group, for saying the “Use of a Project Management Office [PMO] is another key to achieving world-class status.” The article indicated that half of world-class companies manage IT projects through a PMO compared to just 25% of median companies. Hackett defines a “world-class” IT organization as one that scores in the top 25 percent in its client database for measures of efficiency and effectiveness.

Given such recent focus on PMOs, it is expected that senior IT Executives would wonder about the relevance of a PMO for their organization. A PMO must be a necessary component of all project focused IT organizations. Furthermore, its overall function ties directly to achieving the objectives set by the CIO.

What is a PMO?

This may be rudimentary; however, in order to understand the value the PMO brings to the CIO’s organization, we must first define what a PMO is in this context. The Project Management Institute defines a PMO as, “an organizational body or entity assigned various responsibilities related to centralized and coordinated management of those projects under its domain.” In other words, a PMO’s main function is to focus on fostering project management excellence throughout an organization. Project management excellence is only achieved when standardized processes, procedures, tools, training and support functions are established, implemented, and continuously improved upon by a PMO. This sets a strong foundation for the successful management of strategic project initiatives.

Why should a CIO consider implementing a PMO?

The charge given to the CIO and PMO are very similar in nature. They both share the responsibility of achieving the organization’s strategic goals and objectives. The CIO plays many roles and has varied responsibilities such as, increasing productivity, driving revenue, and decreasing cost, while implementing efficient processes across the organization. The role of the PMO is to mitigate organizational risks by monitoring current projects and assessing potential risks in investing in new initiatives. PMOs work to decrease project waste by creating organizational efficiencies, and providing staff support and coaching that springs forth consistency in the use of project management processes and procedures.

The PMO works for the CIO by shaping and creating processes, as well as gathering information that can be used to support the CIO in decision-making and process improvement. For instance, as the PMO defines scaleable and repeatable standards and processes to decrease project waste, it generates a more efficient project management operation, which supports the CIO in increasing productivity. Furthermore, when the PMO provides staff support and coaching to increase overall understanding and consistency in the organization’s approach to project management, it provides a well-trained staff that works more efficiently, pushing products to the market faster, which ultimately supports the CIO in realizing the goals of the business. As a final point, when the PMO identifies and mitigates risks by anticipating project risks before they occur, it decreases costs associated with unknown risks, allowing the CIO to focus more on value added initiatives. A significant amount of IT projects continue to fail or are late on delivery. Implementing a PMO not only improves the relationship between the business units and IT, but it also provides the CIO organization with the tools needed to improve the delivery rate of projects.

The article, “From One CIO to Another: Focus on the Fundamentals,” outlines the fundamental responsibilities of a CIO, and breaks them down into three main areas: planning, implementation and operation. A CIO who successfully performs each of these areas will achieve operational efficiencies that ultimately reduce cost, streamline internal processes, as well as mitigate risks to the organization. There are three fundamental responsibility areas of a PMO, which I call the 3 P’s: people, processes and projects.

• People: Those who provide support to the organization in achieving its strategic initiatives. They require the proper tools and training to assist them in achieving each initiative’s desired result.
• Processes: Standards and methods defined within the organization to provide a consistent approach to the delivery of the initiative.
• Projects: The strategic initiatives defined by an organization to achieve its strategic goals and objectives.

A well run PMO will integrate the 3Ps by establishing project management processes that can be used by its people to successfully manage projects that were initiated to add value to the organization. An established PMO that successfully integrates the three P’s will support the CIO as he or she works to achieve the organization’s strategic objectives through the functions of resource development, process standardization and improvement, risk management, portfolio management, and enterprise reporting and metrics.

PMO Functions and how do they support the CIO?

There are many functions that can be established within a PMO. While some may be more critical than others depending upon your organization’s needs, each must be properly implemented and managed to gain the most value and operational efficiency. Listed below are several PMO functions and the benefits provided to CIOs when implemented.

Portfolio ManagementPortfolio management focuses on project investment selection, project prioritization, resource management, project monitoring and executive reporting. It provides a global perspective and insight in to the overall health of current projects, organizational resource capacity/availability, and supports project investment decision-making processes. Portfolio management will support the CIO in answering the following questions: “Are our projects aligned to our strategic objectives?”, “Is this the type of investment we want to add to our project portfolio?”, “Are we overspending in a particular investment area?”, “Are our critical investment projects on target for completion?”, “Do we have enough resources to support our organization’s project initiatives?”,

“Do we need to re-adjust our project mix to realign to our strategic objectives?”

Process Standardization and Improvement

Project management tools, techniques, processes and procedures are established by the PMO to increase project management efficiency by adding a repeatable and scaleable methodology and approach to each project initiative. This PMO function supports the CIO by adding consistency to the management of initiatives throughout the organization.

Resource Development

Performance management processes are established; training, coaching and mentoring opportunities that are provided to project management staff to continually nurture and promote development. A wide range of developmental functions and reoccurring training will steadily progress an organization’s project management maturity and increase overall project management efficiency. This function provides support to the project management staff and CIO by producing a well-trained project management resource pool. This resource pool will work more efficiently and confidently in leading and managing strategic initiatives, thereby decreasing the potential for project overruns that could have been prevented if proper training and support had been previously provided.

Risk Management

Risk management and portfolio management are interdependent PMO functions. A project should not be initiated unless it aligns to the strategic objectives set forth by the organization, and if it does, then it is added to the organization’s project portfolio and monitored by the PMO. However, prior to inclusion, the PMO analyzes the potential risks to the organization as well as identifies risks that may impact the ability to achieve a successful project completion. The risk management function within a PMO supports the CIO by answering the questions: “What are the risks associated with implementing this type of initiative?”, “What is the impact to the organization if the initiative is/not implemented?”, “Do the risks associated with implementing this type of initiative align to the organization’s risk tolerance level?”, “Is this initiative performing within its established baselines, and if not, what are the necessary corrective actions?”

Enterprise Reporting and Metrics

A PMO with an enterprise reporting tool and project management repository allows for the consolidation of project management data and comprehensible executive reporting. Project management repositories allow for the storage of project management processes and procedures, lessons learned and project history data. This information is used by the PMO to create and enhance project management best practices and procedures. An enterprise reporting tool is used by project managers to upload project status, scheduling and project resource allocations. This tool supports the PMO in generating executive reports displaying the health of the organization’s overall project portfolio, resource capacity and availability levels. In addition, data stored within the enterprise reporting tool supports the PMO in determining metrics data (e.g., cost/benefit analysis, ROI) that can be used by the CIO when analyzing newly proposed or current investments.

Structuring the PMO to gain the most efficiency

The structure and functions of the PMO should be customized based on the organization’s current state and future needs. The CIO may structure the PMO to perform all of the functions identified above or may select individual functions based upon the organization’s size and resource capacity and capabilities. For example, some PMOs manage a group of projects and program management resources while also facilitating project investment decision-making, portfolio management, project metrics, project audits and standards/methodologies. While other organizations may already have resources and functions that focus on audits and portfolio management and may need a PMO that focuses just on methodologies, standards, training and mentoring. In some organizations where IT functions have been outsourced, PMOs may also take on the additional responsibility of providing oversight for the projects managed by the outsourcer.

Assess your existing organization, functions, processes and procedures in order to determine the PMO structure that would be appropriate for your specific situation. This can be performed by establishing an assessment team. The assessment team should identify key stakeholders that are critical for the PMO’s success; and obtain their buy-in by communicating the value proposition of the PMO. The team should provide recommendations pertaining to employee performance evaluation metrics, and incentives that would encourage the effective use and success of the PMO in the organization. In addition, it should provide input about the appropriate organizational structure and organizational position of the PMO.

Once consensus is reached about the type of PMO, a PMO initiation team should be developed to set the PMO’s objectives, metrics, functions, methodologies, processes, procedures, and templates, as well as assist in hiring the appropriate PMO resource and staff members if resources are not currently available within the organization.

PMO Obstacles

While the process of implementing a PMO may seem simple, there are many obstacles that a CIO should be prepared to face during its implementation as well as throughout the life of the PMO. It would take a separate article to solely focus on “PMO implementations and their obstacles” to address these potential hindrances. However, I have included three that I believe are critical and an approach to each to support you in turning these obstacles into opportunities:

1) As you begin to structure your PMO, you will receive feedback from business units and stakeholders who will most likely have differing expectations surrounding the role of the PMO, its functions, and reporting responsibilities. Involve the business units upfront and communicate the expectations of the PMO. One of the most critical criteria to the success of the PMO is buy-in. By involving the people who will be impacted by the PMO upfront, resistance will be greatly minimized. Furthermore, over communicate! Before you begin, ensure that the PMO has the buy-in and support from the stakeholders and expectations are clearly outlined. Once that occurs, continuously document and communicate the PMO’s structure, reporting and stakeholder responsibilities, and goals and objectives to the entire organization. This should not be seen as a one-time event, but a consistent and formalized process that is included within the PMO’s Communications Management Plan.

2) PMO implementations will also face situations where there is a perception that the PMO does not add value due to lack of communicating and reporting the results achieved by the PMO. Stakeholders and project management staff may question if the PMO is providing procedures, tools, and training that increase project management efficiency, and reports that address their reporting needs. Consistently report on the results being achieved by the PMO. The business will want to see the increase in project delivery and the decrease in cost. In addition, stakeholders will want to understand the financial impact and risks to the business. The PMO should also communicate successes and failures encountered during the implementation, informing stakeholders and project management of PMO activities, their status in regards to implementation, how they will benefit each area, as well as communicate activities that were once seen to be value adds, but changed to non-value adds, based upon feedback and metrics.

3) If your organization does not have systems in place that can be used as a project repository or enterprise reporting tool, ensure you implement something. This will most likely be the case for any organization working towards establishing a PMO. Sophistication is not required; start small. You can create a folder on your shared network drive to maintain project management documents, procedures and templates. Maintaining project management documentation on the shared drive is feasible as long as security rights are established related to accessibility and editing. You can create project portfolio reports using excel spreadsheets. Data included in the portfolio report is retrieved from project status reports and consolidated for executive reporting.

Summary

A PMO definitely contains functions that add value in supporting the CIO in achieving the organization’s business and operational objectives. A well-established PMO will enhance efficiency, effectiveness and productivity while also reducing the organization’s exposure to risks related to project failures. Prior to implementing a PMO, the CIO should assess the organization’s specific situation and develop an appropriate PMO structure that is relevant to its current state and future needs.