Forming and Implementing a Successful Project Management Office

Today, IT organizations spend a large amount of their time delivering projects. While success rates have improved to approximately 34 percent, 15 percent of all projects still fail and 51 percent are somehow “challenged,” according to research from the Standish Group. There are many reasons why IT projects fail — several of which can be attributed to a lack of visibility into long-term project needs. Without proper visibility, organizations are unable to see what is needed six months, three months or even two months down the road, resulting in poorly constructed project plans that do not capture critical dependencies, including assigning project resources and key milestones.

One way organizations have moved from an ad hoc approach to a more effective process is by implementing a project management office (PMO). To create a successful and useful PMO, you must first assess needs and resources by determining the state of your company’s existing IT efforts, confirming the overall business goals and creating a roadmap that brings together the necessary people, processes and technologies to achieve them. Organizations are then able to establish a PMO that ensures efficient and cost-effective project execution and delivery.

Determining Your Organization’s Needs

The first step to establishing a PMO is to determine your organization’s IT needs. Start by examining the key processes in the areas of project, portfolio and program management as defined by the Project Management Institute’s (PMI’s) project portfolio management (PPM)/PMO framework. The PMI’s PPM/PMO framework breaks down the three levels of work (project, program and portfolio) into 12 process groups which contain 92 processes in total, relating to the management of knowledge areas. Examples of PMI processes/components include a project charter, project plan, work breakdown schedule and cost estimate.

You must also determine what type of management office best suits your needs (project, program or portfolio):

A PMO oversees a temporary effort with a definite starting and ending point. The PMO helps development teams finish projects on time and on budget through the use of established best practices, while ensuring the finished project or product meet stakeholder requirements.

A program management office oversees a collection of projects or portfolios that, when managed together, often provide greater benefits than if they were managed separately. A program management office is typically tasked with providing an optimal mix of resources and achieving economies of scale.

A portfolio management office oversees a collection of projects aligned to meet specific business objectives. Key objectives of a portfolio management office include aligning portfolios of projects and services to business goals and managing risk exposure to the business.

To determine what management office (or offices) best suits your needs, analyze which PMI process benefits your organization the most. For example, if your immediate issue is to improve project success rates, then consider starting with a PMO. If your immediate issue is the need to understand where your IT dollars are being spent, consider starting with a portfolio management office. The results of your needs analysis will guide you in determining which of the three offices are most suitable for your organization.

Determine Your Organizational Maturity

For the PMO to demonstrate clear and tangible value in a relatively short period of time, it is necessary to set up a process that quickly measures its value to the enterprise. First, a baseline must be established. Steps to establishing a baseline include:

Assess your organization’s capabilities against industry-standard best practices, such as those defined by the PMI’s PPM/PMO framework.

Record your level of maturity in each of these process areas using a capability scale from zero to four:

Level 0: Chaotic - No evidence of documented processes or best practices.
Level 1: Active - Documented processes carried out but not formalized.
Level 2: Efficient - Consistent discipline started but only in use in “pockets.”
Level 3: Responsive - Ubiquitous and measured.
Level 4: Business-driven - Provides data and information to drive business decisions.

Once the maturity level has been measured against the most important PMI processes, develop a target maturity level to quantify progress. If little or no accurate data is available to establish a baseline, you can seek out historical data points, such as the length of projects and the number of developers who worked on these projects, to help extrapolate a cost estimate and a baseline from which to measure future successes.