Despite the reported value of the project management office, many companies find it difficult to properly implement and evaluate the office within their organizations. If a PMO is not used correctly and its efforts not measured accurately, then it can appear to be a resource drain. In actuality, the majority of PMO-related problems exist outside of the PMO’s control. This can result in frustration for everyone within the company and often leads to the dissolution of the office. Changing the way in which the PMO is chartered, works and is perceived within a business can ensure that it offers plentiful advantages for the entire organization.
Strategies to Solve Two Common Problem Scenarios
Scenario One: The PMO is spawned by an executive with a big problem.
Let’s consider this example: A client forms a PMO to salvage a huge contract with a customer. A very large project lags, causing late deliveries and missed expectations all around. Department staff is not completely honest with the customer, hoping that they will somehow be able to catch up. They fall further behind and an executive is forced to intervene. Experienced senior project managers are brought in to assist with the problem, turn around customer expectations, and evolve communication and estimation processes within three months. In another four months, the project managers turn the projects back over to a grateful department.
The senior project managers who saved the day wonder, “Now what? We had unrestricted executive access, some of the best people across the organization loaned or transferred to our projects, and spent tens of thousands of dollars on training, equipment and process improvement. Results were great. Now we can’t get a phone call returned from a director outside the PMO or any attention to the best practices we just proved are necessary to keep projects out of the red zone.” Three of the four project managers are let go or quit within the next six months, along with half of the PMO staff of 20.
This example is not just for illustration – it is happening in organizations across the country every day. If the PMO is helpful in solving the big problem, then PMO staff members must assume other roles to continue to justify their existence. When PMOs define their own course, the high-percentage outcome is stagnated by over regulation and process. It does not take long for your PMO to lose power and possibly be disbanded.
Strategies to remain financially viable:
- Always take on the big problems. Put the PMO on each issue as a fix-it or turnaround weapon.
- Key deliverable leave-behinds should include significant process improvements that equip your internal customers with tools they didn’t previously have that make them more successful going forward.
- Processes used should include mentoring and training key people in the problem domain so the fixes the PMO put in place will stick.
- Help the involved departments win their battles, shore up their defenses and then move on to the next big problem.
Scenario Two: The PMO is spawned by one or more executives who want more visibility or compliance via governance efforts but don’t really care about lasting change.
Let’s look at another example: A large organization takes a hit in their most recent audit for compliance with regard to Sarbanes-Oxley and internal policy governance requirements, which affects the organization’s financials. The projects in violation include IT projects as well as others. Several direct reports of the COO band together to review the situation that a now-out-of-favor peer has gotten their department into. They recommend many process changes at a high level, mostly stating something like, “They should have done this, this, this and that.”
No one considers or estimates the amount of effort (person hours), training or persuasive change management required to move the entire staff to a phase-gate approval process. (A phase-gate approval process requires that at the end of every phase, the project manager prepares a project status report and submits it to senior management to get approval to move on to the next phase of the project.) A project is chartered, training is authorized, tools are purchased and installed (not implemented, just installed), and a set of directives comes down to the PMO, not the departments, to get cracking.
At this point, department heads and their direct reports begin a campaign to undermine PMO authority, which quickly degrades. Eventually, the PMO is disbanded and the PMO director is fired for “not being able to work with his peers.” The organization’s compliance is upgraded from a complete failure to spotty (at best).
Financially, a PMO tasked with making other departments comply with vague or second-hand demands is destined to fail. PMOs in this position can be misused as merely lip service providers for governance coverage required by Sarbanes-Oxley, FDA and many other regulatory, investor and customer requirements.
Strategies to remain financially viable:
- Show that complying with executive mandates is faster and cheaper with the PMO than without.
- The PMO should be the leverage point and path of least resistance to complying with executive directives, not the source of those directives.
- PMO staff effort should not be billed back to the department. This will ensure that PMO resources are welcomed and not shunned.
The best way to understand how a PMO offers benefits over time is to look at it as analogous to weight loss. When people want to lose weight in, say, their hips or stomach, they cannot simply target the fat in those areas. They must instead use a properly implemented diet program that will gradually cut weight from the entire body in order to eventually see benefits in specific trouble areas.
According to a survey conducted jointly by CIO.com and the Project Management Institute, the longer a PMO is in existence, the greater the results.Of those surveyed, only 37 percent of companies that had a PMO in place for less than a year encountered increased success rates of any kind. Conversely, those companies with a PMO in existence for more than four years experienced a 65 percent increase in success rates.
The savings come from increased project success rates, as failed projects represent a loss of resources, time and money. According to another recent study, organizations with PMOs saw, on average, a 31 percent decrease in project failures and a 21 percent increase in overall productivity, resulting in cost savings of approximately $567,000 per project.
Since the long-term benefits of the PMO “diet” are evident, how can a company be sure it is following the appropriate plan?
Making It Work
The groundwork for a successful PMO actually begins at the top. A PMO requires sponsorship from upper-level management (read: C-suite executives) in order to build and maintain a presence across the organization with the flexibility required to address various important project management issues. Allowing the PMO to do its job with executive backing will empower the PMO to address widespread issues quickly and effectively.
There is no set-in-stone way to implement a PMO. Rather, it should be organized and supported in ways that address the organization’s specific issues. When considering where to go with a PMO, an organization should ask the simple question, “What problems prompted the creation of the PMO in the first place?” Assign the PMO to those tasks, and extend its reach as necessary to enable smooth operations.
There are three metrics commonly used to determine the effectiveness of a PMO at any given time. These are:
- Accuracy of cost estimates: How close is the final cost of the project to the initial budget?
- Accuracy of schedule estimates: How long did the project take to complete in comparison to its original schedule?
- Stakeholder satisfaction: Overall, how happy were the stakeholders with the final project and their relationship with its developers?
Improvement in each of these three categories is a good indicator that the PMO is working smoothly and to the best financial interest of the organization.
As more projects are supported by the PMO, specific patterns in project execution will emerge and its predictive accuracy will increase. In this way, the PMO is constantly self-improving and will eventually become a cost-saving nexus of efficiency within your organization.
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