Where do you stand on the Project Management Office (PMO) debate?

A Project Management Institute (PMI) and CIO study found that of 750 organisations researched worldwide, over 75% of organisations that had set up a PMO shut it down because it did not demonstrate any added value. PMOs should be a way to increase efficiency, cut costs, and improve programme and project delivery in terms of time and budget. So why are so many failing to deliver?

Challenge yourself. Go on, really challenge yourself.

As a programme and project management practitioner, how well are your PPM practices working? Do you believe that you are performing optimally across the spectrum of functionality; are you concerned that there may be deficiencies in your individual and organisational capabilities; do you know where the gaps lie and do you have an approach to address these areas?

Now, challenge yourself again!

A combination of the increasingly complex nature of today's programme delivery environment and an overarching focus on cost reduction has thrust the role of the programme management office (PMO) back into the spotlight. And the debate between those who recognise the PMO function as a fundamental enabler for delivery success and others who simply perceive it as unnecessary and costly overhead to the business is hotting up.

The problem with PMOs

Whichever side of the fence you sit on, the PMI and CIO findings are a worrying indictment for the programme and project management (PPM) profession.

Why are PMOs perceived as failing and whose fault is it? Does the blame lie with the organisation in not being able to exploit PPM, in part or full, or the capabilities of the PPM community in not delivering maximum value to the organisations they serve?

The statements below* are often cited as key factors for why PMOs do not deliver optimal performance:

• Generally, people do not understand the term PMO and cannot assert whether it is a function or capability, it is frequently perceived as an administrative body;
• Poor leadership is exhibited at many levels and there is frequently a lack of accountability to deliver successfully at an individual, business unit or organisational level;
• Many senior executives, and line staff, do not “get” what PPM is all about and how it can help them and organisations frequently perceive programmatic rigour as bureaucratic or academic;
• There is a propensity for inadequately trained and inexperienced programme and project managers with such titles and responsibilities being added as a second or third “hat” to the incumbent's day job.

The points above, individually or collectively, infer that competent, high quality people are required to staff a PMO that adds values, and distributes the services required of it to ensure PPM delivery success. If this is the case, it is appropriate for the PPM community to develop a means to improve the performance of the PMO function and its professionals, and deliver what we term the latent capability into the organisation.

A new PMO concept

Today's businesses demand a capability that can proactively shape and discharge the effectiveness of organisational planning and delivery. There are four key reasons why there is a need for a new PMO paradigm:

• In some proactive organisations, PMOs are increasingly being asked to take a lead role in the development and execution of complex business and transformational change. They are, and should continue to be, instrumental in translating strategy into reality across the business.
• Businesses are now realising that PMOs can leverage additional value in planning and delivering change, through their application of rigour, methodology and process. PMOs have the ability to define key success criteria for change initiatives, create plans to realise them and measure their success accordingly.
• The professionals being employed in PMOs are frequently drawn from a background that can genuinely add value to the overall business offering. This blend of functional and programmatic competences is a key capability to facilitating organisational ambitions and goals.
• In highly dynamic environments there is a need to minimise ambiguity and increase predictability wherever possible. Effective controls, led by a PMO, can provide this capability to assure that levels of certainty can be increased, costs can be predicted and maintained and key decisions and stakeholders can be positively influenced.

Whilst the old PMO model may have been very process-orientated, hopefully, the current organisational and operational model is far more focussed on outcomes and benefits, harnessing the synergies of a multi-disciplinary team and integrated with the business to continuously enhance standards of planning and delivery. And what should an emergent model offer in terms of capability? The developing PMO will constantly evolve to the business context and operating environment and be agile enough to be proactive to new operating conditions. Programmatic capability will be fully integrated into the business model to be a key influencing factor in how transformation and change is implemented. This development trajectory is highlighted in Figure 1.

Figure 1. The PMO Development Model

How can current PMO capability be transitioned to the emergent model?

There are three key steps to enhance the overall capability of current PMO capability and each is not mutually exclusive. They are:

• Assessing current capability, defining future capability:know what PMO capability you have now and where you aspire to be within a defined period of time.
• Building the new capability: follow a rigorous method for getting from your current state to the aspired one, cognisant of the preferences and cultural of your organisation.
• Engaging and winning the support of senior stakeholders:understand the key factors that are likely to convince senior stakeholders to invest in enhancing overall PMO capability and to assure that business strategy and programmatic delivery are wholly aligned.

Assessing current capability, defining future capability.

Now, moving back to the original challenge at the start of the article: what capabilities do you discharge now and what improvements would you like to make over defined timescales? Almost certainly, you will know that your PMOs are effective in executing some key programmatic functions and, perhaps, less good at others. As such, it is prudent to consider which functionality you will target for improvement and to what level. There is a presumption that in order to develop capabilities there is a minimal level of capability as a foundation from which to build ie. just doing the basics effectively. Developing capability requires the investment of time and effort and, potentially, the prioritisation of some functions over others. It does not just happen on its own. At Moorhouse Consulting, we consider this situation as a shift from a transactional-type model to one that plays a major contribution to an enhanced delivery capability.

Examples of some dimensions of capability improvement are highlighted in Figure 2. It may be the short-term objective of your organisation to target specific functions recognising their relative import in your business and accept that others will remain subject to a more deliberate and, long-term development cycle. It is critical to know what you want to be good at.

Figure 2. Transitioning the PMO from a transactional to enhanced delivery model
 

Building the new capability

Moorhouse has developed a methodology, specifically targeted at enhancing PMO capability. Key to the methodology is a comprehensive and structured plan to realise any improvement. This plan must be directly influenced by those stakeholders impacted by the operation and performance of a PMO (the consumer of “PMO services”) in order to gain traction within the business. What follows then are two key tracks of activity, one '”hard”, the other “soft”. One dimension is no more important than the other; indeed, experience suggests that aligning '”soft” factors for programme delivery are significantly more challenging than the hard!

• The hard dimension seeks to identify what functionality is required of the PMO, and what level of capability currently exists and the gap from the aspired level. This determines which functions are going to be targeted to realise greatest effect for the business; recognising that this will differ between organisations, dependent upon their demands and priorities.
• The soft dimension assesses the organisational culture and the “type” of PMO most suited to deliver value into the business. The ways that business make and communicate decisions, the level of control over initiatives and the readiness to change are all factors for consideration in designing the new PMO model.

The hard and soft dimensions converge to form design options for the construct to deliver optimal performance: for example, this could be a hierarchical model of PMO capability supporting portfolio, programmes and projects, akin to the OGC P3O proposition, or a hub and spoke method where a “corporate” PMO coordinates programme offices. Design of your PMO capability should also consider options of physical and virtual capabilities.

The final stage in the development of the capability is implementation. There will be a need to assess the suitability of the model with a feedback mechanism (step 5 back to 1) to assure that the PMO is delivering upon the needs of stakeholders within the context of macro-operating environment and the programme lifecycle. This development model is shown graphically in Figure 3.

Figure 3. The Moorhouse PMO development method

Engaging and winning the support of senior stakeholders

The support of senior stakeholders for any new investment will typically only be present where there are overriding business imperatives supported by tangible, demonstrable, value drivers and alignment with organisational strategy. In practice, to improve overall programme delivery, one is trying to minimise delivery risk and maximise certainty.

A key enabler to facilitate stakeholder engagement is a “living, breathing” business case that is constantly referenced during the programme lifecycle. The HM Treasury Green Book** specifies five key components to a successful business case. Three of these are highlighted in Figure 4. The examples highlighted can make a compelling case for senior stakeholders to sit up and take notice as to why they need a PMO/PPM capability:

• The strategic case. There needs to be an explicit link between the programme and organisational strategic objectives, otherwise why implement the initiative? This relationship must assure the programme lifecycle. Prior to and throughout the planning and delivery of the programme, stakeholders must be proactively engaged to satisfy their information needs. Nuggets of information delivered frequently are better than infrequent volumes of information being released which will be susceptible to challenge.
• Options appraisal. It is imperative to understand from the outset those benefits to be realised and how they may be relatively weighted to select those delivering greatest value to the business. Furthermore, it is prudent to explore the most effective methods of working with partners in order that risk and reward criteria are appropriately apportioned, an harmonious relationship for a “win-win” is developed and delivery certainty is increased.
• Achievability. How are those lessons identified from previous deliveries converted to learning; does your organisation effectively develop from experience? It also useful to acknowledge that the environment, context and situations are dynamic and liable to change. Consequently, it is worthy to have sufficient contingencies to counter unexpected circumstances.