February 2008

The Project Management Office (PMO): A Proven Method for Increasing Project Success

Today, many companies have active projects that are over budget, behind schedule, and experiencing excessive scope creep. According to a 2004 PricewaterhouseCoopers survey of executives and project managers from 200 companies in 30 countries, only 2.5% of these companies completed 100% of their projects on time, within budget, and within the originally defined scope.

Based on this track record, how can an organization have confidence that their projects will succeed? The solution may be a Project Management Office (PMO). In recent years, the PMO has been publicized as the most effective business solution for managing projects and controlling change necessary to compete in today’s marketplace. This article seeks to provide a general understanding of the Project Management Office, expected organizational benefits, common barriers to implementation, and best practices for ensuring a successful PMO implementation.

The Need for a Project Management Office

Gartner defines a PMO as “a center of expertise that provides organizational focus on improving the management of projects, programs and portfolios”. It can manifest itself in a wide variety of ways, ranging from a suite of best practices to a more formal enterprise-wide organizational structure with sophisticated project governance and a focus on continuous process improvement. As stated in a previous SEI Quarterly Communication article, entitled Making Project Management a Strategic Advantage, typical PMO duties consist of:

  • Creating standard tools, templates, processes, and mechanisms to monitor the overall health of projects and process performance
  • Managing resource allocations
  • Developing tracking and reporting mechanisms for business and project metrics
  • Incorporating rigor into the project prioritization and management processes by leveraging historical metrics and lessons learned

The impetus for the creation of a PMO often originates from the failure of a critical project and the resulting realization that there is a need to improve project delivery. It could also be fueled by market demands like a firm’s rapid growth or anticipated mergers and acquisitions. In any event, a PMO may be the appropriate business solution if an organization has any of the following warning signs:

  • Projects are misaligned with strategic goals
  • Stakeholder expectations are not formally managed and are often misunderstood
  • Projects often do not meet the assigned completion date
  • Projects run over budget
  • Project management processes, reporting, and metrics are inconsistent across projects

The Project Management Office and its Benefits

There is not a “one size fits all” model for establishing a PMO. The particular needs of your organization, its structure, and project management maturity should direct how and to what degree your PMO is implemented and developed. The benefits of implementing are strongly supported by statistics, such as The Standish Group’s 2003 report, which showed that 34% of projects succeed when accompanied by a PMO. This represented a 100% increase over the same report conducted in 1993. Similarly, a survey conducted by the Project Management Institute (PMI) and CIO magazine in 2003 showed that project success rates increased 46% as a result of having a PMO. These results are primarily achieved through the following benefits:

  • An alignment of projects with the strategic objectives of the enterprise
  • A decrease in the project failure rate
  • Visualization of the organization’s project portfolio
  • Increased visibility into project status and reporting metrics
  • Introduction of common processes and templates
  • More effective risk management
  • More projects completed on time and on budget
  • Increase in ROI of the individual projects

Common Barriers to Implementing a PMO

As would be expected when undertaking any complex effort, navigating the PMO path can be challenging, and organizations need to be aware of the obstacles that can prevent a successful PMO implementation. Prior experience has shown that the primary obstacles preventing a successful implementation fall broadly into one of three categories:

Resistance to organizational change: Planning, staffing, and implementing a successful PMO is a difficult task for an organization of any size. One needs to be cognizant of the fact that the start-up of a PMO is only the first step in a process that will change how an organization governs and manages projects going forward. As with any organizational change, some apparent resistance may be legitimate and justified, and therefore it is critical for your effort’s success to be able to explain the reasons for creating the PMO in a way that is convincing.

Miscommunication of goals and objectives: Without strong, directed communication related to the goals and objectives of the PMO, it is very easy for the rumor mill to disseminate inaccurate information. As is common, this can quickly lead to questions of the true purpose and benefits of the PMO, causing a lack of participation among those that it was designed to assist.

Misunderstood as an administrative function: A common misconstruction is that the PMO merely serves as an administrative function. In reality the PMO functions as a strategic organizational entity that supports project-based work with best practices, training, and leadership. Having a PMO allows the business to achieve lower costs, reduced risks, and increased successful outcomes. A company that has implemented a PMO that meets its stated objectives will often find that “bureaucracy for the sake of bureaucracy” is reduced and that the number of successful projects is significantly increased.

Tactics for Implementing a PMO

In order to overcome the barriers described above, the following best practices are recommended as a way to quickly gain traction and head-off the primary obstacles that can prevent a successful implementation:

A strategic vision: Developing a strategic vision document for the PMO is the critical first step for ensuring a successful implementation. At a minimum, this document would identify the business opportunity, goals/objectives, sponsors, stakeholders, proposed solution, and key milestones. The more detailed the vision, the greater the likelihood of success.

Senior management level sponsorship: Once the vision is clearly defined and articulated to all levels of the organization, it is important to reach out to those senior managers who are excited and supportive of this effort to garner their sponsorship for the impending roll-out. Their advocacy of the new PMO will be critical for breaking down any barriers that are encountered and the eventual acceptance within the organization.

A project approach: In order to increase the chances of a successful PMO deployment, it is best to approach the deployment like any other large project, complete with the standard deliverables. For example, a project charter, stakeholder analysis, risk management plan, resource schedule, and project management plan. This approach will help to establish the foundation for tracking and communicating project progress as it relates to meeting the overall objectives of the PMO implementation.

Quick wins: When planning the deployment of a PMO, it will be important to gain a positive image by quickly achieving some early successes. If possible, tackle a troubled project, streamline processes, provide training, or assist with overcoming obstacles. These steps will work to increase awareness of the PMO, show that there is value being added, and help to prepare the organization for the work ahead.

Conclusion

The Program Management Office (PMO) is an innovative approach for providing leadership and standard procedures for controlling and managing projects. The PMO establishes consistent implementation practices for projects across the organization. Although the appropriate implementation for the PMO will depend upon the objectives, complexity, and culture of the organization, it is proven that the benefits of a PMO ensure higher project success rates.

Once organizations begin to experience the benefits of a PMO, they will understand that effective PMOs are continuously assessing the maturity and long-term benefits provided to the organization. This focus on continuous process improvement is recognized by best-practice maturity models, and is a cornerstone in organizations with highly effective PMOs. In upcoming articles, we will be examining what these process improvement activities involve and what benefits they can provide to your organization.