If the statistics for the lifespan of PMO structures are so pessimistic (3 out of 4 PMOs close within the first 3 years of activity), then what can we do to improve the value driven by PMO and the actual need for having a PMO?!

Despite the abundance of research into the PMO role, PMO responsibilities and their actions to support the business and implement the strategies, there is no consensus on what constitutes the successful PMO and its right structure, even struggling to standardize what the letters stand for.

So how can PMO leaders actually setup their teams and department for success?

In this article I will explore couple of strategies, guidelines and key performance indicators to help PMO leaders enable that expected value for their organizations and customers.

The success of the projects is usually consisting in reaching their objectives, but in the case of development of a new product or upgrading a product, the success will not be known until the product is reaching its estimated market share, profitability for the organization. Such measurements of success are included in the business case and benefits management plan which are developed priorly to the initiation of the project (PMI, 2017). Therefore it is important for PMO to be involved in the creation of such business documents and to have means to follow-up on the project success after it has been transferred to operations so they can realize if the business value has been reached or not.

In order to create that direct link between PMO and value for organization, it is important that PMO has access to the strategy and is reporting directly to the C-level executives. To support this recommendation, the study conducted by PMI in 2013 revealed the fact that 31% versus 17% of the PMOs have a better understanding of their project objectives and direction when reporting directing to executives. And also according to the same study only 31% of the PMO reported they achieved their full potential to contribute to value for their organizations (PMI, 2013).

According to this study, successful PMO need to develop capabilities in these three areas: create an organizational culture of project management, continually evaluate the PMO performance, evolve and improve through knowledge and change management.

An organizational culture that supports the development of project management starts with the C-level executives recognizing the valuable PMO role plays into organization’s success and also supporting the PMO by providing them with the right authority. Besides having a strategy on the governance, which is the work of the PMOs, these structures also need leaders to support them in terms of financial requirements (staffing opportunities with top talent) and clear, direct access to top management.

While the PMO connect the business strategy with execution, the success depends on how aligned the strategic objectives are with the overall progress and actions performed by PMO. In order to stay productive and efficient, PMO leads need to regurlarly evaluate performance, be self critical and find improvement areas. The PMO reports need to have key performance indicators and adjust them according to the organization’s needs: what has worked for a strategic objective may not fit another strategic objective and therefore the metrics should cover a 360 degrees perspective on the performance, from the status of projects (PMI triangle: cost, schedule, timeline), to customer feedback and satisfaction. By conducting regular feedback collection from stakeholders (customers, project contributors, management) PMO leaders can establish directions for improvement, adapt and implement actions for better results.

Among the quantifiable objectives such as projects’ health status, PMOs structures are also in charge of the training and change management function in their organization, determining the knowledge gaps, providing support to respective teams and guiding the organization through change, which can be a difficult process for stakeholders to understand and support. This is the reason why constant feedback loops are needed, feeding back lessons learned from the actual management of projects to executives so they can utilize this feedback when planning strategies and strategic objectives. PMI, 2013 (PMO frameworks)

These feedback loops need to be formalized so that information is passed transparently, regurlarly, not just as a one time annual exercise, so that business can analyze future growth opportunities or optimization strategies.

Majority of initiatives within organizations require cross-collaboration and work involving mulitple departments (this is known as breaking the silos practice) and this may be seen as a challenge, as reported by 51% of executives, with specific misalignment between IT and business functions, as identified by 49% of executives (Workfront, 2018).  PMO have a crucial role in establishing the way of work for teams across organization by implementing adequated tools and processes, taking into account the strategy of the organization and the human factor, as people are the basis for any process analysis and improvement.

Some of the best practices to achieve an improved way of working and drive value for the organization may comprise the following:

• PMOs first need to be recognized by the C-level executives as the capable function to coordinate the organization’s efforts in terms of portfolio and portfolio governance and therefore a direct line of communication needs to be created;
• PMOs need to grow out of the facilitator/coordinator role and become the true strategic partner of C-level executives by providing clear direction on how the strategic goals are achieved by projects: a roadmap enabling the critical milestones corresponding to various projects & programs that would target the strategic goals;
• PMOs play an important role in the Change management since it is the function which is assessing the current state vs. the future desired state and determines the what, how, who for this change to turn into reality: PMOs need to support the teams in understanding the need for the change, the benefits of the change and be the actual change developers. One particular aspect is the monitoring and continuous improvement of the change benefits which PMOs would also need to consider as part of their ongoing responsibilities.
• Adoption of tools which truly simplify the bureaucracy and support the transparency: PMOs would need to be in control of the tools used for the portfolio governance and the customization of such tools, according to organization’s needs. As a matter of fact, the collected data need to be transformed into useful information according to agreed standards, information should be available to all interested parties, repositories being secured, compliant and up to date so that the correct information is passed to all level of organization or considered as input for reports.
• The reports provided by PMOs should not be limited to the project health status, but deep dive into the metrics showing the benefits realization (ROI, budget variations, profit, etc.) and how the overall organization’s activities to implement the strategy are identified by customer: customer satisfaction and feedback, retention/growth of users.

To increase the project performance and the overall perception on the PMO, there are four approaches on how the PMO should relate to projects’ metrics: increase the frequency of measurements and number of metrics, increase the effectiveness of measures, involve the right stakeholders, increase the use of technology (PMI, 2022).

As mentioned above, the reports need to contain measurements of projects’ health, but also measurements on the overall alignment to organization’s strategy, such as recommended by PMI in their report on importance of measurements and how the organizations relate to these, as depicted below:

In conclusion, the most successful PMOs are the ones who are establishing early a direct communication with the C-suite (sometimes PMOs are reporting directly to C-level executives), involve a diverse pool of stakeholders in the assessment of organization’s needs for having a PMO, build alignment with the strategic goals, act as a change enabler for the organization and bring together the IT and non-IT business departments, focus on relevant metrics and reporting methods to provide visibility and transparency on the PMO initiatives, drive innovation for the PMO governance by increasing the adoption of tools to facilitate the communication, cross-collaboration, effectiveness and efficiency of the processes required for project and portfolio management.

 

References:

1. Project management institute. (2017). A Guide to the Project Management Body of Knowledge PMBOK 6^th Edition
2. Duddy, M., & Perry, M.P. (2010). APM, Business Focused PMO Setup, PMI survey
3. Project management institute. (2013). PMO Frameworks https://www.pmi.org/learning/thought-leadership/pulse/pmo-frameworks
4. Workfront. (2018). 5 ways the PMO can drive digital transformation
5. Project management institute. (2022). Measuring what matters