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The Performing Organization Best Practices- Part 4: The PMO: your partner for excellence and a major change champion

The PMO (can stand for Portfolio or Program or Project Management Office, depending on the scope covered and maturity of the organization) has become a fairly common function within organizations over the last 10 years. Five years ago, I covered in another article how a starting PMO could develop a project management culture in organizations with low maturity in this area. In this environment, initiatives come from the bottom- up, with limited support from top management to deploy project management. In this article I will provide some additional guidelines on how to position the PMO as a partner to top management to reach its vision of business excellence and help drive the necessary changes on this path.

For an organization to reach excellence, it needs several key components covered in our Performing Organization best practices (see other articles from the Author). Top management obviously needs to strongly support the necessary changes, but somebody needs to follow-up and make it a reality. The PMO can significantly contribute, especially in the area of strategy execution.

Tip #1: Establish a strong governance to allow effective Portfolio Management

This might be the highest added-value a PMO can deliver to the organization. The PMO means different things to different people. Oftentimes in not yet mature organizations the PMO may be seen as a support office doing administrative tasks such as planning, budget preparation and monitoring, meetings organization, etc. These tasks actually have value for any organization in the short-term, because they help make the best usage of people’s time and allow to reach results faster.

In addition, if the PMO can also help management make better decisions by bringing a better visibility on portfolios (activities, resources, assets) and facilitate the governance process, then the PMO will deliver higher value in the long-term. It can do so by making sure resources focus their time on the projects delivering the highest return and balancing risks so that business sustainability can be guaranteed. By ensuring resources are not spread across too many projects, throughput (number of projects completed per period of time) will also be increased.

So while the maturity increases within the organization, it is wise to find the right balance between these two focuses to bring the biggest perceived value to the organization and ensure sustainable support for strong project management processes.

Implementing a disciplined approach for portfolio management is not always straightforward since executives may prefer to select priorities independently. However, only by aligning department leads early on can one ensure priorities will remain stable over time. First step will be to start an inventory of all existing projects. Chances are that some projects will be shown as non-strategic, or sometimes redundant. Facilitating the review and gradually bringing improvements like agreed-upon selection & prioritization criteria, will make decision-making more robust over time.

To support the dynamic decision-making process, a good bottom-up reporting from projects is also critical. Project health can change rapidly and impact business benefits quite substantially. Making sure quality and timely information is available will definitely contribute to the quality of decisions. 

Tip #2: Align departments with different cultures

One of the big challenges within organizations is to align priorities and methods between different departments. Strategic projects often require cross-functional teams. For example, to implement Shared Services in an organization, multiple departments must be involved: Finance, HR, IT to setup the entity and the department’s owners of the processes and IT for the service setup. These departments may have different work cultures and different methods. When it comes to managing projects, R&D, Engineering and IT typically have a higher maturity in this field, because it is daily business to them, whereas HR or Finance are more operations oriented. So it is important to make sure that all teams share a common approach on projects, and the PMO plays a key role in that respect.  

As an example, let us take the relationship between Business and IT. For the implementation of SAP ERP (Enterprise Resource Planning) functions, if the business does not manage appropriately the activities for which it is responsible (like validating the application once it has been configured and/or developed), delays will inevitably occur and impact the time and budget of IT.

The role of the PMO is to bring a common framework to which all departments contribute and coach people to ensure they understand the purpose, know how to play their role, and deliver accordingly.

This includes the resource managers which the PMO should develop as key allies. Without their support, promoting discipline in project management will be much harder. The PMO can get their support by addressing some of their specific needs and by spending time with them to show that the provided framework simplifies their job, e.g. in terms of forecasting necessary resources or reporting status or financials to the hierarchy.

Tip #3: Ensure the PMO has sufficient authority

If you want to be effective in improving project management practices and project performance, it is easier if Project Managers report to the PMO, or if they both report to a common manager who will ensure the consistency of approach.

First it will be easier to evaluate their performance and therefore motivate them to apply the practices promoted by the PMO. Second it will allow to rotate jobs between PMO and PMs so that methodologies and tools promoted by the PMO are adapted from experience in the organization.  This applies for full-time project managers, who should be generalists with good experience in different types of departments. They should manage the business critical projects. Smaller or less-critical projects can be managed by part-time project managers who are often also specialists in their field.  

Sometimes it is not feasible to have the Project Managers also reporting to the PMO (or to a common line manager), then a strong Project Management community can be developed by the PMO to leverage experiences from different parts of the organization and make sure alignment can take place.

The goal should be to have project managers be the champions of project management within their department.

As with any new entity, especially those with a strategic role, which is the case of the PMO, it is important to define clearly its mission and have it officially validated by top management (e.g. by a message coming from them to the entire organization). This will avoid misunderstandings, make management support visible, and give the PMO some authority to carry out necessary changes to improve performance. 

Tip #4: Find the right balance between process, people and tools

These three elements, process, people and tools must be carefully looked at to ensure a smooth execution.

The process must be designed to support the business improvement objectives, and be deployed gradually with the maturity increasing over time. Having too much process will discourage everybody. Adapting the process quickly over time, based on user feedback will sustain buy-in. Discipline and adherence to the process is a key success factor, but

Second, people should know their role and be trained and coached until they can fulfil it. This goes for all actors: from demand managers to project managers and also team members.

Third, tools should support the defined process and nothing more. If too much attention is focused on the tool (especially a mature one), the temptation is big to implement too many best practices at once and to overburden project managers with tasks that will be perceived as administrative because the organization is not ready to leverage them. 

Tip #5: Communicate organization performance and PMO value

Since the PMO is there to help the business implement its strategy and reach excellence, which will involve changes, it is a good idea to establish some key indicators of progress to keep focus, reach results and show value at regular intervals.

To cover change aspects, we propose to consider 3 types of KPIs:

Compliance: the first step in an implementation is to make sure everybody follows the process otherwise it is difficult to consolidate the information and have a good basis for decision making. For example, what is the percentage of projects that have a project charter properly filled in? 

Quality: once compliance is under control (i.e. when there is discipline and people follow consistently the process, for example when they plan the work in a project management software allowing resource usage consolidation), one should make sure the quality of the provided information is satisfactory. Otherwise the decisions on which they are based will be wrong.

Results: Finally, we are able to measure the business results of new processes in place. An example is the percentage of projects completed on time and under budget.  

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