A recent Google search on “project management office” revealed about three quarters of a million commercial links providing consulting products, tools and expertise for PMOs. Many of these links offer methods and theories for managing PMOs, but few provide insight into an actual PMO in action. Following the first installment in this series (PMO Functions Explained), this article takes a look at how a real-world organization implemented an organizational PMO, and the benefits realized. By reviewing this project management office example, you can tailor it for your own organization.
Background: The IT organization within a Fortune 500 manufacturing company has established a number of PMOs at various levels. An enterprise PMO manages strategic IT programs across business units, and program-level PMOs support IT initiatives within business functions such as Accounting, Human Resources and Manufacturing. Organizational PMOs have also emerged in response to the growing need for project and portfolio management — the various departments within the IT organization had numerous related and unrelated projects that required governance.
Within the IT organization’s technical infrastructure division, a central department was responsible for hosting internal and external company websites. Web Hosting Services experimented with emerging trends in web technology and supported enterprisewide programs. The department had an abundance of technical talent yet suffered from poor project management. Project end-dates were often missed, new projects were initiated randomly, and the department had little visibility into resource demand or the portfolio inventory. A structured project management philosophy was nonexistent, and ad hoc approaches were applied to “just get it done.” Figure 1 depicts the Web Hosting Services organization prior to implementing a PMO.
Due to a number of missed project dates and sliding project schedules, the senior management team established a team to implement 11 key project management processes (see PMO Functions Explained). Figure 2 depicts Web Hosting Services with the expanded PMO model.
Structure: The PMO established a flexible resource pool of project managers to support different projects within the portfolio, and assigned a project management resource to each team. As each team accepted additional projects, an appropriate level of project management resources was added. Additional project managers were also added to the PMO to support complex projects or programs from other organizations.
Within the PMO, a dedicated financial management position was established to track the IT organization’s budget forecasts, 300-plus annual service requests, and the internal budget transfers.
The PMO also created a technical project manager role to advise resources on project management technique, process methodology and best practices. The technical project manager was an expert in project management process and highly proficient in commonly used project management tools such as Microsoft Project and portfolio management solutions.
Across the organization, the level of project management expertise varied, and both technical team leads and novice project managers needed to improve their project management competency. Through knowledge sharing and mentoring, the technical project manager helped increase the organization’s project management competency. Because the technical project manager wasn’t dedicated to a specific project, he was available to consult with the dedicated project managers. The critical success factor was investing in an independent resource to consult with other projects and raise the level of project management knowledge.
The PMO human resource reporting structure was also different from a majority of PMOs. Most delivery organizations have project managers within each department reporting to a supervisor. The Web Hosting Services PMO centralized the project management function directly under the PMO manager. Project management resources dotted-line-reported to each team supervisor, while a hard-line HR relationship was maintained with the PMO manager.
The reporting relationship within the PMO provided shared accountability for successful delivery across the performing teams and the PMO. Instead of being viewed as a staff organization with limited value, the PMO had project delivery responsibility that made it an integral part of project execution. The project management processes were also more easily adopted because the PMO manager was able to enforce compliance with individual performance goals and objectives.
Benefits: By establishing the PMO and implementing key processes and reporting structures, the IT organization realized several improvements. Troubled projects still existed, but the PMO helped communicate problems earlier and raise issues and risks to senior management.
Prior to implementing a portfolio governance and resource management process, the organization had no comprehensive view into the work pipeline. By implementing these processes, the management team recognized the organization was implementing 30 projects per month across its 60 resources. The comprehensive view allowed management to prioritize requests better across the resource pool. New project requests were funneled to the PMO and prioritized under a formal change management process. Ad hoc projects were funneled into a biweekly change control and portfolio status review. By adopting a change control process, resources were effectively allocated and projects were properly prioritized.
Issue and risk management were centralized within one tool, and the PMO had immediate visibility into issues and risks requiring senior management attention. By allocating a project management resource to each team, project delivery improved and project management discipline became further embedded within the organization. Within 12 months, the organization shifted from an ad hoc collection of projects with poor execution to a well-managed portfolio with predicable results.
The Web Hosting Services PMO is just one example of a PMO in action. Other organizations feature a spectrum of PMO variations — some PMOs operate as administrative staff organizations with little delivery responsibility; other PMOs have a cross functional responsibility to deliver projects. As companies adopt a “manage-by-projects” mindset, the need for a PMO increases, as do the pressures to do it right.