BUILDING A PMO THAT EXECUTIVES LOVE

Transcription

1 BUILDING A PMO THAT EXECUTIVES LOVE ARUL NAMBI THIRUPPATHI TESCO HINDUSTAN SERVICE CENTRE, BANGALORE, INDIA PML 2007 PROJECT MANAGEMENT LEADERSHIP CONFERENCE FEBRUARY 13-14, 2007 NEW DELHI, INDIA Arulnambi.t@gmail.com / Arulnambi.thiruppathi@in.tesco.com

2 Building a PMO that Executives Love 1 Building a PMO that Executives Love Arul Nambi Thiruppathi Abstract The role of project management in the modern organization has grown significantly. The effective management of project portfolios that include numerous short-term projects, large multi-project programs or both has become a growing challenge for the industry. Many organizations have identified a need to formalize the practice of project management and develop centres of coordination and excellence for project management. Organizations have therefore implemented an organizational entity, the Project Management Office (PMO) to help to steer projects to completion, while ensuring the overall success. This paper defines the PMO concept, describes its structures, functions, and outlines its lifecycle. This paper describes five stages of PMO capabilities along a competency continuum. The paper also discusses the major processes that are essential to make Project Management Offices work and key success factors to improve the performance of the PMO. The paper also discusses the measurement approaches for getting value out of a PMO and the challenges to sustain the PMO. Introduction Many organizations have struggled to deliver projects on time and within budget. The success of projects, primarily in the areas of scope, cost, and duration, becomes the focus of assessment of the effectiveness of the project manager implementing the project, and the efficacy of the organization in supporting the project manager in pursuit of overall organizational objectives. When dealing with such ventures, success can be achieved only through centralized management and careful coordination of all involved projects, with a specific focus on communication and risk management. A model for establishing an organization that is responsible for managing projects has emerged. This organization is known as the Project Management Office (PMO) Organizations today have recognized the need for a PMO to achieve project management oversight, control, and support. The PMO s role is to help both the project manager and the organization to not only understand and apply modern project management practices, but also to adapt and integrate business interests into the organization s project management efforts. The PMO is not merely staff to provide support for project activities such as schedule development, monitoring tasks, and for the use of project management software. Rather, it is an essential component for future organizational success. The PMO is the organizational entity with full time personnel to provide a focal point for project management. It provides services and organizational focus in core and supporting areas of project management by training, consulting, and mentoring the project-related personnel, by augmenting project teams, and by serving as a clearinghouse for best practices. What is a PMO? A Project Management Office is an organization entity that is structured to apply project management practices to the needs of a particular program. PMOs can help by providing the structure needed to standardize project management practices and facilitate IT project portfolio management, as well as determine methodologies for repeatable processes. The top 2 reasons for establishing a PMO are for improving project success rates and implementing standard practices

3 Building a PMO that Executives Love 2 The PMO successfully addresses many of the typical challenges inherent in managing a series of interdependent projects: Project schedules not adhered to and implementation dates rarely met Senior management not having comprehensive insight into projects progress and performance Projects customers not sufficiently involved in product planning, design, and acceptance Disparate and inconsistent communication patterns Inadequate control and understanding of actual costs Lack of repeatable processes guided by best practices Unanticipated risk events and inadequate or missing contingency plans Unexplained changes in project scope, schedule or budget Unacceptable quality of products and processes Unproductive or non-existent peer reviews A PMO establishes an environment that prevents many of the aforementioned issues from occurring. It also conducts monitoring and controlling activities that correct problem situations by: Implementing consistent project management and product development methodologies Establishing governance processes and structure for managing changes to the program Conducting planning and control activities, including alignment with other strategic initiatives, integration with the governance process, and integration with resource planning Coordinating delivery of project information through consistent and standardized data gathering, analysis, and reporting Providing continuity and reinforcing commitment among business customers, project teams, and support organizations Initiating audit review procedures that identify problem areas and provide processes to closely monitor risks and issues Increasing project success rates by obtaining executive buy-in and gaining enterprise-wide support for program needs and objectives The ideal PMO model IT organizations tend to choose between the extremes of two PMO models: one empahizing a support role and one emphazing a supervisory role. In fact, the two functions are not mutually exclusive, and the ideal model combines the best of both The Support model: The PMO in a consulting role According to this model, the PMO functions primarily in a support role instilling project management skills into the organization. PMO staff are cast in a mentor relationship vis a vis existing project managers (PMs). They might train PMs in the organization in a common methodology or process. Another role for the PMO is to provide the tools, templates & training PMs need to do their work. The PMO might develop software tools for specific tasks, as well as standard documents such as project charter or project plan that is uniform across the organization. In addition, the PMO staff can be a backup source for groups in need of help with project management, particularly in cases where there is trouble in the PM ranks. The PMO as a support group really plays a distributive role within the organization and has little or no control over which projects are funded, and no authority to ensure projects align with business needs. PMO staff typically cannot compel project managers to accept their guidance. They cannot force user groups to adopt a common methodology; they can only encourage them to do so. The Centralized model: the PMO in a supervisory role PMO staff are given a supervisory role, with budgetary authority to determine which projects get funded and which do not. Project managers, instead of being attached to operational divisions, may be directly on

4 Building a PMO that Executives Love 3 the staff of the PMO and lent out to working groups on a project specific basis. The PMO may even control who gets assigned to which projects. This centralized PMO compensates for some of the problems inherent in a strictly supportive role. The PMO can impose greater discipline on the choice of the projects and how they are carried out. Use of standard methodologies, processes, templates, and tools can be enforced. The PMO can decide when to terminate a project that isn t delivering. In short, the PMO plays a strong role in project governance. Such a strong role enables the PMO to ensure that projects are tied to business goals. However the centralized model only works within a highly structured environment, and so superimpose it upon a decentralized organization is to invite trouble. Taking away managers authority and imposing decisions from above will produce culture clash and provoke resistance. The Facilitating model: The PMO in a consulting role The best model is one in which the PMO takes a facilitating role, working to bring business planners and IT together for joint decisions governing project investments. The PMO might also become a change agent, identifying opportunities for change within the organization, determining the best approaches, and introducing the changes to the community. The PMO can communicate new ways of thinking, introduce new tools and processes, refine evaluative metrics, and work to constantly establish a new baseline of performance. The PMO should also play a crucial role in knowledge management (KM), effectively becoming the organizations memory by keeping records of projects, i.e., what works and what doesn t, the steps through which certain processes must pass, and so on. Too often, different parts of the organization are unaware of what has been done by others, and new staff have no knowledge of what has gone before. Effective KM enables that valuable lessons are retained and passed on to others. PMO Frameworks The nature of the role and the purpose of the PMO can vary significantly. By knowing the reason for setting up the PMO, organizations are in a much better position to define what the role and purpose should be, and that the services that are critical to be focused on and delivered immediately. When developing a PMO, one of the greatest struggles is the identification of a model that can be adopted as a framework for development activities. There are several archetypes or scenarios that define the majority of PMO frameworks. There are two primary dimensions that influence each archetype: the degree of support provided or control exerted over project teams, and whether the focus of he PMO is on supporting the management of projects through existing capabilities or on improving how the organization manages its projects. The characteristics of each archetype are determined by where they lie along each continuum (See figure below): Scorekeeper. The basic role of a PMO is one of supporting project managers in delivering current initiatives. The principal emphasis is on monitoring and reporting project progress of current projects in other words, on keeping score. The Scorekeeper archetype serves as a conduit for information about current projects, and managing a clearinghouse of consolidated status updates Facilitator. The Facilitator archetype approaches the role of the PMO as being an enabler of improvement efforts. Often viewed as a source of best practices and management ideas, the model this archetype supports is largely demand-driven, the PMO will provide support, information and assistance only where requested by its customers. Scrum Half. The Scrum Half archetype is typical of this approach, serving not as a support organization but as the central focus of project delivery. Organizational PMOs modeled after the Scrum Half archetype often see the project managers actually reporting to the PMO, which serves as an internal services organization that not only monitors but actively intervenes to ensure the successful delivery of projects

5 Building a PMO that Executives Love 4 Perfectionist. The Perfectionist archetype is defined by a control focus combined with an emphasis on improvement. The most interventionist of all archetypes, the PMO views itself as a centre of excellence which embodies organizational best practices. Control Scrum Half Perfectionist Scorekeeper Facilitator Support Assist Facilitate What a PMO does During the life cycle of a project, a PMO can instill project management discipline and align it with a company's overall strategic goals Generate Concept Prioritize project in terms of an organization's overall governance, project portfolio processes Assist project leaders with business case development Ensure the project links to a company's strategic goals Plan Resources Add project to the project management or portfolio system Assign staff and resources to the project Lay out governance standards, including repeatable project processes, training and metrics Launch Project Provide coaching and mentoring to project managers Begin to facilitate ongoing project planning sessions Ensure proper tracking of project data and milestones Provide Ongoing Project Management Ensure regular project status reports are available to decision-makers Coordinate communications across business units Conduct regular quality assurance reviews Complete Project Lead post-implementation reviews Capture and record lessons learned Ensure that project data and project team evaluations are recorded and distributed to decision makers Full Range of PMO Functions Communications Management

6 Building a PMO that Executives Love 5 This function communicates program status, progress, and performance at multiple levels. It also prepares briefing documents and program dashboards for senior management and other high-level stakeholders, generates an information base that allows drill down capabilities, and facilitates communications among project teams involved in the program. In addition, this function builds general awareness about the projects and their impact on the business Financial Management This function maintains and reports financial performance through objective metrics, ensuring no cost overruns for the program. It tracks variances against the program budget, ensures that expenditure targets are met, and verifies performance against business objectives. This function collects metrics at the project level and rolls them up to the program level. Finally, this function is responsible for forecasting future budget requirements Resource Management Procuring, training, onboarding, and managing project staff is a major responsibility of a PMO. Consolidating resource management at the program level enables program executives to optimally deploy staff resources across all projects. The PMO is responsible for overall capacity planning, including the complex logistics of ensuring that the right people are available at the right time and place. This may include negotiating and managing relationships with third-party vendors and subcontractors and deploying internal and external resources. This function is also responsible for properly training program staff in program processes, tools, and applied methodologies. Technology Management This function implements and maintains the physical, technical, and process infrastructures used by the program. Responsibilities include implementing consistent methodologies and tools, managing facilities and equipment, performing capacity planning for the resources required by the program, managing licensing and other technology agreements, performing disaster recovery planning, and procuring the necessary equipment. Risk Management This risk management function is responsible for evaluating the project plans, identifying program risks, and developing risk management strategies. It works with business areas to anticipate and understand the changing business environment and associated risks, modifying project plans and risk response strategies as needed. Quality Management This function ensures that the projects within the program meet quality objectives. These objectives include adherence to program procedures and standards, as well as the completeness and quality of project deliverables. It audits project practices and captures project quality and performance metrics. Program Integration This core function oversees the integration of the projects that make up the program and provide a comprehensive approach to issue, change, and acceptance management. This function has a handle on all the project interconnections and dependencies. It monitors project progress closely and addresses individual project delays before they affect other projects in the program. When problems arise, this function adjusts and rebalances the project plan. In worst case scenarios, it oversees the implementation of contingency and triage plans Organizational Roles The people comprising the PMO and its projects are critical to the programs success. A PMO must provide management support to ensure the productivity and success of its staff (See figure below) Sample PMO Organization

7 Building a PMO that Executives Love 6 Executive Steering Committee Program Sponsor Program Director Program Advisory Board Program Coordinator Communications Financial Resources Coordinator Quality and Risk Logistics Project Project Project Project Project Program Sponsor (Executive Sponsor) The program sponsor is the senior corporate executive responsible for the program. This individual works with the executive steering committee, which sets the overall priorities for the program, approves all major strategies, and handles cross-organizational issues. The executive sponsor, based on information from the PMO Director, intervenes as necessary to ensure that program objectives are met. Program Director This full-time manager of the PMO owns the day-to-day responsibility for the execution of the program, reports to the executive sponsor, and directs the PMO staff. The program director is responsible for ensuring that all business objectives are met and that all program guidelines are followed. Program Coordinator This supporting role can take many forms, including administrative support, maintaining the program repository, executing communications plans, and providing resource coordination. This role can also provide valuable tool support by relieving the program director of the burden of integrated program schedule maintenance. Function s The function managers report to the Director. They must have strong communication and project management skills. Depending on the size and focus of the PMO, specific functions may not be staffed, and managers may be responsible for more than one function. Project s These are the managers of specific projects within the program. They provide the Directors or function managers with the status of individual projects within the PMO Program Advisory Board This structure represents managers of the functional areas of the business with which the projects and the program as a whole must interact. It may also include customers, suppliers, or other program stakeholders. PMO Competency Continuum The PMO competency continuum provides a vehicle that defines a series of five PMO stages that can be examined for application in the organization. These five stages represent a progressive competency and advancement of functionality that can be attained to meet the needs of the project management environment and the associated business objectives of the relevant organization. It is critical to discern the approximate level of PMO competency that the organization needs Stage 1: The Project Office

8 Building a PMO that Executives Love 7 The Stage 1 PMO is the fundamental unit of project oversight in the project management environment. It provides the capability to ensure professionalism and excellence in applying widely accepted principles and preferred project management practices to each project effort. The project office performs a variety of essential project management activities, including: Applying principles and techniques of modern project management, through the skill and knowledge of the project manager, to ensure that successful project performance is achieved Serves as the direct interface to project team performance management Applying organizational guidance in the form of policies, standards, executive decisions, and so on to project effort Serving as the first level of project oversight and, often, the highest level of technical oversight The project office s role is that of implementer. It carries the policies, practices, and guidance prescribed by higher authority into the project management environment for project team implementation. Stage 2: The Basic PMO The Stage 2 or basic PMO is the first PMO level that deals with multiple project oversight and control. It furnishes the capability to provide aggregate oversight and control of multiple projects relative to the performance of multiple project managers. The basic PMO performs a variety of centralized project management activities, including: Having primary responsibility for establishing a standard approach to how project management is conducted in the organization. This includes the introduction of common tools, repeatable processes, and preferred practices. Providing the means to aggregate results and analyses of project status and project progress as a basis for ensuring the achievement of project objectives Introducing project management as a professional discipline in the organization Stage 3: The Standard PMO The Stage 3 PMO is central to the PMO Competency continuum, representing the essence of a complete and comprehensive PMO capability. This stage introduces a new focus on support that optimizes individual and project performance in the project management environment. The standard PMO performs complete centralized project management oversight and control activities, with an added emphasis on introducing process and practice support in the project management environment. These activities include: Serving as a centerpiece of project management support in the organization Functioning as the interface between the business environment and the project management environment Acting as the facilitator of project management environment process design and as a catalyst for project excellence. This extends from attending project management methodology and practices used to ensure project success; to introducing project reporting tools and collaboration techniques; to providing executive support processes Serving as the representative of the project management environment to senior executive of the organization, and participating in or possibly convening and leading associated control boards comprising executives and senior managers Operating as the recognized organizational entity that directly or indirectly influences resource participation on projects, to include addressing such matters as qualifications, training, assignment, and evaluation. Stage 4: The Advanced PMO The focus of the Stage 4 PMO is on integrating business interests and objectives into the project management environment. This implies introducing common practices to be applied to both project management and business processes. The PMO performs comprehensive, centralized project management activities, together with expanded functionality that represents a mature and business-oriented project managem ent organization. These activities include: Appearing more and more like a separate business unit. The advanced PMO normally prepares and manages its own budget as a means of pursuing development and implementation of advanced project management practices

9 Building a PMO that Executives Love 8 Collaborating with business units within the organization and participating in the development or adaptation of practices and processes that are common to both the business environment and the project management environment Providing distinct expertise in state-of-the-art project management practices and procedures Stage 5: The Centre of Excellence The centre of excellence is a separate business unit within the organization and has responsibility for enterprisewide project management operations. The PMO functionality prescribed for the centre of excellence has a focus on strategic business interests across the organization. The centre of excellence assumes a strategic alignment role in the organization and guides the project management environment in its continuous improvement efforts. These include: Providing direction and influence for enterprise project management operations Building both project management environment and project stakeholder awareness and representation across business units, customer relationships, as well as vendor and partner relationships Sponsoring and conducting studies and evaluation of project management functionality and business effectiveness, which may include affiliated PMOs Representing the business interests of the organization in the project management environment, and vice versa PMO Lifecycle The introduction of a PMO into an organization should be viewed as a significant initiative that must follow a proven lifecycle. The phases of a PMO lifecycle begin with an assessment phase that allows the organization to determine its current state of readiness to introduce a PMO. Based on the approval, the organization can move into the start-up phase and begin detail planning and staffing. The plan developed during the start up phase will guide the organization through an execution phase of the PMO. This phase includes staged implementations of processes and tools. The execution phase will run the duration of the program or until a specific event occurs, which will signal the beginning of the final phase: closeout. The closeout phase represents the conclusion of the program once the business objectives have been achieved. Execution Assessment Start-Up Closeout Assessment The assessment phase of a PMO implementation is critical in that it determines the direction of the PMO moving forward. Key activities in the assessment phase includes Developing the business objectives with the program stakeholders All new PMO are based on a business event that drives the need to bring improved structure and discipline to a series of projects. The PMO should be viewed as an organizational component focused on delivering business benefits through successful program delivery. Assessing the current state of organizational project delivery

10 Building a PMO that Executives Love 9 Most organizations implementing a PMO have some level of a project office or project management standard in place. Determining whether the current structures are equipped to support the delivery of the identified business objectives will be key to the PMO planning process. During the assessment, it is important to determine if stakeholder concerns are caused by flaws in the process and tools, lack of organizational discipline and management support, or by flaws in the execution. Understanding these root causes is key to improving the organization s project delivery capabilities. Defining the scope and objectives of the PMO Implementing process or tool changes that do not provide management with improved access to information would result in missed expectations. Clear definition and stakeholder approval of the PMO scope and objectives are necessary components for defining PMO success. Determining the proper role of the PMO Depending on the level of the organization s project management maturity, the PMO may have to exercise a different level of control over its constituent projects. As the PM maturity level of the organization grows, the level of control a PMO needs to exercise over its projects decreases. Determining the role for a PMO that will best help an organization realize its desired business benefits will be crucial in recommending a PMO development approach Capture and Organize PM Maturity Advise and Report Degree o f Manage and Control LOW Degree of PMO Control Securing approval to move forward with the implementation of the PMO All the information gathered during the assessment phase should be compiled into an assessment report and approved by the program executive stakeholders. The report should clearly recommend the appropriate PMO role and identify critical success factors for its implementation. Start-Up Once the program executives give the approval to move forward with the PMO, the start-up phase of the PMO lifecycle begins. Key activities in the start-up phase include: Establishing the PMO team

11 Building a PMO that Executives Love 10 A senior experienced manager heading the PMO team is critical, as this individual will work with the program executives to set the direction. The exact size of the PMO team will be determined by the number of individual projects governed by the PMO, as well as the PM maturity of the organization. Developing a PMO charter to confirm the boundaries of the PMO The information from the assessment report, plus information gained from additional research, should be utilized to develop a charter for the PMO. The charter should clearly define the scope and objectives of the PMO along with specific measures of success and associated critical success factors Creating the detailed PMO start-up plan This plan will guide the efforts during the start-up phase as well as the execution phase of the PMO Implementing a single conceptual information model or repository This repository will become the central warehouse of information with respect to the status of projects within the PMO. Implementing changes through a support model based on frequent communication The PMO is a means for ensuring the successful delivery of projects by project teams. As such, improvements must be transitioned into the organization via frequent communication to the execution teams Initiating a continuous improvement process The PMO must have a continuous improvement feedback loop established early in the lifecycle Execution The PMO start-up phase will quickly overlap with the execution phase to ensure the management of the program s active initiatives. Key tasks in the execution phase include: Executing specific PMO reporting cycles by functional area The PMO team must present formal status reports to the executive stakeholders atleast once a month. Effective execution of these reporting cycles will become key to the overall success of the PMO. Analyzing information gathered through PMO processes The PMO team will gather substantial information on a regular basis through the execution of the PMO processes. The data can then be translated into useful information, which mitigates the overall risk in delivering the business objectives. This translation of data into actionable information becomes the key activity during the execution phase of the PMO. Continuing implementation of process and tool enhancements During the start-up phase, a staged implementation of PMO functions was identified. This staged implementation continues during the execution phase of the program. Planning PMO checkpoints Depending on the length of the program being governed by the PMO, checkpoints should be planned during the execution phase. These checkpoints should include a formal assessment of the effectiveness of the PMO against the program charter. Additionally, the checkpoint serves as an effective time to evaluate the staffing model of the PMO Closeout The PMO will move into a closeout phase when its business objectives have been achieved. The key activities in the closeout phase include: Approving closeout confirmation and planning

12 Building a PMO that Executives Love 11 The closeout of a program must be confirmed and approved by the executive program sponsors before any closeout activities can commence. The executive approval should also provide a definition of a successful transition Developing a transition plan The PMO must prepare the organization to accept and support the products and services developed by the program. Transition planning includes such considerations as defining operational procedures and establishing service levels Executing the closeout The PMO closeout should be managed tightly to ensure a smooth transition of products, processes, and resources. The transition must address the handoff of process and tool ownership. The information gathered by the PMO should be effectively achieved for future reference Optimizing the PMO Apply Change Management Principles Change Management is the single most important contributor to PMO success. Essentially, Project s implement change, and therefore must be adept at Change Management. In addition, an appeal must be made to the human psyche to secure buy-in and participation among affected stakeholders. Securing buy-in entails increasing awareness, understanding, and motivating affected individuals to participate in a supportive and productive manner. An inclusive and engaging change program builds trust and participation, decreases resistance, and promotes change sustainability. Change Management also decreases risks, and leads to the realization of timely, high quality, and cost-effective results. Secure Strong Executive Sponsorship A strong executive sponsorship is needed to ensure a program s success. The executive sponsor s primary role is to provide financial backing for the program. But effective executive sponsorship requires more than just financial support. The sponsor must serve as the program s ambassador and continuously communicate progress, and the importance of the initiative to executive leadership. Additionally, the executive sponsor should be present and actively participate in major program meetings to demonstrate support to stakeholders at every level. Define the Vision Program Visioning is a beneficial activity that the PMO should facilitate during the early stages of the initiative. The high level vision and goals for the program must be defined by the sponsor and senior program leadership. Once program resources are on board, the entire team should take part in the further definition of the vision, and development of objectives for the portfolio of projects to be undertaken. A set of success criteria should also be defined and agreed to by executive leadership so that the team will know when it has successfully satisfied its objectives. Manage Risks An important factor for success is for the PMO to proactively identify potential risks and take steps to mitigate the likelihood of their development into issues. Risk Management activities should be factored into the project budget with additional funds set aside to address risks that develop into issues. Risk management reporting tools provide transparency into the program for senior management, increase ownership and accountability, and encourage proactive problem solving. Use Status Reporting Dashboards An extremely helpful program management tool that is useful to nearly all stakeholders is the project status reporting dashboard. The purpose of the dashboard is to provide a high level snapshot of how the work is progressing at the project level. Dashboards keep the PMO and senior management up to date, and promote inter-project communication with other projects within the program. They also hold project management accountable for thinking proactively about tasks that must be accomplished in the short-term to keep the project progressing on schedule.

13 Building a PMO that Executives Love 12 Standardize the Approach, Customize the Templates The PMO must identify the aspects that are most critical to the program s success and customize tools and templates accordingly. Some projects are deliverable intensive and require the tracking of various documents to completion, while others contain multiple inter-related work streams with critical paths that must be identified and managed. Once the PMO understands the nuances associated with the nature of the work, tools and templates can be tailored to meet specific program or project needs. PMO Measurement Approach The main value and the main reason for the existence of a PMO are to cause project delivery to accelerate throughout its sphere of influence within the enterprise and the primary business unit it supports. In this respect, there are two key measurements for the PMO. The correct approach is a combination of both factors Project Net Goal units If the PMO is successful, the volume of goal units should increase from year to year. This should come from more projects being completed, better management of resources, fewer overruns. Goal units could be net profit, net present value, shareholder value, or other tangible measurable units Project Cycle time, in days The shorter the combined cycle time of all projects, the more projects the organization can complete, the faster, the investment is returned to the organization. The current project cycle times are like an inventory of resources that is being invested in projects. If the same inventory of resources are being used to do more projects, the return on investment increases. The combination of the two factors is a ratio that is called Project Value Days. It is the total project goal units from all projects expressed as a numeric value, divided by the total number of days duration of project cycle time required to generate that value. With this kind of measurement proposed by the PMO advocates, the idea of implementing a PMO should be accepted more quickly by executives in search of meaningful ongoing improvement in their organizations. It will also cause project teams to constantly look for opportunities to accelerate projects and to avoid threats of delays. The ROI from PMO would be very important and critical for establishing and sustaining the set up. This is also a very essential to get top management buy-in. some of the quantifiable benefits were discussed above. Defining and monitoring these numbers continuously will speak out the value added by the PMO clearly to all the stakeholders. The returns can be quantifiable primarily by establishing the savings due to reduction in the rework and the savings due to increase in productivity. Challenges to sustain the PMO A PMO brings about a fundamental shift in how information flows and how decisions are made in a project driven organization. The PMO is supposed to help leaders align go/no go decisions with the current strategy based on a clear picture of the current reality. As the strategy evolves, leaders have a handle on how to shift the focus of activities toward the new direction. An effective PMO fuels decision making with cross-functional transparency and up-to-the minute accuracy from bottom up. The result is a focused, flexible, learning organization that delivers on its promises. All too often, though, the PMO doesn t become a clear asset. Due to lack of organizational commitment and insufficient tools, PMO team members spend the majority of their time hunting down basic day-to-day information and trying to figure out where they fit in. They get lost in the shuffle and confusion of the highly dynamic project organization. In the worst case scenario, the PMO becomes the choke point for information and a source of frustration for the delivery teams. One key reason the PMO struggles is that the core team does not truly support the PMO initiative. The core team consists of the people who are responsible for forming and funding the PMO. Unless the core team

14 Building a PMO that Executives Love 13 can fundamentally agree about the goals and objectives of the PMO initiative, the PMO will struggle to gain power, and without power, it will struggle for relevance. Another classic conflict brought about by the PMO is the fear that the PMO will inhibit the project teams that are doing the daily work. The answer on how to balance control versus freedom in the PMO will vary from organization to organization. Too much control can lead to micro-management and too much freedom will lead to undirected chaos. But what s clear is that until project driven organizations deploy some level of PMO control, reliability and successful attainment of the company goals will elude the organization. Key Success Factors Organizations need to take a more strategic, holistic view of the PMO s role in the organization. Some of the key success factors for an effective PMO are listed below Strategy Holistic approach to addressing portfolio, program, and project management Alignment of initiatives to the business objectives Business results measurement of completed initiatives Process Effective demand management processes Disciplined project planning and estimation processes Rigorous project tracking, issue, change, and risk management Industry proven system development methodologies Organization Skilled and experienced program/project management resources Structured program governance and decision making Clear roles and responsibilities Effective communication and integration Tools Integration PM toolkit that support processes Enterprise-level visibility into project status, issues, and risks Conclusion A properly planned and launched PMO will achieve the program s overall business objectives, and will also benefit the organization s people, process, and technology by establishing improved executive communications, valuable progress reporting, effective tracking mechanisms, and meaningful risk identification and mitigation To that end, the PMO: Ensures that project objectives are aligned with the business strategy Saves a considerable amount of senior executive time and effort by concentrating on all aspects of program execution, control, and reporting into a single organization Realizes great efficiencies in resource management by providing a mechanism for project prioritization and integration Manages enterprise risks and protects the projects objectives with a balanced risk response Provides a flexible level of control necessary to ensure that a mission critical program completes on time and within budget while achieving the business objectives Achieves significant productivity gains through efficiencies of scale, standardized processes, effective communications, and continuous improvement activities

15 Building a PMO that Executives Love 14 In order for the PMO to succeed, the organization must commit to its success. Organizations must understand the business context of running a PMO, and they must commit resources and authority to the PMO to make it effective. More importantly, if the organization commits to the PMO, the advantages can be tremendous: stakeholders will have visibility into meaningful, timely information; work becomes aligned with goals; and employees grow increasingly productive. References Santosus, Megan, Why You Need a Project Management Office, available at ww.cio.com/archive/070103/office.html Paust, Michael, Optimizing the Program Management Office, available at h ttp:// Stephens, Ted, The ideal PMO model is a balancing act, available at Kendall, Gerald, How to Get Value Out of a Project Management Office (PMO), available at Hill, Gerrad, Evolving the Project Management Office, available at htt p://whitepapers.techrepublic.com.com/whitepaper.aspx?docid= The PMO Conflict, available at htt p:// Elkins, William, Maximize ROI with a Project Office, available at Improving the Performance of Your Program Management Office, available at htt p :// Nicholson, Laurence, The Value Proposition of Outsourcing PMO Activities with Organizations, available at