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Ira Lehrman
Ira Lehrman
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Does the PMO Create Value or Overhead?

The project management office model has been heralded as a way to reduce costs and restore sanity to technology projects. But do PMOs deliver value, or just get in the way?

I recently glanced through the Information Week 2014 Enterprise Project Management Survey. There were a few interesting data points that caught my attention. For instance, 34% of respondents say the general business attitude toward IT projects managed by the project management office (PMO) is that these efforts almost always deliver value to the business, versus 41% saying it’s a mixed bag -- sometimes beneficial, sometimes not.

This data suggests that endorsement of the project management process is pretty low. Of course, one may argue that the results of projects would be far more disastrous without the PMO! But when you think about it, in contrast, if you had an employee who didn't deliver value most of the time, you'd put him under performance review. Without measureable improvement, this employee would be managed out of the organization. With only 41% indicating that the PMO’s results are as much as a mixed bag, is it time to manage the PMO out of existence?

Today, companies are demanding that PMOs and their environments demonstrate value for money and actually deliver it. If not, they’ll be discarded, and the core competency and organizational capability gone. The significant amount of investment that’s been poured into them over the past years will fade away. The pressure to show value raises a couple of very good questions:

  • Has the PMO bureaucracy has gotten out of control or gone wild?
  • How can the PMO stay relevant and increase value delivery in the face of cost rationalization and continuous business change? Does the cost/value ratio make good business sense?  

Defining a role
PMOs are struggling with defining their roles within organizations and demonstrating their value, despite evidence suggesting that PMOs offer a collection of benefits to organizations that champion them. “Organizations with a well-planned and well-run PMO generally see a 20% improvement in project results,” according to a Gartner report. Wow, now imagine the impact a poorly planned PMO has on an organization!

Some question the value of formalized programs and formally trained project managers. Some development managers might say that things will get done in spite of the certified project managers or the PMO.

The PMO’s ability to execute is often mired by poorly functioning, costly, and overly process-heavy project portfolio management (PPM) environments.  Agile development and collaboration methodologies such as Scrum (or variations thereof) can reduce the need for heavyweight PMOs. This will dramatically change the dynamics of prevalent heavy-handed project management.

The old project management obsession with heavy compliance, reporting, and metrics will be gone. Overly administrative or policing PMOs that can’t demonstrate their contribution to organizational value, and draw a direct line to competitive advantage, will ultimately dissolve.

To reap the full benefit of PMOs, organizations need to transform their project structures, processes, and cultures; they must embrace PPM as a critical core organizational capability, while demanding more of the PMO as a reliable source of competitive advantage. Management needs to shift the interaction patterns within the business, IT, and the PMO partnerships. To succeed, an organization needs to culturally remap the PMO environment away from the heavy process orientation and shift towards one of trusted partnership, value, and delivery focus.

The modern PMO
The principal transformational challenge to achieving PMO value is the PMO must adapt and measure its activities against the needs of the ever-changing business environment. Project managers need to be more agile and have the entrepreneurial skills to deliver projects and create stronger and trusted partnerships with the business. PMOs are expensive, and they need to make sense based on scale, cost, and number of projects (IT and non-IT related). If implemented correctly, they can be enormously effective.

Avoid the three-ring binder syndrome full of unproductive templates, and adopt a more delivery-focused perspective. In fact, change from a PMO to a PDO, a Project Delivery Office.

Here are six steps to move to a PDO:

  1. Partner with IT and business stakeholders in PPM.
  2. Provide, create, and foster best business analyst and project management practices and resources -- as drivers of projects and delivery… not scribes and reporters.
  3. Measure results and demonstrate PMO value. Develop a PMO scorecard for measuring results and demonstrating ROI -- to be viewed as a value-added partner.
  4. Be business driven. Focus on stakeholders, outcomes, and delivery.
  5. Provide adaptable and flexible methods vs. heavy and overly process-oriented methods.
  6. Perform project and post-project reviews. How did we do? How to avoid project risks, improve project delivery, etc.

The delivery-driven PDO drives efforts to closure; aligns program objectives with organization goals and missions; integrates domain-specific experience, knowledge, and skills across the enterprise; prepares the organization and its members for change; and manages risk to help the programs achieve their expected objectives.

Is your organization ready for a PDO?

Ira is presently a Senior Vice President at Athene USA, and head of technology for Athene Asset Management, L.P. His responsibilities include information technology, application development and delivery - systems integration and architecture across the asset management ... View Full Bio
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User Rank: Apprentice
5/21/2014 | 9:33:41 AM
Restore balance to The Force
I've seen great PMOs, and I've seen PMOs add cost and delay projects just because of "the process."

In order for a PMO to work, the business, IT and PMO all have to have equal power. If the PMO can overrule the business and IT, it will ultimately slow projects, add cost and increase frustration, sometimes unnecessarily.

Similarly, if the business can ignore the PMO and plow ahead on a project, the project will probably run into problems. 

The PMO serves a purpose, but it needs to be balanced.
User Rank: Apprentice
5/21/2014 | 10:14:07 AM
Re: Restore balance to The Force
I wonder though -- does a really good Agile development process make a PDO unnecessary? Will those two forces be forever in conflict? 
Lorna Garey
Lorna Garey,
User Rank: Apprentice
5/21/2014 | 10:58:50 AM
Whether you call it PMO or PDO is really going to be academic to the business. To me there are two very simple rules for a good PM:

First, do no harm. Don't throw wrenches into the process.

Second, be diligent about balancing stakeholder concerns and interested. Don't let any group be steamrolled.

Seems like, no matter what you call the group, if you do that you'll be effective. I think PMs are very important today, when people are so slammed -- I know they help me keep my priorities in balance. 
User Rank: Author
5/21/2014 | 11:13:59 AM
Impact of Agile?
Chris, you took the words out of my "mouth" -- I was going to ask Ira about the impact of agile methodologies on the whole approach to project management. User expectations have changed (this also is a manifestation of the consumerization of IT trend), and if projects are being managed in a way that doesn't incorporate agile, especially the iterative aspect with business users, it's not surprising there is dissatisfaction.
User Rank: Apprentice
5/21/2014 | 3:38:57 PM
Re: Impact of Agile?
I agree to you. Agile is the way to go. In current world, the way business demand is shifting, traditional PMO office is no longer relevent. But we surely need to have a process to manage the Budget/Cost/Margin, where Scrum Master kind of role cannot play. So Whatever we say whether it is PMO/PDO, the task might get limited towards mnagaing and reporting overall utilization/Productivity/Profitability of the program that is running.
User Rank: Apprentice
5/22/2014 | 3:08:03 AM
the PMO creates Overhead, not Value!
Ira, your question is in its place and the stats your brought show it all. 

There is no need for a PMO, businesses had enough of this extra cost and layer!

It is simply time for a representative from one of the three functions ( the business, application development and IT Infra) to assume the project management responsibility of that specific project.
User Rank: Author
5/22/2014 | 1:03:59 PM
Re: Impact of Agile?
I guess one of the challenges may be that by definition a PMO or even PDO is about documented and consistent processes -- which may seem contrary to flexibility and change.
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