The meaning and purpose of a PMO

Let me start in the spirit of that classic US game show ‘Jeopardy[1] …

Answer: ‘a PMO’

Question: (and therefore actually the correct answer; that is just the way it works on the game show trust me – or look it up) ‘What is the department or group that defines and maintains the standards of process, generally related to project management, within an organization?’

Applause from the audience and smiles all round.

Yes, the Project Management Office (PMO) in a business or professional enterprise is typically the department or group that defines and maintains the standards of process, that are generally related to project management, within the organization.

But I am afraid it is not that simple.

The abbreviation, PMO, can stand for Program Management Office (confusingly also a PMO) or Portfolio Management Office (increasingly confusingly also a PMO). There is even talk of a Project Office (PO), a Project Control Office (PCO), a Central Project Office (CPO), and a Project Support Office (PSO). Up to you to choose – what do you have in your company? What are you leading? What are you part of? What is it that you are currently planning?

You may well have a completely different flavour of PMO from the above.

The PMO strives to standardize and introduce economies of repetition in the execution of projects and is the source of documentation, guidance and metrics on the practice of project management and project execution.

It is also the body that links business strategy to the projects that such strategies require.

Organizations around the globe are defining, borrowing and collecting best practices in process and project management and are increasingly assigning the PMO to exert overall influence and evolution of thought to continual organizational improvement. Many PMOs will base project management principles on accepted industry standard methodologies such as the PMBOK[2] or PRINCE2[3].

There are as many variances in the structure, format and focus of PMOs as there are definitions of the term.

PMO Types

Typically there are five basic types of PMO:

• A Departmental PMO
• A Special–purpose PMO
• An Outreaching PMO
• An External PMO
• An Enterprise PMO

It should also be noted:  the ‘enterprise’ structure can apply in more than one of the first four categories.

Type definition aside, a PMO is a group or department within a business, agency or enterprise that ‘owns’ the kind of project based activity that cuts across the operational activity. The primary goal of a PMO is to achieve benefits from standardizing and following project management policies, processes, and methods. Over time, a PMO will become the source for guidance, documentation, and metrics related to the practices involved in managing and implementing projects within that organization.

Why Invest

Why do businesses invest in a PMO?

On the one hand, companies of all kinds face the continued fallout from the most recent global recession which has placed an added burden on projects and project managers delivering expected benefits.

On the other, we are part of a dynamic, resourceful and ever-evolving commercial world that demands change as part of its survival; change demands projects, and projects demand project managers.

History is littered with significant project failures (witness some of the statistics of the CHAOS[4] report analysis of IT project success, and more often failure[5]), yet there are also spectacular project success stories linked to the maturing practice of project management.

Those projects that will be commissioned in the future, as well as the ones that are allowed to continue in the current challenging climate, will be expected to deliver greater business benefits, endure closer scrutiny from senior management and are likely to face far more pressures to deliver. There is no longer any room for project failure; projects that are approved need to succeed.

And who will be under the most pressure? You guessed it, the managers responsible for those projects.

Right now our projects, and our project managers, need the help, support and guidance of a good PMO and a ‘good’ PMO has to be led by a ‘good’ PMO leader.

The good news is that PMOs are in demand.

In their ‘The State of the PMO 2010’[6] report PM Solutions stated that “The upward trend is unmistakable, both in sheer numbers of PMOs and in the rising organizational clout. In our 2000 research on ‘The Value of Project Management’, only 47% of companies had a project office. In 2006, our research on ‘Project Management: The State of the Industry’ showed that 77% of companies had PMOs; ‘The State of the PMO 2010’ research shows that 84% of companies have PMOs”

This is excellent news; it suggests the battle to establish the value of the PMO has, for the most part, been won.

This book is therefore less about the business justification of a PMO and more about being the very best that you can be as a leader and a contributor to a successful PMO; making your PMO the one that really delivers.

Projects, programmes and PMOs

To avoid confusion, it is important that we all have a common understanding of project and PMO terminology.

To that end we should all align our language when it comes to Projects and Programs[7], Portfolios and PMOs.

It can be a very confusing world when we talk of projects and programs and portfolios and project management offices so I am going to open with the simplest of explanations which I am hoping you will accept for the purposes of this discussion.

I call this ‘the PMO declaration’

Project Management is all about doing something (a project) in the right way and the ‘right way’ is all about method and discipline and quality and control.

Program Management is all about doing those things (the projects) in the right sequence or order.

Portfolio Management is about doing the right things.

Which leaves the PMO; and which I think of as doing all the above but with the right team (the right things, in the right way, in the right order).

Hopefully that helps?

If you prefer a more detailed explanation:

Project Management

Project management is the discipline of planning, organizing, securing and managing resources to bring about the successful completion of specific project goals and objectives. It is sometimes confused with program management, however technically that is actually a higher level construction: a group of related and interdependent projects.

A project is a temporary endeavour, having a defined beginning and end (usually constrained by date, but can be by funding or deliverables), undertaken to meet unique goals and objectives, usually to bring about beneficial change or added value. The temporary nature of projects stands in contrast to business as usual (or operations), which are repetitive, permanent or semi-permanent functional work to produce products or services. In practice, the management of these two systems is often found to be quite different, and as such requires the development of distinct technical skills and the adoption of separate management.

The primary challenge of project management is to achieve all of the project goals and objectives while honouring the preconceived project constraints, or at least in managing the adjustments of these constraints through a disciplined process. Typical constraints are scope, time, and budget together with an over-arching consideration of quality.

Program Management

Program management is the process of managing several related projects, often with the intention of improving an organization’s performance. A program of projects can help a company achieve one or more of its strategies. The individual projects within it have varying end dates but the program ends when the strategy has been reached.

There are two different views of how programs differ from projects.

In one view, projects deliver outputs, discrete parcels or “chunks” of change; programs create outcomes. Thus, a project might deliver a new factory, hospital or IT system. By combining these projects with other deliverables and changes, the associated program might deliver increased income from a new product, shorter waiting lists at the hospital or reduced operating costs due to improved technology.

The alternative view is that a program is nothing more than either a large project or a set of projects. In this second view, the point of a program is to exploit economies of scale and to reduce coordination costs and risks. The project manager’s job is to ensure that their project succeeds. The program manager, on the other hand, may not care about individual projects, but is concerned with the aggregate result or end-state. For example, in a financial institution a program may include one project that is designed to take advantage of a rising market, and another to protect against the downside of a falling market. These apparently opposing projects fit together in the same program.

Portfolio Management

Project Portfolio Management (sometimes referred to as PPM) is a management process designed to help an organization to register and view information about all of its projects. Once it has the visibility (you can’t manage what you don’t measure) then this allows such organizations to sort and prioritize each project according to certain criteria, such as:

• strategic value
• cost
• impact on resources
• tactical need

A PPM driven organization will have, typically, a portfolio/project dashboard representing the overall health and status of each project.

It should be noted that the projects and/or programs within a given portfolio may not necessarily be interdependent or directly related to each other. For example, in a services supplying company the portfolio will mainly record customer project activity with little relationship between the individual projects.

PMOs

The Project Management Office (PMO) in a business or professional enterprise is the department or group that defines and maintains the standards of the business processes, generally related to project management. The PMO strives to standardize and introduce economies of repetition in the execution of projects. The PMO is the source of documentation, guidance and metrics on the practice of project management and execution.

A good PMO will base project management principles on accepted, industry standard methodologies, as well as government regulatory requirements as applicable. Organizations around the globe are defining, borrowing and collecting best practices in process and project management and are increasingly assigning the PMO to exert overall influence and evolution of thought to continual organizational improvement.

Establishing a PMO group is not a short term strategy to lower costs. Recent surveys indicate that the longer organisations have an operating PMO group the better the results achieved to accomplish project goals (which might lead to eventually lowering costs).

PMOs may take other functions beyond standards and methodology, and participate in Strategic Project Management either as facilitator or actively as owner of the Portfolio Management process. Tasks may include Monitoring and Reporting on active projects (following up project until completion), and reporting progress to top management for strategic decisions on what projects to continue or cancel.

So there you have it – personally I like my simple model better so let’s stick to that shall we?

A simple Guide

The PMO is all about doing it all but with the right team but as there is no one model for a PMO you’ll not be surprised that there is no one ‘right’ team to make up the PMO.

Being a successful PMO leader is all about delivering the ‘right stuff’ and putting together the right team to do this. There is a lot more to this as just having the ‘right team’ doing ‘the right job’ is no guarantee of success. But we will explore this idea a lot more later on in the book.

And being part of a PMO team is all about supporting the ‘right stuff’ delivery by best practice and professionalism.

You can read a lot more about PMOs and PMO leadership in my book ‘Leading Successful PMOs’ (Gower) and at my website www.leadingsuccessfulpmos.com

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[1] Jeopardy! is an American quiz show featuring trivia in history, literature, the arts, pop culture, science, sports, geography, wordplay, and more. The show has a unique answer-and-question format in which contestants are presented with clues in the form of answers, and must phrase their responses in question form.

[2] The Project Management Body of Knowledge (PMBOK Guide) is a project management guide, and an internationally recognized standard that provides the fundamentals of project management as they apply to a wide range of projects, including construction, software, engineering, automotive, etc. The purpose of the PMBOK is to provide and promote a common vocabulary within the project management profession for discussing, writing, and applying project management concepts. The PMBOK is developed byPMI® The Project Management Institute (PMI) is a non-profit professional organization for the project management profession with the purpose of advancing project management

[3] ‘PRojects IN Controlled Environments’ (PRINCE) is a project management method. It covers the management, control and organisation of a project. “PRINCE2” refers to the second major version of this method and is a registered trademark of the Office of Government Commerce (OGC), an independent office of HM Treasury of theUnited Kingdom.

[4] The Standish Group regularly produces the CHAOS reports which research the reasons for IT project failure in the United States, the last report showed that software projects now have a 32% success rate, or put that another way a 68% chance of ‘failure’. As an example of ‘failure’ the Standish Group found that the average cost overrun was 43 percent; 71 percent of projects were over budget, exceeded time estimates, and had estimated too narrow a scope; and total waste was estimated at $55 billion per year in theUS alone.

[5] The Standish Group report has been challenged in the past. With the problem being that it measures success by only looking at whether the projects were completed on time, on budget and with the required features and functions. It does not address such other measures of the quality, the risk, and customer satisfaction. Nevertheless we can all speak to a project success score of less than 100%.

[6] PM Solutions Research. (2010) The State of the PMO 2010. Research report. Glen Mills, PA: PM Solutionswww.pmsolutions.com

[7] The basic difference is between different languages: American English always uses program – British English uses programme unless referring to computers – Australian English recommends program for official usage, but programme is still in common use. The word “program” was predominant in theUK until the 19th century, when the spelling “programme” became more common — largely as a result of influence from French, which has the same word “programme”.

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