The Project Management Office (PMO) is not for every organization. It comes with both risks and rewards.
Organizations must weigh the advantages of disadvantages before making the decision to build a new PMO, change an existing PMO or altogether remove a PMO. We’ve come across all three situations during recent conversations with several organizations. In fact, we have even seen many organizations build PMOs, then demolish them, then build them again.
Many flavors of PMOs
PMOs come in many flavors. It’s certainly not a one-size-fits-all approach. Some PMOs run like “process control offices” without dedicated project managers managing projects, whereas others run like a soft matrix environment allocated by capability or functional area. The reality is that even in an organization with a PMO, there are often project managers that work on projects but are distributed throughout the organization rather instead of reporting directly to the PMO. We have also seen managers throughout organizations that manage projects but do not consider themselves project managers or part of the same mission as the overall PMO. The success of a certain PMO type ultimately boils down to transparency and an organization’s overall maturity level.
PMOs are expensive from a headcount perspective, and the need for one varies by each organization’s size, scale, cost, number and type of projects that need to be managed. While some organizations we see could benefit from formal project and/or process management, they unfortunately cannot justify the cost of additional headcount to manage a PMO. Others decide to build a PMO, but fail to invest the right resources or to secure C-level support, and eventually the PMO is eliminated.
PMOs are more important than ever and have been going through a major transformation to adapt to changing customer needs. According to the Project Management Institute’s 2020 Pulse of the Profession report, “…Organizations are creating future-ready talent by prioritizing technical proficiencies, leadership acumen, business strategy and digital skills.”
Today’s business leaders recognize the need for highly skilled project leaders who can build and sustain successful PMOs, setting the foundation to be agile and measure their projects and initiatives against the needs of the overall organization. Those that fail to transform may fall victim to what we refer to as the “PMO elimination.”
The PMO elimination trend
So where does PMO failure come into play? From our experience, ineffective PMOs normally have a shelf life of four years or less. That does not leave much time to prove your worth in the world of PMOs, hence the PMO elimination or decentralization trend we have started to see over the past few years.
One reason for the PMO elimination trend may be due to a disconnect between what the business believes the PMO should do and what the PMO actually does. This disconnect could be the cause for not only confusion and finger-pointing but also PMO failure.
Gartner PMO disconnect
A few years ago, Gartner published a report for clients entitled, “PMO/Business Disconnect Presents Risks and Opportunities for PMO Managers and Senior PPM Leaders”.
The report notes, “Organizations must constantly change and adapt to respond to the environment surrounding them and successfully deliver on their corporate ambitions. Without engaged PMO managers and PPM leadership, there is a risk of continental drift — that is, an emerging gap between what services and tasks the business wants from a PMO and what the PMO is actually doing. The picture presented in the business view of the PMO survey is not unique. A separate survey of PPM professionals found that nearly half had experienced no more than one significant change to the original set-up of the PMO. Considering that half the PMOs had been in place four years or longer, it suggests that a PMO may struggle to keep up its pace of change with the pace of change elsewhere in the business.”
The key fact that nearly half of the PMOs surveyed have made no more than one significant change to the original set up of the PMO gives a clear picture to why some may be eliminated. That fact remains true today. Think of how often the overall business pivots and changes its direction. In an innovate or die type of world, only those businesses that can quickly adapt to change will survive. The same mentality applies to PMOs.
PMOs that fail align their priorities and activities with the overall business objectives will always struggle to prove value. In addition to a lack of alignment, PMOs are not adapting as quickly as the rest of the business, which holds them back from being strategically focused on driving portfolio success. And finally, executive support will make or break a successful PMO.
PMO of the future
Successful PMOs are transitioning from being the home of the tactical execution with talent that plays a more strategic role with the right experts for every project. The successful PMOs become centers of excellence/coaching that guide the overall business on what’s best from a strategic perspective. The focus has shifted from the previously known nuts and bolts of project management to honing in on the overall portfolio. Today’s strategic PMOs answer questions like, “How do we continuously improve?” or “How do we drive holistic planning?” Immature PMOs, on the other hand, take a more command and control approach with generalists and forget about the bigger picture at hand.
Future PMOs will be expected to be the strategic voice of an organization. Project execution will be driven from the portfolio down and will align to the overall business objectives and goals. The PMO should strive to gain visibility into the portfolio review and approval process and play a role in the annual or quarterly planning process. As such, portfolio management will drive all project execution activity.
Ricardo Viana Vargas, Director, Sustainable Project Management Practice Group (SPMPG) at UNOPS suggested a nice summary in his presentation, “PMO of the Future”:
- Invest, invest, invest in culture change
- Foster a collaborative environment
- Develop standards to be used in a democratic manner
- Always seek to align projects with the business objectives
- Break the paradigm of immediate results. Accept the realization of its benefits often take time
Strong, visible and proactive PMO leadership that can reach all areas of the organization and can drive results-oriented behavior is required for the PMO of the future to succeed. Understanding how to add value and how to follow the money are also musts for the PMO of the future.
Your toolkit for success
Whether you’re starting a new Project Management Office (PMO) or want to update an existing one, our PPM/PMO Toolkit will help you get moving. You can use it to:
- figure out the type of PMO you need
- follow templates and checklists to help structure your PMO
- set timelines to launch your PMO or revitalize an existing program
- gather support from others with change management and communications plans
You’ll also get insights on how to evolve your PMO maturity over time, so you and your team can continue to execute as business needs change.