Establishing a PMO

"69% of project failures are due to lack and/or improper implementations of project management methodologies."

–PM Alliance

"68% of projects do not meet time, cost or quality targets."

–PM Alliance

What is PMO?

The project management office (PMO) in a business or professional enterprise is the department or group that defines and maintains the standards of process generally related to project management within the organization.

Our client's IT department had no experience with a PMO and lacked project management experience and processes to oversee such a large scale undertaking. iSphere proposed a strategic framework to the engagement through a hierarchical project management structure in order to manage the active projects concurrently and with limited dependency on additional staff.

  • The IT Project Management Office (PMO) is the primary change agent for this and future IT governance initiatives. All governance processes will be indoctrinated into the project management practices and serve as a model for achieving project success.
  • The IT Department will present proven best practices to encourage the use of the same or similar processes for IT projects that are undertaken by departments outside the IT Program.
Contact Information

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Regardless the function title, Program Office, Project Management Office, Project Control Center or a central office to manage projects; its need has become an essential element in assisting organization in making projects more efficient. Many companies are recognizing they must build project management capabilities and core competencies in order to meet the business challenges of tomorrow. They also understand that common processes and practices must be implemented consistently across the organization, thus leading to more effective and efficient delivery of projects while successfully controlling cost overruns.

The project management office (PMO) initial intent was to define and maintain standards within an organization; however in many organizations the PMO has developed a more strategic role. The office is now involved with assisting organizations in making better decisions such as identifying which projects to initiate, optimizing resource allocations and the constant evaluation and impact of in‐flight projects to name a few. It is essential to the success of a new PMO that there is a clear understanding from senior leadership and the business before establishing as to the role of the office, its interaction between the office and the individual project owners (departments, business groups /business functions). The Project Management Institute’s (PMI) project framework has defined 3 levels of work groups as: projects, program and portfolios and an organization must define its maturity level and what type of PMO to establish. For many organizations the PMO has broaden its role to include responsibilities such as stakeholder communications, data analytics or resource allocation / procurement decisions.

This white paper examines the steps and approaches an organization must consider when implementing a Project Manage Office.

A case study of a client engagement is included that illustrates key factors for implementing a successful PMO process.

Why PMO?

For years, companies and IT departments (in particular) have struggled to deliver projects on time and within budget. A Gartner survey, list some common complaints and issues shared by organizations to include the following:

  • Poor Business Justification for a project – Projects start up without any business case, analysis or benefit to why it should exist.
  • Project Failures – Late projects, poor quality of product /deliverables, cost overruns, dissatisfied customers are few challenges for many businesses. Projects underway are not regularly assessed to reviewed to decide if they should continue Budget Issues – Some project are inadequately funded or there are duplicate project happening within the organization. Cost projections vary from the actual cost incurred.
  • Lack of Information – Leadership either does not understand the project, status or hears about it when it’s failing. Any information about the project is usually poor, inaccurate or outdated.
  • Poor Project Management Processes & Controls – Projects are managed in a very ad‐hoc way without any standards, best practices, processes or lesson learned. Takes time for project managers to get up to speed or difficult to reassign project managers between projects. This is a recipe for failure.
  • Resource Constraints – No way to forecast resources needed for committed and forecasted projects. Usually, resources are over under allocated and skill sets are poorly aligned with the project(s) the organization want to be executed.
  • No Strategic Value – Many projects approved do not tie to the goals and objectives of the business.

The best performing project management offices have clearly defined projects with proven business justification that reduce business risk, optimize resources, are cost efficient and contribute to the growth and goals of the organization.

Determine Maturity Level

The scope of the PMO needs to be considered across projects, programs and portfolios. Not all organizations have reached a level of maturity where they have defined programs and portfolios. Perhaps you have already established a PMO on some level, however the road to project portfolio management maturity starts with recognizing the issues /challenges and its affect on business improvement processes. Not all companies require the most sophisticated level of portfolio management. It important to determine what level of PMO your company needs, analyze which PMI process benefits your organization the most.

The three stages include the following:
  • Project Management Stage: Focus is at the project level on tactical processes including scheduling, budgets, resources, deliverable based management, scope, risk and metrics.
  • Program Management Stage: High‐level governance programs and communication programs are most frequently implemented at this stage to coordinate business and IT projects. This stage involves more comprehensive planning, budgeting, change and risk management, project delivery and measurement of results.
  • Portfolio Management Stage: At this stage, PMO manages portfolio scope definitions, overall investments, benefits and risks assessment, performance monitoring and business environment change adaptation. Focus broadens to benefit realization and knowledge management.
Services the PMO provides

Organizations must determine the scope and services the PMO will provide to its customers and broader audiences throughout. Below may be a subset of its services initially, but has the PMO matures so can its services.

Here are a few examples:
  • Process, standards and template development for managing projects– The PMO can develop a set of practices, standards and templates for managing projects.
  • Data consolidation and analysis – The PMO can provide a central data capture, consolidation and analysis function feeding into other services such as status reporting, dashboards and decision support.
  • Project Management and Execution – Project management services can be provided.
  • Status Reporting, dashboards and decision support –The PMO can develop standard reports and dashboards for communicating project and portfolio status to stakeholders.
  • Reviews of Projects – The PMO can provide a quality assurance function to check projects are following the organization’s standards and processes.
  • Project Inventory – Maintain a central inventory of projects.
  • Resource Allocation –The PMO can hold an inventory of the skills in the organization and facilitate the resource planning and allocation process.
  • Project Evaluation and Review – The PMO can facilitate the project evaluation process, develop scoring and prioritization models. Furthermore the PMO can implement a project review and lessons learn for detailed project assessment.
Case Study

Establishing IT governance involves defining the processes and management oversight structure that ensures work is adequately identified, planned, executed, and delivered to meet the needs of stakeholders. In an IT organization, demand from multiple internal business clients, often with competing priorities, must be managed. In the Fall of 2014 a large Texas base public entity was seeking qualified technology consultants and/or project managers to provide independent, highly specialized technology project management services for the successful implementation of its 2014 Bond Funded Technology Projects. This on-going effort (5+yr plan) is a $217 million dollar bond consisting of over 15+ new projects. iSphere was chosen as the partner to help this IT organization establish IT Governance and a new Project Management Office (PMO).

The IT department had no experience with a PMO and lacked project management experience and processes to oversee such a large scale undertaking. iSphere proposed a strategic framework to the engagement through a hierarchical project management structure in order to manage the active projects concurrently and with limited dependency on additional staff. The iSphere Project Management Team through its structure and direction by the client, served as an independent, third‐party resource to augment the clients staff members. This holistic and partnered integration provides for comparative, optimized resources that the client would not otherwise have, to include a second set of “neutral” eyes to review implementation plans, accuracy of data and the delivery of key milestones.

Our project management process enabled iSphere to meet the client's requirements and expectations as they relate to project scope, risk, schedules, and resources. Additionally, iSphere's PMI based delivery methodologies focus on providing consistent and repeatable solutions, while emphasizing attention to quality, standards, and minimizing costs. Our delivery methodology combines proven industry standard business and technology strategy techniques, life cycle methodologies, rapid application development approaches, and infrastructure deployment strategies providing consistent, efficient, and cost effective delivery of any service or solution to our customers.

IT governance also proved beneficial by providing a structure for monitoring approved work to ensure client expectations were met (at a minimum) both during the creation of a product or service and once the promised product or service had been delivered.

Although IT governance can cover a breadth of standards and processes, the results of this initiative produced deliverables that allowed the client to achieve the following:

Improved Discipline in IT Project Management Practices

Standardized processes for Project Initiation, Project Portfolio Management (including Budgeting), Resource Management, Risk Management, and Change Control. Quality Assurance was also introduced as a mechanism by which compliance will be assured.

Provided a Framework for Monitoring IT Project Delivery of Promised Benefits

Established a framework for evaluating whether projects are on target with delivering its defined benefits, and making adjustments when/if conditions change during project execution. This also included postmortem assessments of completed projects as a measure of project success.

Created Alignment of IT Projects with Key Business Drivers

Ensured the business drivers are defined and readily visible to influence the selection, prioritization and realignment of projects in the Project Portfolio.

Provided a Mechanism to Ensure IT Resources are Responsibly Utilized

A structure that provided an appropriate monitoring of resource demands and allocations in order to ensure IT resources are effectively and responsibly utilized during project life cycles.

Improved Management of IT Project Risks

An established structure for identifying, monitoring and managing project related risks throughout all phases of the demand‐to‐deliver process was implemented.

The Conclusion

In almost any organizational system today, a tremendous number of projects are underway at any one time. Whether operational or technical in nature, these projects will benefit from a rigorous approach to project management. The development of a PMO will improve the caliber of project management within an organization.

Developing a successful PMO requires:
  • Strong Value Proposition
  • Support of senior leadership
  • Commitment of resources (human, financial and technology)
  • Strong organizational commitment to its success

This white paper is the result of many years of experience in developing multiple PMOs across several industries. Let iSphere be the consulting company you chose when developing your PMO.