The Money Files

A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

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How to Construct Your Project Budget

4 Estimating Terms You Need To Know [Videos]

Questions from PMXPO 2015

4 Initiatives for Improving Major Projects (And Small Ones)

How to Use Your Budget to Anticipate Risks

The Future of Your PMO is Safe…

Categories: PMO, research

…At least, that’s what a survey by ESI would have you believe.

The funding for PMOs has historically been a bit iffy. That’s not a technical term, by the way. PMOs have struggled to prove their value and there is a cyclic effect when times are hard in business: PMOs start to lose their funding and get scaled back or cut completely. That, according to ESI, is finally changing.

The study of over 900 respondents held earlier this year reports that 49% of PMOs are funded as a corporate overhead. Even the word ‘overhead’ doesn’t do the PMO any favours. I know PMOs aren’t exactly revenue generating but they should be a governance and cost control centre rather than a bottomless black hole of overheads. In fact, where a project is done for a client, and a PMO is part of the deal, 40% of them are funded by the project. So you could argue that the PMO is a revenue centre in those situations. However, the study does not make it clear whether those costs are passed to the client or not. I digress…

Corporate i.e. central funding is a good thing for PMOs. ESI believes that corporately-funded PMOs have a far greater opportunity to mature and to provide a wider range of benefits and services both to projects and the business as a whole.

Funding increases on the way

Enterprise PMOs are optimistic. The report concludes that around 30% of enterprise PMOs thought they would be seeing increased funding in the next financial year, so they must think they are doing a good enough job, growing enough and gaining enough recognition to be worth the extra investment. The ESI pundits report that enterprise PMOs typically have a wider influence and higher visibility than those PMOs set up to support an individual project or programme.

PMOs that are supporting individual initiatives are less optimistic about their future and their funding. This is hardly surprising: if your department has been set up to support a project and then that project finishes, your future is uncertain. You can foresee the end of the project from Day 1 so it is no shock that project level PMOs are a bit more reticent about their future.

The challenge of resource management

Another interesting statistic from the ESI study is that resource management is perceived to be the thing that the PMO is worst at by the people who actually do the job.

About half of respondents reported that their PMO has been ‘very ineffective’, ‘ineffective’ or ‘neither effective nor ineffective’ at resource management across projects and programmes.

This is a shame (and a surprise). I thought one of the main benefits of a PMO was to handle resource management and make sure that the right people were working on the right projects at the right time. They certainly have the tools and the remit to do that, if they want. Resource management is tough because it’s probably the part of project planning that deals with the vagaries of your people more than any other. There are just so many variables and things that might change. Keeping track of who is doing what when is more than a full-time job and relies heavily on the support and input from the team members themselves. Plus more and more of what project managers do is knowledge work which makes it very difficult to estimate. This is going to continue to be a challenge for project managers and PMOs.

Another resourcing point flagged by the study is the lack of access to team members trained in Agile working practices. More and more teams are adopting Agile but the training and change management aspects of embedding this in the organisation seem to be lagging behind.

And the challenge of recognition

The survey invited participants to say what other people thought the PMO struggled with as well as giving their own assessment. Inability to effectively manage resources was not something that made the top list of reasons why people challenged the PMO.

The main reason for ‘challenging’ (for which I would read ‘complaining about’) the PMO was about the value that it added to the organisation. In other words, people saying that it didn’t add any value to the business. That’s not really a surprise. Executives have struggled to see the value of the PMO for some time and it’s only when you have a programme of quick wins and a high profile about the work that you do that the value of a PMO is clear. And even then you won’t always win over the detractors. There will always be someone who says project managers should just get on with it.

PMOs provide a valuable role within a company and the regular ESI studies show the changing landscape of the global PMO. It will be interesting to see if we are still hearing the same complaints and complements about PMOs in a few years.

Posted on: August 13, 2015 09:34 AM | Permalink | Comments (4)

The budget challenge for PMOs

Categories: PMO, research

ESI International, a large project management training company, released the findings of its latest annual benchmarking survey this month. “The State of the Project Management Office: On the Road to the Next Generation” survey investigates the current role of the Project/Programme Management Office (PMO), its development to full-blown maturity and value for the overall business.

Based on responses from over 3,000 respondents in more than 17 industries on six continents, the research revealed that budgets have been the biggest challenge for PMOs over the last year.

The survey respondents also said that in order to measure success, they relied on the standard definitions of the triple constraint: namely on time, to-budget project delivery. This is one way of defining success, and perhaps one of the easiest to measure but not the most effective (or modern) way of thinking about project success results. Maybe that’s why around 55% of respondents said that the value of their PMO was questioned by key stakeholders.

Why might budget constraints be a top problem?

Here are some reasons why budgets make the top of the list for PMO challenges:

  • Budgets are tight – we’re still in very difficult economic times
  • PMOs are not traditionally a profit centre – they don’t make any money themselves, although they do facilitate making money through the delivery of projects
  • PMO resources are typically expensive, so they need to justify their worth
  • PMO core activities like training could be being squeezed by less money available to spend on these activities, giving rise to challenges balancing the department’s books

Like all departments, PMOs are having to come up with new ways to do more with less. Maybe this is just a symptom that all departments are suffering from and is not a specific research finding related to PMOs.

Is budget the top challenge for your PMO in 2012? If not, what is?

Posted on: May 25, 2012 03:59 PM | Permalink | Comments (0)

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