Theory of PMO Evolution

Jim Harris

For a long time, organizations completed projects on an ad hoc basis. Management identified what needed to be done, looked around the water cooler or break room to find who had time on their hands, gathered the select few and pronounced them the newest team to do such-and-such. Sometimes this team actually completed a task. But more often than not, projects remained only half-materialized or uncompleted.

In those early days of project management, a senior manager anointed individuals "project managers" with the statement, "We need this done by this time, and here’s your funding. Good luck!" This sink-or-swim induction to project management is how many of us got started.

Experimentation of processes eventually led to the development of today’s project management environment. The ad hoc method slowly gave way to a new approach: Planning, management and execution of prescribed tasks in a consistent and logical manner ensure the successful completion of a project.

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Now that project management has become a recognized skill set that ensures successful completion of most major tasks, it’s time to take it to the next level by considering the project management office (PMO) approach.

Companies delivering products or services should have an office that performs the management functions of the delivery process. Having said that, let’s quantify the scope of this office. Large corporations have many operational units that deliver products or services. Marketing gets the message to the public about products, and Public Relations broadcasts the good image of the company, etc. Within these support units, there is a need for project management to ensure that a particular project is planned and executed well. The PMO I will focus on is one responsible for the delivery of a product based on a contract or the client receiving the product.

Over the last 15 years, organizations have come to realize that project management is a unique discipline that brings value to the enterprise. This value is measured either in terms of cost–benefit achieved or the return on investment (ROI) of the funds invested in the program management function. The PMO provides a home for project management and a point from which to effectively manage the delivery process of the company’s products or services.

When you establish a PMO, you need buy-in from all senior managers to the PMO sponsor. Who the sponsor is depends on the focus of the PMO. If the focus is on delivering products or services to an external customer, I suggest the senior manager in charge of operations. (The successful delivery of a company’s product is part of daily operations.) On the other hand, if the focus is on internal development and delivery to enhance customer services, I suggest the CIO. Why? The CIO is the person ultimately responsible for the implementation of new technology to improve internal processes and enhance customer services.

The PMO is a nearly self-governing business unit that enables management to reduce the cost of product delivery by implementing standard proven practices in planning and project control. In addition, it puts into place a feedback system that provides the entire management process continuous improvement with predicted outcomes.

Management must not develop the PMO as a policeman looking over shoulders to make sure that project managers adhere to policies and procedures when managing projects and other quality processes. Rather, the focus of the PMO is the development of management-accepted standards and practices that permit the repeated success of every product delivery.

 

The PMO focus should not only be on the major project management processes (project planning, teambuilding, execution, change control, etc.), but must also formulate sound internal processes and fully satisfy the needs of external interfaces. This total approach will achieve maximum payback to your organization.

Internal Processes

Develop Common Methods

The PMO does the following:

The PMO does the following:
  • It provides an organizational structure that supports the overall delivery process.   
  • It develops common policies, processes and standards that are its cornerstone. Every project manager follows the same process and produces the same type of reports in a standard format. Project communications are clear and presented in a way consistent in content and structure.   
  • The PMO provides a point from which all projects can be evaluated. It clearly defines ownership and accountability of each project. It establishes clear standards of performance measurement to judge the success of projects. Every project manager starts from and is held accountable to a common set of standards.

Central Visibility of Projects–Planning and Execution of the Delivery Project–Centralized Coordination

The PMO is a tactical asset for the organization. Assigned project managers are focused on the daily coordination and management of project teams, thus ensuring good client relations. The PMO is not the office where strategic planning for future programs originates. However, the PMO needs to be part of the development of programs having an expected start within a year. Project managers should be involved in developing requirement documents that lead to the start of a project.

The PMO provides daily monitoring and audit functions. Through reports and status reviews, it gives senior management timely feedback about project goals, status, accomplishments and issues. The PMO should be the source to which senior management turns to assess a project’s true status.

Not only does the PMO provide focus on delivery management, but it also mentors less experienced project managers and encourages professional development in the discipline of project management. The exchange of information and professional experience among seasoned and developing project managers is an invaluable asset to any organization.

External Interfaces

Communications–Senior Management–Project Reviews

Communicating project status is critical, and the PMO provides the central point from which project status emanates. How this information is made available to senior management and project stakeholders must be detailed in the project communications plan. The PMO and staff must present a regular review of project status through scheduled reports, notices of critical issues and formal presentations. No matter what means you use, keep the following in mind when communicating project status:

  • Tell it like it is. Never dress up bad news or even try to talk around it. Bad news is like a dead fish. After it is covered up so long, it stinks.   
  • Be factual. When you are giving the status, make sure you present all the facts correctly. This is especially true when reporting financial status of expediters, projected expenses and, if applicable, customer invoicing status.   
  • Be brief, concise and to the point. Don’t begin a long dissertation. Limit the number of charts you show when giving a project status review presentation. However, always have ready any charts that may help provide background information to address a particular question.

Keeping senior management updated on a regular basis also helps curb their urge to micromanage the project. If you are a senior manager, I offer the following quote from Thomas Dreier: "When you find a man who knows his job and is willing to take responsibility, keep out of his way and don’t bother him with unnecessary supervision. What you may think is cooperation is nothing but interference."

 

 

 

Financial Accountability

Controlling and managing project finances is not simple, but the PMO staff must not delegate that entire task back to the organization’s accounting department. I suggest that the PMO must have full authority—and thus the responsibility—for the fiscal state of assigned projects. This includes:

  • annotating man-hours used to those estimated   
  • authorizing purchases and associated expenses   
  • invoicing   
  • executing cost control measures   
  • financial reporting

Procuring project items must be a short process. When project finances are split among several entities, this can result in the delayed purchase of items because one person has to approve the purchase, another has to log it, and a third has to send the procurement action. The PMO should authorize all purchases listed on approved project appropriation documents, with direct interface to contracting and procurement to issue the purchase order. In addition, the PMO must provide for adjustments to a project’s financial picture caused by scope changes, incorrect manpower or financial estimates.

The PMO and financial unit are a team, so don’t ignore your organization’s accounting department. Provide it with project financial information (e.g., expense and procurements authorized, and projection of unused budget lines that remain obligated). Through the submission of accurate cash flow reports, the PMO must be able to project when expenses will be incurred. The PMO tracks project expenses, and the accounting team takes the project financial data and folds it into the total corporate picture. More than likely, the accounting department is showing company financial data based on invoices paid for project items ordered, or hours expended that won’t be reported until the following month due to the payroll cycle. Therefore, the PMO should be the information point for project financial status because it has the most current picture in terms of funds spent.

Keeping track of project finances involves great attention to detail. Design and use spreadsheets with simple calculations and links, or use commercial project tracking software to shrink that task to a manageable size.

Team Coordination–Everyone Is a Player

The PMO is the office of coordination where every project manager provides the synergy for a successful project.

Your PMO needs to establish a sound working relationship with the managers of the operational units whose assets will be needed for a successful project. (At times, this can become a real love-hate relationship!)

Both the PMO and the operational managers have defined roles and responsibilities to each other.

Operational managers can be looked at in the context of contract providers. The PMO provides them with the equivalent to a request for proposal for an expected deliverable. The requirement document is developed with the participation of the operational unit when total program requirements are defined and specific deliverables are identified.

You need to get commitments to deliver. Why? The PMO relies on these commitments to prepare project plans, control time lines and set customer expectations. Hold internal sources for deliverables accountable for meeting commitments just as if they were third party contractors. If internal resources cannot be provided, or if commitments cannot be met due to higher priority tasking, then the PMO must be told so it can acquire external resources and address subsequent funding issues. Provisioning internal resources can often conflict with senior management’s desire to maintain an economical staffing level. That conflict can place strain on meeting the resource needs of the PMO.

In the end, once the corporate commitment to deliver a product or service to a customer is made and expectations are set, everyone must manage his respective area to meet that commitment. From executive management to the project team and supporting technical staff, no one is off the hook.

Customer Care/Management (Client Relations)

The PMO organization, standards and execution of the delivery process must ultimately focus on the customer. No matter how well the project is planned, the management process is executed, or how good the product quality is, if customer expectations are not fulfilled, the project fails.

By involving the customer from the outset as part of the project team, rather than a sideline bystander, you set the needed positive tone. Make your customer part of the project plan development and planning process. You both must agree from the start what to provide, when and at what cost. Once you have established this baseline, your focus turns to customer relations and management.

PM Process

One of the foundations of building and maintaining customer confidence is having your customer understand the delivery management process you follow. During the discovery phase of the project, a team of your sales and PMO staff should not only show the customer the product or service to be delivered, but demonstrate how your company will manage delivery on time and on budget.

Develop the project plan so it specifies to both sides (project team and customer) how the project will be managed to final delivery. The more detail that goes into the project plan, the more informed all recipients are.

After the project plan has been developed, hold two kick-off meetings, one with the internal project team and the other with the customer and their principals at the customer location. Major advantages to having a kick-off meeting at the customer location are:

  • Going to your customer’s turf provides many non-tangible benefits in the area of relationship building. Your long-range goal is to have a customer who will provide good references and follow-on sales.   
  • The PMO project team can meet its client counterparts and those who will help coordinate delivery.   
  • The complete team can conduct a detailed review of the project and physically walk the areas affected during the delivery process.   
  • You can make adjustments to the project plan with immediate coordination and concurrence.   
  • You can facilitate the goal of total team cohesion.   
  • You can review the communications plan and be sure everyone understands how project status will be disseminated.   
  • You can make sure that all team members understand the change management process from the beginning.

Meetings with the customer must take place on a regular basis. After the initial kick-off meeting, it’s beneficial to hold regularly scheduled meetings with the customer stakeholders at their location. These meetings limit the time customers must take from their schedules, display the willingness of your company to go the extra length and foster relationship building between the PMO principal and the customer. Meetings also provide both the customer and PMO principal an opportunity to physically review any site preparation activities that may be part of the project.

Summary

An organization must invest in establishing a PMO to manage the delivery of products or services. When sufficiently staffed and equipped with up-to-date technical resources, the PMO can be a powerful asset for the organization, ensuring team cooperation and providing the highest standards of customer care while delivering services and products on time and on budget.



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