Project Management

Is the PMO a revenue generating department?

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I recently had a discussion with a colleague during which I expressed my belief that PMOs should be operated just like any other department in an organization. I was promptly informed that PMOs are different, special, and can't be operated like a business department. PMOs are not revenue generators.

I advocate that they are. The majority of PMOs are responsible in some way for the successful delivery of an organization’s projects.  Most projects are growth engines, with the product of the project a revenue generator. Most projects are taken on to either increase revenue generation or reduce costs. In either case the outcome of these projects affect the economic viability of the business. Because PMOs are revenue generating entities, it is crucial that PMOs and project managers have business knowledge and acumen.

A project itself has no business value. Projects generally bring increased cost, significant use of resources and often create havoc. However businesses undertake projects because projects bring needed growth, change, improvement and other things of value to the business. Projects are undertaken in order to achieve a specific result or outcome. That outcome or project objective is what brings value to the organization. We must keep in mind that only through the successful attainment of the project objectives will any value be achieved.

Projects must be managed first and foremost to deliver value. On time, on scope, on budget are not the measures of project success. They were never meant to be. The measurement of project success is the amount of value it brings to the organization.

There is a resistance among some PMOs and project managers to accept responsibility for the value of the project. Once the project manager takes responsibility of the project he also takes on the responsibility of ensuring the project outcomes deliver as much value to the organization as possible. In order to do this, the project must be managed with the project outcomes and potential project benefits in mind at all times. All decisions made, all actions taken must be driven by the business needs and objectives of the project. Factors like time to market, competition, market changes, regulatory changes, resources and raw materials will have more influence on the successful attainment of value than will scope, time, and budget.  

Do project managers need to be SMEs? No, but project managers need to understand the business, the market, and the factors that will influence the value of the project outcomes. Business acumen and knowledge are the most critical skills needed by a project manager to ensure the success of the project. It is only with this knowledge can a project manager use the processes and tools of our profession in such a manner that brings the most value from the project outcomes.

Projects do not belong to project managers. We are the stewards of the project and it is our responsibility to deliver the expected outcomes and project benefits to the project owners, the business.

Because the products of projects are frequently revenue generating, cost reducing, or in some way essential to the economic growth and viability of an organization, PMOs are revenue generating departments as much as marketing and sales and certainly much more so than IT or HR.

Posted on: January 08, 2013 01:21 PM | Permalink

Comments (3)

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That's a very well thought out article, I am in agreement with you, thanks for sharing your thoughts

Harlan, some great arguments in your article. However, I do have a slightly different view. Depending on how you define it. Realizing the values of a project is the job of the product manager (or sponsor). The project manager's role is to ensure the project is delivered to meet the objectives and success factors defined for the project up front. Usually, a project is initiated by a sponsor claiming certain values that the project will bring. It does follow that the sponsor will have the responsibilities to realize (and justify) the values of the project once it is delivered. For example, a product manager may initiate a project to add certatin features and improvements to an existing product in an attempt to increase its market share. Here, these features and improvements (or we say scope of the project) are what the assigned project manager handling the project needs to deliver within the given cost and timeline of the project. After the project is delivered meeting the specified criteria for the given scope (features and improvements), it should be the responsibility of the product manager to ensure this updated product will gain a bigger market share as claimed (which is the real values of the project). Of course, there are exceptions; for example if the product manager and the project manager are the same person which, in most of the time, it is the case.

PMO a revenue generating department article is a pretty good read. More business insight in terms of value addition a PM has , better will be the outcome of the Project as he plays a role of coach during the project life cycle.

Furthermore It is right that PM is responsible for the project delivery that results a revenue generation .I think may be we can extend the thought to run PMO as a business unit where a good bunch of team members services can be outsourced to other industry related projects . This will allow the PMO a revenue generating entity on its own and side by side running the internal projects (that company undertakes).

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