The value of the project management office (PMO) is sometimes questioned, never more often, it seems, in a time of economic uncertainty. Preliminary research findings, however, demonstrate that PMOs can provide significant cost savings and other benefits, as long as they align themselves with the organization’s strategic plan. Those that fail to do so will not survive.

With economic pressures looming over the world, most executives are spending considerable time wondering how to manage the impact of outside forces on their business. Many organizations, even those that may be economically healthy, are seriously considering whether or not to cut fixed spending by layoffs, usually in non-revenue generating departments.

The Project Management Office (PMOs) is often seen as non-revenue generating and as a result is vulnerable in difficult economic times such as these. Yet a PMO provides important benefits to an organization by ensuring that projects are completed successfully and efficiently. However, preliminary findings of research conducted by our firm, Business Improvement Architects, indicate that PMOs are missing the opportunity to prove their value and to steer projects to a satisfactory completion.

Conducted in 2008, our research provides some insights that will help PMO demonstrate their value and survive during uncertain times. To meet these goals, a PMO should:

1. Train the management team on Strategic Project Leadership.
2. Conduct more Project Health Checks and Audits, following the ISO10006 Guidelines.
3. Manage the resourcing of all projects.
4. Ensure that only strategically aligned projects are managed. All others should be dropped during project prioritization.
5. Review all management presentations before they are delivered.
6. Ensure that all project changes are documented and approved by the sponsor.

1. Train the Management Team

Organizations should train the management team, including functional management, on Strategic Project Leadership so that everyone on the team understands why they should support you, the project manager, and why such a show of support is good for them and the organization.

2008 PMO Research Findings

• The main resistance to the PMO inside an organization was at the functional manager level.
• Sixty-one percent of PMOs we surveyed are responsible for project-management training. Training is generally conducted for project managers and to a lesser degree, for project team members. Surprisingly, only one-third of PMOs trained project sponsors or functional managers, even though functional managers, for the most part, refuse to recognize the PMO.

Example

A global manufacturer had two major projects that were suffering. The project manager and her team received intensive project-management coaching over a one-week period. They learned what was wrong with the management of their projects and what they needed to do in order to get their projects back on track. They also learned about the importance of receiving sponsors’ approvals on certain key documents and for keeping the management team updated as the project progressed.

Within six weeks, members of this senior management team started to notice that things were being done differently. They began receiving updates and were asked to sign-off on documents, including a Scope Statement, Change Requests and the likes. They liked what they saw but didn’t understand why their approvals were required and how these reports were developed. Essentially, they wanted to better understand the basics of project management and in particular, what their role and responsibilities were in ensuring the project’s success.

A full day of training was provided to enable them to:

• Implement project-management practices throughout their organization in order to increase the speed and quality of the execution of their business and functional projects.
• Develop project management as a core competency across the organization.

Within six months, the senior management team saw significant improvement in the management of projects and a substantial reduction in the number of projects that were problematic.

Conclusion

The management team, including functional managers, provides sponsorship and resources for projects. Team members need to be “on-board” for projects to succeed. Functional managers often view sponsoring as a non-strategic function, one that takes them away from their day-to-day job responsibilities and puts them onto non-value added work. But there is a missed opportunity here, namely one of providing them, through training, with an understanding of the critical importance of their role in ensuring the project’s success.

This training should focus on:

• Their role and responsibility in ensuring the project’s success.
• The impact of project management on the organization’s continued success.
• Their role in ensuring that all projects are strategically aligned.
• Creating a culture that supports a project-management environment.
• Implementing strategic project-management best practices.
• Creating a strategic project-measurement system.

2. Conduct more project health checks and audits, following the ISO10006 guidelines

The clear documentation of all quality project processes enables the PMO to conduct a health check/audit of a project.

2008 PMO research findings

Increasing customer satisfaction is one of the PMO’s more important goals, and 71 percent of respondents in our research to date have told us that their project success measures include meeting customer requirements. However, while most PMOs apply PMBOK as a guideline for establishing PMO processes our preliminary findings show that little attention is paid to the quality of these processes because nobody is applying ISO 1006 Guidelines for Quality Management. (PMBOK; Project Management Body of Knowledge, textbook).

Example

The Department of National Defence’s Victoria submarine retrofit project was struggling with the implementation of a large and complex project. Management was determined to make it a success. Mid-way through the four-year execution period of the project, they requested a mid-term project audit. The project audit followed ISO 10006-2003 guidelines and it compiled a detailed assessment of what was working and what was not working.

The report not only identified all the major problem areas, but also provided substantive recommendations for correcting them. The report was invaluable in improving the overall success of a highly complex project.

Conclusion

The ISO 10006:2003, Guidelines for Quality Management in Projects, is creating the next wave in our understanding of the management of projects, and using them should be considered when planning and auditing projects. Their overall purpose is to create and maintain quality in projects through a systematic process that ensures that:

• The stated and implied needs of customers are understood and met.
• Interested stakeholders’ needs are understood and evaluated.
• The organization’s quality policy is incorporated into the management of projects.

Unlike the PMBOK, the ISO 10006 Guidelines are often used to conduct project health checks/ project audits to ensure compliance with these guidelines. For example, during an audit, the Guidelines provide guidance on how to review all project documentation to ensure that:

• Managing each project is clear and well documented.
• Creating and maintaining the team’s performance are documented.
• Managing change on the project is apparent and documented.
• Managing risk is continuous, is documented and followed.
• Reviewing task completion is documented and followed.
• Reviewing the budget is documented and followed.
• Closing and evaluating the project is documented and followed.

3. Manage the resourcing of all projects

While the resourcing of projects continues to be a top priority of management it is a significant barrier that prevents PMOs from achieving their mandate. Often, functional management is not “on board” because it is uncertain about what the resources are doing and why. They often perceive that work on projects is an intrusion on their own work requirements. PMOs do not appear to be addressing this opportunity, namely by working with the Human Resources department to create new performance-management systems.

2008 PMO Research Findings

The top mandates for PMOs were:

• Monitor projects (90 percent).
• Portfolio project reporting (53 percent).
• Train in project management skills (50 percent).
• Prioritize projects (48 percent).

Example

A technology company that had a traditional performance-management system in place was finding that the system was inadequate for managing projects in their organization. The system did not take into account new reporting structures such as Matrix Management, in which employees may have reporting relationships with someone other than their departmental manager. Therefore, if the employee was assigned to a project during the course of the year, this aspect of their job performance was usually overlooked or not considered in their performance review. Therefore, employees found that their involvement in projects was an intrusion on their work, since the time spent on the project was not included in their overall end-of-year performance review.

Recognizing the failings of their Performance Management System, the organization had a Total Performance Management™ system designed to assess work performed by each employee more accurately. The new system collected feedback about an employee’s performance from departmental managers and project managers; this information became part of the annual employee review process. Total Performance Management™ changed the attitude of employees about being assigned to projects and encouraged them to take this work as seriously as their day-to-day work. This improved the effectiveness and efficiency of projects in the organization, because employees willingly dedicated the time required to their assigned projects.

Conclusion

Organizations implementing a project management system must recognize that their employees are facing a performance-reporting dilemma because they have a dual reporting relationship, one with a functional manager and another with a project manager or sponsor. This affects their performance evaluation, and can be an obstacle to a project’s success, unless employees’ work on projects is recognized, assessed and appropriately rewarded.

Traditional systems for performance management must be revised to reflect the employee’s “total” performance. This includes the job-description performance as well as the performance on their assigned projects. Total Performance Management™ is a performance system that evaluates employee performance on the basis of all the time spent at work. This includes the time an employee spends on their functional job as well as on a special project.

4. Ensure that only strategically aligned projects are managed – and that all others are dropped during the project-prioritization period.

Implementing a process that prioritizes projects will help ensure that limited resources are being spent most efficiently. To do this, PMOs should ensure that all projects have detailed project plans which include task and resource identification. Use the resource information to map these projects into a large resource grid and prioritize them in accordance with the organization’s key strategies. Provide the management team with your recommendations regarding any resource over-allocation issues which may affect the ability of a project to be completed successfully.

2008 PMO Research Findings

Best practices include:

• Executive buy-in and sponsorship are critical.
• PMO has to directly link to the strategic plan.
• Strategically focused projects are well received and successful, while tactical projects struggle to fulfill reporting requirements.
• Getting corporate support for prioritization and selection of projects is important.
• Project budgets should be centralized for prioritization.
• Organization structure should support the PMO’s existence and operation with direct line authority and communication with stakeholders.

Example

The MTHA (Metro Toronto Housing Association) and THC (Toronto Housing Company) were impacted by the Ontario Government’s devolution of responsibilities for administering housing from the province to the City of Toronto. This significant change in the business environment for both organizations required a dramatic transformation in the structure and operating practices of both organizations. As well, the combination of these two organizations created a list of over 110 projects.

Recognizing that they didn’t have adequate resources to manage so many projects, they created a Project Prioritization process. They identified specific criteria they could use to determine the relative importance of one project over another. One of the more important selected criteria was Strategic Alignment. Each project either aligned with one of the new corporation’s strategic imperatives or it did not. Through this process they were able to reduce the total number of projects to half of the original combined total.

Conclusion

Most PMOs have found success by focusing on the delivery of the organization’s Strategic Plan. Strategically focused projects have been well received and successful, while tactical projects seem to struggle to fulfill reporting requirements.

Ensure that all projects have detailed project plans which include task and resource identification. Use the resource information to map these projects into a large resource grid. Provide the management team with your recommendations regarding any resource over-allocation issues which may affect the ability of a project to be completed successfully.

5. Review all management presentations before they are delivered

When PMOs present to management, reporting must be accurate. If not, this can lead to dire consequences.

2008 PMO Research Findings:

The top factors that contributed to success of a PMO are:

• Clear process in place for managing projects.
• Executive sponsorship.
• An organizational culture that is supportive of projects.

The top-rated project success factors were:

• On-time
• On-budget
• Project achieved scope requirements
• Customer requirement met

We took these findings and supplemented them with one-on-one interviews. These revealed that:

• On-time and on-budget (traditional project measurements) was a moving target. The original timeline and budget were missed. New timelines and budgets were put in to place.
• No sponsor-approved change documentation was in evidence to support the changes.
• Project presentations were high-level project overviews that often hid the facts.
• The PMOs did not conduct Project Audits to validate the information they were getting. This meant that management was not given correct information.
• At the outset, everything looked good on most projects but a deeper analysis indicated many projects were managed by crisis, fire-fighting, and a hope and a prayer.

Example

A pharmaceutical company decided to outsource their logistics while it retained all manufacturing. This was expected to produce a cost savings while ensuring continued service to their customers. The executive team received regular updates in the form of PowerPoint presentations. But some executives questioned the accuracy of the limited data that was being presented. Although the project team was painting a positive picture, it was not providing sufficient details about the project to the executive team. Nevertheless, nothing was ever done and the executive team assumed that the information they had been given was correct.

A year after the project was under way we received an urgent call from a member of the organization’s executive team. The executive explained that the project had lost millions of dollars and almost lost some lives, creating one of the biggest disasters for the company in its entire history. While I listened to her story, I wondered what we could possible do at this point to be of help, short of recommending the name of a PR agency. Then she exclaimed that they had to learn what went wrong so that they could ensure it would never happen again. As a result, we helped the organization undertake an intensive project audit of what went wrong and why. Of the many observations, one of the early warning signs of trouble that had been ignored came from the presentations to management. They were not accurate and management didn’t know enough to ask for more detail.

Conclusion

• Review all management presentations before they are delivered.
• Ensure that the correct/accurate facts are presented.
• Conduct Project Health Checks every 6 months and a detailed Project Audit at the project’s conclusion.

6. Ensure that all project changes are documented and approved by the sponsor

Many projects have timetables and budgets that are continuously shifting, even though no project changes have been formally approved. Weekly project team meetings are often not held or do not have detailed project plans that give an accurate accounting of the schedule and budget. As a result, projects do not meet their implementation goals.

2008 PMO Research Findings

• Fifty-five percent of PMOs provided project teams with methodology training to ensure that documentation is followed.
• Most PMOs ensure that documentation is followed using regular project reporting and project monitoring.
• The most widely used tools and templates are:
  • Project Management Process
  • Change Request Template
  • Reporting Template
  • Scope Statement Template
  • Issue Log Template
  • Issue Report

To make sure that projects are on track, the PMO must ensure that all projects have detailed project plans with projected timelines and budgets. Weekly meetings of the project teams should include a review of project’s schedule and budget. Any variances should be recorded as issues. If it is apparent that a milestone might be missed, the project manager and team must complete a project change request. This should be reviewed by the PMO and approved by the Sponsor before implementing the change.

In a climate in which resources are limited, PMOs will be expected to generate savings and efficiencies for their organizations. In the end, it will be up to those who manage the PMO to demonstrate that they are meeting this expectation. Implementing our six recommendations above should guide your path to success with minimal additional investment.