Project Management Offices (PMOs) often fail to improve their organization’s project success rate. Most frequently, the PMO either tries to impose pointless paperwork on all the project managers or it gets no executive support for changing the way projects are done in the organization. With either of those barriers, the project management office is doomed to fail.
We tell our clients who are considering a PMO “the pain of project failure must be severe for you to succeed with a project management office.” We’re trying to communicate that the sacrifices and restrictions that come from an effective PMO are painful. They are painful for executives who lose some of their decision-making prerogatives. They’re also painful for project managers whose work is more closely scrutinized. So to get the necessary support, the organization’s pain from project failure has to be much worse than the pain from establishing an effective project management office. The organization is ripe to establish a PMO and make it work immediately after a large project failure that affects many parts of the organization.
Why Creating an Effective PMO is Hard To Do
One of the things that makes a project management office or PMO so hard to get off the ground is that you must start by controlling the initiation of new projects. Uncontrolled initiation of projects is almost always the major problem in organizations that have poor success rates. That is defined as 70% of projects fail to deliver their scope on time and within budget. There are simply not enough resources to complete all the projects that are started. What we consistently find is that when managers and executives who want to launch a new project are required to explain and commit to the business benefits that will result, at least a quarter of the projects vanish.
PMO Must Control Project Initiation
While this early success in controlling initiation looks good, it does not do away with the fact that the process will eventually restrict the ability of executives and managers to start any project they want. This is a bitter pill for many of them to swallow. However, it is absolutely necessary for the organization to identify the business benefit of all new projects.
First, the organization needs to eliminate the projects whose benefit is far less than their cost. Second, identifying the business benefit is also the basis for setting project priorities and that is the basis for the allocation of resources. Organizations that can’t properly allocate resources are unable to complete strategically significant projects. Why? Because those large strategic initiatives are starved for resources by all of the “puppy” projects that are launched in large litters every year. Bringing the initiation of new projects under organizational control is exceedingly difficult. What we’re fighting here is the executives’ belief that because of their rank they can start a project whenever they wish. Their belief that they can start a project using their own subordinates whenever they wish is especially strong. But an effective PMO must control the initiation of projects across the entire organization. That is the only way to prevent wasting resources on projects that produce little benefit. We often encounter situations where organizations have skipped controlling initiation because it is so difficult. The project office never succeeds when that step is avoided.
PMO Must Set Project Priorities
The second most difficult thing in beginning a PMO is setting project priorities. What this means is that senior decision-makers have to sit down periodically and decide which projects get “first call” on the organization’s human and financial resources. These meetings can be very nasty in the beginning. Hostility and conflict between functional divisions of the company make compromise and bargaining difficult. However, after the executives have met three or four times, they all realize that it’s important to make bargains and set priorities. Specifically, the way to play this game is to have everybody around the table owe you because you’ve made a compromise so they can get one of their projects ranked highly. If each executive behaves that way this process becomes very smooth. All project-based organizations (organizations that make their living doing projects like consulting firms, accounting, engineering, architecture) are effective at allocating resources. With some coaching and counseling, most executive groups can make this prioritization a smooth running weekly process.
PMO Must Allocate Resources
With projects having to pass a business value screen before they can be initiated and with project priorities set, the rest of the PMO is comparatively easy. The vast majority of organizations use the desktop PC to combine the project plans and allocate resources to them based on the priorities the executives have set. On a regular basis, all of the “project people” in the organization get a schedule of which project(s) they’re going to work on. As part of the allocation process, a ceiling is set on how many hours of project work a line manager or supervisor can be assigned. That’s because everyone wants them on their project teams. Emergencies certainly come up and there are crash projects that have to start immediately. The mechanism in place to allocate resources allows the PMO to make changes to the priorities and reallocate the resources when there is a project that must be staffed immediately.
PMO Must Report and Solve Problems
The most publicly visible part of the PMO is turning out data on the status of projects. This requires the implementation of a reasonably standard project management methodology and regular reporting by team members. The key to early identification of problems is to have all team members report not only how many hours of work they completed on their task but also how many hours of work remain. With this “estimate to complete” data, the PMO can identify problems early and take corrective action while the problems are small.
PMO Must Have a Project Management Methodology
Organizations need a scalable project management methodology. One size does not fit all. Small projects that are only going to take a couple of weeks don’t require the amount of documentation and planning that a six-month effort with a dozen people needs. Three levels of project methodology are sufficient for most of our client organizations. They share some common elements even though the scale is different. First, they don’t have project “to do” lists. Project planning is more effective and efficient when the plan is based on deliverables. Team members have a deliverable that is clearly described and they are held accountable for producing it. This is much better than trying to tell them everything they have to do. The only exception to this approach is for a brand-new employee or trainee who obviously needs much smaller assignments so they can learn their job. But if all projects are planned with a consistent methodology, the initiation of new projects, the setting of priorities, the allocation of resources and the tracking of problems can all be done smoothly and effectively.