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PMO – Project Management Office Types and Strategies

Dick Billows, PMP

Dick Billows, PMP
CEO 4pm.com
Dick’s Books on Amazon

When organizations have consistent project failures, i.e. they are late, over budget and produce no business value, the executives often add a PMO – Project Management Office.  There are several types of PMO, each of which plays a different role and uses different staff and techniques. Whatever the type, the goal is always to get projects under control and improve their results.

In many organizations, project failures increase as the number of projects grows. People previously worked on one project in addition to their “real job” and they found it exciting and unique. Now they have 3 – 4 project assignments as well as their real job.  They are unclear which of the  projects has the higher priority because each of the project managers says their project comes first.  The team member’s real job suffers because of these competing assignments.

To make matters worse, the number of new projects grows because there is little review or control over the promised business value of each one. Project failures climb and the organization consistently fails to deliver on organizational initiatives.  When the failure rate rises above 50%, the organization is also paralyzed against their competition. Executives desperately search for solutions. They try project management training programs, new computer systems, more forms, new review meetings and last but not least, a PMO. They hope the PMO can return them to the old days when projects succeeded and people wanted to work on a project.  See Enterprise Project Management

PMO – Project Management Office Problems to Solve

Two main problems that PMOs attempt to solve are project prioritization and resource allocation. Often the organization has no system for prioritizing projects. There is merely a lot of yelling about which project should be priority #1. (And there are already 50 top priority projects in the pipeline.) No one evaluates each new project based on its costs and benefits and then sets their priority. Project work if often interrupted by the appearance of a new top priority project. People don’t know what project is most important or what to work on first. This lack of prioritization means the organization wastes valuable resources on projects it will never finish.
Project Management Office

The second problem is that no one is managing the portfolio of projects. The organization cannot successfully complete larger strategic projects because there are dozens of  small “puppy projects” that get launched every week. In many organizations, these litters of projects consume 40% of the total project resources without any evaluation of their value. They are “off the organization’s radar” and the people who sponsor all these puppies like it that way.

The resource pool is a nightmare because project managers are constantly vying for team members. To allocate resources effectively, someone needs to know who is working on what project, how long it will take them and when they will be finished.  With that information, the organization can allocate resources to projects based on their priority.

PMO- Project Management Office: The Solution?

These two problems must be solved for the organization’s projects to be successful. It requires limiting the autonomy of executives and project managers. It also requires the organization to manage cross functional projects by sharing people across department/functional lines. There are many objections to this.

The complaint we hear from executives is, “I am a VP and these people all work for me.  I can start a project any time I want.”

The complaint we hear from project managers is, “Do you want me to do the project or all this paperwork the PMO is demanding?”

The complaint we hear from managers who lend resources to projects is, “It’s a recognized management principal that no employee can have more than one boss.”

When the organization throws a PMO into this mix, it’s often staffed by people who think they’re the best project managers. These project managers decide that everyone has to do things “the right way.” So they begin issuing project rules, regulations and new forms that project managers must use. They feel all the rules and paperwork will give them control over the projects. But busy project managers usually ignore all these bureaucratic requirements; and they usually get away with it.

In some cases, the net result is that the PMO doesn’t solve the issues of initiation/prioritization and resource allocation. Some project management office efforts fail because they create so many procedures and so much paperwork that compliance is low and scorn is high. They waste a lot of project managers’ time trying to enforce cumbersome academic methodologies. Others fail because they don’t provide useful data to decision-makers.

However, some PMOs work well. Let’s look at some of these options.

PMO- Project Management Office: The Weather Station

Just like your friendly TV weather person, the Weather Station PMO reports on what is going on but doesn’t try to influence it. This PMO doesn’t bother any of the PMs who are leading projects with rules and forms. These Weather Station people accumulate data about projects and summarize it for executives. They don’t make any decisions or enforce any standards. They merely pass on the information to anyone who is interested and wants to use it. The Weather Station can be implemented painlessly and if the information is focused, it can serve decision–makers’ needs.

PMO- Project Management Office: The Control Tower

In the Control Tower PMO, the project office personnel give project managers direction on PM methodology. This includes project initiation, acquiring resources and correcting variances. While each PM manages his or her own projects, the Control Tower PMO will alert them to impending problems. It will also identify situations where the PM is not adhering to the methodology, particularly during scheduling and verification of deliverables.

PMO- Project Management Office: Command Central

The Command Central PMO  may be the home department for all or most of the organization’s project managers . They report to the Command Central management, not to the project sponsors in the operating units. The Command Central’s enforcement of a consistent methodology is strict. This PMO is actively involved in the evaluation of new projects and recommends their approval or rejection to executives. They usually play a configuration management role. This means they analyze changes to projects and changes to the specifications of project deliverables.

PMO- Project Management Office: Which Type is Best? 

What’s the best type of project management office? The answer depends on the state of project management in the organization.

The Weather Station PMO is a good solution for organizations at the chaos stage in managing their projects.  The Weather Station’s data distribution can help with resource allocation and priority issues. The Weather Station also sounds innocent and does not trigger a lot of turf battles like the other two types. But it does not have the clout to resolve issues about nitiating too many projects, lending resources across functional lines, or prioritizing projects.

Organizations emerging from project chaos require more centralized control and enforcement to instill a disciplined approach and a consistent methodology. They must be able to handle the turf wars that usually arise when the Control Tower PMO is implemented. Their role in controlling project initiation and enforcing standards for new projects steps on the toes (and the fragile egos) of sensitive functional managers.

The Command Central PMO pays off when larger organizations have a significant number of cross-functional projects. Then centralization of the project managers (at least for cross-functional projects) can improve training and utilization of the project managers. It also ensures use of a consistent methodology. This type of PMO is useful if management is:

  • Unable to control the initiation of new projects
  • Unable to exercise control over the organization’s portfolio of existing projects and
  • Unwilling to enforce an organization-wide protocol for planning, approving and tracking projects.

We only see effective PMOs in organizations that have solved the authority problems of cross-functional projects and developed a key group of skilled project managers. These PMs apply a consistent protocol for planning, budgeting and tracking projects. This Command Central PMO allows the line managers and PMs sufficient “elbow room” for creativity while still allocating resources properly and coordinating the organization’s initiation of projects.

You can learn how to build an effective PMO and enterprise project management protocol in our online course #201 – Managing Multiple Projects.

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