What are people’s opinions on the value Project Management Offices (PMOs) bring to an organization? Well, some may still have the opinion that a PMO is simply an office supporting a project (as the term says) and will come and go. Then there are others who use the term “PMO” to describe a group of people tracking KPIs of something fragmented and call it a PMO, too. But these opinions all fall short of something. Fairly said, there are already a lot of organizations who have a better understanding of what a PMO can be, but, even then, quite often these PMOs touch only a part of what you can do with them. Powerful organizations need to understand that in current days, PMOs have truly evolved into something bigger!
The Project Management Institute (PMI) clearly states that “the Project Management Office (PMO) is easing its way into the mainstream. Yet to be truly effective, PMOs must reflect the organizational culture and strategy“. Currently, different types of PMOs can co-exist next to each other. However, all of them have to be linked to the organizational strategies and objectives, and have to be created, and aligned within a holistic approach. To reduce the complexity, we can break down PMOs into so-called PMO Frameworks. We of course still talk about PMOs which support project work, but this is just one of the existing Frameworks. Later, you will see that even for large strategic initiatives like Post Merger Integration activities, PMOs can be the right instrument to drive them on a global scale.
1. Types of PMOs
In the past, organizations established PMOs to ensure and support projects on client sites better. They provided a wide range of support functions: starting from assisting the selection process to choosing the right projects in alignment with the organizational objectives, and of course to initiate, to monitor and control, and finally to help close the projects. PMOs at that time helped a lot to reduce the number of failing projects. The next shift was that organizations started recognizing that PMOs were not only useful to make project delivery better, but that organizational focus areas could be enhanced as well. Therefore, especially during the last decade, companies around the world defined and launched new types of PMOs with expanded roles and responsibilities to coordinate much more than projects alone: they started to focus on business unit improvements, on standardization activities of the company’s best practices, and many more areas. Of course, those activities had already been driven in such organizations before, but under the umbrella of an PMO, they became centralized and governed.
When it comes to current PMO Frameworks that exist today, as part of a broader thought leadership initiative on PMOs, the Project Management Institute (PMI) conducted exploratory research to understand what kind of PMOs we can see today, which included the issues encountered when building, managing and operating them. Out of that research, PMI has defined the following five PMO Frameworks:
- Organizational Unit PMO (or Business Unit PMO, or Divisional PMO, or Departmental PMO): This PMO helps business units, divisions or departments in portfolio management, governance, operational project support and HR utilization.
- Project-Specific PMO (or Project Office, or Program Office): This is the classical PMO which is temporary and supports one specific program or project. It helps the overall program or project team with data management, coordination of governance and administrative activities.
- Project Support Office (or Services Office, or PMO): Unlike the PMO mentioned before, this PMO is not temporary, but continuously supports organizations portfolios, programs and projects. It re-uses the governance, processes, practices and tools which already exist in the organization and provides administrative support for delivery.
- Enterprise PMO (or Organization-wide PMO, or Strategic PMO, or Corporate PMO, or Portfolio PMO, or Global PMO): This type can be defined as the highest-level PMO in an organization and usually focuses on running internal programs and projects focussing on corporate strategy, enterprise governance, strategy alignment and benefits realization.
- Center of Excellence (CoE) or Center of Competency (CoC): This PMO is responsible to equip the organization with methodology, standards and tools so that program and project managers can better deliver projects with the same standard on a global scale. It also often monitors and controls the programs and projects plus is a central point of contact for the program and project managers.
Besides these five PMO Frameworks, many more exist. However, the five above are the most prevalent and are an important starting point for formalizing PMO roles and responsibilities. Respecting those frameworks when building or optimizing a PMO landscape helps organizations stay focused, and run simpler and smarter.
2. Exemplification: The Enterprise PMO
Of the five PMO Frameworks mentioned, the Project-specific PMO (see no. 2 on the list) is the most classical as it supports project work and runs on an operational level. On the other hand, the Enterprise PMO or EPMO (see no. 4 on the list) is the most evolved and advantageous. According to PMI, an EPMO “facilitates governance at the enterprise level and incorporates strategy development and strategic planning support“. It also usually has direct influence on any other (lower-level) PMO, and manages multiple stakeholders in the overall organization to ensure that changes are being realized as planned using a real C-level connected top-down approach. It is interesting to note that three of five organizations, who have officially declared to the market that they have setup PMOs, already run EPMOs.
EPMOs key advantages are a strong strategic alignment and utilization of an organization’s resources through the greater leadership buy-in. Therefore, such EPMO is closest to delivering the highest possible value. The next figure clearly shows that important factors like strategic alignment services are statistically more likely to be reached with EPMO than with other PMO types:
In sum, EPMOs are used to implement strategies in an organization – they get the right things done in the right way, and in doing so, they typically involve the other PMO types as well.
Let us look at a Post Merger Integration strategy as an example: When companies do acquisitions, in some cases they have to make concessions to the owners of the targets who/to sell. These can be agreements which are beyond the price of sale. A typical example is that even after an acquisition, a buyer might not be able to run a hard integration (e.g. by merging legal entities together), but has to agree to keep the newly acquired company independent, at least for an agreed upon time period. In that case, an HQ often sets-up an EPMO with the target of doing a “softer” integration of the acquired firm to at least realize those synergies which were the initial reasons why that firm was acquired at all.
3. PMO domains of work
Even though each PMO Framework has its different areas of responsibility as described before, they all have in common at their top-level to start focusing top-down on the same workstreams which PMI defines as the following nine domains of work (please click on the picture for a larger view):
These domains of work describe clearly what any PMO needs to do. And think about it, it truly makes sense to structure PMOs based on those domains. Let’s look at the “Talent Management” domain as an example: While within a Center of Excellence (CoE), the major focus might be on training the company’s program and project managers with the same global company’s methodology; within an Enterprise PMO (EPMO) the same domain can describe a very different task like e.g. much more strategically ensuring that all countries are compliant with the same global HR policies. Simply said, at a high level, these domains define the workstream structure of each PMO type, while after in detail, the responsibilities need to be adjusted to meet the individual business needs.
4. Setting up PMO Frameworks
When describing what organizations need to do to setup PMOs, the responsibilities of the C-level as well as those from the final PMO leaders and practitioners have to be viewed separately.
4.1 View of C-level: Four Strategic Imperatives
The larger the organization is, the more the C-level will focus mainly on setting up higher-level EPMOs, and the less it will focus on the lower-level PMOs. To gather an understanding what kind of information the C-level needs to take into account to make the right decisions, it is necessary to take a deeper look into a very interesting joint-research by the Project Management Institute (PMI), the Economist Intelligence Unit (EIU), and Forrester Consulting. These three have made strong moves in researching when PMOs can truly positively impact the organizational success. Boston Consulting Group (BCG) has taken the research results into account in their report “The PMO Imperative” and has identified four so-called “PMO Imperatives” which the C-level needs to consider to make PMOs in organizations successful:
- Focus on critical initiatives: The right senior leaders of PMOs have to be chosen carefully. The necessary operational insights need to be given to them in detail, and the right milestones and objectives have to be set clearly to enable them to approach the fullest possible realization of impact. This will also lead to a clear definition of a roadmap, as well as KPI/metrics to be enabled later to measure the performance over the full lifecycle of the PMO.
- Institute smart and simple processes: There must be set rules from the C-level to make the PMO’s milestones and objectives driven in accordance to program management standards. Plus, the overall progress needs to be transparently communicated, and last but not least, the corporate businesses and functions may not be interrupted when the PMO starts to perform.
- Foster talent and capabilities: Not only the right leader centrally, but also the right leaders by region as well, as experts need to be involved and further developed. This sounds commonplace, but consider to temper the wind with the shorn lamb.
- Encourage a culture of change: Whenever a PMO is being setup to realize specific objectives, this initiative is usually more complex, and resistance might arise. Therefore, it is important to get all important stakeholder’s commitment to build an organization-wide support for this strategic initiative implementation, and the PMO needs to be responsible to build confidence in the benefits of doing so.
Respecting these four imperatives will make a PMO strong, and linked to the organizational strategies and objectives right from the beginning. In larger organizations, not only the C-level but also senior leaders of EPMOs need to take those imperatives into account when founding additional, lower-level PMOs.
4.2. View of PMO Practitioners: Managing PMOs
Once C-level commitment and direction has been given, the PMO practitioners, starting with the senior leader, need to take over the responsibility of the PMO and have to make it successful. It has been stated before that PMOs should run based on program management standards. Let’s stick to the PMI standard as well and consult their PMI Standard for Program Management, adopting it to the PMO Management. This means that PMO senior leaders need to focus on driving tasks within the following program management domains:
- Strategy Alignment: As we have seen in 4.1, the organizational strategy and objectives lead to the scope of the PMO with which they have to be synched with. This leads to the creation of a business case, PMO program plan, roadmap (creation or alternatively adoption from C-level and detalization), and the continuous assessment of the PMO’s environment.
- Benefits Management: The C-level came a to a conclusion already on the benefits the PMO should bring. Those benefits need now to be further detailed, analysed, planned, delivered, transitioned and sustained. Hereby, the Benefits Management establishes the PMO architecture that maps how the sub-activities will deliver the outcomes that are intended to achieve the PMO benefits.
- Stakeholder Engagement: Stakeholder needs and expectations have to be captured and understood. The better the understanding of how the PMO impacts its stakeholder, the better the stakeholder support can be maintained and their resistance mitigated.
- Governance: The PMO senior lead has the responsibility of managing the PMO’s interaction with the upper management, e.g. an EPMO lead with the C-level, or an CoE lead with an EPMO lead. It also refers to the systems and methods by which a PMO team monitors and controls the sub-activities being performed under the PMO.
- Life Cycle Management: This part includes the PMO definition, the PMO benefits delivery phase, the PMO closure phase and the mapping of the PMO life cycle to supporting activities. During the delivery, the PMO’s sub-activities are authorized, planned and performed.
Under the PMO, there are a lot of options on how the sub-activities have to be managed: They can be executed by their own PMO staff, and/or delegated to other PMOs (depending on the organizational PMO setup), and/or be realized as projects (refer e.g. to the PMBOK standard), and/or delegated to corporate functions into the matrix organization. Especially in larger organizations, a “PMO does not actually execute the change; that responsibility resides with the business and functions. Then, the PMO plays an enabling role, serving to provide enhanced interactions with the leadership team“, as BCG had analysed.
Project Management Offices (PMOs) have evolved a lot. They do not only focus on project support or best practice standardization activities anymore. As we see the number of PMOs increasing, the expectations are as well: In today’s times and for the background of complex global organizational structures, PMOs not only have to be aligned with the organizational strategy and objectives, they are even found to drive those strategy implementations in the entire organization, and do provide tangible and long-term benefits.
Still today, “organizations have not extracted the full benefits from the PMO” (see BCG). But organizations should have clarity in PMO Frameworks (like PMI defines them) and about the value they bring. Building the right (and re-structuring existing) PMOs in the PMO landscape should be a stronger focus of the C-level, even though they do not have to worry about any PMO’s setup: The larger the organization is, the more EPMOs will take over the management of additional, lower-level PMOs. In any case, all PMOs need to be aligned to the goals of the organization. This also means that bottom-up approaches building PMOs need to be avoided because they often lack strategic alignment. The intention of PMO implementations has to come from top to down.
In the end, we also have to respect that PMOs may still suffer an identity crisis and therefore PMO Frameworks will probably continue to mature. But whatever the future holds in store, I am confident that further evolution of PMO Frameworks will benefit greatly organizations following and aligning their strategy to them.