Beyond the Organizational Chart: Leveraging PMOs to Improve Centralization

IPA research has shown that truly centralized project organizations have more competitive and less variable project outcomes than their decentralized counterparts. Some project organizations claim to be centralized, but still show critical performance gaps. These performance gaps can be bridged with a properly structured and fully endorsed project management organization (PMO).

IPA has found that when a PMO maintains the project work process, project organizations are likely to realize better project outcomes and sustain those outcomes over time. Such work process maintenance tasks include gathering lessons learned and Best Practices, instituting improvements, and ensuring those improvements are consistently used.
Put simply, the PMO is a component of the central project delivery organization whose primary role is to provide active project management support. To be clear, the PMO does not define and execute capital projects, provide all staff for projects, serve as a functional home for project professionals between projects, or provide cost estimates and schedules for projects.

A common difficultly with PMO design is getting the organization aligned and in sync with the corporate strategy, culture, and organization of the company it serves. Although no two PMOs are the same, IPA has found that successful PMOs tend to be structured in one of two ways: (1) as a separate PMO group or (2) as several groups that are part of an integrated project organization.

The Standalone PMO Structure

One effective structure is a distinct, standalone PMO (Figure 1, right) responsible for managing, supporting, and governing the project delivery system. Although separate from the project delivery group, the PMO is charged with all support activities, except it does not usurp project delivery management. The PMO maintains the work process by developing project management guidance and ensuring compliance with policies and procedures. The PMO provides work process assurance and trains project professionals in the work process. Personnel from the separate PMOs can even augment project staff when necessary. In such a group, the same PMO representative may take on all of the above responsibilities as part of that role.

The Integrated PMO Model

In contrast, the integrated PMO model (Figure 2) entails several groups responsible for traditional PMO tasks, but, as the model name suggests, these PMO responsibilities are integrated into the project delivery group itself. This structure is typically found in mature companies with high business buy-in and strong engineering organizations. For the integrated PMO, PMO responsibilities may be owned by the individual functional groups. Although the PMO and functional specialist are aligned, their roles and responsibilities are clearly divided into separate groups.

The decision to choose one structure over the other is strategic. Companies should determine which services are most important for achieving corporate goals and decide whether those services are currently implemented effectively.

For example, an organization with a strong central engineering group may decide that functional training responsibilities should remain with the engineering group rather than being transferred to a PMO. On the other hand, a company with a highly decentralized engineering group may fi nd that by centralizing training and development standards within the PMO, they are able to improve functional competency across the project organization.

All told, the optimal structure is the one that will best align with the overall organization’s intended structure and workflow.

Characteristics and Benefits

Let’s look at a few key characteristics of PMOs that successfully support capital project excellence and then examine a few common failings.

• Developing and Maintaining a Common Work Process
  Maintaining databases and tracking project performance allows the PMO to understand what is and is not working well at the project and portfolio levels, providing rich information to drive evidence-based portfolio decision making. This can range from understanding project interdependencies in the portfolio to gaining a better understanding of how resources need to be deployed across the system. These knowledge management activities can also provide further insight into work process improvements.Project professionals have equal opportunities to receive work process training and gain exposure to associated work process tools. More uniform and consistent training is important because compliance with standards and norms is impossible when knowledge of the work process varies across the organization.
• Training and Supporting Project Managers
  When the PMO is responsible for project personnel development, the added benefit is being able to tailor training to address competency gaps in the workforce and having a better idea of the resource constraints that may emerge from certain portfolio scenarios.
• Providing Work Process Assurance
  Giving ownership of work process assurance to PMO staff, separate from or integrated with the delivery group, helps keep the assurance function independent and avoid confl icts of interest (e.g., feeling pressured to skip critical work process gates to meet aggressive schedule targets). Other common PMO responsibilities include maintaining assurance databases (e.g., cost, schedule), monitoring and reporting project performance, and training and professional development for project functions.
• Developing Work Process Tools and Templates
  PMOs are useful in developing tools and templates to assist work process management and documentation.
• Endorsing and Halting Projects
  PMOs can have a role in endorsing project readiness and stopping projects that are not ready to proceed to the next development phase.

So Why Do Some PMOs Fail?

The PMO is not a shortcut to project success. A weak or misaligned PMO can actually do more harm than good. Many PMO failures or shortcomings result from insufficient time and effort taken to fully integrate the PMO within the project organization and overall corporation. The following are some common pitfalls that undermine the degree to which PMOs can be an effective force for project delivery.

• Lack of Full Support From Upper Management
  The PMO must have clear and continuous support from upper management if it is to have consistent involvement with capital projects across the organization. The PMO’s credibility is seriously undermined if its messages or goals are in direct contradiction with those of business. The PMO needs to engage corporate leaders early in its development and on an ongoing basis to gain alignment, incorporate feedback, and establish rapport.
• Lack of Buy-In From Project Professionals
  Open and frequent communication with project professionals is a must. The PMO must not only be able to communicate its purpose, role, and value proposition, but it should also solicit feedback from its primary user group. The individuals planning and executing projects are in the best position to identify process gaps and ineffi ciencies. Engaging project professionals not only fosters a culture of collaboration, but also promotes continuous improvement of the project delivery system. Without open and frequent communication, project professionals may see the PMO as a hurdle to project delivery, or even as a “police force” of the work process, which can create tension and promote “tick the box” behavior.
• Low Visibility
  The successful PMO must be visible to the rest of the organization. This means project professionals know when to engage the PMO, how to engage the PMO, what support is available, and where to find the tools and templates they need. Although this can be especially challenging for organizations with a geographically dispersed portfolio, many successful PMOs address this issue by instituting regional support hubs or representatives. This allows the PMO to have a global presence and helps more remote regions engage with the central organization.

Instituting a PMO can provide many project delivery and portfolio management benefits. Centralized work process assurance and maintenance promotes more consistent project results. A holistic view of project performance provides insights for more effective portfolio management. However, a PMO should never be viewed as a quick fix. Executing a PMO or PMO-like group takes careful planning and thorough alignment with multiple organizational stakeholders. If sufficient time will not be taken to fully integrate the PMO with the rest of the organization, a PMO can serve as a useful strategic tool that can help institutionalize successful practices.

If you are interested in learning more about your project organization’s or PMO’s effectiveness, please visit IPA’s Organizations & Teams page.

Geoff Emeigh, IPA Staff Writer, contributed to this article