In this episode, we will look at the different ways in which PMOs or project management offices can deliver value to their respective organizations. In this context, we will look at the various sources of potential value that PMOs can tap into to not only justify their existence but also to be a strategic part of their organizations.

The Value of the PMO

Most research organizations like Gartner, Forrester, and others have been saying for a while now that organizations are increasingly looking at their PMOs as the primary vehicle to help them execute their strategies through execution of projects and programs.

But, here is the issue. Despite the enormous promise that PMOs hold for organizations’ success, many PMOs struggle to justify their value. The fact is that a PMO has an associated overhead. And this overhead is due to the staffing of the PMO, the investment in the formulation and institution of its processes, implementation of various types of PMO tools, etc. So, unless this overhead is justified in terms of a PMO’s contribution to the delivery of successful business outcomes and benefits, the overhead always sticks out like a sore thumb to senior management.

So, in this episode we will highlight four sources of value that PMOs can tap into to improve their visibility and perception in the organization.

But first let’s revisit the definition of a PMO or a Project or Program Management Office. A PMO exists to enable the successful delivery of projects and programs. These projects and programs ideally should be derived from an organization’s overall strategy and therefore should be aligned to the organization’s strategy and goals. So, if the PMO can deliver those strategic projects and programs successfully then a PMO can be considered to provide business value to the overall enterprise.

This needs repetition as we will further expound on this concept later. So, again, if the PMO can deliver an organization’s strategic projects and programs successfully then a PMO can be considered to be living up to its promise of delivering business value to the organization.

Based on this concept and foundation, we can say that for a PMO to deliver business value, it must build four specific capabilities. They are

  1. Ability to execute projects and programs successfully
  2. Delivery of tangible business outcomes and benefits
  3. Ability to work on strategic projects and programs
  4. Ability to handle an organization’s demand and investment functions.

In the remaining podcast episode, we will explore these four sources of value in further detail.

Ability to Execute

In the context of what we are discussing now, the ability of a PMO to execute refers to starting, executing, monitoring, delivering, and closing of projects and programs. This ability, therefore, touches most of the areas that are covered by the traditional project management methodologies. A PMO’s ability to execute therefore is its use of appropriate PM methodologies and processes to deliver the projects and programs within scope, budget, and schedule. We know that the Project Management communities globally have always struggled to deliver projects within those boundaries. So, in the case of Project Management Institute’s (or PMI’s) PMBOK methodology, the PMO’s ability to execute could cover all 47 PM processes that are covered under the 5 process groups of the methodology. This again would depend on the PMO’s type but for argument’s sake the assumption is that it’s a full-fledged PMO.

Although a PMO’s execution ability hinges upon a number of factors and we can’t cover all of them here but it would be prudent to highlight some of the critical factors. You can also listen to other episodes on the key building blocks of a PMO at CIOtechCentral.com. Let’s review some of those critical factors.

  • One factor that influences a PMO’s execution ability is to use the right methodologies to execute and deliver its projects and programs. The choice of methodology is usually contingent upon the nature of projects and programs as well as an organization’s culture and other factors. The choice of the right methodology ensures the delivery of actual business outcomes and benefits. However, trying to follow the wrong steps and path in an attempt to reach towards ones destination can have adverse consequences and in the case of delivering a project or program with a non-relevant methodology can impact the scope, schedule, as well as cost of the projects and programs. So, as a manager, your task is to ensure that you pick the right methodology and if needed tailor it to your organization’s needs to increase your chances of success.
  • Another factor that determines the execution capability of a PMO is its alignment with various business stakeholders. This is an important point because unfortunately there are many PMOs today which work in isolation without interacting with their business customers and stakeholders. So, naturally, if the PMO isn’t going to have the right level of engagement with the business then that can result in the delivery of systems that aren’t really aligned with business requirements and that in turn that can lead to customer dissatisfaction. So, to ensure the success of projects and programs, alignment with the business and overall organization strategy is a must.
  • The third factor that influences an organization’s ability to execute is having the right number of staff with the right skills. It’s not unusual, for example, for the PMOs to be light on resources relative to the load of projects and programs that they have. Because then the resulting imbalance leads to juggling of resources across projects and not giving projects their due share, which as we know can then impact the quality of their delivery.

So, the ability to execute effectively is a major source of value for an organization’s PMO. What we just covered were some of the vital factors that determine a PMO’s ability to execute. As I mentioned earlier, there are other episodes that you can listen to on the program that cover this in more detail. And I plan to bring more insights and knowledge on this in the future episodes.

Ability to Measure and Communicate progress in terms of Business Benefits and Outcomes

The second source of value that a PMO needs to cultivate is the ability to measure and communicate progress in terms of business benefits and outcomes. Historically, especially within Information technology, PMs rarely focused on benefits realization. They would simply focus on to get the QUOTE systems up and running. However, over the past few years, the PMO leaders and project managers are increasingly being asked to describe their successes in terms of business benefits and outcomes that they deliver to the organization as a whole.

Business benefits can be described in terms of helping the organization to increase revenue, increase productivity, or to avoid certain costs or to help the organization alleviate some type of abusiness pain points. For example, if an organization launches a mobile app that can help the organization increase sales from their mobile customers then that would be a business benefit. Similarly, if an organization migrates its Human Resource system to the cloud saving the organization internal costs, then that would be another business benefit. So, the business benefit is not launch the mobile app or to migrate the HR system to the cloud, but in the outcomes they result for the organization.

Although these examples may seem to be quite obvious but in some cases, the business benefits may not be as apparent. In those cases, the PMO and the Project Manager should strive to identify and highlight the business benefits and should also do so early in the project’s lifecycle. Doing so early in the project can be helpful because the Project Manager can keep his or her team focused on the expected business outcomes. As I mentioned earlier, in many cases, PMs only focus on deliverables such as bringing the system live in operations. By keeping the project team focused on the benefits and outcomes can also help in setting the right expectations with the project stakeholders and sponsors. A PMO or a Project Manager can then continue reporting progress in terms of how much benefits have been realized from a project or a program during the project execution phase. So, when the project is delivered there are no surprises in terms of missed expectations.

If, while trying to identify benefits and outcomes, the PMO and the PM are unable to see concrete business benefits, he or she should discuss that with the stakeholders to ensure that the project indeed still has merits for it to be worked on.

Some PMs raise the question whether it’s their job to push for the identification of business benefits. Their view is that as long as the sponsor is funding the project, then their task in the PMO is simply to deliver whatever has been asked of them. This thinking isn’t proper for two reasons. First, being part of the project can sometimes give the PMO and Project Managers a deeper insight into the project and program details and it’s their duty to divulge any business benefits related gotchas even if it could risk further work on the project. So, the long term interests of the organization should always supersede any short term gains and I believe the project manager and PMO has that duty to expose such issues. Second, if the PMO ends up working on projects that complete successfully but if those projects end up being not useful or beneficial to the organization, then no one really wins and that erodes the overall value of the PMO as no one wants to be associated with failed and scrapped projects. The PMO manager should therefore ensure that the PMO works on projects that actually deliver business benefits to the organization.

Need to Become Strategic

This then takes us to the third capability that a PMO needs to cultivate in itself to be perceived as delivering value to the organization and that is to deliver strategic projects and programs. This may seem to be the same point as the one that we had discussed just now related to benefits but it’s somewhat different. The point here is that the more strategic and important projects and programs your PMO is involved with, the better can be its perception. Consider this – what if the PMO that you are responsible for delivers projects and programs that are not considered important by top management? Regardless of how successful you may be in delivering those un-important projects and programs, your PMO is not going to be highly visible. As the setup and running of a PMO has an associated overhead cost, its value would always be questioned. So, it’s in your interest that the PMO works with various LOBs and stakeholders to bring in strategic projects within your PMO. The more strategic projects and programs that your PMO delivers, the more visible it will remain in the higher management circles and the less questions will be raised related to the value that it delivers to the organization.

Need to expand the scope of your PMO

This final point has to do with expanding the scope of your PMO beyond the delivery of projects and programs to instead take on additional responsibility of Portfolio Management. More specifically, if your PMO can take on functions and processes related to investment management, demand and capacity management, then it can get closer to becoming a strategic entity within the organization. These functions where management and executives discuss the value of starting various initiatives in the organization, evaluating their merits, their funding, and prioritizing of various initiatives, etc. –  all fall under the realm of Portfolio management. As Portfolio management is closely related to the discipline of Project and Program management, a PMO can potentially take on those functions and become more strategic in nature. In some organizations the Portfolio Management function is usually managed by a PPMO, which stands for Project and Portfolio Management Office. In a PPMO that Office is positioned separately from the Project Management Office. In those cases, the Project Management Office should then better align itself with the PPMO to ensure that the processes and functions of both are synergistically aligned. But the key point is that once you can elevate your PMO to a level where it is involved with planning project portfolios and evaluating the merits of projects and programs, etc. that can be a true value-add to your organization.

So, in conclusion, we covered four areas that bring sources of value.

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