What is your PMO looking to achieve?
Companies establish their PMO (project management office) for a wide range of reasons. It may be because they want to introduce consistent standards and greater process rigor into projects that are ongoing, or because they want a centralised way of managing ongoing initiatives to improve delivery timeliness.
Depending on the level of project management maturity within the organisation as a whole, your PMO, if you have one, can have a very different focus and objectives. Based on Gartner’s research, the main reason why PMOs are established is, unsurprisingly, to improve project management as a whole and to standardise business processes.
Interestingly, 40% of the sample polled by Gartner have a very strategic vision for their PMO, to support their organisations with resource allocation and picking the right investments in projects and programmes. Ultimately, how and why you establish the PMO will in turn dictate how much value it can offer in return to your organisation. These organisations clearly understand this connection.
If the PMO exists just to manage project frameworks and ensure the correct standards are followed, the benefits to be realised are far fewer than if the PMO is operated as a strategic asset and actively advising the executive team on which projects to undertake in the first place. There is no ‘best model’ and it depends on what you want to achieve as an organisation, your level of PM maturity and whether PPM software is in place to support the function.
What are the main types of PMO?
Gartner has categorised the PMO into 4 main types each of whom has very different expectations of their PMO. According to Gartner’s analysis, the 4 PMO classifications are: Active, Delivery, Compliance and Centralised.
Although this framework has been developed with IT PPM in mind, we can spot parallels with our clients, who are typically managing high value capital projects in the oil and gas, manufacturing and construction industries.
This structure is found in organisations with a mature PM function. Rather than being gatekeepers and controllers, the activist PMO takes a broad view and enabling approach, helping to support decision makers by analysing project business cases for alignment and risk.
Using tools such as enterprise PPM software to scrutinise business cases and project proposals for their benefits and strategic fit, an activist PMO supports executives in portfolio investment planning, helping to prioritise investments and achieve proactive resource management and demand capability planning. A good example of an activist PMO in action is Nestle. Project Objects has been working with Nestle’s PMO team globally over the last 18 months, to assist them in defining and configuring their global processes around capital projects.
They have built the Nestlé Investment Management Tool (NIMT), which enables the PMO to evaluate Capital Investment projects globally from conceptual study, credit submission, project execution to project closure. Quality project metrics support the entire Capital Investment Management process, supporting over 6000 users in Marketing, Finance, Engineering and Procurement across 475 countries.
The delivery PMO, also known as the project delivery PMO, is perhaps the most commonly found structure given that 63% of organisations establish their PMO to improve project delivery levels, according to Gartner estimates. Here PMOs are focused on delivery, planning and controlling the tactical execution of projects to meet business expectations. Project managers are encouraged to build repeatable processes and techniques that will foster a culture focused on results. Interestingly, these PMOs may use a range of methodologies, from the traditional waterfall and stage gate methods to agile, or even a combination of both.
Tryg, one of the leading non-life insurance companies in the Nordic region, provides a good example of a delivery PMO. With activities in Denmark, Norway and Sweden, Tryg is replacing its Lotus Notes workflow solution with Project Objects’ Enterprise PPM solution, to provide a central knowledge database for all projects. They have found a tool to act as an ‘Umbrella Portal’ for the PMO, to support project and portfolio management with Pipeline and Forecasting, Cost Control management and Stage Gate models.
According to Gartner, the compliance PMO is a suitable structure for organisations where project management documentation, processes, procedures and methodologies are lacking or inconsistent. In our experience, compliance PMOs tend to be found where project maturity levels are lower and a PMO is being established for the first time or when an organisation is in a highly regulated industry and needs to follow a strict protocol. It is rare to find a PMO that is exclusively focused on compliance, since this is a foundational aim of every PMO, regardless of the organisation’s PM maturity levels.
When PPM maturity levels are low or where the organisation is highly distributed and needs to cater for a high variation in maturity levels, a centralised PMO structure is commonly found. Here, organisations depend on the skills and abilities of key performers to achieve project goals and they need a consistent, centralised core that is able to support the wider organisation and share best practice. Our client ENI provides a good example of a centralised PMO. An international oil and gas exploration company, ENI’s PMO helps the organisation establish standard practices for measuring project performance and understand the status of key initiatives.
Working with Project Objects, ENI now has the means to collaborate closely with internal and external stakeholders on highly complex projects and run a more efficient programme management function. As a highly distributed organisation, they maintain higher levels of visibility, monitoring and control on projects and have standardised oil and gas contracts management. In turn, this has improved document and cost management, plus helped to balance capital and development expenditure with production and reserves, using an integrated cost management system.
Which of the 4 PMO structures most closely reflects what your organisation is looking to achieve? As we explained at the outset, there is no right or wrong structure, the PMO is a resource to support the organisation.
When establishing a PMO for the first time, rather than dictate a structure, we recommend researching what your stakeholders actually need. Using this information, develop the right PMO to suit your organisational priorities, whether that’s compliance and control focused, aimed at maximising cadence or providing more strategic analysis of ROI and resource allocation. It is also critical that your PMO is enabled with the right software to drive benefits and adoption. As experts in portfolio and programme management, Project Objects can offer support for all of these models and integrated PPM technology to deliver the real-time data needed.