PMO’S Organizational Impact

The introduction of Project Management and Project Management Office has an organizational impact that should be monitored carefully in order not to adversely affect the company. Many effects are not seen in the early months after create structure, but appear after some time of running. The most common problems are:

The exponential growth in the number of staff from the PMO: As it operates, the organization is transferring more and more work within the PMO, considering that this will raise even more the benefits it provides. Top-management, that can now trust the new structure, will address to the PMO for convenience, instead of requiring that work should be carried out within departments. This is not always beneficial; for acquiring real maturity in Project Management, the entire organization should learn to work horizontally and Project Manager should have less work to do, not more;

Bureaucracy: In an effort to gain control of the department acting as a company within a company, a PMO Manager will create a lot of reports, policies and procedures to force departments to formally give control to the project managers and to enforce double subordination. With time, these rigid papers should be replaced of communication, cooperation, guidelines and a minimum of paper;

PMO involvement in all activities of the organization: With confidence gained in the PMO, top management will tend to assign all sorts of activities to the PMO, which will lead to a bottleneck of its activity and an overhead of communication unjustified by benefits. In this respect, some limitations should be established PMO activities such as:
- the value of the project;
- project duration;
- involvement of two or more entities (departments, suppliers);
- Risks for a company;
- If the goal is critical to the company (eg a new product launch before the holiday season).

Special attention must be given to cost reduction initiatives. If you want to maintain the for the PMO medium and long term, do not declare such an initiative as a project for the PMO. Resistance to a measure to reduce costs will be added to the resistance to the new way of working and will compromise the PMO and the definition of Project Management. Rather, approach this initiative as a target for each department manager to reduce costs in his department and for the PMO to improve inter-departmental processes to achieve synergy.

On the other hand, with the establishment of PMO, executives and managers should quickly find the following qualitative benefits:

The number of conflicts and problems escalated at your level dropped because it was filtered and settled largely at the Project Managers level;

The time required for finding information on the progress of a project decreased. Without PMO, the information on the projects are scattered throughout the organization and there are multiple formats for planning. With the standardization brought by the PMO, status meetings are shorter and more revealing;

Decisions on strategic initiatives are difficult to take in the absence of a PMO and are often delayed. With a PMO, data are available and decisions are possible.

Time spent in meetings is shorter when there is a contact point that has for information, knows the issues and know who and in what meetings should be involved. As executives, you have the opportunity to spend less time solving operational problems and more time in strategic meetings.


On Project Management Office

I am on vacation, so I will be blogging a lot :).

Today it's on Project Management Office. We will discuss in later posts about its impact in the organization and the Project Management Information System.

The concept of Project Management Office was introduced in this post as a structure that is established when a company reaches a certain level of maturity in terms of Project Management. PMO can be established even earlier by a visionary executive management, but then the journey of this structure will be longer and more difficult, until the organization matures to allow for proper functioning of the PMO.

What does actually mean a Project Management Office? The meaning of the PMO might vary, according to senior management vision who needs to define and explain the objectives of the PMO to the rest of the organization. An example of the mantra of the PMO is described below.

The role of the Project Management Office is to supervise all activities of Project Management and to ensure standardization and predictability in how projects are run. Standardization is ensured through the use of a single project management methodology, and predictability is ensured through regular operational processes such as: Revenue Forecast, Progress Reporting and Portfolio Analysis.
In terms of the PMO and project managers, departmental lines are transparent and decisions are related to the whole portfolio, rather than at the department. For senior management, PMO provides the information necessary for optimal planning of resources, especially human resources, and access to any information required on the project. PMO is the single point of accountability on projects in the portfolio.

We underlined in the above description the word "predictability", which is very closely related to standardization. These are key words in a company, because they provide control over the future of the company. The stock exchange or the investors appreciate the quantitative indicators (eg, income or profit), but also the predictability of a company's financial statements as compared to the forecast. Any variation is perceived as a risk to the company's shares of stock in question and is penalized by a decrease in share price (for more information see the course of "Investments").

How is this linked to project predictability? In the case of organizations delivering services and solutions customized in a B2B model (business 2 business), projects provide the vast majority of revenue and profit. It is clear then that their financial results are as predictable as the Project Management activity, depending on delivering and billing projects as expected.
If organizations are not project-oriented, the projects are actually initiatives to create new products or make changes (improvements). In any case, the ability to run successful projects and completing projects on time is the company's ability to keep up with competition, market and industry. The relationship between healthy projects and financial results is more subtle and it is more difficult to demonstrate an impact on profit for example. It is therefore important to look at projects’ Return on Investment (ROI), and to determine the opportunity cost in case of failures or delays, to motivate management to provide resources to projects.