PMO Inc – The Art of Running a Project Management Office
Once the dust of selling the idea of a particular project and haggling over budgets has settled, the Project Manager comes into play. The Project Manager’s job is about delivering. It’s about getting things done. It’s about taking the promise and turning it into reality. What makes all of this a challenge is that there every project comes with pre-set expectations in terms of scope, timing and costs. Operating successfully in this magic triangle is a key expertise, and hitting commitments consistently is not easy to do.
Organizations set up project management offices (PMOs) enabling project managers to do their job effectively and consistently. Minimally, a PMO is in charge of actively managing the project management capabilities of an organization including methodology and tools. Also, it oversees best practices (e.g. R&D related processes and procedures, partner relationships, training etc.) The PMO is responsible for training project managers and ensuring that they have the proper tools to do their job effectively. In essence, they are expert consultants to the project managers.
Because they are overhead, PMOs unfortunately face a particular challenge regardless of the industry they’re in. If project management is perceived to be an issue, then voices are quickly raised to argue for the necessity of a PMO. Typically, after a few quarters/years a PMO gets traction. The capability level across the PM population rises. There is a higher level of consistency in the way projects are managed. The immediate issue of “We need to fix project management!” goes away. However, instead of being rewarded for this improvement, very often PMOs come under pressure, particularly in cost-cutting situations. Sometimes, they are dismantled entirely. The argument is that the project managers in the field are doing a great job, so oversight is not needed and the money spent to finance an PMO can be invested somewhere else. After a while, maybe a few years, the skills and methodology best practices to erode. That’s when the cycle starts again.
These cycles are not a given. They are not a law of nature. There is a lot that can be done to avoid them. By avoiding these cycles, corporations can preserve their investments in people and intellectual property. So, how do we avoid these vicious cycles? The answer to this question starts with a different mindset for the people who are running a PMO and its members. In any organization, it is important to ask: What is the bottom line impact that the work of the PMO has delivered? If this PMO were an outside organization, let’s say a consulting company, would it receive more work from its client, the senior executives of a company? Would it be able to sustain its business in the long run? In order to answer those questions in a positive way, a PMO needs to be able to demonstrate impact on the issues that senior executives care about (e.g. time-to-market, efficiency improvements, on-time delivery rate). In short, like any other business, a PMO needs to learn how to translate the results of its daily work into bottom-line benefits. It needs to learn how to behave like a business. In short, it has to operate like PMO Inc.
The key to long-term success and sustainability of PMO Inc. is data substantiating its successes. A PMO should be able to back up the portfolio of its services and people with conclusive evidence of how it improves the bottom line of the business it is supporting. In that case, its customers (e.g. senior management, project managers, other functions) will happily pay for the inter-organizational cross charges. CFOs will continue to approve capital expenditures and head count for the PMO. People working for the PMO will see their careers advancing. The question is: What to collect from the universe of possible data sources?
While implementing Critical Chain in large and small corporations, I learned that happy talk doesn’t buy anything. People telling you that you are great, and that this particular approach to project management is the best thing since sliced bread, doesn’t mean a thing when it comes down to funding discussions for next year. What is needed is hard evidence. Using the example of how to justify the investment into a PMO implementing Critical Chain, I’d like to give you some pointers on how to set up the business case for PMO Consulting Inc.
One key area of the data collection process is intra-process data that can be collected as the project management process is on-going. The key question that needs to be answered is: What kinds of decisions are project mangagers, members of the team, or senior management making as a direct result of the data that a certain management methodology and the tools supporting this methodology provides? For example, a project manager enters into an in-depth planning session with the team facilitated by one of the PMO experts. After a few days of intense planning it becomes obvious that a particular timeline is only feasable if the procurement process of getting a particular contractor on board can be accelerated significantly. After talking to senior managers, the PM has permission to single source this particular procurement. Instead of managing multiple bids, she makes a deal with the one contractor she knows can do the job. This vendor might be uniquely positioned, and making the timeline is more crucial than saving a few dollars in a prolonged negotation process. This is an example of a unique decision that the team and management were able to make, because they understood the impact of a complex bidding process to their timeline. The decision effected one key dimension in this project: time-to-market. As a consultant of PMO Consulting Inc., you would collect the days/weeks/months saved based on this decision. By using a basic estimate of how much it is worth to the corporation to get this particular project to market one day earlier, the consultant can add this item to his database of concrete improvements.
Where do we find this intra-process data?
– Project Planning Sessions: During the network reduction efforts at the beginning of a project, there are likely to be a number of decisions that take place influencing the direction of the project. It is worth capturing those for further analysis on bottom-line impact.
– Ongoing day-to-day management of tasks and process steps: Good project managers are constantly looking for new ways to avoid small slippages in a project because even the smallest deviations add up over time. Capturing these small decisions along the way is key to understanding why a project is on track or even ahead of schedule.
– Mitigation and contingency plans: If, for some reason, a project is getting off track, good project managers should ideally build mitigation and contingency plans well ahead of the time when the actual problem materializes. This requires the right set of metrics managing a project (e.g. in Critical Chain: buffer status reports) and a forward-looking risk assessment of tasks that are known to be critical. Once these mitigation plans are implemented they can provide a great data source for decisions the team makes to improve and advance a project.
Before this data is broadcast to a wider audience, there is one more important step: validation. It is one thing when two team members agree on the validity of intra-process data. But when it comes to issues like days saved or reduced spending, these findings should also be validated by people external to the project. The process of validating these findings might involve PMO management, functional leaders and/or finance. In the end, it is equally important what has been validated and who is willing to stand up for that data.
A database of impact data can be used in a number of different ways:
1. Marketing : Don’t be shy about tooting your own horn. Nobody else will. Make sure executive management, project teams, functional leadership, the CFO and his dog know that the work of the PMO has raised the quality of decision making throughout the organization.
2. Share best practices: Stimulate organizational learning by sharing the decisions teams made with a larger audience. Maybe some of the data collected suggests that certain decisions can be replicated. This is valuable information.
3. Kick off Six Sigma initiatives: Some of the data might even suggest that it is worth revamping entire processes (e.g. the procurement process). In that case, it is worth working together with representatives from Six Sigma or similiar organizations to modify an existing process or policy.
In certain industries it is possible to go beyond these ideas and collect benchmarking data. For example, the pharmaceutical industry is very well known for its sharing of industry standards for key processes like the submission of a drug application to the FDA. Any player in the industry can compare their own cycle times for key processes with the industry averages. Mid- to long-term, the work of a PMO should have an impact on these metrics. Minimally, a PMO can start to collect internal benchmarking data and build a database on its own. This way, at least internal trends can be measured. When the moment of truth comes, when budgets and bonuses are being discussed, this is the type of data you’d like to have in your hands.
One last piece of advice. Running PMO Inc. as a business also provides a career path. Instead of being a dead-end, working in a PMO should be seen as a great step to advance people’s careers (like Six Sigma organizations are today). In order to attract the best talent, position the PMO as a great way to learn about the company as a whole. Position it as a temporary step (ideally a 2-4 year assignment) that helps people to develop and advance, preparing them for leadership roles in functional management or for senior program management of strategic initiatives.
- On May 7, 2010