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PMOs: Changing the Center of Gravity in Project Management

Success in the Life Cycle of Initiatives/Complex Projects

By Rich Sanderson and Helmut Steudel

In March of last year, the Project Management Institute (PMI) released its annual "Pulse of the Profession®" report. Considered the world’s leading authority on project management, its 2021 report, "Beyond Agility," documented that in the midst of a global pandemic, a diverse range of companies around the world achieved successful project outcomes comparable or better than previous years. Many were able to accomplish those results while reducing wasteful spending.

PMI’s analysis coined a term for these successful companies—gymnastic enterprises—because they were able to flex, pivot, and adapt quickly to changing internal and external challenges while maintaining their structure, form, and governance. In addition, they were able to look for new ways to solve problems and meet challenges.

According to the report, the key difference between gymnastic enterprises and traditional organizations is that the more successful companies rated themselves higher on organizational agility (48% vs. 27%). These emerging gymnastic enterprises embrace new ways of working, empower their workforce, and put their organizational culture front and center in strategic planning and decision-making. Many have incorporated Project Management Offices (PMOs) into their project management approaches.

As more organizations adopt agile delivery practices and lean management approaches, PMOs offer excellent opportunities for companies to ensure their capital projects are aligned with strategic business objectives. In addition, PMOs are particularly effective when managing large multi-disciplinary scope integration or transformational projects.

What exactly is a PMO? PMI’s flagship publication, “A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Seventh Edition,” defines a PMO as “a management structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques.”

While a PMO can either be staffed with internal resources or may be outsourced to a consultant, its primary purpose is to set, monitor, and ensure standards for project management and project delivery across an entire organization. PMOs provide best practices, learnings, project status, and direction—all in one spot.

The following are strategies, insights, and suggestions for establishing and managing a successful PMO.

What type of organizations Need a PMO?

Understand not every organization needs a PMO. If your organization has a relatively small annual capital expenditure program, a PMO investment may outweigh the potential benefits. However, when the number of small projects reaches a critical point where priorities and schedules begin to slip, and project complexity increases, this is a sure sign that a PMO can be beneficial.

Below are several types of businesses where a PMO will provide significant benefits in cost and efficiency:

High-Growth Businesses: As high-tech or research incubator startups become successful, and there is a demand to scale up production and associated support facilities, many organizations recognize the benefits of having a centralized project management office function that can prioritize resources and ensure critical projects are expedited. The PMO can identify potential bundling of projects across business units to maximize value and ensure strategic alignment. The norm is for organizations to have a capital plan in which they can release each project separately to different AE/CM organizations. As these organizations traditionally compete with each other, there is a minimum amount of collaboration and opportunity for buying power or knowledge sharing. The PMO can facilitate these interrelationships.

Inherently Complex Businesses: High-risk or capital-intensive organizations such as black box R&D or bioengineering firms have very specific design and construction requirements. Pharmaceutical and aerospace companies are highly regulated, resulting in layers of complexity to ensure government certification approvals. Large infrastructure projects present myriad challenges, from skilled labor to climate impacts. When managing highly complex projects or high-stakes initiatives, it is essential to “get it right the first time.” As a result, many businesses in this category find PMO to be extremely valuable. Many organizations think they need project momentum to achieve business continuity/targets, but sometimes the decision is made in isolation to meet an immediate problem. Few organizations assess the balance of capital project interrelationships to enhance and create better efficiency or certainty of outcome.

Businesses with a Specific Problem to Solve: The research, mass production, and distribution of the Coronavirus vaccine is an excellent example of a problem-specific industry where a PMO could address and resolve issues across diverse business units or multi-organization collaboration. There must be an emphasis on program delivery in the business-problem-solving process, e.g., carbon footprint reduction, which may drive non-construction-related solutions. A good PMO will not necessarily select an option that is beneficial to their own reward but will choose by overall advantage and the needs of the customer.

Build Trust: First Step in a Successful PMO

Whether using in-house resources or consultants, trust and cooperation between project management personnel and C-Suite decision-makers are essential to a successful PMO. They must remain 100% focused on the alignment of project or program goals. Because many organizations are experts in manufacturing or research, they do not have in-house resources to manage large expansion projects, which means it becomes a second-day activity to their primary responsibilities.

When engaging a partner to provide PMO services, it is critically important to send a message of collaboration and respect for the expertise they bring to the table. It can be detrimental to the project to bring on a consultant and an expert only to challenge them at every turn.

Contractual language can impede the development of trust. Project leaders need to remove the restrictions of collaboration and sharing of knowledge, trust, and cooperation, which is inherent in traditional contracts. Traditional contracts create a barrier for organizations to be fully transparent.

Stakeholder Buy-In

It is important to remember that the PMO is a service provider within the organization. That is why stakeholder buy-in and consensus are important. PMO managers are to focus on achieving early success right from the start by casting a wide net and canvassing any and all participants about project specifics such as size, capacity, and functionality—but also aspirational goals like how they want to feel in the space when they come to work. In large projects or programs, they must demonstrate a degree of forward momentum so larger audiences and contributors do not become complacent.

In all organizations, there are tactical teams, engineering and operational teams that support the space, and end customers that use the space. Because of this diverse set of contributors, which have different drivers and decision points in a project, choices must be made on feel as much as fact.

The PMO has the ability to begin the dialogue not only to determine what is important for senior management and departments but also for individuals. The PMO needs to balance functional and spatial requirements with the end user’s personal, social, and emotional needs. Beginning the process by explaining the “why” behind a project being undertaken before asking “what” end users need often elicits feedback that provides a crucial bridge to achieving consensus. Themes will emerge that can help build agreement and project momentum. By developing solutions together, you also secure the support of your stakeholders over the project cycle.

Don’t Reinvent the Wheel: Benchmark Other Industries

Many organizations make the mistake of spending valuable time developing either processes and procedures or a PMO “from scratch.” this, in part, is because they perceive their industry or company to be unique. Spend time to investigate other leaders in your industry as well as tangential industries. There is so much information and knowledge to be gained by talking to those who already have learned the hard lessons.

Invest the time and effort to see what has been done rather than creating the wheel. This is one of the primary benefits of hiring an external consultant to manage your PMO.

It is key to note the tools, standards, procedures, and templates that the PMO brings to the project. Especially when outsourced, the PMO is not simply a collection of experienced people but is rather an integrated machine that controls the flow of capital through an organized process that relies on tools that the PMO knows how to deploy.  

Educate Key Stakeholders

Fear of getting it wrong by key stakeholders and project executives drives the need to create a forensic analysis of every eventuality and option. This is true for very regulated and scientific-led industries, and it is the way they work. A PMO can take performance or outcome-based requirements and translate them into an effective delivery approach, taking a lot of the non-critical decisions off the table. 

Based on post-project client surveys, stakeholders often do not fully trust project management personnel until approximately 35% to 40% through the project, which is well within the Design Development phase when a baseline is set and may be too late). Therefore, PMO team members must educate and share information with key stakeholders to help them understand potential risks, transparency, and trajectory of a project early. Most importantly, acknowledge when there is a problem and be prepared to come to the table with innovative solutions.

Changing the Process versus People Accepting Change

Even before the pandemic forced many firms to rethink their project delivery strategies, innovative disruptions such as Integrator led project delivery and delivery pulling design changed how companies manage and coordinate their projects. These factors have contributed to an increased acceptance of the PMO approach across a diverse range of companies.

PMO implementation places equal emphasis on both process improvement and change management. Process improvement focuses on how things are done (policies and procedures), while change management focuses on why people should adopt the new procedures. Both are necessary for a successful PMO.

Once people are familiar with the new delivery methodology, lessons learned on one project can quickly and easily be applied to other projects. By providing training and support, the PMO can be an advocate for the process and uphold the best-in-class approach.

Align Strategic Plan with Supply Chain

The most successful PMOs take the necessary steps to align an organization’s strategic plan and business objectives with their supply chain members. For example, increasing revenue goals by 30% over the next two years undoubtedly will require significant growth in facilities and production capabilities to ensure business targets are met.

Good PMO structuring works deeply with the supply chain to preposition assurance of service, supply, and delivery, whether it be resources, major construction delivery, key equipment, or consumables and commodities required for facility operation. The past 24 months have demonstrated a greater need to create collaboration and partnership with key suppliers and contractors to maintain assurance of delivery.

It is key that the PMO understand the rhythm of an owner´s decision process and organize the resources accordingly. Boards of Directors often inject a halting inefficiency into the capital delivery process, and the PMO needs to ensure that the relevant resources are kept productively engaged. The PMO must also establish a contracting strategy for the project that recognizes immediate market drivers and limitations.

PMO Benefits

The goal of a PMO is to facilitate efficient project delivery which in turn allows organizations to be more effective and profitable in their line of business. There is no one-size-fits-all approach to setting up a PMO. It is important to structure it in a manner that complements the existing organization. Successful PMOs provide tangible and meaningful benefits, including:

  • Earliest engagement to plan for success and ensure the right first-time
  • Alignment of the strategic plan with operational objectives.
  • Identifies potential linkages and dependencies across multiple projects.
  • Increases efficiency through consistent best practice implementation.
  • Improves communication and collaboration across business units and departments.
  • Ensures consistency of meeting budget and schedule delivery.
  • Supports accountability through Key Performance Indicators and reports.

A well-defined and structured PMO can be the catalyst for increased efficiency and cultural change in an organization as it allows for an organization to do more quality work with fewer resources and with less risk.

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