Many organizations struggle to deliver projects to the satisfaction of their sponsors and advocates. The Project Management Institute (PMI) estimates only 30% of projects are on time and on budget. The challenges represented by this sobering statistic have led many organizations to turn to the Project Management Office (PMOs) as a way to improve project delivery. The primary objective for creating a PMO is the timely delivery of strategic IT projects with more consistency, effectiveness and efficiency.
How the PMO is organized and staffed depends on the organization’s goals, strengths and corporate cultural. Each one is as unique as the clients it serves. PMOs generally utilize one of two basic approaches. They may be consultative, where the office acts in a consulting capacity, providing business-based project managers with training, guidance and best-practice methodologies; or centralized, where the office is staffed with ready-to-deploy PMO project managers who are loaned out to business units to work on projects.
The benefits of establishing a PMO include:
1. Better IT investment decisions and improved governance through increased business/IT alignment. The PMO ensures:
- All projects conform to the governance process; acceptable business cases have been established prior to project start-up
- Visibility needed to cancel, postpone, or scale back unnecessary or less strategic projects
- Improved project portfolio management to identify cross-project synergies and opportunities for increased program management.
2. Improved accountability for critical efforts by:
- Attracting, developing and retaining experienced professional project managers with unique insight into the organization (without the need for adding additional permanent staff)
- Relieving functional managers of hands-on project management so they can devote their time and skills to management of operational systems and processes, human resource issues, the long-term health of the organization and long-term relationships with the user community
- Establishing clearly defined roles and responsibilities for all people engaged in the project, reducing the risk of duplication and conflict between individuals and between teams
3. Improved communications and change management
- Coordination of communications means that the right messages are getting to the right people at the right time, reducing information overload
- Cross-business change management provides a more efficient and more effective approach to introducing change and in training people in new processes and procedures
4. Increased consistency of project delivery by:
- Providing guidance on best project management practices and standards across the organization
- Developing and implementing a consistent and standardized process.
• Formalizing the project management approach
- Ensuring the use of templates, best practices, and common tools, saving money by sharing resources across units
5. Improving project predictability by conducting appropriate risk assessments and project audits on a regular and routine basis
PMO success rates should be measured by:
- Business Case Realization
- Accuracy of Project Cost Estimates
- Accuracy of Schedule Estimates
- Project Stakeholder Satisfaction
- Risk Reduction
- Increased Employee Productivity
In a survey conducted by CIO and the Project Management Institute (PMI), respondents reported positive benefits from the formation of a PMO. Out of 450 people surveyed, those with a PMO operating for more than four years reported a 65 percent success rate increase. The Sarbanes-Oxley Act, which requires companies to disclose investments, such as large projects, that may affect a company’s operating performance, is also a driver. The Act forces companies to keep a closer watch on project expenses and progress.
PMOs can realize substantial benefits for their companies by selecting and supporting those projects that offer the biggest payback. They can save money by enabling better resource management and reducing project failures. They also provide the structure needed to standardize project management practices and facilitate IT project portfolio management, as well as determine methodologies for repeatable processes. Most organizations that have established PMO’s have reported them to be a positive addition to their organizations.