A Project Management Office (PMO) can play a significant role in helping organizations implement their strategic initiatives. It can help boost efficiency, reduce costs, and improve project delivery time. But its value continues to be a source of debate as PMOs struggle to demonstrate sufficient value and the needed buy-in at the executive level of the organization.
Recent research shows that as many as 50 percent of Project Management Offices are failing, even as more and more organizations implement them. And of those not quite failing, a high percentage are not maturing fast enough to provide value to the organization’s bottom line.
So What's the Problem?
In this article I discuss why PMOs fail, how High Performance Organizations have leveraged their PMOs and some considerations to take into account to make your PMO provide strategic value in your organization.
We know that organizations need better solutions for managing projects because of the high cost of project failure rates. We also know that a PMO can be the solution to manage that risk. A functioning PMO drives the successful implementation of strategic projects that contribute to your business goals.
What varies so much with different PMOs is that many are administrative in nature and do not have a strong value proposition. Some do not even have clear objectives and clear benefits in the services they provide or how that links to strategic objectives. The absence of that alignment creates a high overhead cost to the organization. It makes it hard to justify their existence, especially during budget crises.
PMOs that are gaining more and more influence in high-performance organizations have their goals, mission and performance indicators clearly defined, clearly linked to corporate goals and clearly communicated at the executive level. Executives who see the strategic value that PMOs bring to their organizations maximize the role of the PMO.
Those leaders leverage the PMO to help build a high-performance organization with a strong project management culture focused on results. They redefine leadership best practices and effective collaboration between business units, leading to significant results.
Projects are the link between your organization’s strategy and its execution. The successful delivery of projects is critical to your organization’s growth and competitive advantage. High-performance organizations recognize that strong project management practices are key to the successful delivery of their strategic projects. As a result, they have invested in one or more Project Management Offices across their organizations.
Through proper support, visibility and commitment from executive-level management in such organizations, PMOs have demonstrated significant value and returns on investment. Results are evident in the following areas:
A strong PMO has the potential to create tremendous savings for your organization, especially when you look at the astounding statistics of project failures today. It still costs companies millions of dollars in wasted resources, time and hard dollars that go down the drain when projects fail. The extraordinary costs of missed opportunities and potential threats and risks to an organization’s competitive advantage and growth are mind numbing.
Additionally, morale within the organization wanes when projects fail. The negative political impacts and unproductive relationships that are created as a result of the failures continue to mount. These may represent intangible costs that are difficult to measure, but nevertheless are costly to organizational performance.
The obvious reasons projects fail involve poor management of the scope, risk and scheduling, as well as the ineffective use of project management best practices. Additional key reasons that projects fail include:
A strong PMO addresses these problems and provides the leadership, project management disciplines, expertise and experience to bridge the gaps. However, it takes time to strengthen a PMO’s position within your organization.
Strong PMOs continue to demonstrate results. The higher their success rate in delivering strategic projects on time and within budget and quality, the stronger they become. The more value they contribute, the more support they earn at the executive level. This in turn enables them to be more strategic and evolve to achieve best-in-class status.
Even with all the knowledge about the benefits a PMO can deliver, there are still many organizations not getting results from their PMOs. Various studies not only show that the PMO failure rate is still around 50 percent, but that only about 40 percent of PMOs are meeting their goals of delivering on-time, on-budget and within-quality expectations. The Association of Project Management, Gartner, the Standish Group, and IBM published their studies in January 2014 on Why PMOs Fail: 5 Shocking Statistics on PMOs. This only adds to an unfavorable perception of PMOs by the rest of your organization and compounds the problem of gaining acceptance regarding their value.
The level of value that comes from a PMO is directly correlated to the type of PMO your organization puts in place. There are many types and varieties of PMOs in organizations. Some are temporary and some are permanent. On one end of the continuum, some are administrative and on the other end are those that drive strategic initiatives and are best-in-class.
But regardless of the type, PMOs that are seen as a cost center without demonstrating sufficient value do not survive long. Those that have a vision and a plan for growth continuously improve their value proposition to the organization. They earn a seat at the executive table and merge project management into a strategic service for your organization.
There is no silver magic bullet, no one-size-fits-all PMO solution that every organization can plug and play successfully. There are, however, considerations that you can take into account when assessing the type of PMO you want to drive the highest value for your organization. Get the most value out of your PMO by considering these steps:
As you work through these considerations, consider bringing in an outside perspective to help you put together a plan, roadmap and roll-out approach that creates a cultural shift and transforms your PMO into a strategic partner within the organization.
Rania Kort is an Independent Management Consultant and Business Advisor with more than 20 years’ experience helping Fortune 100 companies successfully implement strategic initiatives. Rania has managed large-scale programs and programs, established and run PMO's and implemented process improvement in many different industries. She ran and grew an IT Management Practice for PricewaterhouseCoopers for more than seven years managing over 300 consultants. Currently, she serves as an independent consultant focusing on achieving results through collaboration and a team leadership approach that ensures alignment, accountability and trust to develop high-performance teams.