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You Do Not Need A PMO. You Need THE PMO!

why-Do-you-need-a-PMO

I’m always being asked why organisations need a Project Management Office. For years, I was never totally satisfied with my answer.

“A PMO is there to ensure project success,” I’d say, “it makes sure company procedures, practices, cultures and operations are followed and work at their best, it makes sure that projects are delivered on time, on budget and in a consistent way. Its value is gained from ensuring its parent organisation gets maximum value from projects and the best return on investment.”

It always felt a bit like I’d swallowed a PMI encyclopaedia!

The essence of what I’m saying is true. You’d broadly agree with the above I suspect. And yet, as I say, I’ve never been terribly satisfied with my answer. PMO's are increasingly being challenged to provide additional business value to your organisation. Projects must be delivered faster and cheaper, boards are demanding greater transparency. The PMO is the catalyst for optimised project resources.

It dawned on me recently that it wasn’t my answer that I had a problem with – it was the question.

Organisations shouldn’t be asking why they need a PMO, they should be seeking to create the PMO.

The PMI’s 2020 Pulse of The Profession bore this out. The Pulse of the Profession, the annual survey of project management practitioners, takes feedback from 3,060 project professionals, 358 senior executives and 554 directors of project management from a range of countries and industries – as a survey, it’s about as robust as they come.

Globally the percentage of organisations that have a PMO is 66%. There are some standout exceptions: the UK figure is 70%; just behind India on 80%.

Given my definition of why you need a PMO, the definition that you broadly agreed with, you’d expect countries like the UK to deliver above average project outcomes.

UK – More PMOs Does Not Equal Greater Returns

In the UK, the percentage of projects completed on time is 46% (against a global average of 53%). The percentage of projects completed within budget in the UK is again below the global average of 59%, the UK scores 53%. OK, what about scope creep? Surely a nation with an above average tally of PMOs has a below average number of projects that go AWOL! Sadly not, again the UK percentage of projects with scope creep is 39% above the worldwide average of 35%.

In the UK, even the percentage of projects meeting goals and business intent falls short of the global average of 69%, two points behind the UK scores 67%!

Time to read my definition again…

“A PMO is there to ensure project success, it makes sure company procedures, practices, cultures and operations are followed and work at their best, it makes sure that projects are delivered on time, on budget and in a consistent way. Its value is gained from ensuring its parent organisation gets maximum value from projects and the best return on investment.”

What about India? India has an even greater percentage of organisations with a PMO - let’s take a look at the metrics the UK’s PMOs seem to have underperformed in.

In India, the percentage of projects meeting goals and business intent is above the global score of 69%, India reporting 72%. Timewise, the percentage of projects delivered on time is 58% (versus the global 53%) and financially, again India’s PMOs are delivering greater than average ROI with the percentage of projects completed within budget 64%, against the planet’s average of 59%. The scope creep figure is lower than the average, the percentage of projects with scope creep in India, 32%, compares favourably to the worldwide average of 35%.

The Cost

According to the PMI, organisations in India waste an average of $92 million for every $1 billion “spent on projects and programs due to poor project performance”, compared to the global average of $114 million for every $1 billion spent. A pretty decent return and given their higher take up of PMOs a definite case for having one. Meanwhile, organisations in the UK, where again the instance of PMOs is higher than the global average, here organisations waste an average of $130 million for every $1 billion spent – considerably above the average!

I was right about that question needing a reframe, wasn’t I? It’s not about needing a PMO, it’s about needing the PMO – the one that’s right and fit for purpose!

So, what should you be looking for in a PMO?. The three Ms is a good place to start.

The Three Ms: Milestones, Maturity and Malleability!

1 - Milestones

Let’s take a look at Europe where the percentage of organisations with a recognition process for meeting milestones is below the global average (of 51%) at 46%. (The UK does even worse on this score by the way at 44%!)

In Europe, the percentage of projects completed on time (like the UK) falls short of the global score (of 53%) at 48%; and the percentage of European projects completed within budget is also below the global average (of 59%) at 55%.

Percentage of North American organisations “with a recognition process for meeting milestones” is comparable to the UK at 44% and here organisations are squandering $123 million for every $1 billion spent on projects and programs (against that global average remember of $114 million).

So, make sure your PMO has nailed its milestones and is transparent about when they’re not met.

2 - Maturity

Project or program management maturity is kind of hard to define, indeed the right level of maturity will vary for each organisation, factoring in your specific needs and goals, strategies and resources, capabilities and scope. For the sake of simplicity, let’s say maturity can be measured by the status of your project management approach, methodology, strategy, and decision-making process and how enterprise-wide and progressive it is.

Among the regions with the lowest maturity scores, you also find the lowest project returns.

Latin America for example, the percentage of organisations with high project management maturity is considerably below the average (of 42%) at 33%.

Let’s see how this affects the metrics discussed earlier (global averages in brackets): percentage of Latin American projects meeting goals and business intent 64% (69%); percentage of projects completed on time 48% (53%); percentage of projects completed within budget 55% (59%); percentage of projects deemed failures 18% (13%)

Organisations in Latin America waste an average of $125 million for every $1 billion spent on projects “due to poor project performance”, compared to that global average of $114 million.

Make sure your PM maturity matches your business needs!

3 – Malleability 

Reading the PMI’s Pulse report, a number of common themes emerged from which we can all learn. Notably, for me, was when the primary cause of project failure was analysed - how often the top reason was a change in organisational priorities.

This last year has seen changes to organisational priorities like we have never seen before and hopefully the likes of which we’ll never see again. When business needs change ‘can turn on a six pence’, your project delivery capabilities must be equally flexible.

Where do you suppose the greatest reason given for failure is change in organisational priorities was above average? If you thought, Europe, Latin and North America - you’d be right. Why?

The percentage of projects using agile project management approaches in North America and indeed the UK is pretty much in line with the global average, whereas in Europe and Latin America – it’s lower (19% plays the global score of 22%).

Compare this to regions with greater project returns. India, for instance, where the agile percentage is 37% (versus that global average of 22%) and China where it’s 29%. The data makes a definite case for a more agile approach.

Be nimble: Fail fast and pivot quickly!

Interestingly, in the UK, the top failure reason was poor requirements gathering which, based on my experience this last year, could amount to the same. If the information you gathered doesn’t match the current business need you should cut yourself a little slack (not a lot but a little) – the information you gathered may have been spot on it may be just that business need changed and you didn’t update your project output accordingly. Like if my beloved Manchester United prepared for a derby game based on their opponent’s form in 1998. City were a third tier side then, your intel has to match the actual needs (by the way, so sorry to my Manchester City supporting friends for reminding you of your division two days).

What next? How Stoneseed can help.

Enhance Your Existing PMO

Stoneseed’s PMO Assessment will take your PMO to the next level, from objective evaluation of the existing PMO structure and the 12 core knowledge areas to recommendations targeted to enhance it. Stoneseed will develop a roadmap for change, identifying key areas of opportunity, strength and weakness to work collaboratively with you to create an implementation plan for deployment.

You need someone who can benchmark your PMO against the best in class, the finest, most effective and most productive PMOs. At Stoneseed, we’ve worked with many and we can help.

Start Your PMO Journey With A Virtual PMO

Stoneseed’s Virtual PMO service offers you benefits of Project Management Office, without the commitment of full-time resource on-site.

 The Virtual PMO is a flexible consultancy, where you can align resources as and when you need it, to deliver specialised PMO expertise on a cost effective, part-time basis. With low cost set up, it can be deployed to support just one project, multiple projects or a programme of projects in any geographical location.

Virtual PMO can also be used as the starting point for establishing and evolving your Project Management capability. We offer three service levels of PMO each of which build upon each other; Basic, Standard and Advanced PMO so that you can tailor VPMO to suit your Project support needs.

Project Management as a Service (PMaaS)

Stoneseed’s Project Management as a Service model provides access to project professionals, resources and tools at a flexible and predictable cost.

Our services portfolio offers a true end to end service, from IT Advisory, Business Analysis Services through to Programme & Project Delivery. PMaaS provides access to Flexible Resources on Demand, Project Management Office, Process and Methodology, Tool Sets and, best of all, a straightforward and transparent cost model.

Remote Project Services

Experts in Remote Access Project Management, Stoneseed can help support your IT Project Delivery in these uncertain times and cover staffing shortfalls.

Our expertise is available on demand remotely, offering rapid response resources. You can align resources as and when you need it, on a cost effective, full-time or part-time basis.

In an age where nimble can be the difference between success and failure, at Stoneseed, we flex to support your project needs.

 

Find out about Stoneseed's PMO Services

Source
The PMI’s 2020 Pulse of The Profession

 

 

 

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