The PMO – Who Needs it?
It's not always easy trying to sell the merits of a PMO to a “technical” CTO or CIO – or anyone who doesn't necessarily have a good understanding of project and programme management. Many people elevate to the heights of a C-level post without having been through the project and programme management trenches.
So what can we suggest the CIO can expect from a PMO? I have seven items on the list:
- Project support;
- Project management process/methodology;
- Home for project managers;
- Internal consulting and mentoring;
- Project management software tools;
- Portfolio management.
Then of course we need to justify to the CIO what the benefits of the PMO would be. Here are a few which come to mind, but please post any others you can think of in a comment below.
- Improving project success rates
- Implementing standard practices
- Better visibility into project status
- Tighter change control
- Higher ROI
- Fewer failures
- More projects completed on time and within budget
- Better risk management
- Better management of external partners
There’s an interesting survey which KPMG carried out in 2002 and the figures always stick in my mind. Geoff Reiss also used them in a PowerPoint presentation a while back. KPMG’s global survey covered all industry sectors and 50% of the participants were from the UK. The results showed that 98% of organisations with a mature programme office reported a 100% success rate.
These statistics might come as a surprise, especially when we all read about the high percentage of IT projects failures, but they reaffirm to us the critical role that a PMO can play in the success of an organisation.
That said, it’s amazing how many organisations I’ve entered and found no PMO, no document templates, no quality guidelines, no process – in fact, absolutely nothing. I even once did some work for global consulting firm that claimed a maturity level of CMMI 5 and they could not provide any project document templates, risk strategies – nothing! But I digress.
I read that Schlumberger, PMO Manager Vincent de Montmollin said that his PMO saved more than $3 million by reducing the number of small projects from 233 to 13.
And Sun Life Financial’s American subsidiary CIO Jim Smith said that their PMO relies on three metrics to determine its effectiveness; 1) accuracy of cost estimates, 2) accuracy of schedule estimates and 3) project stakeholder satisfaction. From 2001 to 2002, the metrics for each improved 25%, 31% percent and 9% respectively.
But if you’re somewhat stubborn and need more convincing; a few years ago, the PMI ran a PMO survey. Out of 450 people surveyed, 303 (67%) said their companies have a PMO. Of those with a PMO, half said the PMO has improved project success rates, while 22% didn’t know or don’t track that metric, and 16% said success rates stayed the same.
The PMI also found that there’s a strong link between the length of time a PMO has been operating and project success rates. The longer the better. While 37% of those who have had a PMO for less than one year reported increased success rates, those with a PMO operating for more than four years reported a 65% success rate increase. 39% of respondents said the PMO is a strategic entity employed at the corporate level, meaning it sets project standards across the enterprise and is supported by upper managers.
If you experience project failure but still think that your organisation doesn’t need a PMO, I’ll begin to shake my head from side to side and ask which banana boat you came in on.
But seriously, PMOs really can help CIOs and CEOs by providing the structure needed to both standardise project management practices and facilitate IT project portfolio management, as well help facilitate repeatable processes.
All this said, a PMO is not a quick-fix for project challenges and there is no ‘one size fits all’ solution. It is critical that the PMO structure is built around a company’s own culture.