Working within the project management field today and you can’t fail to see mention of a PMO. It is an entity that has successfully divided opinion across the profession. Those supporters who believe an organisation cannot execute projects without one and those that call for their disbandment based on ruinous costs and lack of value. Interestingly for a business entity like the PMO, much of the discussion is based on the lack of uniformity across the industry, even down to what the “P” means in PMO. Yet organisations are setting up PMOs, people continue to work within them, books are still written about how to make them successful even though we still aren’t sure exactly what a PMO is and what it does. Doesn’t it seem strange to you that an organisation is willing to invest hundreds of thousands of pounds on an entity that is still surrounded in controversy?
Amongst the reports and surveys issued about project management from associations and private firms both here in the UK and globally, surprisingly there are only a handful that focus on PMOs.
In this article we take a look at recently issued PMO research (the list and links are below) from a number of sources to help us dig deeper into the subject of PMOs. There are some core questions that need clearer answers like, ‘what are PMOs?’, ‘are they common in organisations?’, ‘what value does an organisation gain from them?’ and ‘do PMOs actually bring value to an organisation?’
Each research report is based on respondents from the profession – those carrying out the work of project management – rather than academic research or thought leadership pieces. The reports used have all been issued in the last two to three years.
How many organisations have a PMO?
On average 72.4% of organisations have some kind of PMO. So it is sizeable and significant and all the more reason to understand more about them.
ESI – 72%
Arras People – 75%
KPMG – 60%
PM Solutions – 80%
PwC – 66%
PMI – 69%
What types of PMOs do organisation have?
Not all the reports specifically cover this question which seems a fundamental error. One of the most often asked questions about PMOs is what kind of PMO does an organisation have. Without understanding what the PMO primary objective is, it makes it impossible to ask follow-up questions such as does it add value.
Across the surveys there were between four and five different types of PMOs. There were commonalities:
ESI – referred to the Hobbs and Aubry definition of project-program (covering projects or programs)
Arras People – 47% of PMOs are Project Management Offices (in name)
PMI – 31% have a Project Office or Program Office
KPMG – Project PMO
Arras People and KPMG see the Programme Office as a separate entity from Project Office unlike ESI and PMI
39% have a Programme Office (Arras People)
ESI, PMI and KPMG all recognise the department PMO – an entity which supports “the organizational unit strategy”, an example would be the IT department
An organisation wide PMO is mentioned by all four reports. In PMI’s survey 39% have an enterprise PMO, 8% is reported by Arras People and ESI’s report indicates that a department or enterprise wide were the most common.
With 35% of organisations having a centre of excellence (CoE) according to PMI, this entity is described as “supports the execution of project work by equipping the organization with methodology, standards and tools.
Although PMI indicates the Centre of Excellence as being a fifth type of PMO, the other reports are not ignoring this entity. When we look at the next level of detail of what a PMO actually does, we can see that included in for example, the Department PMO are the CoE elements. PMO entities are carrying out the CoE activities yet don’t choose to use the CoE title.
Another type of PMO, included in the PMI PMO Framework report, includes the temporary PMO – for projects and programmes that are only set up for the duration of the delivery.
There is a gap in the research that really needs addressing and that is understanding how many PMOs an organisation has. An organisation will not just have a department PMO they will also choose to set them up for individual programmes or projects. Indeed there are enterprise PMOs that exist as well as department, programme and project level ones within the same organisation. What is not clear is how many organisations have multiple PMOs and exactly how many do they have and in which combination.
What does the PMO do?
The title of the PMO is not always a clear indicator of what it actually does for an organisation. Due to the different types of PMOs available there is no set or prescribed “services” that each PMO should have.
It is imperative then that the PMO is clear about what it is there to do. The latest reports cover these areas in different levels of detail. They also highlight that all the services listed do not appear in every type of PMO, for example portfolio management will appear at department and enterprise levels but not programme or project.
Here we take the 9 areas outlined by PMI in its PMO Frameworks report and use them as a baseline to show a comparison with the other reports. The descriptions of the Domains of Work can be seen in the report itself. Here we show the list:
Standards, methodologies and processes
Project/Program Delivery Management (e.g. resource management, risk, schedules etc)
Governance and Performance Management
Organizational Change Management
Administration and support
Arras People reports that 49% of PMOs provide the best practice, standards, governance etc. This incorporates Standards, methodologies and processes, Project/Program Delivery Management (e.g. resource management, risk, schedules etc) and Governance and Performance Management domains.
The top ten functions from PM Solutions DO NOT include Knowledge Management and Change Management – all the other listed functions are within the Domains of Work.
ESI introduces six stages to highlight basic to advanced services. All six areas are covered in the Domains of Work.
PM Solutions’ top three services are implementing standards, monitoring performance and mentoring & coaching.
Talent Management services vary as some PMOs take responsibility for ensuring learning and development across the project management community whilst others don’t control this. 62% of PMOs provide direct training in the use of methods and tools (ESI) whilst PM Solutions report 85% of PMOs providing basic training.
Portfolio management is still a relatively new area to project management and of course PMO.
The report from PM Solutions indicates that portfolio level services are on the increase but it’s still not as popular as you would think.
21% of PMOs provide portfolio management level services (Arras People)
22% of PMOs are strategic (ESI)
43% of PMOs are a strategic resource (PM Solutions) performing more functions especially portfolio management.
PwC report that portfolio management adoption has not increased since 2004, remaining stable at 53%.
The most common services the PMO provides has been accurately listed in the PMI PMO Frameworks report with the exception of knowledge management as compared to the other reports. According to the PMO Framework report, the departmental PMO is the most common PMO type, listed at 54%. Of this type of PMO, the most common services are Program/Project Delivery Management (support in key areas such as scheduling, resource management, risk management etc) at 46% followed by Standards, methodologies and processes at 15% and Portfolio Management Prioritization at 15%.
Which type of PMO is valued the most?
Regardless of the types of PMOs that are available today and the services / functions they can provide, it stands to reason that an organisation chooses to maintain their PMO because it provides value in some way. From the reports we take a look at which type of PMO tends to provide the most value to an organisation.
According to both ESI and PMI – with PMO leaders citing project alignment to strategic objectives as the top rated PMO function.
Yet only 39% of organisations have an Enterprise PMO according to PMI.
No other report covered the value of the PMO
What the research lacks is more detail about the audience for whom perceived value is being delivered. It is difficult to see if only senior management (C-level) are considered – whether it includes project and programme managers – or the departmental leads? Each group will perceive the value of PMOs differently, yet we don’t know exactly how from the research currently available.
Citing throughout the reports is the link between project management and the strategic objectives of an organisation. Reports by ESI, PMI, PwC, KPMG aand Project Solutions all mention the importance of the PMO in relation to ‘strategy implementation’ and how it can help “align project outcomes to strategic priorities” (PMI).
The question about perceived value of PMOs is also closely linked to the maturity levels of the PMO. The more mature a PMO, the more likely it was perceived as adding value. Maturity was measured in terms of length of service (over 4 years was a common number), the breadth and depth of services offered and how well they have been adopted by the organisation or those people it exists to serve (still evolving or fully embedded – ESI).
When we consider the impact of maturity levels on perceived value and the most common PMO being a department PMO and not an enterprise one there is a need for deeper research here to understand why the most common PMO type is not the most valued.
Perceived value is only partially controllable by the PMO, much better to tell the organisation just how effective it is through results of its own instigated measurements and metrics.
The research available gives some examples of how PMOs measure effectiveness depending on the type of PMO in operation. The headlines however show that PMOs don’t do enough analysis on performance even though they are often under scrutiny and challenge.
Project Solutions show that just 45% of PMOs communicate their business value to the organisation. PwC reports that 29% never evaluate what they do.
Yet ESI reports that 68% do measure their own effectiveness up from 51% in their previous survey and PMI backs up those numbers with 75% of PMOs carrying out fundamental checks
The PMO needs to be able to show that their involvement ultimately benefits the organisation. Analysis and performance monitoring of the PMO’s own effectiveness can be done in a number of different ways. The reports cover the basic – project related measures – did a project come in on time? Did it deliver what it was supposed to? Is the customer happy?
Project delivery versus schedule evaluations (74% do this)
Customer feedback evaluations (67%)
Cost reviews (63%)
Projects delivered on time and within budget (between 76% and 80%)
Increased customer satisfaction (between 45% and 64%)
Improved number or percentage of successful projects (between 67% and 74%)
KPMG also included these basic measures
The basic measures are the most frequent measurements used by PMOs when monitoring project performance. These basics tend to be the easiest to set up and are used initially by young PMOs.
The reports also showed more advanced metric types which can be used to measure project performance. The reports indicated that these measurements tend to be utilised by more mature PMOs.
Conduct project owner feedback evaluations (between 33% and 61%)
Seek feedback from other stakeholders (between 41% and 60%)
Seek feedback from customers (between 58% and 76%)
Improvements in resource utilisation and reduction in project staffing issues (between 41% and 50%)
Included a list of advanced options which included; alignment to strategic goals; return on investment, cycle time, cost of quality, requirements performance and employee satisfaction
The ESI report was the only report to include measures which can be directly attributed to the performance of the PMO rather than just project performance.
Project management’s raised profile throughout the organisation (between 35% and 54%)
Higher levels of proficiency & motivation in staff (between 23% and 38%)
Existence and use of a common enterprise wide methodology (between 49% and 55%)
Further research would be welcomed which covers PMO specific performance and measurement. With PMOs often challenged to demonstrate the value they bring to an organisation it would be a useful exercise to understand exactly what high performing PMOs choose to measure and share with their organisations.
Leading on from perceived value and effectiveness, the reports also cover the negative side of PMOs. PMOs do get de-established or disbanded for a variety of reasons. In Arras People’s report, the question was directly asked to those having been effected by a PMO closure.
PMOs without senior management buy in are more likely to fail
36% was recorded by Arras People followed by ‘being seen as an overhead (29%)
Other reasons include; no obvious benefits, unnecessary level of control and project numbers not big enough to justify it
Other reasons highlighted include:
PMOs are deemed to be an overhead
21% recorded by KPMG – 29% by Arras People – 47% by Project Solutions
Other reasons from KPMG include; the perceived focus on processes, insufficient learning being transferred across programmes and projects, process inefficiencies and organisation restructure.
PM Solutions recorded 45% of PMOs having difficulty in devoting time to strategic activities, 43% having difficulties in demonstrating the value of the PMO and interestingly 43% having inadequate resource management capability.
Although many PMOs continue to exist in PMOs without the threat of disbandment they do still receive challenge on perceived value from the business.
ESI reported that 69% of PMOs were challenged by senior management or questioned on their value. The most visible PMOs were challenged the most.
12% of PMOs have had their value seriously questioned including possibly closing it (up from 7% two years ago, Project Solutions)
Just 33% of PMOs have realised their full potential in contributing business value to the organisation (PMI)
Yet Project Solutions highlighted that the greater a PMOs capability is, the less challenges it faces.
It’s clear that senior management support for the PMO is imperative if it is to succeed. In PMI’s report it outlines that “clear direction, governance and support” is needed for a PMO to be successful. It goes on to conclude that there is a strong link between top performing PMOs and their access to top-level management.
One area of further research which is touched on in just two reports (Arras People and Project Solutions) is the impact of PMO capability and maturity when Project Managers directly report to the PMO. There is currently not enough detail to see if this type of PMO set up brings a greater degree of PMO success.
Ending on a strong note
What is clear from the reports issued over the last few years is that PMOs are not simple, straightforward structures. Future reports into PMOs need to reflect the complexity – especially if we believe that no two PMOs are the same in any given organisation.
A combination of larger surveys that enable a good level of granularity of different types and levels of PMOs and detailed case studies on ‘high performing’ PMOs will certainly help us to understand further.
There are no clear statistical conclusions across the reports – just areas of commonality – both positive and negative.
To conclude the article we finish on a strong note – a reminder why PMOs are important and why further research should be supported:
Survey data indicates that 74% agree that using an established PMO will result in projects delivering high quality (PwC) and 62% achieving the intended business benefits.
$101K cost saving per project / 27% decreased in failed projects / 45% improvement in alignment of project with firm’s objectives (PM Solutions)
56% of PMOs have executive sponsorship (Arras People)
PMO staff have considerable experience (over 10 years) and over half are PMP qualified (Project Solutions)
56% of active PMOs claimed more than 75% of on-time, to-budget project delivery (ESI)
Project-specific PMOs claim the highest level of business value realization amongst PMO types (PMI)
75% of PMOs were reported as providing a structured path for project managers (ESI)
Advice and guidance is the top benefit to Project Managers from the PMO at 37% (Arras People)
ESI The Global State of the PMO:An Analysis for 2013