| Articles » The Strategic Importance of the Enterprise Project Management Office |
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The Strategic Importance of the Enterprise Project
Management Office |
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| by MIchael Stanleigh |
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| Overview |
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| Many project management offices (PMOs) are not successful in
addressing the strategic priorities of their organization because
they are departmentally based and not enterprise-wide. This reduces
their span of influence and limits corporate support. This is a
finding from a comprehensive research
study of 750 global organizations that was conducted by Business Improvement Architects. The research shows that PMO’s
are more effective and can better impact the bottom line, when they
are operating at the corporate enterprise-wide strategic level,
rather than at the departmental level. |
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| According to a study, fifty-seven percent (57%) of survey respondents
indicated that all levels within an organization had not embraced
the direction of the PMO. However, sixty (60%) of interviewees who
headed departmentally based PMOs indicated that all levels of their
departments embraced the direction of the PMO. The findings suggest
that departmentally based Project Management offices are successful
in their own silos but not accepted outside their span of influence,
and therefore, are unable to influence the organization as a whole. |
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| An examination of the traditional Project Management Office model
compared to the more current corporate-wide (Enterprise) approach
helps in building this case for moving the PMO to this more strategic,
enterprise-wide position. |
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| The Traditional Project Management Office (PMO) |
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| Most Project Management Offices are located only within a department
in their organizations. Generally these project management offices
are relegated to the IT or Engineering department. They struggle to
maintain a strategic orientation because they are not set-up to affect
the entire organization. This is because many project management offices
started off from a grass roots approach. They were started by an individual
or small group of individuals who saw the need to bring more control
over the management of a portfolio of projects, which, although based
on good intentions, lacked senior management’s direction and
control. |
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| According to the research, initial effort on the part of the
PMO usually included presentations to increase departmental awareness
and provision of training for the management team to help ensure
their understanding. This helped the PMO to move from a grass-roots
approach into a more formal structure. Generally, these Project
Management Offices gained success through their department. |
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| Their success increased when they were able to get executive
sponsorship for their efforts but this was not always the case.
In fact, the research shows that executive sponsorship was a critical
requirement for PMO success and lack of it was a key reason for
failure of the PMO. |
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| The Enterprise Project Management Office (Enterprise
PMO) |
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The next evolution of the Project Management Office is for it
to move into the corporate side of the business. This allows the
PMO to gain a strategic position within the organization and works
to ensure that projects proceed on the basis of their strategic
alignment to the objectives of the organization. A PMO that is organizationally
based versus departmentally based is more likely to get executive
support. After all, project management should not be a departmental
strategy; it should be an organizational strategy. |
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| The senior management team can demonstrate a strong
commitment to this Enterprise PMO by requiring all project teams
to adopt the process, tools and templates of the Enterprise PMO.
The Enterprise PMO should ensure projects are aligned with corporate
strategy and direction. Senior executives are most concerned with
how an Enterprise PMO will positively impact the organization as
a whole, each individual department, and their customers. |
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| In some organizations, the Enterprise PMO will oversee
the management of all strategically aligned projects. In larger
organizations, the Enterprise PMO will have departmentally-based
PMOs reporting directly to them. This provides them with an opportunity
to align all corporate-based and departmentally based projects against
the strategic plan and to manage project prioritization and resourcing
issues. This is an example of what the Enterprise PMO structure
looks like: |
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| Measuring the Impact of the Enterprise PMO |
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| The Enterprise PMO is more likely to receive continuous support
from the management team if they can provide both quantifiable and
qualitative data on projects that they are responsible for overseeing
on a weekly or monthly basis. This data can include a comparison
of the number of projects as well as the changes that have occurred
since the implementation of the Enterprise PMO. It includes the
number of projects that:
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- Were completed within their time constraints since the implementation
of the Enterprise PMO as compared to the number of projects completed
within their time constraints prior to the implementation of an
Enterprise PMO.
- Were completed within their budget constraints since the implementation
of the Enterprise PMO as compared to the number of projects completed
within their budget constraints prior to the implementation of
an Enterprise PMO.
- Met or exceeded the customer requirements specifically identified
at the beginning of the project.
- Aligned with corporate strategy (Alignment should be 100%).
- Have successfully been managed (on-time, on-budget, met customer
expectations) after training of project managers and team members
as compared to projects managed by individuals not formally trained.
- Followed the prescribed Enterprise PMO project management process
and were completed successfully as compared to projects that did
not follow the prescribed Enterprise PMO project management process.
- Applied a risk management process with fewer crisis situations,
as compared to those projects that did not apply risk management.
- Realized a reduction in cycle time from order to delivery or
from product design to product launch.
- Simplified by making transparent a complex project for the customer,
supplier and third parties.
- Utilized staff with appropriate skill sets for the project.
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| Guidelines for Structuring the Enterprise PMO |
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A reporting structure in which the Enterprise PMO reports directly
to one or more members of the senior management team increases the
likelihood for timely approvals and decisions regarding projects
and generates greater visibility and acceptance for the Enterprise
PMO by the rest of the organization. |
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| Furthermore, correctly structuring the Enterprise PMO requires consideration
for the authority of its leader. The head of the Enterprise PMO must
have the same management level as the managers of the functional departments
from which they will need to draw staff for the project team. This
will help the Enterprise PMO to focus on the interests of the organization
as a whole rather than on the interests of any particular functional
group. It will also ensure that the Enterprise PMO is able to resolve
any conflicts that may arise between projects competing for common
resources. |
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A current approach to the structuring of the Enterprise PMO is
to have anyone who manages a project reporting to a functional manager
rather than to the Enterprise PMO. Our research indicates that this
matrix management structure tends to reduce the hierarchy of the
Enterprise PMO and it ensures it is able to stay focused on coaching
and mentoring all project managers rather than the more time consuming
role of managing all project managers. |
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The Enterprise PMO should engage the senior management
team to visibly support it and its project management approach.
They can do this by coaching senior management through the approval
process to ensure timely approvals are given for Project Scope Statements,
Milestone Reports, Project Change Requests and other key project
documentation. As well, the Enterprise PMO should review each of
these documents with the Project Manager to ensure that the documentation
is clear and accurate before presenting to the member of senior
management who acts in the role of sponsor for the project. This
will reduce the need to coach the senior management on every detail
of each document before they agree to its approval. |
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It is important for the Enterprise PMO to provide early warning
signs to management about difficulties that projects may be facing.
While senior management does not have the time to examine individual,
detailed reports on each project, nevertheless, they do want to
be kept up to date on the progress of all projects. Therefore, it
is preferable for the Enterprise PMO to maintain a regular practice
of communicating and reporting to the senior management team through
an integrated report that combines all projects into one report.
This report will indicate which of the projects is on-track, which
are off-track, and which are experiencing serious problems and/or
blocks. This provides early warning signs to management of
difficulties that may be occurring with any project. |
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“Lessons Learned” from projects and customer feedback
are other forms of communication with the senior management team
that will generate added support from them as continuous improvement
is applied. |
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| Summary |
| A PMO that is structured to manage projects across
departments, locations and countries is best implemented on an enterprise-wide
basis. This is because it will hold the responsibility for ensuring
consistency in the management of all elements of each of these projects
and will also be able to assess and prioritize each project for alignment
with the corporate strategy. The goal of an Enterprise PMO is to help
their organization effectively manage projects in today’s complex,
global marketplace. The successful management of these projects has
a direct impact on the organization, its customers and its resources. |
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| About the Author |
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| As President and CEO of Business Improvement Architects, Michael works with executives and senior managers around the world to help them improve operational effectiveness through strategic planning, leadership development, project management and quality management. He has been instrumental in helping his clients reduce waste and increase efficiencies and profits with his clear processes and quality approach. |
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| For more information about this article, please contact
bia™ at info@bia.ca. |
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| Michael Stanleigh is author of the global report: “2010 PMO Global Study: How a Project Management Office Can Improve Organizational Effectiveness”.
For more information about this report, please contact
bia™ at info@bia.ca. |
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| © Business Improvement Architects |
