What Makes a Project Management Office (PMO) Effective?

13 April

According to Webster’s Dictionary effective means producing a desired result. Based on my experience and observations across corporate landscapes there is one major desired result that a project management office (PMO) must achieve to be effective and that is to get the top of the house to establish a business strategy that addresses the multi project resource conflict that exists in most organizations.

Most organizations add projects to the pipeline without looking at the root cause for past failures; which is simply project volume exceeding resource capacity. They continue to overload resources and accept project delays as a normal course of business without doing root cause analysis to address this unproductive environment.

The implication of this for organizations is huge. According to the Project Management Institute, $12 trillion—nearly 20 percent of the world’s GDP—is invested in projects. And with this work, systematically improving project productivity within and across organizations is the most common bottleneck. This bottleneck causes high enterprise project failure rates as high as 70 percent according to Standish Group research.

The execution of projects is the way the strategic plan gets implemented and project management offices typically attempt to improve project performance by:

Establishing a project management methodology

Developing standard templates

Providing training in PM concepts and software

All of the above add value but to really be effective the PMO needs to influence, impact and change the behavior at the executive level of an organization and fix the problem of competing project priorities that have no mechanism for resolution. Without that happening those three bulleted items mean nothing.

Project managers live with uncertainty in every project they manage. They know right from the outset of a project that they will have to fight hard for resources, and that there is no assurance they will be able to keep their resources as long as they need them. This is because most strategic planning processes are flawed when it comes to transitioning to strategic execution. There is no process to stop the ad-hoc pushing of projects by executives into the pipeline that creates, sustains and exacerbates the resource conflicts across the organization.

So for the PMO to be effective it must get executive management to establish a governance strategy that includes a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making. The focus of the strategy is about how people throughout the organization should make decisions and allocate resources in order to accomplish key strategic objectives. A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals.

This strategy, known as portfolio project management, stops the madness that results in bad multitasking. Multitasking becomes bad when the combined duration of all projects increases as a direct of the multitasking. It’s always the same people assigned to too many projects that creates bad multitasking which culminates in the project productivity bottleneck.

When this occurs the organization loses the concept of the relay runner work ethic on projects delaying completion of project activities. The relay runner concept supports Dr. Eliyahu Goldratt’s improvement methodology called the Theory of Constraints. Simply stated Dr. Goldratt indicates that “if a project is initiated to have a positive effect on the organization, the sooner the project is completed; the sooner the organization receives the benefits. Therefore the constraint of any single project must be its cycle time (the time it takes for the project to complete). The constraint of the entire collection of projects of an organization, its portfolio, must be the combined cycle time of all of the projects¹.”

To provide effectiveness the PMO must help its organization choose a strategy that dramatically fixes the resource conflict on projects by convincing executives to stop pushing new projects into the organization irrespective of the resource capacity to perform those projects. This requires the PMO to counsel the executive team to create a common approach to view the organization holistically, providing new skills for strategic execution and remove competing priorities. This approach requires a minor amount of initial complexity at the front end to avoid an unworkable amount of complication later on; evidenced by today’s project failure rate.

Today what matters most is not what you know but how fast you can apply it. In a rapidly changing competitive environment, acceleration is an essential ingredient in achieving high quality and sustainable competitive advantage.

So forget about checklists, templates and project plans. To be effective the PMO must get executive management to change their behavior and figure out where the company should be focusing its limited resources as opposed to doing a lot of things that effectively fall outside that focus. This is no small task.

 

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