Project management offices (PMOs) are evolving, and significant shifts have taken place, more specifically over the past two years for clear reasons. However, with the 2022 PMO Outlook Report finding that 71 percent of projects are not very well aligned with strategic business priorities, PMO leaders and executives are under more pressure than ever to redefine success metrics.
Building an effective PMO, one that is doing the right things, in the right way, in the right order and with the right team, is already a complex process and adapting to evolving business priorities is crucial for survival. So said Dr Clive Enoch, head of the BanservAfrica enterprise project management office (ePMO), while unpacking current trends developing within PMOs, present-day pain points, and what PMO leaders must know and do differently to thrive in the coming year and beyond.
Dr Enoch was speaking at a recent PMO Forum event, a quarterly invitation-only interest group falling under the umbrella of Project Management South Africa (PMSA) and sponsored by Project Portfolio Office.
“The role of the PMO is shifting from one of support, or an entity that lacks authority within the broader organisation, to one that is driving the value within a business,” he commented. “There is a clear move away from just tracking, monitoring, and reporting, towards taking control and managing business outcomes. We’re also seeing a greater focus on resource management and prioritisation based on strategy, with PMOs having more say in looking at initiatives put forward and seeing how aligned to strategy they are.”
The PMO’s biggest challenges currently
According to the 2022 PMO Outlook Report, the biggest issues identified for PMOs include a lack of adequate resources, which is a pervasive challenge within this sector. The report also pointed to project failure, a lack of strategic insights to drive project prioritisation, and misalignment to business strategic priorities as problem areas within today’s PMO.
“When posed with the question ‘what is the biggest challenge you face today with managing your portfolio of projects’, 48 percent of respondents in the most recent PMO Outlook Report stated that it was resource management, with capacity planning being the most challenging part of this,” Enoch explained.
“Those who have gone into the art and science of capacity planning will attest to the fact that it’s easy to get lost here. It’s really difficult to get it even 80 percent right, in my experience, because you could plan your capacity and allocate your resources, but things do change and there are often resource constraints within organisations, with people working across multiple projects, as well as a reliance on IT resources. This means that, while you’ve planned ahead and allocated your resources well, people can be taken off the project and you need to rethink capacity again.”
The next most significant challenge, according to the paper, is project prioritisation, as voted by 31 percent of those surveyed. Drilling down further, 40 percent named the issue of saying no to some projects in the portfolio as challenging.
“Theoretically, if we have portfolio management and a prioritisation mechanism that is well tested, approved, and adopted by the organisation, then it should be easy to say no,” stated Enoch. “However, it can be difficult because, even though you might have a prioritised list of projects, there will still be those things that the executive or the board request to be reprioritised, or perhaps something related to compliance that was not included in the original plan that comes out of left field. The key point here though is that, if you have good processes in place, they can be dealt with more easily.”
The next challenge, which weighed in with 16 percent of responses, was visibility and reporting. “Sub elements of this part of the report showed that there can be a lack of real-time data (16 percent). This relies not only on the systems you have in place but also on your project managers and administrators providing the data as quickly as possible. The major challenge here is data not being centralised, as attested to by 53 percent of those interviewed.
“Therefore, having a tool in place, and project managers who are not dispersed within the organisation working on various spreadsheets, is key. The integration of data from systems outside the PMO’s control also scored high on the list of visibility and reporting challenges, at 34 percent. There can be a real disconnect here, as for instance finance and the PMO have very different perspectives.”
Financial management scored fairly low on the list of challenges, at only five percent. There was a fifty-fifty split here on which specific areas are the most difficult, between effectively forecasting portfolio or project costs, or gathering accurate financial data.
Redefining the PMO’s success metrics
The 2022 PMO Outlook Report also addressed how success metrics should be redefined in order for PMOs to succeed in the new era. “The first question to ask is what success means for your PMO, and the next is what it means for your key sponsor, or perhaps a chief strategy officer, and the organisation as a whole?” Enoch asked. “To do this, you would need to understand the purpose of the PMO and where it fits in. It’s important to define what success means, using metrics based on business goals. This then allows you to create project KPIs to support goals, measure against these metrics, and align the project management KPIs to how you’ve defined success.
“Typically, the way that a PMO is measured is based on delivering on-time and within budget, and 27 percent of those surveyed attest to this. We all know about the triple constraint – how the success of a project is affected by its costs, time, and scope – and there has long been debate on whether this is how a PMO should be measured. I don’t think you can get away from it completely, although there is definitely more that needs to be considered.
“Twenty-two percent felt that the PMO should be measured on delivering the most valuable projects. Hopefully the organisation is following some sort of financial model to quantify which projects are more valuable, but in my opinion, the PMO needs to make visible the value that the projects are delivering. Another 22 percent said that the PMO should be measured on how it is driving the business forward, and the role it plays in cutting costs and boosting revenue. The PMO might not always be looked at to provide this type of information, but I think that it can provide input into these discussions at a strategic level.
“The other side to the coin is the question asked on how your organisation defines project failure. What’s interesting here is that 34 percent said that a project would be deemed as having failed should the stakeholders not be satisfied with the end result, while 19 percent said that this would be the case should the project be delayed or over budget. The statistic around stakeholders is a noteworthy one, and a good example is the Hubble Telescope project. Although the world’s greatest minds were involved in the initiative and it achieved something quite significant, it was still deemed to have failed by the American public due to a flaw with its mirrors. They might not have been direct stakeholders in this, but they did have a say in sentiment around the project.”
The report lists the most common reasons for project failure as: scope creep or unrealistic deadlines (42 percent); not enough resources to meet project demands (31 percent); no clear objectives or milestones to measure (14 percent); no executive support (nine percent); and a lack of communication (four percent).
To get a view of the common PMO metrics or key performance indicators (KPIs) measured by the forum’s PMOs, download a free copy of the PMO Metrics Scorecard.
Portfolio level impact
Respondents were asked what percentage of their portfolio projects had failed over the past year, with 26 percent saying that they have a 20 to 50 percent failure rate. This is a significant figure, said Enoch, but it reflects directly on how you define failure.
Finally, the report looked at what interviewees are currently using to manage their project portfolio. “We saw a vast improvement in this from previous reports, with 41 percent of those who participated now using project management or task management software. There’s definitely a move away from tools not necessarily project management focused that were previously used to manage projects.”
Challenges, why do PMOs fail?
Enoch then took PMO Forum attendees through the challenges faced by PMOs that cause failure, looking at symptoms within organisations, related behaviours, and root causes. For instance, a symptom could be that business demand is invisible to the PMO, with the behaviour being the fact that business requests bypass the PMO completely, but the root cause is that it is viewed as unresponsive. “Here, the step to ensure PMO success would be to review and redefine the value proposition of the PMO, to ensure that it addresses the interests of business and IT stakeholders.”
Another example would be the weak adoption of project management standards, with projects not adhering to them and team members sticking to the ‘comfort zone’ of familiar methodologies. According to Enoch, to ensure success, the PMO would need to clearly define the metrics used to measure its success.
“Other required steps for success would include the creation of high-level reporting that all key audiences agree meets the required visibility levels, clarification of the PMO’s role in corporate governance, and refining processes for project feedback.”
The PMO’s value proposition
Taking a look at the value provided by a PMO, Enoch discussed several point, including the establishment of a common set of project management processes and templates. “This is the fundamental stuff,” he said, adding that another key value add delivered by the PMO is the building and updating of methodologies.
“Many organisations are employing a waterfall agile or perhaps hybrid approach. You might even find that part of the business is trying to delivery in an agile way, and the rest of the company is struggling with this type of thinking, with management still wanting to manage in a waterfall way, because this is the way they’ve done things historically. It’s a really big change management function to adjust the hearts and minds of the people participating in a project, and so, methodologies are very important and you need to define them clearly and communicate them well.”
The PMO also facilitates project team communication, by providing a common language to the organisation, provides training to build core project management competencies, delivers project management coaching services, tracks basic information and provides project visibility, tracks organisation-wide metrics on the state of project delivery and the value being provided to the business, and acts as the overall advocate for project management to the organisation.
“As part of a transformation approach to PMOs, there are several key considerations to be taken into account. Firstly, the existing PMO must be assessed, to understand the services that are being provided, its purpose, role and perceived value within the organisation.
“The second step is to ascertain what stakeholders and resources need from the PMO, evaluating what the business requirements are for the PMO and establishing the gap between these needs and new vision, and the existing PMO.”
The next action is to design a new operating model, where the processes, structure, templates and everything else that a PMO is comprised of are clarified, followed by a competency assessment. Here, the competence of resources is measured, to determine the best fit within the new model. This can obviously be a sensitive topic, and should be tackled in conjunction with the HR manager and the relevant unions.
“The final step is actually defining the implementation roadmap for the new structure, ensuring all stakeholders are aligned with the need for transformation, the specific milestones, the people and systems impact, and the benefits to be gained.
“Critical success factors include visible and active executive support, proactive and continuous change management throughout the organisation, enough of the right people with the correct skills set, and the implementation of fit-for-purpose technology and processes to ease the administration and collation burden, amongst others,” he concluded.
PMO leaders and executives from Africa and beyond who would like to join a growing community of like-minded individuals committed to advancing the project management profession to increase knowledge and improve skills are invited to sign up here. Book your place to attend the two remaining PMO Forum events taking place virtually for 2022, on 19 August and 11 November, as seats are limited.