Optimizing a company and it's PPM with a PMO system

Abstract

Project Management Offices (PMO) are centralised functions within organisations that facilitate project, programme, and portfolio management. PMO systems aim to standardise project management practices, optimise resource allocation, and align projects with strategic objectives. They support project management at various levels, including project, programme, and portfolio management. Integrations in PMO systems can include tools and models such as the stage-gate model, earned value management, and SWOT analysis. PMO systems aid in risk management, resource management, and visualisations, such as project dashboards and Gantt charts. The implementation process for a PMO system requires a change management plan to ensure stakeholder buy-in and effective execution. Applying change management models, such as the ADKAR model, can help organisations effectively manage and implement PMO systems, leading to improved project outcomes and organisational performance.

Concept of PMO system

PMO systems are a centralised function within an organization that oversee project, program, and PMO systems are centralised functions within an organisation that oversee project, programme, and portfolio management. They provide a framework for standardising project management practices, optimising resource allocation, and aligning projects with strategic objectives.

The concept of a PMO system involves implementing a set of processes and tools to manage and optimise the project management function. Its primary objective is to improve project performance by providing project managers with the necessary support, guidance, and resources to manage projects effectively. The system also helps organisations standardise their project management practices, increase project success rates, reduce project risks, and achieve strategic business objectives.

How it supports project, program and portfolio management

Project level: A PMO system can help ensure that a project is completed on time, within budget, and at a certain level of quality. This can be done by including tools for project planning, risk management, and quality control. The system can also support individual projects with the needed templates, guidelines, and best practices.

PMI defines the primary function of a PMO in project support, but not limited to, as:

• Managing shared resources across all projects administered by the PMO;
• Identifying and developing project management methodology, best practices, and standards;
• Coaching, mentoring, training, and oversight;
• Monitoring compliance with project management standards, policies, procedures, and templates by means of project audits;
• Developing and managing project policies, procedures, templates, and other shared documentation(organizational process assets); and
• Coordinating communication across projects.

Program level: At the programme management level, a PMO system can provide support for managing multiple projects that are related or have dependencies. This can include tools for programme planning, resource allocation, and risk management. By providing a holistic view of multiple projects, a PMO system can help ensure that programme goals are aligned with organisational objectives and that resources are used effectively.

Portfolio management level: A PMO system supports managing portfolios to align with the organisational strategies by including tools and models for project selection, prioritisation, and resource allocation. This ensures that organisational goals are reached with value maximisation, and proper resources are allocated. The portfolio level aligns with the executive level for strategic informed decision-making and overview. A PMO system can provide real-time visibility and transparency in project, programme, portfolio, and company performance.

PMI describes a portfolio management office as service for project and program in following areas:

• Aggregate and provide performance results of the portfolio components;
• Define portfolio management methodology, best practices, and standards for use as guidelines while formulating the methodology and standards for project and program management;
• Forecast supply and demand for a portfolio that can be further broken down into supply and demand for projects and programs;
• Define a portfolio management strategy;
• Provide portfolio oversight and manage the overall portfolio value; and
• Identify risks, analyze risks, and plan risk responses at a portfolio level.

Integration of tools in a PMO system

There are a variety of models and tools that can be suited for a PMO system, and the specific tools and models that are used will depend on the needs and objectives of the organisation. When implementing a PMO system, it’s essential to map the models and tools used in practice already and integrate them into the common platform of the PMO system. Some examples of tools and models which can be used are:

• Stage-gate model: The model can help create a structure to follow the different levels of PPP management in the PMO system, tracking progress and department involvement in terms of clear communication and ownership allocation for each stage and gate customised according to need.

• Earned value management (EVM): EVM helps to track the progress of a project by comparing the amount of work completed to the budgeted cost of the work. EVM is often used in PMO systems to help project managers identify potential cost and schedule overruns and take corrective action.

• SWOT analysis: SWOT analysis is a strategic planning tool used to identify organisational strengths, weaknesses, opportunities, and threats. SWOT analysis can be used in PMO systems to help organisations identify areas for improvement and to develop strategies to take advantage of opportunities.

Risk Management

With the holistic view a PMO system offers in project, programme and portfolio management, it also opens up the opportunity to assist with identifying, analysing, and responding to risk management.

• Identifying risk involves using the holistic view and historical records to recognise similar risks from the past. Although all projects are unique, this approach provides an additional resource in the identification process. The system can track portfolio or programme-level risk down to individual projects, creating more transparency. If the PMO system is properly aligned with the company strategy, it will be easier to identify any risks of misalignment between that and a project objective.

• Analysing risks can be visualised and structured using an impact-likelihood matrix, providing a comprehensive insight into the identified risks. The analysis can also be compared to a risk register of previously assessed risks. Associated quantitative measures of the risks being realised and qualitative measures on well-being and retention can be considered.

• Response strategies can be developed with support from the system analysis of the risk. With a holistic, broad view, resources can be appropriately allocated to mitigate risks across the portfolio, programmes, and projects. The system should also be able to help provide a time estimate to anticipate the potential realisation of the risks.

Resource Management

When referring to resource management, it is not just cost-related, but also refer to human capital.

Thus, properly defining and allocating talent and skills is crucial for Resource Allocation in Project Management. In this regard, the PMO system can aid in centralising the management of project resources and distributing them across portfolios.

The system can help structure but not limited to:

• Resource identification
• Process development on resource assignments
• Project staff planning and controlling.

By centralising these aspects within the system, the organisation gains: PM competency. Better defined resources help to appoint suitable PMs, who can then assign appropriate resources and provide more effective training. This results in higher quality project management, delivered within budget and on time, in line with the Iron triangle, thus reducing project failures.

Professional development programs. When PM competencies are identified forms KPI’s for the project performance, which can be used to proactively develop and train PM’s. A well trained PM should be able to support the project using the PMO forecasts, resource allocation and reviewing plans.

Role description for responsibility and ownership. With a clearer description of the knowledge and skills needed for a project role, the required project resources can be better managed. This is achieved by properly defining names, descriptions, and required backgrounds for roles, so that less time and skills are wasted in the wrong positions.

Organisational capacity. In a holistic view, once the database of specific roles, along with their skills, capabilities, specialities, experience, and technical skills are mapped, the company can begin to see existing resources across the organisation and assess its capacity.

To achieve these gains, it is essential to gain support from the top, in order to make the best use of resources across portfolios, align with the company strategy, and establish proper governance for project selection.

Visualisation

Visualisations can be a powerful tool for PMO systems, as they provide a way to quickly convey complex project information to stakeholders. This should be considered when setting up the PMO system. Some examples of ways to visualise models and tools in the PMO system could include:

• Project dashboard: Project dashboards can utilise available data from both within and outside the organisation to provide a high-level overview of a project's status and performance using charts, graphs, and other visualisations, depending on the needs. Dashboards can help stakeholders quickly identify areas of concern or opportunities for improvement, for example, through KPIs. Tools like Power BI and Tableau can be used.

• Gannt charts: Gantt charts are a popular project management tool that offers a visual representation of a project schedule. They can be used to track progress, identify potential delays, and communicate project timelines.

Implementation process of the PMO system

Building a PMO isn't a plug-and-play task, which is unfortunately an assumption some organisations make. There needs to be a change management plan to ensure the best possible stakeholder "buy-in" for the optimal intended use of the PMO system, minimising the risk of a worst-case scenario of PMO shutdown.

Implementing a new PMO system involves introducing new methodologies, policies, and procedures for projects, a knowledge base, a repository for PMs, alignment with benefits and strategy, and an entirely new software. These changes impact areas adapting to uncertainties, introducing responsibilities and ownership for project KPIs, delivering realised benefits aligned with business values, and adding qualitative measures for costs and reductions thereof.

Building a PMO

To build a PMO system, follow these steps.

• Choose the PMO type that best fits the existing business model and operational processes, minimising the necessary alterations with the new management processes.
• Education has two parts: clearly stating the role of the PMO in relation to project management, and training and coaching employees on the new processes.
• The change management process should address the new PMO processes and methodologies customised for the organisation.
• Establish a governance structure for reviewing and approving project stages.

All steps need to be communicated in an orderly manner to the organisation through a change management plan.

Change Management

Change management models vary, but most revolve around the following five steps:

• Initiation phase: Identify and clarify the need, readiness, and scope of change.
• Planning phase: Define the change plan, stakeholder engagement plan, transition, and integration plan.
• Executing phase: Prepare the organisation for the change, mobilise stakeholders, and begin delivering project outputs.
• Monitor and Control: Measure the adaptation rate, change outcomes, and benefits during the system implementation. Define quantitative and qualitative KPIs, as well as tangible and intangible measures, to monitor during and after the implementation.
• Sustaining: Continue stakeholder communication, consulting, and representation after implementation. Adjust based on KPIs identified and maintain control.

By addressing these areas and integrating change management as part of the PMO execution, as well as continuously assessing the process, improvements can be made in the implementation, targeting stakeholders' perceived value of the PMO system and realising the benefits.

ADKAR

The people side of the change is big part of a successful software implementation. ADKAR is a change model, presenting a framework intended to increase the likelihood of a successful change, by understanding the individual level change, where the stage model of transition like the five stages of grief should be considered . The model consists of five steps, Awareness, Desire, Knowledge, Ability, Reinforcement, which all needs to be realised for the change to be successful.

• Awareness: To establish awareness, the PMO should communicate the need for change, emphasizing the urgency and importance of the transformation. The PMO should clearly articulate the rationale, benefits, and potential consequences of not implementing the change. The lack of awareness will increase resistance to change in accompany. So important questions surrounding why the change is happening, the as is situation and what’s in it for the stakeholders, should be properly communicated. Also address missing information of circulating rumours.

• Desire: Following the creation of awareness, the PMO must foster a desire among the individuel stakeholders to participate in and support the change process. By addressing individual concerns and highlighting the personal benefits of the change, the PMO can create a supportive environment that encourages stakeholder buy-in.

• Knowledge: With stakeholders aware and motivated, the PMO must equip them with the necessary knowledge for change implementation. The PMO should focus on transferring relevant information and ensuring that stakeholders understand their roles and responsibilities in the change process.

• Ability: After stakeholders have acquired the necessary knowledge, the PMO must support them in applying it effectively. The individual abilities include physiological, intellectual and physical capabilities, which can be developed on by offering coaching, mentoring, and hands-on assistance to help stakeholders adjust to the new processes and tools through both workshops and small pilot projects to gain experience.

• Reinforcement: The final step in the ADKAR change model is reinforcing the change to make it sustainable and integrated into the organization's culture. This can be done through recognition, rewards and celebrations, as well as the personal satisfaction from realising the benefits from the change. The leadership should also introduce policies and procedures ensuring the phasing out of old practises.

By applying the ADKAR change model in a PMO context, organizations can effectively manage and implement change, leading to improved project outcomes and organizational performance.

Benefits of a PMO system

PMO systems can help organisations address issues such as lack of project visibility, inconsistent project management practices, insufficient resource allocation, and poor alignment with strategic objectives. Some main benefits of implementing a proper PMO system is, as discussed throughout this wiki:

• Improved project success: Improving the success rate of projects by providing consistent methodologies and tools, as well as increased visibility into project status, risks, and performance.
• Increased project efficiency: Increasing project efficiency by providing a centralised warehouse of project information, which can help reduce redundant work and ensure that resources are allocated properly.
• Improved strategic alignment: Ensuring that projects are aligned with the organisation's strategic goals and objectives, which can help ensure that projects are delivering value to the organisation.
• Better resource management: Optimising resource allocation by providing a clear view of resource availability and demand, which can help ensure that resources are allocated to the projects that are most critical to the organisation.
• Improved stakeholder communication: Improving stakeholder communication by providing a centralised platform for project information, which can help ensure that stakeholders have access to the information they need to make informed decisions.

Limitations and pitfalls of a PMO system

PMO systems can face challenges such as lack of executive collaboration, resistance to change, and insufficient resources. It's important to address these challenges and customise the PMO system to the needs of the organisation. Here are some common pitfall which have been discussed throughout this wiki:

• No clear objectives for the PMO system: If the PMO's purpose, goals, and stakeholder expectations are not well-defined, it can lead to misaligned efforts and dissatisfaction.
• Inadequate support from senior management: Without strong commitment and backing from top-level management, the PMO may struggle to influence the organisation's project management practices and achieve its objectives.
• Lack of support and resistance to change: Failure to address and manage resistance to the changes introduced by the PMO can result in reduced adoption of new methodologies, policies, and procedures, thus impacting the PMO's overall effectiveness
• Insufficient resources and budget: A lack of necessary resources, including skilled staff and budget, can hinder the PMO's ability to perform its functions effectively.
• Poorly defined roles and responsibilities: Ambiguity surrounding the roles, responsibilities, and authority of the PMO can cause confusion and conflict within the organisation, obstructing the PMO's success.

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