Is your PMO what it should be? A model to define which functions a PMO should perform, taking into consideration the expected benefits of its clients.

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1 Is your PMO what it should be? A model to define which functions a PMO should perform, taking into consideration the expected benefits of its clients. Americo Pinto, Director of Research, Noorden Group, Brazil Abstract In a worldwide scenario where PMOs are being continually challenged to deliver value to their organizations, how to ensure that a PMO is fully aligned to the needs of its clients? Based on a research conducted with PMO leaders and PMO clients in Latin America, this paper presents an original model developed to suggest and prioritize the functions that a PMO could perform, considering the expected benefits by its clients. This model, named PMO MIX MANAGER, is freely available at for all project management worldwide community. Introduction Since the 90's it has been possible to observe the emergence of consistent PMOs (Project Management Offices) in organizations around the world. This trend has been confirmed and consolidated over the last decade (Dai & Wells, 2004, p.524, Hobbs & Aubry, 2007, p.74), reinforcing the perception that many of the largest organizations in several countries have at least one PMO in their structure. The creation of these PMOs has been justified over the years by different needs, but most of them have always shared a larger common goal: to obtain better results in the projects developed by the organization. The existence and continuity of these organizational entities, on the other hand, has been constantly questioned in many organizations, as identified by Hurt and Thomas (2009, p.55) when reporting the tenuous issue of sustainability of PMOs." The ultimate goal of PMOs worldwide is to generate perceived value to their organizations and therefore are permanently challenged, which in many cases results in loss of support, reductions, and even the complete elimination of the area. This significant variation in the perceived value of PMOs was confirmed by Hobbs and Aubry (2007, p. 74) and deepened by Aubry, Hobbs and Thuillier (2008a, p. 43), via analyzing the story of four PMOs and realizing a complex phenomenon: the transformations of these entities, on average every two years, due to the process of evolution or an organizational instability. In another qualitative study, Aubry, Hobbs and Thuillier (2008b, p.554) also concluded that organizational tensions are the main motivations behind the reconfiguration of PMOs, which thus justifies the need for flexible models that enable new or existing PMOs to adapt to changing needs, an objective of this article. 1

2 Additionally, in their study "A Portrait of Reliable Population of PMOs", Hobbs & Aubry (2007, p.82) reported that among 500 PMOs evaluated worldwide, 50% provide the function of "monitoring and controlling the performance of the PMO ", demonstrating the concern and the need for PMOs to measure their own performance, and reinforcing the need to establish models - such as the one presented below - to facilitate this process. A PMO can be seen as a service provider, which has clients with specific needs (Pinto, Cota and Levin, 2010a, p. 386). Senior management, project managers, functional managers and team members are some of those potential clients who have different needs, and in some cases even conflicting needs. The better a PMO delivers its services (or functions), and only those related to the needs of its clients such as identified by Thomas & Mullaly (2008, p.33) by introducing the concept of "fit" the greater the perceived value generated. But the one important question for a PMO leader is: Is your PMO what you idealized by yourself or it is what your clients really need? Definitely it is common to find PMOs performing services that do not meet the value expectations of their clients. Some PMOs apparently have little commitment to the practical application and effective results. And the result is that they lose support quickly because they do not generate perceived value for their clients and for the organization. But how to know what clients really need from the PMO? Asking them directly might seem like a good alternative, but the problem is that the language of the leader and members of the PMO is not the same as their clients. While the PMO thinks "what services we should offer," the client thinks "what benefits and results are concern to me and the organization." The solution then is to speak the same language of the clients: benefits and results. Considering therefore the gap in existing knowledge on the subject, this paper proposes a new model to help a PMO to establish what services should be prioritized, while considering the expected benefits of its clients. One of the findings of the first study that presents a Reliable Portrait of the Population of PMOs (Hobbs & Aubry, 2007, p. 82) was that 50% of the PMOs investigated have the function of monitoring and controlling their own performance. In other words, PMOs are concerned with assessing and measuring their own performance. And considering the lack of knowledge that exists regarding the maturity of PMOs, this paper suggests a specific model to assess the PMO maturity. Its aim is to allow a PMO, based on its mission, to objectively assess its maturity level, considering the degree of sophistication with which it performs each of its functions, while also taking into consideration its clients interests and the organization s needs. Identifying the potential and expected benefits The literature presents several definitions for the term "PMO", but many share the same essence: The PMO is an area that centralizes certain activities - also called functions or services - related to the practice of project management, with the goal of making the organization achieve better results through projects. Some common functions/services of PMOs are: reporting project/program status to upper management, developing and implementing a standard project management methodology, providing mentoring for Project Managers, managing one or more portfolios, and even, manage certain projects or programs considered strategic. These and other functions/services were observed by Hobbs and Aubry (2010, p.40), totaling 27 functions / services most commonly found in 500 PMOs worldwide. 2

3 1 - Report project/program status to upper management The most common PMO functions/services 15 - Develop and implement a standard project management methodology 2 - Monitor and control project/program performance 16 - Develop the competences of professionals, including training 3 - Implement and operate project management information systems 4 - Coordinate and integrate the projects in the portfolio 5 - Promote project management awareness within the organization 17 - Provide top management with advice 18 - Develop and maintain a project scoreboard 19 - Monitor and control the performance of the PMO itself 6 - Participate in strategic planning 20 - Provide mentoring for Project Managers 7- Manage one or more portfolios 21 - Identify, select and prioritize new projects 8 - Manage project files/documentation 22 - Manage one or more programs 9 - Audit projects and programs 23 - Manage customer interfaces 10 - Provide a set of tools that can be customized to meet the specific needs of programs and projects 24 - Provide specialized tasks for project managers 11 - Allocate resources between projects 25 - Carry out post-project management reviews 12 - Implement and manage the database of lessons learned or knowledge repository 26 - Implement and manage the risk and issues database 13 - Manage program benefits 27 - Networking and environmental scanning 14 - Recruit, select, evaluate and decide on the salaries of project managers EXHIBIT 1 - The 27 most common PMO functions/services of Hobbs and Aubry (2010, p.40). A PMO that wants to survive in an organization needs to understand itself as truly a services provider, remaining permanently aligned to the needs of its clients. On the other hand, it is important to draw attention to the complexity of maintaining this alignment, as the organization and the clients of the PMO are also constantly changing, depending on the business scenario, strategic decisions or simply by the maturity evolution of each its clients, which directly influence their needs. In other words, the success of a PMO goes not only for its ability to understand who its clients are, but also their needs and how to meet them while creating clear benefits and perceived value. In fact, it also involves its continuing ability to readjust and reconfigure, as well as understanding and meeting the new needs arising from the maturing of its clients and the organization as a whole. Among other aspects, this challenge involves mainly the ability of the PMO to provide services aligned to the priority needs of its clients. But how to translate those needs into a set of services provided by the PMO? In general, PMO clients expose their needs in terms of expected benefits, not in terms of what services should be provided by the PMO. For example, a senior director may possibly say that it is among his/her priorities to have more effective control over projects, but hardly identify the best way to do this. Would it be providing a methodology for project management? Mentoring for Project Managers? Planning support? Finally, what 3

4 services offered by the PMO can maximize the possibility of generating the expected benefit for the client, in this case, more effective control? In order to study this issue, the first step of this research was to understand that these expected benefits may extend into an extensive list, which for purposes of this study, was developed and validated in interviews (Silverman, 1997) with PMO clients in different hierarchical levels among 11 organizations from 9 industries (Banking, Consulting, Energy [2], Financial Services, Manufacturing, Mining, Oil & Gas, Retail, Service, Telecommunications), located in Latin America, totaling 45 respondents (12 Directors, 12 Project Managers, 11 Functional Managers and 10 Team Members). Thus, 30 potential expected benefits were identified and listed in the following table: Potential benefits expected for a PMO 1 - Better availability of resources with skills in Project Management 2 - Effective transfer of knowledge in project management 16 - Better availability of information on lessons learned from previous experiences 17 - Better communication among areas of the organization 3 - Better communication among the project team 18 - Better communication with the executive level 4 - Improved reliability of the information provided 19 - Time and cost estimates more reliable 5 - Improved availability of information for a better decision-making 20 - Better control over project teams 6 - Better project time and project costs control 21 - Better third parties and subcontractors control 7 - Improved support from the executive level to the projects 22 - Increased motivation and individual commitment 8 - Better definition of roles and responsibilities 23 - Greater agility in project management decisionmaking 9 - Better allocation of resources across projects within the organization 24 - Reduction of the projects life cycle 10 - Reduction of risk exposure 25 - Greater integration among areas of the organization 11 - Increased productivity on projects 26 - Better quality of projects results 12 - Improved client satisfaction 27 - Better projects prioritization 13 - Increased visibility of the relationship between projects and strategy 28 - Increased visibility of the relationship among projects 14 - Greater organization commitment to results 29 - Increased visibility of project progress 15 - Increased visibility of resource demand 30 - Increased predictability for decision making EXHIBIT 2 - Potential expected benefits for a PMO based on PMO clients opinion in 11 organizations. Defining the mix of services 4

5 But how to know what benefits each service could generate? To answer this question in a quantitative approach (Cooper and Schindler, 2008), we used a questionnaire relating PMO services and expected benefits, which was answered by 40 highly experienced leaders of PMOs, in organizations in advanced stages of maturity located in Latin America. Basically, each respondent identified his/her perception of the probability of obtaining each benefit from the implementation of a particular service of the PMO, based on his/her own experience. The PMO leaders may agree, for example, that a particular service would be able to generate a specific benefit while another service rarely contributes to generating this same benefit. Thus, it was possible to establish correlations between services offered by the PMO and the perception of benefits, which could be more or less likely to be observed. Based on consolidation of reasoned opinions and the observed correlations, we identified the services that could maximize the probability of obtaining a particular benefit. The result of this research phase established thus probability curves suggesting the weight of the contribution of each service in the generation of a specific benefit. As such, it was possible to build a database with probability curves based on experience from experienced PMOs leaders for each of the 30 potential benefits identified. The graph below shows the curve for the benefit of "Greater availability of resources with skills in project management." It can be seen in this case that from the 27 services, only 5 were cited as relevant to generate such benefit, and each one contributing in a different intensity for the cumulative probability of achieving the expected benefit. The first services of the curve have higher contribution and, of course, are a priority to maximize the probability of obtaining the desired benefit. Cumulative probability of achieving the expected benefit EXHIBIT 3 - Example of contribution curve of the benefit "Greater availability of resources with skills in project management". 5

6 But how can all this information be used to align the PMO with the needs of each client? Firstly, to answer this question it is necessary to obtain from the PMO client what his/her priorities are in terms of benefits, using the list of 30 potential benefits presented earlier. Then, using the probability curves for each benefit prioritized by the client, it is possible to establish a kind of "mix" of services - in fact, a new consolidated curve - that best serves the needs of that client. Again, the first services on the curve are those that have a greater degree of contribution, and therefore, should be prioritized. Following it is possible to see, for instance, the curve suggested to the client "Project Manager X", which was based on the five prioritized benefits identified via a questionnaire with thirty potential benefits. In this example, the services Develop and implement a standard project management methodology, Monitor project/program performance, and Implement and operate information systems projects are the main contributors in generating the expected benefits. On the other hand, the contribution of the service Monitor and Control the performance of the PMO itself, at the end of the curve, is the one with the least potential to contribute to the expected benefits. EXHIBIT 4 - Example of a curve of services to the client "Project Manager X". Naturally a PMO should have more than one client, even in different hierarchical levels. In this case, it is possible to establish specific curves for each client and consolidate them in "clients' group curves" as Directors, Project Managers, teams, among others. In this case, each group will have its own curve, consolidating their own suggested "mix" of services. Finally, using the same reasoning, it is possible to establish the curve consolidated for the PMO, with a suggestion of prioritization for the "mix" of services that the PMO could offer, taking into account the expected benefits for each of its clients. 6

7 Client s curves Consolidated curves for each group of clients Consolidated curve for the PMO EXHIBIT 5 - Process of preparation of a consolidated suggested services curve for a PMO. It is also possible to establish different weights for each group of clients, which would influence the construction of the consolidated services curve for the PMO. Thus, the suggested "mix" of services for the PMO is the consolidation of the resultant clients curves in client groups curves, and subsequently in a single curve to the PMO, taking into consideration the respective weight of each client group, if necessary. In the example bellow, the final curve for the PMO focuses on three priority services: Implement and operate project management information systems, Develop and implement a standard project management methodology and Coordinate and integrate the projects in the portfolio. The service Audit projects and programs, potentially, is the least helpful in meeting PMO clients' needs. 7

8 EXHIBIT 6 - Example of consolidated curve for a PMO, considering all its clients groups. The model presented in this article was named "PMO MIX MANAGER" and applied in eight PMOs in large Latin American organizations, obtaining relevant results in terms of user satisfaction. These organizations have supported the development of the model and its automation, which will be freely available in the second semester of 2013 on the Internet at the website as a contribution from the author to the global project management community. It is important to reinforce that this model is not intended in any way to be deterministic or establish final cause and effect relationships between services and benefits. It is just a tool to encourage reflection about the alignment between the PMO and the real needs of their clients and the organization, using the experience of PMO leaders that have gone through similar situations as a reference. Eventually, services that are not part of the 27 identified by Hobbs & Aubry can and should be considered if they meet the specific needs of some client. Additionally, services that are positioned in the middle of the curve are also subject to further assessment of its importance. On the other hand, services located at the beginning of the curve must be considered, while those that enclose the curve should, of course, be questioned. Finally it is recommend that those interested in evaluating the maturity of a PMO under the same philosophy of a service provider PMO, access a model designed for this purpose at (Pinto, Cota and Levin, 2010b), which has been used since 2010 by more than 400 organizations in 17 different countries. Conclusion To consistently create value for an organization, a PMO should establish its services based on the combined needs of its clients and the expected benefits and results. It should also prioritize and develop services which most contribute in meeting the expectations of its clients. And finally, it should continually reevaluate the "mix" of services established, and keep in mind that the needs and expectations of its clients can and will change. It is a fact that "surviving" is today one of the great challenges of many PMOs, which have been systematically challenged regarding their value and contribution to the organization. 8

9 Understanding that the PMO is a service provider and serving its clients is the top priority is the first step towards a successful PMO. The second step, no less important, is to understand that the change process is permanent and the PMO that fails to meet it is on the path to failure. Change and re-adaptation is not the main problem. The major flaw is not realizing the need for change or not having a clue as to where to get it, contributions that the model presented in this article hopes to give. References Aubry, M., Hobbs, B., & Thuillier, D. (2008a). Organisational project management: An historical approach to the study of PMOs. International Journal of Project Management, 26(1), Aubry, M., Hobbs, B., & Thuillier, D. (2008b). The project management office as an organisational innovation. International Journal of Project Management, 26(5), Cooper, D., Schindler, P. (2008). Business Research Methods. New York, NY: McGraw- Hill Irwin Dai, C. X., & Wells, W. G. (2004). An exploration of project management office features and their relationship to project performance. International Journal of Project Management, 22, Hobbs, B., & Aubry, M. (2007). A multi-phase research program investigating project management offices (PMOs): The results of phase 1. Project Management Journal, 38(1), Hobbs, B., & Aubry, M. (2010). The Project Management Office (PMO): A Quest For Understanding. Newtown Square, PA: Project Management Institute Hurt, M., & Thomas, J. L. (2009). Building value through sustainable project management offices. Project Management Journal, 40(1), Pinto, A., Cota, M. F. M., & Levin, G. (2010a). The PMO Maturity Cube, a Project Management Office Maturity Model. In C. Letavec & D. Bolles, The PMOSIG Program Management Office Handbook (pp ). Fort Lauderdale, FL: J. Ross Publishing. Pinto, A., Cota, M. F. M., & Levin, G. (2010b). The PMO Maturity Cube, a Project Management Office Maturity Model. In Proceedings of PMI Research & Education Conference, July 10-14, 2010, Washington, DC. Silverman D. (1997). Doing qualitative research. Theory, method and practice. London, UK: SAGE Publications Inc. Thomas, J., & Mullaly M. (2008). Researching the Value of Project Management. Newtown Square, PA: Project Management Institute 9