So Many Projects, So Little Coordination: The Value of a PMO

Value-of-a-PMOSquareI talked with a project manager the other day who told me that she had more than 100 active projects that she was responsible for planning, monitoring and controlling. Interestingly, she had absolutely zero input during the initiating phase. Across her organization, people were submitting projects without regard to capacity, budget, resources, or any real review process. The projects she ends up with have been approved by a functional manager who has no visibility into organizational work capacity.

Does this sound familiar? If you have been a project manager for more than a day, you have likely encountered this problem. But why does it happen, and what can organizations do to stop it? The answer is simple in theory and difficult in practice: establish an effective portfolio management function and a project management office (PMO).

Avoid Risk, Make Informed Decisions

Ugh, a PMO? Another level of project bureaucracy? Another cost center for the organization? I suppose the answers to those questions depend on how you view bureaucracy and cost.   The PMO is not supposed to be the supervisor of all organizational projects. If they are, then you have just shifted the problem from the project manager to the PMO. The PMO’s primary function is to manage and interpret data that is generated by projects throughout the organization so that informed decisions can be made. Additionally, the PMO should ensure that consistent project methodologies are used throughout the organization. Which methodology is used is not important, only that it is consistent. When project managers and project teams operate on instinct instead of methodology, inconsistent and unpredictable results are generated. Unpredictability breeds risk. Organizations like to avoid risk. I think you can see where I am going here.

Pay More Now or Pay More Later

But doesn’t running a PMO cost a lot of money? First of all, the term “a lot” is relative. Do project failures cost a lot? Yep. In 2012, The Standish Group reported in “The CHAOS Manifesto” that only 39 percent of IT projects were deemed successful by organizations that participated in their research. Thirty-nine percent is a little shocking. The top three reasons cited? Inadequate planning, lack of control and lack of upper management support. The PMO and portfolio management functions address all three of those concerns. So, it is the “pay now or pay later” axiom. Pay upfront to have PMO oversight on certain projects, or pay on the back end when projects are managed in a haphazard manner and come in over budget, late, or not meeting all of the original requirements.

Gain a Project Watchdog

The portfolio management function, supported by the PMO, is there to support the selection and resourcing of projects in a thoughtful, consistent and transparent manner. Portfolio management is about organizational capacity; capacity to do projects. The portfolio manager (PfM) using information and data generated in the PMO, is the organizational project watchdog.

The PfM has to make sure that the projects under consideration by the organization align with one or more organizational strategic objectives, have passed through a selection process, and that the resources exist to actually do the work. Without a PMO or portfolio manager, functional managers with budgets will continue to launch projects simply because they can. The problem with that lack of oversight is twofold: functional managers launch projects that will benefit only them or their department, not necessarily the organization as a whole, and they often launch projects without regard to the work capacity of interdepartmental resources. With smart portfolio management, supported by a PMO, the risk of choosing the wrong projects for the wrong reasons will be greatly reduced.

Related Courses
Project Portfolio Management
Establishing and Managing the Project Management Office
Program Management

In this article

Join the Conversation