PMO: A Best Practice for All Seasons
Posted by
Marty Peralta
on
Monday, July 26, 2010
The economic downturn has been difficult for all business sectors. Companies are now scrutinizing where they can reduce costs, which has resulted in reduced capital budgets. The result: fewer approved projects for implementing technology solutions that address defined business problems. For those projects that are approved, they are monitored with greater scrutiny and require greater accountability. And no wonder. Roughly 65 percent of IT projects are challenged or fail, according to the Standish Group’s report from just a few years ago.
As a business manager, ask yourself: Where does my company do with regard to project success or failure metrics? Do we even capture the data? For those projects that fail, do we know the reasons why? When project snafus occur, it is a sure bet management will begin asking those types of questions. While it is advisable to have the supporting data metrics available in response, it is certainly preferable to have the processes and controls implemented to have prevented the snafu in the first place. One of the most effective approaches of doing that is the establishment and use of a Project Management Office (PMO).
A PMO is designed to assist in the approval and management of the company project portfolio. Specifically, this includes defining the key performance metrics that management will use to judge project success, defining consistent processes for creation, review and approval of business cases for new projects, prioritization of projects based on alignment with company goals and strategy, and continued monitoring and communication of portfolio health.
The PMO serves as an advocate for the business and for IT, with the common good of the company as its primary objective. The PMO works with the business to develop the business case for the project to ensure it addresses the key ROI and value questions that company management needs to make an approval decision. The PMO also works closely with IT to identify and understand the technical requirements and factors that can significantly affect the ROI equation and stakeholder expectations. This level of positive collaboration between the business and IT is often viewed very favorably by company leadership.
The PMO provides a central location for management to seek answers to questions about the company project portfolio. A variety of project-related KPIs can be managed related to financial health, schedule health, and deliverable functionality in relation to the original project plan.
The PMO is responsible for defining a common set of project management practices, procedures and tools to permit consistent project execution across the organization. This includes providing education to project managers regarding how to perform key project planning activities such as requirements gathering and analysis, risk analysis, and cost and effort estimation. It also addresses how to better manage and prevent one of the most common causes for project failure: scope creep.
In troubled economic times, a PMO can become a competitive differentiator to ensure that the project dollars and resources invested will provide the maximum possible return. It works to make certain that the IT projects your company begins are executed consistently in alignment with company goals and leadership expectations. While it cannot be a guarantee of project success, the PMO creates the proper procedures and controls to improve the chances of meeting business needs and expectations.