As project management offices mature, they move from a bureaucratic cost centre to a value-driven asset. Embarking on a PMO maturity journey can unlock the value of your PMO and drive it towards a more supportive, strategic role.
The uptake of project management offices (PMOs) in Australian organisations indicates a growing recognition of their value and heralds the maturation of this business function.
According to research published by the Australian Institute of Project Management (AIPM), there is a growing trend of using a centralised or enterprise project management office (EPMO) to uplift the delivery of projects and programmes. In its 2020 Project Delivery Performance in Australia report, the AIPM found that 57 per cent of respondents were using a centralised PMO, and that 37 per cent of organisations rated their ability to support and effect change as ‘very’ or ‘extremely’ effective, both increases on its last survey in 2018.
Why maturity matters for PMOs
The original function of a PMO was to play a supervisory role with regard to projects within a programme or portfolio. PMOs often had oversight of resources, systems and reporting, which unfortunately gave them a reputation for being compliance-driven, bureaucratic and authoritarian. It’s no wonder then, that as recently as 2018, almost one in three organisations disbanded a centralised PMO; that rate has since reduced to 19 per cent in 2020.
Today, the role of EPMOs is increasingly evolving to deliver more value. While many still hold the same responsibilities, PMOs are now maturing to the point where their remit also includes support for project practitioners, portfolio leaders and sponsors to excel at their job through functions such as training, knowledge management, and hosting a centre of excellence.
Due to their increasing importance for project-led organisations, PMOs also provide key decision-making functions to assist the organisation with project selection, benefits realisation and investment management. This gives PMOs a strategic position in the organisation, one which requires considerable capabilities and experience.
In short, the PMO has become both a coach for project teams, bringing value through to the front line, and an informed adviser for the executive level. Whereas in the past PMOs were too often seen as back-office cost centres, more organisations now recognise their strategic value.
The PMO maturity journey
Define your PMO’s purpose
Before starting an EPMO/PMO, it’s important to understand its purpose. Many organisations start from a place of need: their projects are wayward or failing to thrive, resources are not being allocated equitably, there’s a disconnect between project delivery, the business and the executive level, and/or project teams are desperate for guidance. By identifying requirements, you can begin to select the PMO functions and services that will be of most benefit and define its remit (Charter).
PMOs require a solid foundation in order to scale and mature. While service offerings will vary according to your organisation’s needs and complexity, core functions typically include planning and management of risks, issues, change and information, to monitoring, reporting and maintaining consistent use of delivery methods and tools across the organisation. To function effectively, all PMOs need a structure for control of projects and establishing this is primarily what this foundational stage is about.
Implemented well, the PMO can begin to demonstrate value according to its purpose, which is ultimately what helps to secure its future. For example, a project-led organisation that needs to improve its reporting may find that a PMO helps to streamline project tracking and delivery so that the executive level can make more informed decisions about its projects.
While you cannot underestimate the importance of having the right tools, core functions and controls in place, at this level the PMO is purely focused on the delivery of projects; it’s still fairly immature. It needs to progress to the next maturity stage in order to uplift performance and drive improvements.
The next level is more attuned to the resources and capabilities available to enhance project delivery. Additional PMO services being offered or developed at this stage include:
- Coaching & Quality assurance
- Capacity & Resource management
- Performance management
- Portfolio Management & Investment decisions
- Information management
At this intermediate, or enhanced, maturity point, the organisation is focused on optimising its resources and investments in line with strategy.
It is also here where the ‘PMO as coach’ makes sense as a support function for better project delivery, especially in areas of most ambiguity – such as project mobilisation.
This includes upskilling project team members, improving business systems and managing lessons learnt. For example, instead of relying on inconsistent pieces of knowledge based on individual experience – a hallmark of low maturity – it’s now about facilitating a move to end-to-end organisational knowledge and expertise; in other words, ensuring that lessons learnt transfer from individuals to the organisation. This is completed by ensuring delivery lessons are looped back into the continuous improvement of delivery frameworks and playbooks.
A mature PMO has a strategic function within the organisation, steering the portfolio investment/funding in line with external/internal business impacts and objectives. It will sit within or alongside the C-suite and influence decision-making, provide accurate, informed advice, and contribute to the development of the organisation’s long-term vision and strategy. This may manifest as project selection, prioritisation, change or cancellation, to help uplift the effectiveness of the organisation, its profitability, enable transformation or – for government bodies – its public service delivery.
Maturity gives the PMO the ability and experience to initiate the right project at the right time, based on a deep understanding of its current and future resources and capabilities. It combines this with a view of the relevant risks and opportunities inherent in the business environment in which the project will be delivered, and the organisation’s capacity to navigate and respond to change.
This ensures the organisation doesn’t commit to unwieldy portfolios or carry risk beyond its appetite. It’s about right-sizing their portfolios to achieve the strategic goals of the organisation. At this stage you would also expect the PMO to include benefits realisation and management within its remit, ensuring that a programme or project’s objectives and intended benefits are at the forefront of delivery.
The PMO at scale
In most cases, as the PMO matures it will also grow within the organisation, transforming from a back-office cost to a strategic asset. One of the most common mistakes organisations make in the early stage of establishing the PMO, is staffing it with unsuitable people to keep costs down.
Team members may be inexperienced or have an inappropriate skill set, or the balance of skills, knowledge and experience within the team may be wrong. This can also be the result of setting up your PMO without a sustainable and integrated funding model, making it more vulnerable to cuts.
Either way, a poorly resourced PMO will always be a barrier to maturity. This is particularly the case if the team makeup confirms the early stereotype of PMOs being compliance- or process-driven bureaucracies, rather than drivers of growth, change and achievement. Ultimately, it’s like buying a Ferrari, filling it with E10 and then wondering why it doesn’t perform very well.
Addressing barriers to PMO maturity
At PM-Partners, we conduct maturity assessments that take into account the balance of resources required to run a PMO to add value to your organisation. One essential ingredient is a cohort of senior project practitioners who have the experience of project delivery while staying focused on the business requirements. Knowledge and experience enable them to guide and support project teams to focus on outcomes, instead of reverting to a purely process and compliance function.
For larger, permanent EPMOs, we recommend a three-part office with tailored, overlapping functions. One function will look after portfolio management and governance, the second will be focused on delivery, and the third will perform as a centre of excellence overseeing standards and tools and offering guidance to project teams (which is aligned to P30).
Likewise in this scenario, having appropriately experienced people to face into the difference areas of an organisation, will support effective delivery and, in turn, build trust. Specifically, these senior practitioners can provide that coaching/supportive role to delivery leaders on the front line to help them comply with set standards, ensure everyone’s aligned with the purpose and value of the PMO, and uplift delivery execution. They can also facilitate those peer-to-peer conversations and engagements with the C-suite to drive strategic portfolio decisions. Back to our Ferrari analogy, you’re now filling it with premium 98-octane and the results should speak for themselves.
Markers of success
A PMO provides different levels of value at different stages of its implementation, and when it reaches maturity it goes from a back office that streamlines the delivery of projects to a front-facing strategic asset that helps guide and drive the organisation.
An effective control function for delivery is, of course, vital but it’s only one portion of the task. The rest of it is about the environment you’re working in, having a well-established mandate for your PMO, building out your key services, and ensuring you invest appropriately and in the relevant talent.
Once you can address the barriers to maturity, you will unlock the full potential of your EPMO/PMO and your organisation’s ability to deliver the right projects with the right people at the right time. One key marker of success is when you’ve got delivery practitioners coming to the PMO and asking for help instead of spending time and effort trying to avoid the PMO. Then you know you’ve got a winning formula!
Ask PM-Partners to conduct a maturity assessment today and find out where you can add value to your PMO. Contact us on 1300 70 13 14 or make an enquiry.