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Building Successful PMOs

Project Management Interview with Peter Taylor

Peter Taylor, famously known as “Project Zone Congress” on 28-30th April 2014 in Frankfurt. As the main sponsor of the Project Management Congress Can Do presents a project management interview with Peter Taylor.

Project Zone Congress (PZC): I want to start with a question that might sound trivial: What is a PMO? There are so many definitions for that abbreviation and it can sometimes be quite confusing.
Peter Taylor: That is a great question and it is the basic question. Every conference I go to, we always talk about this. What does everyone mean by their PMO? Is it Project Management Office, Portfolio Management Office, Program Management Office? It could also mean some sort of support in project function, center of excellence, or project managers. In simple terms, it is kind of like a unit or department or group that defines and maintains the standards of process related to project management within the organization.

So a PMO should strive to introduce economies of repetition of success in the execution of projects. It should aim to reduce project width through common practice and quality assurance and also link the business strategy to the project-based execution of that strategy. I like to make things as simple as possible because I am a very simple person, and the way I describe it to people is this: Project Management is about doing something the right way. Program Management is doing things in the right order. Portfolio Management is about doing the right things for the business; and if you think about the PMO, it ́s about doing all of those things, but doing all with the right team. It is the right things, the right way, the right order, with the right team, and I think therefore the PMO is very much about people.

PZC: So PMO is very much involved into the entire life of the organization when it comes to project, program and portfolio management. What capacity should the PMO get involved in managing the entire portfolio or looking after the portfolio of the business?
Peter Taylor: For the portfolio side of things, it depends. The answer is it should possibly appear in charge of book value; I think the answer is: Yes –In what capacity? That depends, because we’ve already said there are many meanings to a PMO –there are many types of PMO as well. There are Departmental PMOs, Enterprise PMOs, Virtual PMOs, Special Purpose PMOs; and there are different models, there are either Controlling, Directive, Supportive, and it is a very complicated subject. It is very nice to have that three letter abbreviation, the PMO, but it can mean so much. But for the right sort of PMO, the PMO that is operating at an enterprise level –senior authority inside an organization, then there is a strong argument that they are in charge of the portfolio and will take that responsibility to represent the business very well.

PZC: In this case, if the PMO is involved in looking after the portfolio, do they have power, authority and influence; do they have policing responsibility to ensure the processes are followed according to the PMO’s expectation?
Peter Taylor: Yes. There are potentially three . First of all, most PMO’s at the moment don’t operate at this level; they operate at the lowest level of overseeing the project delivery and trying to raise the success rate and improve quality through project management training, methodology adherence, and that sort of thing.

But for a PMO that is heading in the right direction inside an organization there are potentially three levels to the sort of authority you talked about. The way you can think about them is this: There is Strategy Delivery, Strategy Management, and Strategy Creation. First of all, Strategy Delivery; the business has decided that these projects – however many they may be, they may be two or three projects or they may be one or two hundred projects, every organization is different – but the business has decided these projects are important to some type of change delivery inside the organization and all projects should be directly or indirectly linked to that sort of strategic intention. Now, at the lowest level the PMO looking after the portfolio is effectively overseeing the delivery of strategy by overseeing the projects and making sure those projects that are supporting the strategic intentions of the business are well managed and are delivering a high level of success.
The second level is what I call Strategy Management, but not just the blind following of “These are the projects we’ve got. Let’s make sure they are all successful.” Now the PMO is looking at the balance of project-based activity, recognizing that this is a finite capacity capability which means that ‘there can only be so many projects with so many resources at any given time’. Therefore it is making recommendations to the business, but as new projects are discussed, they are saying, “This is the consequence or the impact of this new project on the current portfolio and these are the recommendations of how we balance the priorities and perhaps we slow this project down, perhaps we speed this one up, perhaps we cancel this project or delay it”.
The third level and the rarest at the moment of course, is Strategy Creation. It is about the PMOs representing project-based activity at the highest level inside an organization, the Executive level, and being involved when strategy is being discussed and created. I have said that this is a high aspiration; it is the world of PMO that is lead by perhaps the next generation of C-Level executive, which is the Chief Projects Officer. You do not come across many of those, but I think that is going to be a very influential future role inside of an organization. So I believe there are three levels: Delivery, Management, and Creation.

PZC: Yes, fantastic summary, Peter. Now, setting up a PMO–it really does require a lot of resources and commitment from the business to make them to see the value of PMO. Who actually initiates setting a PMO, and once it is set up, how is it effectively sold to executives, and key stakeholders? And of course, for its success it is important to keep these executives and stakeholders involved, so how do they ensure their long-time commitment and involvement throughout the process?
Peter Taylor: Like everything, sponsorship is key. A PMO must have some sort of sponsorship at a reasonable level inside the organization to even get off the ground. One of the case studies in my book is about a PMO’s failure because it was a PMO that was created through the Project Management Community. They felt that there was a gap or a need in the organization and they started investing some of their time in some of the things that PMO’s do, but they had no sponsorship and at some point they were challenged by the business and were basically told to get on with teir real job. It was not a very mature organization as far as projects were concerned, but because they did not have that sponsorship, the PMO was basically removed – despite the fact that it was created for the very best reasons and should have been supported by the organization. Also, when you think about sponsorship there is a rise in C-Level interest such as the CEO, COO, and the CIO’s. These people are hearing more and more about PMOs. It is effectively a great buzz-term out there, and the recent survey performed on the state of the PMO looked at the PMOs and saw a significant growth in the last few years. Somewhere around 87% of businesses now have some form of PMO. Evidently it is on the rise. The highest levels in the organizations are recognizing that project-based activity is growing and therefore there is an increased risk for the business, and obviously an interest increase in their desire to make the projects that they commission more successful.

How do you effectively sell it to key stakeholders and how do you keep them involved? The success is very much in the hands of the PMO leader inside these organizations, because the PMO leader is potentially the most senior person in that organization who really understands the project landscape – the world of projects and because the highest level of authorities inside the organizations may not move through the project world as we have, and therefore have a weakness to error.

They see projects growing, they see investment in projects, they see the need for projects to change, they recognize now that PMO is a value-add to this process; but a large part of ‘Does it succeed or fail?’ comes down to the PMO leader. I explain a lot of that in the book you mentioned, The Leading Successful PMOs. The best PMO leaders are the ones that understand the project world, are great communicators, great negotiators, are capable of leading change and representing change in the business, and are not afraid to be different and unique, because every PMO is different based on its need and what the business requires at this point and time.

The last thing about selling and engaging key stakeholders – the PMOs that succeed at this are balanced PMOs. A lot of PMOs look at process and they look at people. They look at the project managers and they look at the methods and the delivery framework, but they also need to look at the promotion of the PMO and the way to justify his existence inside organizations by marketing what projects are all about and engaging the wider business community in order that people recognize what the PMO is trying to do and recognize how important he is.

PZC: You mentioned, Peter, that PMOs are actually on the rise, that more and more PMOs are being created and that executives are buying into the idea of PMOs; yet we read in many of the papers that PMOs fail to deliver and are actually disassembled prematurely. They are dismantled much faster than was initially planned, business results somehow not realized – so what are the most typical reasons you see for PMO’s not being able to deliver according to expectations?
Peter Taylor: I would answer that in two halves. The first half is: Why do PMOs fail straight out? I already mentioned the leadership issue. I see PMOs fail when they don’t have a good leader, someone who understands what a PMO should be about and the fact that it’s not just about projects and project managers; leadership is critical.

Badly managed expectations is another issue. The belief that a PMO is going to come into an organization and in a very short period of time is going to turn things around significantly. Part of that leadership is communicating well to an organization and the sponsors about what can be achieved in what timescales. There is also a form of negative impact on business, people are very worried about PMO. It seems to be something that is hot at this point in time and the chief executives says, “This is important”, and money is being put into it; but the rest of the business are saying, “We don’t understand PMO’s. We don’t understand why this is so important. In fact all the PMO does is ask us for resources and cause problems to us”, so the impact on business can be a difficult thing. This is why I mentioned earlier that one of the key skills to leadership is negotiation and communication.

The last issue is that while PMOs could start out well down into the hierarchy of an organization, but they do need to commit themselves to that kind of strategic intention of a business quite quickly. Otherwise they are just seen as an overhead at a lower level. Another reason why PMOs fail to deliver is that they are given a short moment in time to make some significant changes. Perhaps they do a good job, but they are then considered to be dispensable because the job has been completed. So they invest in a PMO, they bring some experienced people in, project success increases, processes increase, skills increase, etc., and the business looks excellent. ‘Job well done, now we don’t need you anymore’ and the result is they get removed, and of course what happens after that is the project success rate starts to drop again. I believe those are the two areas.

One is having the right sort of person lead it, engage with the business and link it to strategy, and the other is the fact this is a journey. The PMO I led inside Siemens was a four year journey and it continues, people have taken over after me. It is a long-term investment.

PZC: Many organizations, especially large companies – you mentioned Siemens and I can think many of the large organizations have multiple PMOs across business units, across funcions. Based on your experience, whar is your view? Should there be some sort of synergy among these PMOs and if so, how and what is the best way to synergize PMOs across organizations?
Peter Taylor: Yes, that is a perfectly normal way. You often see what you might call Departmental PMOs. More like the PMO representing a geographical area, a part of the business, a product line, a department. This is where PMOs often start because they are almost experiments inside the organization, and if they seem to be successful then the thought is, ‘Hey, why not? Let’s create another PMO over another part of the business.’ In Siemens that is exactly how we worked. We had a European PMO and we were sharing some success, then we had an American PMO and then an Asia-Pacific PMO. The important thing for us was that they needed to connect, and effectively we became an Enterprise PMO.

The reason people have PMOs is as I mentioned at the very beginning, it is about economies of repetition and reducing project risk, etc. So if you have multiple PMOs all trying to do the same thing, what you do not want are six PMOs inventing their own method of project delivery and having their own process for training project managers; the whole purpose of the origination of the PMO is suddenly changed. The one thing you don’t want is replication or variations in this.

You need consistency; so why should each PMO be doing things a different way? However, there might be places where this is possible within a business. In Siemens, for example, we were part delivering technology and part creating software, so there were even in an unofficial or ad hoc way, to make sure they are not replicating or creating huge variations of behavior. By coming together they also maximize efficiency.

You will find that some organizations start out on the PMO track –they have one PMO then two PMOs and see the improvement, then suddenly the PMO becomes something like, ‘This is the solution. We have a business, so this is the solution. We need PMO’s everywhere’, subsequently what you actually see is a reduction in success rates because there is replication and variation and they are not working as one. Sodefinitely, synergy is very important, connecting in a formal or informal way is really very important.

PZC: To whom would you recommend that this is a good career choice, being in charge of setting up and leading PMOs? You have done it successfully – What is the right sort of person and what characteristics constitute the right leader to lead PMO’s?
Peter Taylor: I think it is a great career step and a great opportunity. This is a very interesting time because most people out there have not run more than one PMO. It is not like you can go and find someone with twenty years of PMO experience. There are definite challenges and challenges lead to opportunities, of course.

Who is the right person? It will vary in business. If you can find an experienced person inside your organization that has strong project background and capability, who is a good leader in the sense that they can also communicate well, they can negotiate the place of the PMO inside the organization, they can communicate both upwards into the executive level and downwards into the project management community

and the business community, and effectively, they’re not afraid to take a stand and to represent somethingthat to most organizations is very, very new – if you can find that person inside the organization, then that is the sort of person that you should be looking at.
One of the consistent failures I came across in the research for the book was where PMO’s were given to someone who didn’t have a project background. They were good business managers of other business units, but because they didn’t understand the nature of projects – and projects are very different – then they really struggled to commit with their project community and connect to what project and project based activity requires of them. Still, I believe it is a great career step and a great opportunity. Even being inside a PMO is a very interesting place to be right now and something I recommend to anybody in the project world