Setting up a Best-in-class PMO Function

Whether it is the rollout of a new product, or expansion into a new market, launch of a new cost optimization program or implementation of a enterprise IT project, establishing a fully functional Program Management Office (PMO) is fundamental to the success of the underlying initiative. However, it is not necessarily as straightforward as just recruiting one project manager and making him the head of PMO function! Lets explore a little more on what the Program Management Function entails, why would it be relevant and how does it create value.

Program Management Function: Strategic or Tactical?

It is not necessary that a PMO necessarily have to be a permanent function. In many occasions, it can just serve to be a temporary unit, whose scope is limited to a specific project, providing structure and oversight to a specific initiative that is to be managed. More often than not, projects tend to be more technology driven, and hence PMO functions get to become ubiquitous with IT units. However, it is also commonplace to find that in such situations, the unit struggles to get the projects executed, as they tend to lack enterprise wide influence. The PMO function gets to become more permanent and standardized, when the authority of the unit cuts across departments, drawing its reporting line to the CEO and/or Strategic planning unit and oversees projects are in strong alignment to the organizational strategy

The typical role of PMO gets classified at three levels:

1. Advisory: The PMO conceptualizes and advises on project alignment to organizational goals, advises on setting the project scope, objectives, budget, and best practices to be adopted
2. Governance: The key role of PMO being to ensure projects is governed with right tools, templates and supervises progress of the project.
3. Execution: The PMO gets to take a far more active role here, right from defining the project plan, charter, monitor project for adherence to timeline, quality and budget and manage key stakeholder communications.

The maturity level also drives the role played by PMO. Where there is minimal standardization, the role is more reactive. As maturity levels progress, the emerging discipline results in standardizing the project management processes, leading to an integrated unit that helps having a well defined role and an established team. The PMO then gets to manage a more effective integration where it manages projects across the organization, eventually helping in effective innovation and continuous improvement.

The visibility and effectiveness of the PMO is also proportionate to its quality of communication. No matter how good is the planning, scope and timeline management, management of vendors and procurement, and how well the budget definition and cost management function are, the real perceptible value that organizations derive from the PMO is when it proactively identifies the risks associated with the project, effectively communicates this across all key stakeholders and gets passionately focused on delivering quality. The underlying theme that cuts across all of the above is in management of people – both those who are ‘internal’ and involved in the project, and those who are ‘external’ and are impacted by the project.

The PMO gets to accomplish its delivery through 5 key process areas for every strategic project. While each of them have a significant bearing and overtone on the others, it is important that all of these get to be delivered effectively for the real value of PMO to be leveraged:

• Initiation: Gathering insights for the need for the initiative and activate the project
• Planning:Defining the project plan, charter and master program schedule
• Execution: Help in the project groups being formed and execute the initiative
• Monitor & Control: Validate progress, identify risks & mitigation, communicate progress
• Closure: Confirm formal closure of the project – seeking clear signoffs from stakeholders.

The benefits that are driven through a PMO are three-fold:

• The PMO helps drive the strategic alignment of the initiative to the strategic objectives of the organization. As the torchbearer of the critical projects, it also helps provide a continuous visibility on what’s going on, to all key stakeholders.
• As the central function driving all key initiatives, the PMO also helps drive an optimized allocation of resources, effective facilitation of prioritization from time-to-time and providing an overview across all departments and units of the organization. This is somewhat akin to a central nervous system!
• As the custodian of best practices and its implementation, the PMO helps drive consistency and quality in the execution of projects. This is a key ingredient for the success of strategic projects – the value of which is not only to be measured by impact created, but also by the opportunity loss that is protected, with timely and good quality execution.

It is also important to be clear on what gets to be defined as the strategic project that is to be managed by the PMO as well. The point to note here is that while not every initiative in the organization is strategic, each initiative that is indeed identified to be strategic needs to be under the purview of the PMO! So what is a strategic project?

The simple thumb-rule litmus test is ask the following:

1. Does the investment in the project or the value that it is expected to generate / protect large enough for the management team to be concerned?
2. Does the initiative have a direct impact on your customers or a large section of employees within the organization or key stakeholders of the enterprise?
3. Will the successful delivery of initiative make a tangible and significant impact on the strategic direction of the organization? Conversely, will a failure to deliver on this initiative adversely impact the prospects of the organization?

If the answer is YES to even one of those 3 questions, then well, it's time for you to have the PMO setup, and ensure it focuses on a best-inclass delivery of the initiative. After all, it is the 5% of time, effort and money spent on the PMO that assures the protection of the balance 95% that is invested in the project. In a way, this is your own project insurance, and its value is as seen by the eyes of its beholder!

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