Ways That a PMO Can Fail
By Deborah A. Dell, PMP – Director, IBM Project Management Center of Excellence and Harold Kerzner, Ph.D. – Senior Executive Director for Project Management, IIL
Deciding to implement a Project Management Office (PMO) is easy. Being able to implement the decision, however, may be difficult because of all of the roadblocks that could exist. As companies recognize the need for project management, the need for the centralization of project management knowledge becomes apparent. Unfortunately, companies tend to focus on the good things that can happen without fully understanding the roadblocks that can impede successful implementation.
Simply stated, “Be careful what you wish for.”
Unclear Misson Statement
There must be a valid reason why a company wants to establish a PMO. All too often, the PMO is established to either appease project managers or in the belief that the company must follow an example set by their competition. This is the result of a lack of vision on the benefits of a PMO.
Regardless of the reason, there must be a clearly understandable mission statement signed off by one or more senior managers. An unclear mission statement encourages failure. People may not understand the role of the PMO. Likewise, PMO members may not understand their own roles and responsibilities and end up working on activities that may have no direct relationship to corporate objectives. All of this can result in a lack of direction. For example, the PMO members may assign themselves work on projects that are self-serving rather than supporting the overall business. Or, they may commit vast resources for the support of a single project and disregard other projects that may have a greater need for their services or can provide a much greater value to the business.
Mission statements must be future oriented rather than focusing on the here-and-now. Typical goals for mission statements can include:
- Continuous improvements to the project management processes: Without continuous improvement, the organization can become complacent and miss opportunities.
- Opportunity identification: The PMO must help the organization achieve its strategic goals. Without opportunity identification, the organization worries about today rather than tomorrow.
- Change management champions: Opportunity identification and continuous improvement most frequently require organizational change. Unless the PMO has the necessary skills to take the leadership role in organizational change, the change may never occur and the PMO fails to achieve its mission.
Failing to Focus on the Impact to the Business
The mission statement for the PMO should be to serve the overall business needs, not merely the needs of selected projects. Therefore, the PMO must be willing to make decisions that are in the best interest of both the business and the projects, all aligned with business strategy and business objectives. While it is true that some PMOs are more operational than strategic, the alignment of business decisions with business strategy must still exist.
The PMO is expected to add business value to the company. If the company cannot recognize the business value created by the PMO then the PMO has failed and will most likely be disbanded.
Failing to Gain Implementation Support
Deciding to implement a PMO is a lot easier than gaining support during implementation. There are several activities that can be assigned to a PMO. A partial list of activities might include:
- Strategic planning for project management
- Benchmarking internally and externally
- Cost reduction and continuous improvements efforts
- Mentorship for new project managers
- Capturing lessons learned and best practices
- Maintaining a problem-solving hotline
- Creating templates
- Assisting Human Resources (HR) in developing a project management career path
- Supporting education and training for project management
- Assisting projects with disaster recovery plans
- Assessing risks
- Supporting customer relations management activities
- Supporting executives during portfolio selection and management
- Capacity planning efforts
- Maintaining a Project Management Information Systems (PMIS)
- Guardian of project management intellectual property
The order in which these activities are implemented is important. For example, if the first activity assigned to the PMO is to support strategic planning activities, even if just related to project management, some executives may feel threatened by the existence of the PMO with the belief that the PMO will now be responsible for some of their efforts. The result may induce a lack of support for the PMO. It is therefore essential that PMO activities be assigned in the correct order such that support will be forthcoming. Also, trying to do too much too soon can lead to PMO failure.
Determining PMO Headcount
It is very easy to over-staff a PMO. Several years ago, a company determined the need to implement project management and created a project management methodology. The company was losing contracts to their competitors and the need to become good at project management in the shortest amount of time was essential.
The company created a PMO with a staff of more than 50 people. The majority of the people were transferred from business units to the PMO. The business unit managers eventually filled all of the vacated slots.
Three years later, the company had created a project management methodology and believed that they were now competitive in the marketplace. The PMO was treated as a cost center where the salaries of the employees in the PMO were part of the overhead structure of the company. Unfortunately, after economic conditions in the marketplace became poor, executives began looking for ways to reduce costs, beginning of course with the overhead structure of the company. The decision was made to reduce headcount in the PMO to less than 15 people. Unfortunately, there were no positions available in the company where these employees could be reassigned and they were eventually terminated. People began believing that an assignment to the PMO was not a career path opportunity and the support for the PMO diminished.
While we tend to focus on over-staffing a PMO, there is also the risk of understaffing the PMO. If the PMO is assigned more work than it can handle, then the effectiveness of the PMO will be the subject of discussion and the PMO may be eventually dissolved. This will most certainly occur if the PMO is unable to provide the value that is expected from it.
The Failure of Success
Several years ago, an auto supplier in Detroit established a PMO with a mission statement that included the creation of a world class methodology for automotive products. The PMO accomplished their task and the number of project successes grew. The PMO eventually became complacent and began focusing on getting people to use the methodology. Three years later, senior management began asking what continuous improvement efforts took place over the past three years. Much to their surprise, no improvements had taken place.
The organization had become complacent. The PMO lost their vision of the future and had spent three years worrying heavily about the present. When significant successes occur, it is a natural tendency to avoid “rocking the boat” and continue doing exactly what they had done in the past.
When a PMO becomes stagnant, executives wonder why the PMO still exists. Most PMOs are overhead rather than direct labor and, as such, are seen as opportunities for cost reduction. When the PMO becomes stagnant, people may believe it has accomplished its mission and should be shut down.
Failing to Use Intellectual Property Correctly
Project management intellectual property consists of proper understanding of the organizational process assets, the capturing and further use of best practices, an understanding of information stored in the knowledge repository systems for project management, and taking advantage of project management educational opportunities. This intellectual property is designed to improve one’s project management skills by learning from what others have done.
There are two, and only two, ways by which an individual can become good at project management: you can learn from your own mistakes or learn from the mistakes of others from the intellectual property provided to you. Learning from your own mistakes can be a tedious and costly process. The organization may be willing to allow some projects to fail, either partially or totally, in order for learning to take place. That’s somewhat unfortunate, but this was a way of life in the early years of project management, well before the existence of PMOs. Project management knowledge is intellectual property that firms must use effectively.
The creation of a project management methodology, accompanied by forms, guidelines, templates and checklists, has the benefit of providing standardization and repeatability but does not necessarily provide project management education. Rather, it simply provides a roadmap. Educational opportunities must be provided to the workers.
There are several ways that project management learning can take place: college/university coursework, onsite specialized training, knowledge transfer and certification programs. Effective PMOs are actively involved in onsite specialized training, knowledge transfer and certification programs. The PMO must make sure that the course content and possibly the examples provided by the instructors are applicable to the company and or industry. Otherwise, the workers may respond that “the information was nice to know but doesn’t apply to us.” Some companies have certification boards which must approve all certification program to guarantee a good fit with the firm’s educational goals.
Most companies are willing to provide their workforce with educational opportunities. In project management, it is the responsibility of the PMO to make sure that the correct project management education is provided so there are benefits for both the firm and the workers.
Failing to Collect Intellectual Property
Knowledge transfer comes from the collection of lessons learned and best practices. It can be discovered from both successes and failures. The PMO is the company’s guardian of project management intellectual property and must make sure that the information is both gathered and correctly disseminated to the workforce. Even though there may be best practice owners assigned throughout the company, as well as subject matter experts to evaluate whether something is a best practice, someone from the PMO must accept the leadership role for the collection and disposition of the intellectual property.
When best practices are not managed correctly, people end up learning from their own mistakes rather than from the mistakes of others. Mistakes are often repeated, not only by individuals within the same division, but also by individuals in sister divisions. The failure of the PMO to collect intellectual property can significantly impede or even prevent continuous improvement efforts from occurring.
Forcing Organizational Change
The capturing of best practices and lessons learned often leads to organizational change. The PMO functions as the leader for that change. Not all changes are necessary and some changes that are necessary may be delayed until sometime in the future. Forcing unnecessary organizational change or dealing with a culture that tends to resist change can cause the PMO to fail.
Not Understanding Culture and Needs
People tend to dislike changes to their comfort zone. In such cases, it is not uncommon for people to bad-mouth the PMO and recommend it be dissolved. Before recommending any type of change, the PMO must understand the culture and the needs of the individuals. Most people seem to understand the need for change, but it is the how and when that people are concerned about.
In one company, the PMO implemented changes to the project management methodology that resulted in several decisions that were normally made by some of the blue collar workers to now be made by the leadership of the projects. The PMO was unaware that having the authority to make at least some decisions, no matter how small, could be seen as an opportunity for some blue collar workers to advance. Removing this opportunity from the blue collar workforce resulted in a lack of support for the PMO.
In another company, the PMO was asked to create a monetary award system for people working on project teams. The PMO put the system into action without considering the potential impact on the blue collar wage and salary administration program. Some blue collar workers assigned to project teams eventually earned more money than their colleagues that were at a higher pay grade because of project bonuses. Now, blue collar workers were fighting to work on project teams rather than performing their routine non-project work requirements.
Making the PMO a Profit Center
Several years ago, a company with a well-established PMO had a mission statement that focused heavily upon the future. All of the project managers were assigned to business units but reported on a “dotted line” basis to the PMO for the sharing of intellectual property and continuous improvement efforts. The head of each business unit had overall responsibility for profit and loss (P&L) for the business unit and this P&L responsibility was subsequently handed down to each of the project managers. Business units were treated as profit centers but the PMO was regarded as a cost center.
The company then hired in a new president who decided that all of the project managers had to be centralized and with “solid line reporting” to the PMO. The project managers were still required to maintain P&L responsibility for each project. This act converted the PMO from a cost center to a profit center. The PMO now focused on the profitability of projects.
The results were devastating. Long term continuous improvement efforts were avoided in favor of short term efforts to increase profitability. Project management education was viewed as an unnecessary expense. The PMO had lost its identity. While rank has its privileges, and the president can restructure any way he/she desires, making the PMO a profit center resulted in the failure of the PMO.
Focusing on the Profitability of a Single Project
While it is a fact that most PMOs do not have the responsibility for P&L, they are still expected to support all projects equally for the maximization of corporate profitability. The PMO can fail if it overemphasizes the profitability and support for one project at the expense of all of the other projects. This often occurs when a project “cries for help.” PMO employees may also shirk some of their other duties to support just one project. Supporting a project in trouble is certainly the right thing to do, but restraints should be imposed on the amount and level of support provided.
Improper Staffing of the PMO
There are not very many courses in the marketplace designed to train people in how to work in a PMO. People are expected to bring with them the necessary skills when assigned to a PMO. Some people believe that the three most important skills are: process skills, communication skills and project management skills. Too often people accept temporary assignments to a PMO or are permanently assigned to a PMO without fully understanding the roles and responsibilities of the PMO. Sometimes, the executives that support the existence of the PMO provide ill-defined requirements for roles and responsibilities resulting in the wrong people being assigned to the PMO.
Project managers are quite adept at speaking in project management lingo. This is acceptable when managing a project and interfacing with project personnel, but when assigned to a PMO, you must be able to communicate with everyone and not all of the people you communicate with will have your understanding of project management lingo.
Unaware of the Existence of the PMO
It is very hard for people to support a PMO if they are unaware of its existence. This is particularly true of divisions that are remotely located away from the organization that houses the PMO. Even if the existence of it is known, there can still be a lack of support if the people do not understand why the PMO was created and what the responsibilities are for the PMO.
Some companies that are multinational firms may have multiple PMOs worldwide. In such a case, one PMO is considered as the “master” that has the responsibility of networking together all of the other PMOs. Care must be taken that each PMO understands their own responsibilities. For example, the master PMO may be responsible for continuous improvements to the methodology whereas the regional PMOs may be responsible for implementation of the changes.
Because the PMO is the guardian of project management intellectual property, some executives may feel threatened by PMOs that are directly under the control of other executives. Information is perceived as power and sharing information with PMOs that are not under your control could make other executives more powerful than you. Sometimes this can be resolved by having more than one PMO in the same business unit. There can be a separate PMO for IT activities and at the same time a corporate PMO for other activities. This can be effective if both PMOs work together, but more often than not they compete with one another resulting in the failure of one or both PMOs.
Failing to Understand the Cost of Paperwork
Project managers seem to understand the cost of paperwork while managing projects. But when assigned to a PMO, they often fall into the trap of believing that the PMO should be a paper generating machine. The result can be an overwhelming increase in paperwork requirements for project teams to the point where PMO failure is inevitable.
The PMO should strive for paperless project management. As an example, some PMOs have converted their entire project management methodology to an intranet version which is entirely paperless. The entire methodology, together with the accompanying forms, guidelines, templates and checklists are on the company website rather than on paper. Project performance reporting can be done using a dashboard reporting system.
Failing to Understand Resource Capacity Planning
Most executives today do not know how much additional work they can undertake without overburdening the existing labor force. The PMO has the responsibility to provide this information to executives so that they can effectively establish a portfolio of projects based upon the availability of the necessary resources. Resource capacity planning could very well be the most important reason why executives support the existence of a PMO.
Failing to Understand That One Size Doesn’t Fit All
In a utopian environment, we would be able to create a single methodology or set of processes that could be applied to each and every project. In reality, this may be difficult to do because of the differences between projects. Forcing an organization to use improper processes can lead to a dislike for the PMO.
Failing to Understand That Processes Come Before Tools
Several years ago, before a particular company created a PMO, the company spent $600,000 for a licensing agreement for a certain project management software package. Later on, a PMO was established and given the charter to create a project management methodology for the company. It quickly became apparent that the software package that was selected was not a good fit for the methodology that was created.
Processes must come before tools. There are numerous software tools in the marketplace and many of the tools can even be customized to satisfy the needs of a specific project management methodology. When the wrong tools are purchased, blame seems to be placed directly upon the shoulders of the PMO regardless where the decision was actually made to purchase the package.
Inconsistent Use of The Processes
An automotive industry supplier had three business units housed under one roof. Each business unit had their own way of managing projects. Problems occurred when some of the projects required that all of the divisions work together. Coordination of efforts became quite difficult for the project managers.
The president of the company established a PMO with the charter to create a methodology that could be used on a company-wide basis. All three divisions supported the idea and assigned divisional resources to assist the PMO. One of the three divisions already had a methodology that the PMO believed could be used as a starting point. Eventually, a company-wide methodology was created and was heavily based upon the information from one of the divisions.
When the final product was released and project teams were asked to use the new methodology, two of the three divisions argued against its use claiming that “it wasn’t invented here.” The PMO audited selected projects in all three divisions and found an inconsistent use of the processes; everyone was now blaming the PMO. Eventually, the president stepped in and mandated that the methodology and accompanying processes be used in all three divisions. Had the president not stepped in, it is entirely possible that the PMO may have been dissolved.
Failing to Establish PMO Metrics
PMOs are overhead rather than direct labor charges against various projects. As such, when economic conditions deteriorate, overhead activities are one of the first items to be looked at for possible cost reduction opportunities. This puts the PMO in danger of being dismantled.
PMOs must establish metrics that can show how the PMO adds value to the company and contributes to the company’s bottom line. Typical metrics that the PMO might consider include:
- Percent of projects using/following the project management processes
- Ratio of the number of project managers to total project staff
- Better trained project managers
- Higher project success rates
- Improvements in customer satisfaction ratings
- Year over year throughput; doing more work each year with the same or fewer resources
- More efficient utilization of organizational resources
- The amount of decrease in the percent of projects at risk or in trouble
- Headcount per project (staffing tolerance for projects)
- Finding ways to get faster closure
- Amount of reduction in the number of scope changes per project
Conclusion and Recommendation
The need for PMOs is quite apparent. But unless we fully understand the downside risks, the implementation process may not go as smoothly as we like. If the PMO does their job effectively, they will recommend changes for the better. People often tend to resist changes to their work habits. The PMO must address risk management issues for all decisions in order to prevent a PMO failure.