In today’s complex and tepid business environment, new projects are invariably being developed as organizations seek new methodologies to reduce costs, improve processes and procedures, enhance productivity, and maintain a competitive advantage by advancing their bottom line. The task of managing these diverse and often multifaceted projects along with their human capital, resources, costs, technology, and communication is a challenging undertaking for which the risk of failure to achieve the intended outcomes or deliverables is often far too high (Young, 2009). An effective solution, crafted to institute a more formalized and centralized approach to the management of expansive assemblages of projects, is the Project Management Office (PMO). It is against this backdrop that this paper will attempt to offer a critical evaluation of the impact of the project management office on the organization’s delivery of information technology Projects, with a view to demonstrate their increased importance in ensuring successful completion of IT projects Current evaluative studies demonstrate that many organizations, especially those operating above a certain size and with broad differentiation of project work, have taken the initiative to institute PMOs to assume responsibility for project-related tasks and organize project-related activities (Andersen et al.
, 2007). There exist compelling evidence that today, more than ever before, contemporary project management precepts have surfaced to inspire a vitalized and buoyant professional approach to project management across varied sectors and industries (Hill, 2004). Although PMOs should not be perceived as a panacea for all project challenges, individual competences in project management have been revitalized and expanded through a blend of developments in project management approaches and processes, execution of training agendas, and automated work-tools that employ sophisticated design models and technology. However, it should be noted that “…there are large variations in terms of organizational location of such PMOs and the responsibilities/tasks they hold” (Andersen, 2007, p. 97). PMOs, according to Hill (2004), have necessitated today’s project managers who have adopted these principles to assume the dual responsibilities of a technical expert in a specific specialty as well as the business or organizational leader for the project. The project manager, through the provisions of the PMO, assumes responsibilities that oblige the professional to perform in a capacity that will facilitate the achievement of one or more operational objectives, which may include but not limited to project management oversight, organization, control, and support (Hill, 2004). The responsibilities, however, invariably depend on the level of control and influence of the PMO on projects within an organizational setting, and a conscientious team of professionals may have to work out modalities of which type of PMO best suits the needs and requirements of the organization in order to create an effective and efficient project office (Reiling, 2010).
The Information Technology (IT) industry, which is the subject of this evaluation, has not been spared the internalization of PMOs in fundamental organizational approaches and processes relating to how projects are designed and implemented. For years, according to Santusus (2003), IT departments have with great effort attempted to implement projects on time and within the set deadline. The efforts have been frustrated by numerous challenges especially in the absence of an agreeable and acceptable platform for implementation of projects, leading many organizations to incorporate PMOs to their management systems as a way to advance IT efficiency, reduce costs, and enhance project delivery in terms of time management and budgetary allocation. Indeed, “…the trend toward implementing PMOs to instill much-needed project management discipline in IT departments is spreading fast” (Santusus, 2003, para. 2).
2. Brief Description and History of Project Management Office
A project management office is a “…department within a business, agency, or professional enterprise charged with the responsibility of defining and maintaining effective standards and processes for project management within the organization” (Rad & Levin, 2002, p 101). The principal objective of a PMO is to attain quantifiable benefits from standardizing project management approaches, processes and methodologies through the introduction of economies of scale in the implementation of crucial projects. Program offices trace their genesis back to the now defunct Project Support Offices (PSOs) that proliferated in the decade of the 1960s to assist in the management of large, multifaceted aerospace and construction projects (Parth, n.
d.). As automated support and technical tools such as the original Artemis found their way into the market, the overall route of program offices underwent a resounding shift to include tools and methodologies support for program and project managers. The emphasis shifted again in the decade of the 1990’s to “include coordination among multiple projects to ensure consistency in [project management] practices and quantitative portfolio management” (Parth, n.d.
, para. 3). Over time, the PMO intrinsically became the main source of guidance and policy formulation within the organization, not mentioning the fact that it was inexorably linked to the best practices and processes for project management. An effective PMO, according to Nicholas (2004), must base its project management standards, approaches, and processes on universally acceptable industry standard techniques such as the Project Management Body of Knowledge (PMBOK), Malcolm Baldridge National Quality Award (MBNQA), Project in Controlled Environments (PRINCE2), and Control Objectives for Information and Related Technology (COBIT), among others. Such industry-wide strategies are consistent with the obligations related to ISO9000 certification and with other acts of government intended to regulate critical organizational processes such as the U.
S. Sarbanes-Oxley program (Santusus, 2003; Young et al., 2009). According to Thomas & Tilke (2007) “…the PMI’s PMBOK guide is the broadest and most widely used standard reference of industry best practices for project management” (p. 2). The methodology defines universally accepted and essential practices and guidelines that are inarguably applicable to a wide range of functional areas and markets, not mentioning the fact that it has the capability to be implemented at a cross-organizational level. The PMBOK guidelines, according to the authors, outlines 5 critical project progressions, namely project initiation, project planning, project execution, project control and monitoring, and project closing. According to Andersen et al (2007), PMOs have for quite some time been extensively utilized as a means for administering or executing large projects, based on the seminal need for an overall, consistent approach.
Traditionally, project offices were created for purposes of coordinating or synchronizing portfolios of projects, thereby facilitating experience transfer and benchmarking processes among the organization’s projects. Apart from this heuristic function, project offices also “…often functioned as a ‘project monitor’ that reported directly to senior management about problems or deviations from plans” (Andersen et al., 2007, p. 97). This implies that the offices served as an intervention tool for adjusting projects that threatened not to meet their set objectives. Pioneering organizations such as NASA termed the support outfits “program management offices,” and their duties and responsibilities bore a close resemblance of contemporary PMOs. It should be noted, though, that modern-day PMOs have been allocated somewhat divergent meanings and interpretations, as is explained later in this evaluative report.
It serves the interests of this paper to mention at this early stage that modern-day theory and practice situates the PMO as a business integrator – whether in a capacity that is inarguably limited to the management and execution of manifold projects as a program or enlarged to serve as a business unit characterizing the enterprise project management environment – to include all the concerned people, processes, and tools that manage or control project implementation and performance (Hill, 2004). In either situation, “…the PMO helps both the project manager and the relevant organization to understand and apply professional practices of project management and to adapt and integrate business interests into the project management efforts with which it is associated” (Hill, 2004, p. vii). The processes involved must encompass all methodologies and practices, while the tools must encompass contemporary automated systems and other work aids.
Justification for Project Management Office
An organization must have a good and acceptable reason for creating a PMO since it costs a great deal of resources to run in terms of financial obligations and staff engagements. Indeed, some critics of PMOs as noted by Rad & Levin (2002) advance a negative value proposition for the outfits, arguing that they end up consuming enormous resources than they can ever possibly save. But contrary to such unsubstantiated and often tepid value propositions, the justification for establishing a PMO lies in the very fact that the resources, time, and energy devoted to the outfit will be more than saved by delivering projects in an efficient, faster and less costly manner across the entire organization (Andersen et al., 2007). Given the significant dependencies that exist between manifold engagements and projects of modern times, project teams are left with no substantive alternative other than to work in concurrence with a PMO to guarantee timely and synchronized delivery of critical projects and applications. A PMO, more than anything else, must be viewed as a complex business solution intended to address the challenges involved in project implementation and standardization of processes in order for the organization to be more successful.
As such, the justification for establishing a PMO must never be anchored on anecdotal verification or the desire to change the dynamics of the organization for the sake of complying with industry trends; rather, the justification must be centered on the singular aim of meeting the targets of the organization in the best possible manner (Wideman, 2006). According to Parth (n.d.), “…the Meta Group estimates that deploying a project office can reduce project failures by up to 80 percent” (para.
3). A recent KPMG survey demonstrated that inadequate policies and practices on project management execution constitutes 32 percent of all project failures, while ineffective communication methodologies and unfamiliarity with project’s nature, scope, and intricacy constitutes 20 percent and 17 percent of all project failures respectively (Hurt & Thomas, 2009). These challenges can be effectively addressed by the establishment of a PMO, thus the justification.
The justification for establishing a PMO for effective delivery of IT projects is today more real than ever before. In spite of the fact that most projects in the IT sector are not big enough to merit a dedicated project office (Wideman, 2007), increased use of technology to develop and manage projects in other fields within the organization justifies the establishment of a central resource unit for integrated IT activities. Such a unit may serve a range of projects, but may not essentially constitute a program or be equated with a fully-fledged portfolio management office. Still, such a PMO can serve important functions such as project management development for corporate business benefit, standardization of processes for corporate administration and control, and standardization of project support services and dissemination of critical information for the project manager, project sponsors and other concerned stakeholders, thus the justification (Wideman, 2007; Hallows, 1998). Indeed, the knowledge that workload automation through IT projects has quantifiable cost-cutting benefits is in public domain.
Types, Structure, and Functions of Project Management Offices
Today’s global market enterprises, irrespective of area of operation or size, are looking for new ways to improve their systems and business processes aimed at ensuring the attainment of competitive advantage. One approach, according to Bolles & Hubbard (2007), is to institute project management as a core competency within the organization. The authors postulates that “…by setting up standardized project management policies, plans, processes, and procedures within the enterprise, [organizations] plan to learn from past mistakes, make processes more efficient, and develop people’s skills and talents to work more effectively” (p. 19). Organizational analysts are in agreement that the decision to institute a PMO within an organization is the first step towards restoring order to an otherwise chaotic operational environment. How much order is expected is primarily a function of the motives behind establishing the PMO in addition to the roles and responsibilities assigned to the unit in relation to its structural framework (Stanleigh, 2006). In equal measure, business leaders have argued a strong case for PMOs, with many alluding to the fact that these outfits are extremely useful in managing the improvement of fundamental business outcomes through integrated projects and process improvement teams. As such, the formalization of the project management office in modern organizations heralds its increased importance in terms of facilitating successful completion of projects in terms of scope, duration, cost implications, and benefits to the organization, staff, and clients (Rad & Levin, 2002).
PMOs, according to Ward (2010), are invariably related to the project’s size and complexity. Although the fundamental function of the outfits is to offer support across a multiplicity of projects that a particular organization may be engaged in – thus providing a convergence point for effective project management – they do vary in terms of structural framework, scope, functions, and the degree of control and influence on projects (Reiling, 2010; Andersen et al, 2007). Consequently, there exist different types of PMOs which organizations can utilize depending on the settings and applications for which they are intended for. This section purposes to critically discuss three different types of PMOs in terms of their structure and functions, with particular emphasis being laid on IT projects.
1: Corporate Project Management Office
According to Kerzner (2004) “…this type of project office services the entire company and focuses on corporate and strategic issues rather than functional issues” (p. 279). The underlying rationale revolves around the fact project offices can be a feature of any organizational unit, and that it is fundamentally important to come to terms with the fact that project offices exist to serve the entire organization. As such, project offices need to be networked with critical business strategies, not mentioning the fact that their must have the capacity to share information at an organizational level. In terms of structure, it should be noted that corporate PMO must be positioned at a higher level in the hierarchical structure of the organization for purposes of establishing its own independence and control. According to Bolles & Hubbard (2007), “…the position of [a corporate PMO] within a hierarchical organization establishes its degree of authority, acceptance, adoption, and autonomy – and, thus, its ownership of the responsibility for establishing, distributing, and supporting project management best practices within the enterprise” (p.
21). Consequently, the number of layers on the one hand and the number of project and business management units within each layer on the other inarguably depends on the size of the unit, budgetary allocations, number of annual IT projects included in a portfolio, and the complexity of the IT projects within the various echelons of the organization (Bolles & Hubbard, 2007). For small and mid-sized enterprises, the number and size of project management layers and other functional units may be altered accordingly to fit the amount of support and control needed by the project activity at each functional level. Figure 1 illustrates the structure of a contemporary corporate PMO. Figure 1: Illustration of a Corporate Project Management Office Structure Notes 1) Shaded boxes represent functional members of staff appointed as project team members. 2) In the above system, project managers have to report directly to business unit managers as well as the PMO manager or program manager, who in turn report to senior management. Adopted from Bolles & Hubbard (2007) p.
20 The functions of a corporate PMO are many and varied. Many project management professionals and consultants recommend that corporate project management office be given strategic responsibilities for project description in partnership with critical business strategies and processes aimed at managing the organization (Kerzner, 2004). In the delivery of IT projects, this project office can be set on either the IT department or business-oriented side of the organization, but should be equally sponsored or supported by the IT department and business management. According to Hallows (2002), the project office should as a matter of principle have a core staff of project/program managers charged with the responsibility of managing huge, multifaceted, strategic projects that cuts across different units or departments in the organization. In equal measure, the core staff of program or project managers involved in running the affairs of a corporate PMO must strive to offer mentoring services to the IT department as well as the units responsible for overseeing the execution of critical business strategies (Kerzner, 2004).
In other words, the core group would be charged with the responsibility of supervising the project office operations and administrative duties cutting across all IT operating groups and business areas. In addition, the core group would assume the responsibilities of setting the standards, including making provisions for best practices identification and sharing of information. Still, the group of project or program managers would be responsible for coordinating the functions and tasks of the project managers residing in individual IT operating groups (Hallows, 2002). A fundamental function of corporate PMO is to unify goals and objectives of individual outfits within the organization by applying a collective yet flexible approach to project management (Hallows, 2002). This, according to the author, is intended to provide a framework that can be used to pursue enhanced across-the-board outcomes.
This function, which is more directive than supportive, requires project offices to provide the needed expertise and resources towards the management of organization-wide projects. It is imperative to note at this juncture that this function aims to guarantee a high degree of consistency or uniformity of practice across or projects (Reiling, 2010). As noted by Kerzner (2004), program management consultants have lauded this function as a major contributor towards successful completion of multiple projects within the organization.
In addition, a corporate project office is charged with the responsibility of designing and disseminating PMO best practices to other departments within the organization. These practices “…encompass the establishment of standard project management guidelines and templates, centralized communications, training and mentoring of project managers and a centralized repository for lessons learned” (Hallows, 2002, p. 118). Indeed, according to Reiling (2010), this type of project office operates like a “clearing-house” of data and information on standardized project management approaches that can be utilized freely by project managers across the organization.
As such, it can safely be argued that corporate PMOs play critical supportive, controlling, and directive roles in the implementation and management of organization-wide projects and programs. More importantly, a corporate PMO functions to facilitate the alignment of multiple projects with strategic organizational targets and objectives through a well-entrenched framework of project portfolio management. As Cleland & Ireland (2007) observes, this type of project office “…manage the portfolio of programs and projects strategically as core components in the enterprise’s strategies, to include how well this portfolio supports organizational goals, objectives, and mission” (p. 200).
This important function of the project office further serves to thwart mission collapse and indistinctness, often a common setback in new multi-functional or organization-wide IT projects design. In many organizations, a corporate PMO is founded on mission statements, objectives, and guiding principles which assist the organization to “…drive continuous improvement through successfully managed projects delivering bottom-line results” (Kerzner, 2004, p. 280). According to the author, the mission of an efficient and effective corporate PMO charged with the responsibility of delivering IT projects must revolve around the following: Opportunity Identification: Contemporary technology is providing tools, solutions, and platforms which can be used by organizations to further enhance the achievement of not only the business goals and objectives, but also their operational efficiency, communication channels, information dissemination, and overall competitive advantage (Hill, 2004). As such, a corporate PMO must aim to ensure that the organization remains focused on the exact, value-added opportunities to enhance efficiency and effectiveness in the delivery of IT projects. As Kerzner (2004) observes, identifying these opportunities is essential in assisting the organization to realize its strategic goals and objectives. Project Management: An effective corporate PMO must assist the organization to pursue the identified improvement opportunities by way of standardizing critical management processes.
The processes, according to Kerzner (2004), should entail “…feasibility studies, charter documents, status and budget reporting, issue resolution, and impact analysis” (p. 280). Change Champions: A corporate PMO must always strive to identify, create an enabling environment, and drive change throughout the organization. More importantly, the PMO must, as a matter of fact, promote evidence-based decision making processes and cross-organizational collaboration at all echelons of the organization – with project management panels, in support of project managers, and during briefings and communications with senor management (Kerzner, 2004). In many non-governmental and not-for-profit organizations, a major function of this type of project office is to report directly to the project sponsors on the nature, scope, budgetary implications, and progress of the project (Hallows, 2002).
A corporate or enterprise-wide PMO, according to Kerzner (2004), appears to be the most common today not only in the delivery of IT projects, but also in other critical areas of managing a business enterprise. Indeed, this type of project office is commonly used to provide support to the organization on a global basis. Many analysts, however, are of the opinion that a corporate PMO is not used for purposes of delivering projects; rather, the projects managed by this type of project office are limited to process/tools/methodologies development, implementation strategies, project management competency, project reviews, education, and training (Hallows, 2002). In addition, this type of project office is involved in the “…development of strategic business plan that will leverage strengths of both project and resource management disciplines” (Kerzner, 2004, p. 285), not mentioning the fact that it is involved in the facilitation and support of organizational-wide project management practices. The role of delivering projects therefore becomes secondary.
4.2 Customer-Group Project Management Office
This type of project office is exceedingly used to necessitate better customer management, including availing a tangible framework for effective customer communications. According to Kerzner (2004), customers or projects with similar needs are clustered together for enhanced management, supervision, and customer relations. The author postulates that “…multiple customer group project offices can exist at the same time and may end up functioning as a temporary organizations” (p. 278). In effect, this type of project office functions as a fully fledged organization operating within an organization. In discussing the structural framework of a customer-group PMO, it is imperative to note that it may be led by either program manager or director, who is responsible for strategic master planning of customers with similar IT needs or related IT projects within major divisions or localities, not mentioning the fact that the leader must oversee the effective application of project or program business management standards already instituted by the corporate project office in express support of all projects that are being implemented within a functional department or within a program (Bolles & Hubbard, 2007).
This way, the program manager or director reports directly to the leader of corporate PMO. Individual customers or projects within the division are led by the project manager, who reports directly to the program manager and indirectly to the corporate PMO manager. As already mentioned, the project manager is the professional tasked with the day-to-day responsibility of managing the implementation of the project, including ensuring its overall success. In large, complex IT projects, however, the structure of customer-group PMO may change to include the involvement of the program director and the steering committee (Wallace, 2007). The program manager or director is the professional holding legitimate executive authority over similar or related IT projects, and has full answerability and responsibility for the overall success of the projects run within a particular entity in the organization. Consequently the director has the overall authority to make informed decisions affecting projects or programs under his cluster, subject to authorization and endorsement by the administrative panel. The administrative committee, on the other part, is made up of professionals who represent the general executive authority of the enterprise.
Figure 2 next page illustrates an adopted structure of customer-group PMO used in an IT environment. One of the core functions of customer-group PMO in the delivery of critical IT projects is project portfolio management and support for key customers or related projects. It is indeed true that many organizations offering IT solutions have numerous customers and projects running simultaneously in diverse geographical locations around the world (Hallows, 1998). For instance, Hewitt Packard (HP) customers and services PMO offer support to 2,500 project managers dispersed in 160 countries, and running tens of thousands of IT projects at a global level (Kerzner, 2004). To effectively manage the needs of thousands of customers in terms of project portfolio management, HP have strategically located its regional services PMOs in the U.S.
, Asia, Europe, Latin America, Middle East, and Africa. These project offices are not only responsible for managing the health of portfolios of IT projects under them, but are also held accountable for program management development and processes. The health of portfolio, according to Kerzner (2004), must take into consideration the status and financial presentation (actual v/s budgeted) of the IT projects managed and supported by HP’s project office on behalf of its customers.
The fundamental objective as indicated by the author is to improve portfolio status and enterprise-client relationship year after year. Figure 2: Illustration of Customer Group Project Management Office Structure Away from the issue of project portfolio management, customer-group PMO services many other functional and operational areas of ensuring efficient delivery of IT projects, including customer satisfaction, customer relationship management, identification of problem projects, troubleshooting projects in difficulty, vendor relationship management, managing escalations, monitoring and improvement, documenting the number of certified project managers, supporting project start-up activities, and project manager utilization (Kerzner, 2004).
4.3: Functional Project Management Office
The adoption and use of functional PMOs to manage IT projects within organizations have grown enormously over the last couple of years. At the most basic level, a functional project office is employed in a single functional area or division within an organization such as the management of information technology projects (Kerzner, 2004). As such, the most important function of this type of project office becomes that of managing a vital resource pool intended to oversee the successful completion of projects within the PMO.
Consequently, the structural dimensions of a functional PMO must be arranged in such a way that it is materially and operationally able to provide direct support and sustenance strategies to a single mission-critical project under the leadership of a project manager, who is tasked with the responsibility of overseeing the successful completion of the project (Cleland & Ireland, 2007). The structure of a functional PMO is primarily anchored on the traditional resource pool model. This concept, according to Wallace (2008) and Jainendrukumar (2008), revolves around the philosophy that project teams should indeed be assembled from similar types of resource, and that an organization enjoys high rate of success by utilizing consistent methodologies, procedures, processes, and competent personnel to execute the decisions made by a higher office on the project management environment. This, however, does not imply that members of different teams cannot in anyway come together for purposes of delivering a project. To the contrary, members from different teams often combine efforts towards the successful completion of a particular project, but the combined team must efficiently be able to communicate and collaborate. For example, an IT project interested in designing by prototyping can be completed successfully by members contracted from both the user team and applications team. As such, it can be safely argued that the functional PMO structure teams of resources to encourage collaboration, knowledge sharing, and expertise or skills transfer. In addition, a functional PMO may or may not use change facilitators as a vital resource pool.
But as noted by Kerzner (2004), change facilitators occupy an important position in the structure by virtue of encouraging and facilitating change through the user team on the ground and process sponsors. It is imperative to note that a functional PMO is run by a project manager, who directly reports to the program manager and indirectly to the program director. In addition, the input of stakeholders and sponsors as well as the unreserved commitment of the top management are critical for successful implementation of IT projects using the functional approach (Stanleigh, 2006). According to Bolles & Hubbard (2007), many functional PMOs are not tasked with the responsibilities of either managing project portfolio or offering customer support services; theirs is to manage a vital resource pool intended to oversee the successful completion of IT projects for the organization or for clients.
The figure next page illustrates an adopted structure of functional PMO used to deliver an IT project. Kerzner (2004) is of the opinion that “…although functional project offices can be developed anywhere in an organization, they are most common in information systems environment” (p. 279). This type of project office is basically process-based, and views project management as an epicenter of excellence that is initiated to offer support to the strategic objective of the organization in its attempts to curtail fixed and unpredictable costs for its IT projects. In most occasions, the project managers running the projects within a division of the organization, presumably the IT division, reports to the corporate PMO in the event that such an office has been established in the organization. However, they are tasked with the responsibility of managing the projects on a daily basis.
When the functional PMO is fully implemented, it offers the specific division the capacity to achieve operational efficiencies and enhanced effectiveness in all project endeavors (Hallows, 2002). Figure 3: Illustration of a Functional PMO Structure used to deliver an IT Project It is imperative to note at this juncture that the types of IT projects implemented and managed by a functional PMO “…range from application development to preventive maintenance” (Kerzner, 2004, p. 279). It is also important to note that the functional PMO’s portfolio of projects basically consists of the organization’s strategic IT projects as well as internal infrastructure projects. As such, the functional PMO is responsible for: Implementing and managing standardized project management methodology Implementing and overseeing project activities in the project management environment Providing the capacity to guarantee professionalism and brilliance in applying broadly accepted principles and project management processes to individual project effort. This includes applying principles and methodologies of contemporary project management, through the expertise and knowledge of the project manager, to guarantee the realization of successful project management (Hill, 2004).
Collection, validation, and distribution of critical IT project data and information within the project management environment Administration and management of project management tools and training curriculum delivered from a higher office Availing project management support and guidance to 20 – 30 project managers operating within a division Serves as the first tier of project oversight activities and the highest tier of technical oversight. According to Hill (2004), “…whereas higher-stage PMOs may mandate and introduce technical methods and procedures, it is the [functional] project office that implements them in the projects management environment” (p. 47). It is common practice for project managers running a functional PMO to be assigned a coach to oversee the efficient transfer of knowledge and skills in project management best practices, project financials and costs analysis, PMO processes and strategies, and project management tools (Kerzner, 2004). Large projects implemented by the functional PMO may indeed need the input of a project planner who, in addition to the functions stated above, is charged with the responsibility of working “…with the project manager to coordinate project controls, performance and status reporting and to assist the project manager in successfully completing the project” (Kerzner, 2004, p. 280).
As such, successful delivery of IT projects based on the functional PMO approach must meet the following standards: Enhance operational efficiencies and effectiveness throughout the organization. Achieve the objectives of Capability Maturity Model (CMM) in the critical process areas, including project planning, project implementation, project tracking, and oversight. The CMM provides a framework for managing and improving the performance of IT projects in an organization. The underlying rationale of the CMM is that information technology is a management discipline commenced as a critical component of an organization’s mission and strategic arrangement to accomplish its business goals (Hallows, 2002).
Enhance the number and skills of Project Management Institute (PMI) certified project managers. Enhance organizational capacity in forecasting project performance and budgetary allocations using such methodologies as the Earned Value Metrics (EVM). This technique, according to Hallows (2002), has the capacity to evaluate the project’s scope, timetable, and cost implications in a single integrated manner, not mentioning the fact that it provides a platform for early identification of performance challenges when properly applied in the management of IT projects.
In addition, the technique has the capacity to improve the description of project scope, communicate objective progress of IT projects to project managers and other interested parties, and keep the implementation team focused on realizing progress (Budd & Budd, 2005).
5. Comparing the 3 Types of Project Management Offices
Although many IT-oriented organizations implement one type of project office due to underlying constraints in terms of scarce financial resources and manpower requirements (Kerzner, 2004), there exists clear differences and some similarities in the way the three types of PMOs operates as demonstrated in the discussion above. First, the corporate PMO takes cognizance of the fact that projects cannot be implemented or managed in isolation, and therefore must operate in the broad organizational context. As such, many program or project managers involved in running the affairs of IT projects within a corporate PMO need to employ systems thinking, which entails assuming a holistic perspective of a project, including understanding how it relates to the enterprise (Ward, 2010). This is done to ensure that projects – may they be systems upgrades, networking, prototyping, or business process redesign – continue to provide support to the current business and organizational needs. However, the functional PMO is more concerned about pooling vital resources for purposes of successfully completing a project or specific number of projects in a single functional area such as networking or database management within the organization (Kerzner, 2004). A customer-group PMO, on the other hand, is more concerned with supporting a group of customers or projects with similar or related requirements, thus saving on costs and time requirements.
A corporate PMO, under the leadership of the chief information officer (CIO) or a senior program manager, is charged with the responsibility of developing standards, methodologies, guidelines, and procedures for use by project managers in the implementation of IT projects (Nicholas, 2004). This demonstrates the fact that the senior managers manning these project offices are directly responsible for whatever happens at the project level even though they do not control or assume the responsibilities of overseeing the development, implementation, or managing project activities on a day-to-day basis. The project managers operating within a functional PMO, on the other hand, are held responsible for daily project activities, including budget management, utilization of standards, methodologies, procedures, quality assessments, and ensuring that critical IT projects are completed within the set time-frame. The program or project manager manning a customer-group PMO may assume either or all the roles, but he or she must continually prepare status reports and needs assessment to a senior program manager, preferably the chief information officer.
The manager must also work in collaboration with other business unit managers to ensure the project deliverables are aligned to the core business strategies of the organization (Kerzner, 2004). It is the function of corporate PMO to encourage the use of standardized forms and software for successful completion and management of IT projects by project managers in the lower echelons of the project management structure. As such, the project office must not only have the capacity to holistically integrate with critical business and organizational units, but it must also have the capacity to share information both at the organizational level and the project management level (Kerzner, 2004).
According to Rad & Levin (2002), most IT projects are unable to meet their set objectives due to failure by the organization to implement adequate and efficient top-down information sharing frameworks. Consequently, a corporate PMO will inarguably serve the need of relaying information critical to the achievement of organizational goals and objectives to the project managers on the ground. A functional PMO, on the other hand serves to digest and implement the information received from the top with the aim to successfully deliver the IT projects running on the ground. The functions of the corporate PMO regarding information sharing and establishment of standardization mechanisms and processes therefore assumes a management and controlling nature, while the functions of a functional PMO regarding the same assumes a planning, management (of functional units) and implementation nature (Hallows, 2002).
The customer-group project office, on its part, must assume a customer communications, management, supervision, and customer relations nature regarding its role in information sharing (Kerzner, 2004). A corporate PMO is a senior office within an organization, and is placed in the same level with other critical business units, which are directly accountable to the chief executive officer. Moving on, it is imperative to mention at this juncture that the structures of the three types of project offices discussed in this paper differs in terms of scope, resource allocation, functions, and authority (Kerzner, 2004). In many IT-oriented organizations, the corporate project office is held by a senior program manager or the chief information officer (CIO), who performs an overall role of overseeing that organization-wide project objectives are aligned with critical business goals.
As such, the holder of the office must be in constant communication and collaboration with not only the chief executive officer, but also with other senior business unit managers so that fundamental organization and business goals are well envisaged in the projects running on the ground (Kerzner, 2004). This type of project office, according to Hill (2004), is purposely established at a higher level to offer guidance and support to organization-wide project activities, not mentioning the fact that it is also concerned with providing a unified reporting view of all programs and projects in the enterprise. When compared to the above, a functional PMO, often called the Stage 1 PMO, can be perceived as “…the fundamental unit of project oversight in the project management environment” (Hill, 2004, p. 46). The project office is developed as a domain of the project manager, who is held accountable for the successful completion and performance of one or more IT projects initiated by the organization. As such, the functional project office differs significantly from the corporate project office in terms of leadership, scope, and operational objectives. Indeed, it can be said that while the corporate project office dictates the standards and methodologies to be used for successful performance of projects, the functional project office, on its part, is tasked with availing the needed capability to guarantee professionalism and excellence in the application of commonly accepted processes and procedures, including the favored project management practices to projects under its jurisdiction (Hill, 2004).
Unlike a corporate PMO, the functional PMO does not have program-level authority, and its core function is to implement and monitor the standards and methodologies of project management at the project team level as prescribed by a higher project office. On its part, the customer-group PMO can either be led by a program manager or director, who is tasked with the foremost responsibility of ensuring that each project office within a cluster of similar or related projects pursues a common strategy to project management (Hill, 2004). It is imperative to note that unlike the functional project manager who resides in a project management office, a program manager in charge of customer-group project office resides in a program management office since the professional must administer to “…a collection of projects or portfolios that, when managed together, often provide greater benefits than when managed separately” (Hunte, 2007, p.
2). This function is especially important in managing the successful delivery of IT projects due to fact that the projects differ in diverse ways in terms of size, scope or application area, complexity, skills required, deliverables expected, and the resources required (Stanleigh, 2006). For example, a client’s software process improvement program may require the input of various IT professionals pooled from diverse IT project managers, team leaders, and team members with diverse skills such as software development, networking, and database management, among others. Fundamental differences emerge among the three types of project offices when it comes to portfolio management. According to Hunte (2007), a functional PMO is not in any way tasked with the role of portfolio management. Indeed, many functional PMOs operate at the level of project management office, holistically charged with the responsibility of assisting project teams finish the assigned projects on time and on the allocated budget through the employment of established standards and best practices. However, the project office is responsible for managing the resources allocated to it by a higher office or sponsor to ensure that the finished project meet all the requirements set by the stakeholder. Both customer-group PMO and corporate PMO are organized in a manner that permits portfolio management under the stewardship of a program/project/portfolio manager or director (Hallows, 1998).
As demonstrated by Kerzner (2004), large IT-oriented organizations such as Cisco and Hewitt Packard have well established portfolio management offices that are entrenched in their corporate and regional project offices. These offices, according to Hunte (2007), are tasked with the responsibility of supervising an assemblage of projects that are intrinsically aligned to meet explicit business objectives at the organizational level as well as the client level. For instance, a retail business in need of establishing an internet framework to engage in global online sales may need to establish a portfolio comprising of e-commerce initiatives that are aimed at supporting organization-wide strategic initiatives allied to the establishment of a web presence. It is imperative to note that the “…key objectives of a portfolio management office include aligning portfolios of projects and services to business goals and managing risk exposure to the business” (Hunte, 2007, p. 2). It is important to compare and contrast the staffing requirements of the three types of project offices since human resource allocation and commitment is essential to successful completion and management of all project activities.
Many IT-oriented functional project offices rely on part-time staff that may be sourced from various areas within the IT department depending on the nature and complexity of the project being implemented (Hallows, 1998). As already mentioned, most IT projects requires the input of various support staff with varying skills such as web design and development, software development, database management, and hardware maintenance, and as such, it may be counterintuitive for the organization to maintain a full-time staff at the functional project office level in terms of costs and other financial outlays. Another reason why a permanent support staff is not necessary at the functional level is that most project offices operating at this level are established on a temporary basis, with clear-cut start and finish times (Hunte, 2004). As already mentioned, the project or projects under a functional PMO are headed by one or more project managers who are firmly in charge of project deliverables, including costs, time-frames, and resource utilization at the project level. In highly structured IT-oriented organizations the project managers are answerable to the program manager (Stanleigh, 2006). A customer-group project office, on its part, has full-time and part-time staff, and may be headed by a senior program manager or director. Multiple program managers are charged with overseeing the affairs of the multiple projects under each program, especially in project control and support (Hill, 2004). The project managers are tasked with the role of achieving project deliverables on a day-to-day basis.
The third type of project office – the corporate project office – has dedicated PMO technical and support staff as well as enterprise-wide support staff. The project office is tasked with the responsibility of aligning multiple programs and projects to the strategic business goals and objectives of the organization. The office may be led by the vice-president or the director of project management, who is directly answerable to the chief executive officer.
The figure next page illustrates an overview of staffing requirements and scope of operation of the three types of project offices. Figure 4: Overview of Staffing Requirements and Scope of Operation of Project Offices
6. Potential Benefits and Drawbacks of the 3 Types of Project Offices
Today, more than ever before, many organizations have recognized the fundamental importance of a PMO in realizing project management oversight, control, alignment, and support (Hill, 2004).
According to the author, “…the PMO’s is to help both the project manager and the relevant organization to not only understand and apply modern project management practices, but also to adapt and integrate business interests into the organization’s project management efforts” (p. 45). There is compelling evidence that a typical PMO offers many tangible and intangible benefits to the organization as well as the project managers in charge of overseeing the projects. This section purposes to outline the benefits and drawbacks of each type of project office discussed in the paper.
6.1 Benefits & Drawbacks of Corporate Project Office
This project office is the most advanced of the three types discussed in this paper and, as such, most of its benefits tend to accrue at the enterprise-wide level. Below, some of the benefits of a corporate PMO operating in an IT-related environment are outlined. Solution Implementation: A corporate PMO allows for the utilization of best practices and standards, which in turn span solution implementation methodologies and provides principles, guidelines and recommendations for successful process alignment, software and hardware configuration, performance tuning, process maintenance, and end-user training (Thomas & Tilke, 2007). A successful solution implementation strategy benefits organizations as well as project managers by: Considerably rationalizing costs by aligning the project portfolio with the business objectives of the organization Enhancing the capacity to respond quickly to shifting IT needs. Enhancing efficiency, effectiveness, and quality across delivery Reducing time-to-value and increasing user adoption Holistic management of the implementation phases of a project, including involving people with the right type of skills. As demonstrated by Thomas & Tilke (2007), IT- projects are complicated in scope, implying that each delivery stage of the implementation will entail a multi-threaded program touching many branches of the organization.
As such, a corporate PMO enables successful implementations of standardized frameworks such as COBIT or PRINCE2 to share some common characteristics and improve communications planning and execution Benchmarking Effectiveness: According to Craig-Jones (2007), the “benchmarking-centric approach acts as a great ‘insurance policy’ for protecting the value of your investment and improving the project delivery….The clearer the scope, release approach and ROI [return on investment] for all involved, the greater the adoption, buy-in and impact” (p. 1). Benchmarking brings added advantages towards implementing and promoting the successful delivery of a project, program or portfolio. In particular, it allows: Projects managers to successfully conclude projects within scope, allocated timelines, and budget Program managers to oversee successful management of groups of projects and avail the most favorable mix in the utilization of resources, thus providing an efficient framework that can be used to achieve economies of scale Portfolio managers to align project portfolios with critical business goals and objectives while providing an efficient framework that can be used to manage the organization-wide exposure to risk Standardization of Processes: Many corporate PMOs creates an enabling environment through which project data and information is analyzed to necessitate objective definition of processes, supporting standards, methodology standardization, and creation of templates and software for repeatable project, program, and portfolio management procedures. This not only lightens the project manager’s role of ensuring successful delivery of the project within the allocated timelines and budget, but also benefits the enterprise in terms of project forecasting, monitoring and evaluation, planning and organization, and reduction of waste (Hallows, 1998), thereby providing an efficient framework for driving business decisions.
According to Cleland & Ireland (2007), many IT projects fail to meet their objectives in the absence of this framework. Improved Communication & Decision-Making Processes: A corporate PMO not only improves cross-departmental communication relating to all program/project activities and the associated risks, but the data and information acquired as a by-product of the support and technical staff tasked with the responsibility of initiating the processes can be effectively utilized “…as input into business-driven decision-making, such as determining which projects and services the organization should undertake in the future” (Craig-Jones, 2007, p. 4). It is a well known fact that improving communication channels inarguably enhances effective coordination of projects across the organization.
According to Ward (2010), effective decision-making processes can only be done after the project office collects, review, consolidate, and distribute data for all projects to the respective business units. This is especially beneficial to the organization since it helps chart a common all-inclusive methodology of achieving and maintaining competitive advantage towards the realization of its business goals and objectives. Reduced Project Costs: A corporate PMO assists the organization to devise efficient frameworks for saving scarce financial and material resources since common project activities can be adequately managed at the PMO level. Training and Mentoring of Project Managers: A corporate PMO is beneficial in that it offers a training progression for all project oversight and management activities, not mentioning the fact that it benefits the project managers by way of providing training, coaching, and mentoring sessions to improve their competence in the management of projects. Other tangible benefits of a corporate PMO, according to eProject (2004), include: Provision of a single focal point of contact for all program/project data and information Provision of consulting activities to match fundamental business objectives with suitable technology solutions Assisting to balance the work-load of project managers, team leaders, and support staff across all project areas Provision of enhanced resource utilization capabilities across the enterprise matching critical project requirements with specialized expertise and availability Illuminate the differing roles of project managers in the organization to curtail duplication of responsibilities or functions, hence reducing wastage of resources Certification of project managers to acknowledge their varying competencies Enhanced accuracy of project estimates As is often the case in other management fields, the corporate PMO is likely to encounter some difficulties in its attempt to deliver technology projects. Some of the difficulties as demonstrated by Mochal (2002) include: Timeliness: Projects managers on the field may not have the capacity to send the needed project status information within the time-frame designated by the corporate PMO. Accuracy: The information received from the project managers is often inaccurate, thus putting all project and business alignment initiatives into disarray.
Completeness: The information received from the project managers on the field may be timely and accurate, but may not be complete in terms of reporting the status of the project, thus triggering an information gap on the way forward.
6.2 Benefits and Drawbacks of Customer-Group Project Office
The customer-group PMO has many benefits accruable to the organization as well as to the project managers. According to Hurt & Thomas (2009) and Kerzner (2004), some of the typical benefits include: Provision of a framework through which the customer has full objective transparency about the status of all improvement initiatives, including their related costs, gains, and the impact on the overall business environment Reduced projects costs through the management of similar or related projects in one division Standardization of processes, methodologies, and project management tools Effective management and enforcement of project priorities by following universally acceptable standards for managing and troubleshooting difficult IT projects.
Improved communication and collaboration with customers and project sponsors through the provision of a single source for communications Enhanced opportunities to effectively leverage the reuse of critical knowledge among project offices. Reduced project cycle time due to the capacity to simultaneously handle similar or related projects. This benefit further reduces project costs Enhanced perception of the enterprise by customers and clients, who may be end-users or vendors Enhanced manpower and material resources management Training, certification, and accreditation of program/project managers Provision of a centralized, customer-oriented office to care for issues arising from customers, vendors, and other stakeholders Reduction of capital outlays for the organization in the event that multiple related projects are being implemented and managed across diverse geographic localities Reduced time to initiate new projects due to standardization of processes. Effective project and portfolio management for the organization as well as its customers and vendors The drawbacks associated with this type of project office include: operational costs associated with running the project office as a separate entity from the organization; issues of authority and command structure arising from the clustering of many project managers at the project level; timeliness challenges; and lack of clarity of the information received from the ground occasioned by biased or subjective reporting of project status by the multiple project managers who may be overseeing the successful completion of a particular project (Nicholas, 2004).
3 Benefits and Drawbacks of Functional Project Office
According to Hurt & Thomas (2009), the functional PMO operates at the most basic level of project management. Indeed, this type of project office works round the clock to guarantee that IT projects are delivered according to schedule and on the previously agreed upon budget, scope, and time-frame. Apart from this benefit, the functional PMO delivers critical benefits in terms of: Ensuring that critical resources are utilized to successfully meet the project objectives for which they were intended Ensuring that the completed project successfully meet or surpass customer expectations, thus enhancing the public image and perception of the organization Serves other higher project office with critical project information and the risks involved, thus necessitating standardization of project processes, methodologies, and management tools. Ensures improved quality and efficiency of project deliverables Necessitates early diagnosis of project challenges and proactive management of project risks by virtue of the fact that it operates at the project level Allows for improved containment and management of project design and scope by virtue of the fact that the project manager is directly in charge of the day-to-day running of the project until its successful completion Benefits the project managers in terms of training and mentoring services, thus increasing their competency in project management Allows the organization to accurately estimate project costs and underlying benefits Among the drawbacks, it is clearly an expensive affair to offer training and mentoring services to the project managers, needless to say that some organizations find it extremely difficult to change the perceptions and worldviews of project managers operating this type of project office (Jainendrukumar, 2008). Also, project managers may have the skills of implementing project activities on the ground but fail to align the project objectives with long-term organizational goals and objectives as indicated by Andersen et al (2007). Still, this project office is still affected by the factors of timeliness, accuracy, and completeness, already discussed in this paper.
This paper has adduced evidence on the fundamental roles played by the project management office towards the successful completion and delivery of IT projects.
The fact that different organizations operates diverse project offices to meet the project and business goals have been well demonstrated through a comprehensive discussion and evaluation of three types of project offices – functional, customer-group, and corporate. The paper has also offered a critical evaluation of their differences and similarities in terms of functions, scope, benefits and drawbacks with the view to substantiate their impact on organization’s delivery of IT projects. Organizations operating in the 21st century economic environment continue to experience difficult challenges in terms of implementing solutions or managing multiple corporate initiatives geared towards enhancing their competitive advantage and business objectives (Hill, 2004). Although the project management office cannot be termed as the ‘magic bullet’ that solves all organizational issues and risks, its establishment to oversee project and portfolio management for organizations is definitely a step in the right direction.
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