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The Ultimate Guide to PMO in a Professional Services Firm

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Project management office (PMO). Introduction

The project management office (PMO) is typically an operating unit of a professional services firm. The “classic” such firm, in a way, is the consultancy, for which the client “is” the project. But any project-based company in fields from architecture to law to tax return–is a natural candidate.

PMO Services & Project Management Consulting

The writer worked for an extended period in two firms that may broaden the concept of the PMO. One was a leading fund-raising consultancy, entirely project-based. Consultants approached potential clients, prepared proposals and budgets for services, implemented steps such as “prospect research,” delivered services such as fundraising office audit or staff and volunteer training, arranged for the creation of campaign case statements, and much more. The duration of the project could be three years. Success was raising the targeted amount of the campaign. Consultants differed in their experience, clients differed enormously in size, and fund-raising offices (the real “client”) ranged from two or three professionals to hundreds.  

The consulting firm’s reputation depended upon delivering a highly consistent, predictable level of excellence and success. For many years, the office of the financial vice president tried to impose some consistency on projects. Later, the firm created an “Office of Client Services Management”–a classic PMO.

The other firm, however, was a leading New York City grant-making foundation supporting health care services and medical education. Was it project-based? Program officers often created programs and issued a request for proposals to likely applicants for a grant. They divided the workload of preliminary and then full proposals received, did the initial assessment, assigned promising proposals to outside reviewers, used the reviews to make a final selection of proposals, negotiated budgets with the applicants, and wrote up a recommendation for each proposal grant to present to the board of directors for a vote.

Program officers did not think of themselves as “project managers,” had no shared formal procedures, received such guidance as they did from the vice president, and did not think in terms of “success” or “failure.” The applicant always accepted the money, carried out a project in some way, and submitted annual progress reports in any format they wished. Intermittently, attempts were made at “evaluation,” usually by the program officer himself. The closest the foundation came to a PMO was a “grants management office” responsible for payments on the grants and annual progress reports.

Even these brief characterizations of two organizations raise issues about the potential broad applicability of a PMO, why it is needed, the motivations for creating one, and the benefits. What the two organizations required was consistency in carrying out the project (delivering the service), explicit and shared standards, and reliability or repeatability. The name for it on the production line is quality control.

One organization, the fundraising consultancy, realized this because delivering a service that a client can count on being of consistently high quality is the way to get and keep customers. The efficiency possible when everyone is working toward best practices and shared standards means lower costs and higher margins. Neither of these was a concern of the grant-making foundation, so it never felt the need for a PMO.



Meaning of PMO, its role and responsibility

Of course, the role of PMO is to contribute to the organization’s effectiveness and cost-efficiency in achieving its goals. The challenge is to define how the PMO can deliver those benefits. The professional services organization director may not know because, traditionally, project management has been decentralized to the level of the individual project manager. If there are shared standards and a shared methodology among managers, it is thanks to the initiative (in the spare time) of managers.

The move to systematize and institutionalize excellence in carrying out projects must motivate the investment of time and money to create a functioning PMO. Study after study has shown that a PMO’s existence correlates with project success and should provide that motivation.

What are some core functions or responsibilities of the PMO? A typical list might include the following:

  • Work out a shared, articulated methodology for delivering on project goals and identify and develop the needed tools.
  • Review projects, including a financial audit, and report to management and other stakeholders.
  • Step in to support more directly those project managers assigned to complex, perhaps novel, projects.
  • Troubleshoot projects that are floundering.
  • Promote project managers’ professional development by supporting training and assigning priority to developing and sharing new knowledge.

What are the benefits of the PMO for professional services organizations?

The Technology Services Association (TSIA) gathered data from professional services organizations over many years and, in 2014 produced a definitive report on the benefits of the PMO. These included a significant impact on the schedule and budget of projects–both critical measures of project success. One estimate is that a ratio of one PMO professional to 100 members of a firm can produce a return on investment (ROI) representing a 1- 5% improvement in margins. That is a considerable range and may depend upon how long the PMO has been established, but even at the low end, the cost of operating the PMO should pay for itself.

Let’s look in a bit more detail at some benefits a PMO can deliver to the organization:

  • A PMO can take a perspective that considers a project or portfolio of projects in the context of organizational strategy and long-term goals and plans. With this information, specific decisions about projects can be more efficient.
  • The PMO’s core responsibility is to track all firm projects implement a metric for assessing project progress, scheduling, budgeting, and other parameters–and act quickly to flag projects going off the rails. Potential project failures are headed off.

The same company-wide perspective of the PMO and its portfolio reveals how seemingly diverse projects may impact one another. It supports the PMO’s core responsibility to balance projects with available resources across the entire firm. Where a firm is fortunate enough to have an unlimited potential portfolio of projects but necessarily limited staff, time, and other resources to carry them out successfully, the PMO must align projects and resources for optimal productivity. Over the longer term, this alignment can involve decisions on training, purchase of project management tools, and identification of required overall management systems.    

What are the steps in setting up the PMO?

As you begin planning a PMO for your organization, you soon realize that this, too, is a project. It will require that you analyze the organization’s current state of affairs, create a plan that responds to that reality, and then implement it.

Early in this three-step process, you will have to identify the individual in management who can grasp and articulate the nature of the project and become fully committed to it.

Analyzing the situation in the organization requires identifying broadly how projects are managed, the processes, and what resources are brought to bear. Obviously, you are alert to any weakness–inconsistencies in delivery, varying records of success, any pattern in failed or uncompleted projects. Turning from the general, you will want to look at individual projects, too, and compile an up-to-date list of projects and their managers. Who is working on what and at what stage?

Your goal will be to recommend and make a case for improvements, but recognizing success and achievements and avoiding blame that can alienate potential stakeholders in a PMO. They will need to understand what the change will mean for them and how each will benefit.

Creating a plan returns us to earlier issues discussed here. What will be the areas of responsibility of the PMO? What functions must it be prepared to perform? Where does it fit in the organization’s hierarchy of project portfolio management? Although certain broad roles are common to almost all PMOs, the differences in specific responsibilities are huge. In general terms, the PMO’s mandate is to bring consistency to the organization’s performance on all projects. To do that, it develops and articulates standards, methodologies, and processes. But it also monitors each project and the project portfolio, bringing a constantly refined assessment metric to that task. When it gets down to how it actually supports the achievement of performance goals these are among the common responsibilities of the PMO:

  • Training individual project managers, including coaching and mentoring, for continued effective staff development.
  • Supporting the operation of individual projects, which might include workshops but, in other cases stepping in to control a project.
  • Developing tools for project managers, including the best methodological practices and processes.
  • Taking a hand in setting up specific projects, but on the organization’s level, selecting projects and assigning them priority based on cost-benefit analysis or other criteria.

With potential responsibilities ranging from details of projects to firm-wide roles in anything bearing upon delivering services, the PMO can be overloaded and set up for failure. Talk to stakeholders about realistic long-term goals versus start-up objectives that are practical. With the right staffing, the PMO learning curve may be steep, but it will exist.

Implementing the plan for a PMO today involves some routine steps like training the PMO staff. At the same time you are setting up the PMO, you should be educating the firm, including management, about the new PMO’s areas of responsibility. That includes specifying its services, whatever is agreed to date about processes and tools of project management, and introducing the team leader.

But one decisive difference from the period I discussed at the outset of this paper is the opportunity, today, to choose from a wide selection of highly sophisticated software created specifically for project management and the roles of the PMO. The leading PMOs now are not so much “users” of information technology as they are IT platforms. To a significant extent, they exist as a kind of cyber switchboard connecting project managers, clients, the PMO staff, and other resource providers requiring information and results of analyses.

Any effective PMO will need a software package with features such as task management, workflow management, and planning tools. That, of course, is just the beginning. The PMO project management team and the project teams must collaborate on their ongoing projects to understand their impact on each other. This is the reality underlying the goals of ensuring the project processes are standardized and meet the firm’s objectives and long-term goals. A kind of checklist of software requirements might include:

  • PMO or EPMO (enterprise PMO) software that works in real-time, providing a view of what is happening now and collaborating with other teams.
  • Software that facilitates a view of the entire project portfolio on the screen to make evident how projects relate to one another.
  • Along with this high-level oversight of portfolio progress, the PMO needs to monitor many very specific projects and tasks if it is to standardize processes. This means a view at the project task level.
  • Any PMO must have a role in aligning resources (staff, equipment) with projects to keep each project on schedule. A challenge is always to balance resources so that, as far as possible, every project has the resources it needs on time. The same challenge is to ensure that the workloads of individual managers and teams are balanced.
  • Software ought to make possible a focus specifically on teams, the real working unit of most professional services organizations. Within the team as well as across the firm, the PMO needs to attend to the balance of workloads and timely availability of resources.
  • The product of the PMO, in a sense, is the report to management, but also to project managers and teams on the progress of every project and the project portfolio. The reports should be easy to download and share.

What are the pivot points in setting up the PMO?

The introduction of a PMO into an established and successful professional services organization with seasoned project managers and a strong profitability record must overcome inevitable opposition. Some necessary changes will be unpopular. The changes will not succeed if the individual appointed to lead the team is not talented and/or highly experienced in change management. In any case, that individual must be backed by management and have well-understood responsibilities, competency, and standing in the management hierarchy.

The PMO itself obviously is a change agent in the organization. There will be a transition period. The PMO will fail if proprietorship on the part of project managers and teams, territoriality, prevents transparency of the project process from end to end. If that transparency has not been part of the company’s culture, then top management must prioritize (and reward) it.

The first pivot point in the progress of the PMO will be when the benefits of its efforts for particular projects are seen. That is the first step in genuine understanding and acceptance of why the PMO exists. It is the final argument against skeptics.

The Decisive Birdview PSA Advantage

When it comes to investing in the resources that your PMO requires to succeed, the Birdview PSA project portfolio management software package can give your service organization the best chance of success.

With its comprehensive enterprise-ready set of tools, it will help PMOs:

  • Manage multiple strategic initiatives, programs, and ad-hoc projects;
  • Enable real-time capacity and resource planning;
  • Gain visibility into all resources and efforts;
  • Instill accountability across all teams and departments.

Be sure to check back here regularly for information, insights, and updates on the state-of-the-art project portfolio management and the software that makes it easy to succeed. Just ask us for a free demonstration.


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