1. PMO Development & Maturity Levels
Where You Stand Now and How to Proceed
Lisa Marie Neau, PMP June 2008

2. Agenda Could Your Organization Benefit from a PMO?
PMO Maturity Exercise
Conducting an Organizational PMO Assessment
Key Messages to Build Support for Your PMO
Key Take Aways

3. Could Your Organization Benefit from a PMO?

4. PMO Definition
An organizational unit to centralize and coordinate the management of projects under its domain
The PMO focuses on the coordinated planning, prioritization and execution of projects that are tied to overall business objectives
There is no consensus on what PMOs must entail, they can operate on a continuum from project management support functions in the form of training, software tools, standardized policies and procedures and templates to direct management responsible for the project results

5. Centralized De-centralized
The PMO Continuum
Project Planning
Cost
Schedule
Performance
Quality
Shared Resources
Mentoring & coaching
Lessons Learned
Standardized methodology
Templates
Training
Enterprise perspective
Centralized De-centralized
Project Results
PM Support
Story #2
The N-G PMO
Gov’t customer told us PM was important
Incentivized the contractor to use good PM by paying an additional 5%
Contactor revenue from the customer was $200M per year – 5% would add 10M to the bottom line each year
Draw org chart PMO with support to 6 projects
Gov’t evaluated performance quarterly
Cost
Schedule
Quality (Customer Satisfaction)
Risk
Systems Engineering

6. PMO Industry Trends Three Main PMO Models Virtual Model Coach Manager
References
Tutorials
Best Practices
Templates
Virtual
Model
Passive
Coaching
Common
Practices
Training
Coach
Progressive
Oversight
Active
Analyze
Action
Collect
Manager
Report
Gartner “Four Steps for a Successful PMO Setup” October 4, 2006.
Gartner has identified 3 main PMO Models.
Virtual – a repository based model, a.k.a. PMO Lite.
Coach – focused on maintaining standard processes and providing training to increase skill sets. This includes coaching, and desk-side mentoring for affected personnel to validate the value of the processes and tools. Dashboards may be utilized to increase visibility of project status
Manager – Active PMO staffed with analysts who support PMs and who provide real time visibility into project schedules, costs, and risks from a program viewpoint.
Source: Gartner October 2006

7. Today’s PMO Challenges
Acceptance from management
“Buy In” from the Project Managers
Limited resources (staff & budget)
Cultural issues
Resistance to standards/processes
Changing priorities
Communication
Staying aligned with business objectives
Meaningful metrics
Exercise
Throw out for balls to keep audience awake
Bring them to the front of the room
Throw balls to one another
Enter PMO
Throw the balls to the right – measure performance
PMO says I am going to measure your performance-cycle time – measure performance
Process Improvement – using collaborative approach – time process.

8. Misalignment Causes Inefficiency
40% of IT projects fail to deliver their intended results (cost, schedule, performance)
89% of companies are flying blind, with virtually no metrics in place other than financials
Too many active projects (the number of active projects is out of line with the resources available)
Wrong projects (projects that will not provide value to the enterprise)
Projects not linked to strategic goals
Unbalanced project mix (short/long-term, development, research, strategic assets/resources, risk, etc.)
First Bullet: Nike supply chain, Agilent ERP: examples of major projects gone bad that affected overall financial results
Second Bullet: Many things beyond budget versus actual are important, such as whether a new system has created any value
Third Bullet: Yet change is constant. Examples are M&A or, in government, changing predictions of tax revenue

9. Top Ten Reasons Why PMO’s Fail
No clear purpose or wrong focus
No “buy in” by stakeholders
Perception of more red tape and bureaucracy
Viewed as a “quick fix” to deep-rooted problems
PM policing – viewed only as enforcers
Too academic and far from reality
Veneer of participation and hidden agendas
Politics and power struggles
High expectations and fuzzy focus
Hard to prove value
TOP 10

10. Where are YOU contributing?
The Cost of Failure
Nearly 3/4 of all projects fail or run into trouble
$ billion per year is spent on failed and cancelled projects
Successful (S) = completed on time, on budget, and within scope
Challenged (C) = completed, but with time and/or budget overruns and fewer features than originally specified
Failed (F) = canceled before completion
Challenged
46%
Successful
26%
Failed
28%
Averages of Companies Responding
Company Size S C F Large 9% 62% 29% Medium 16% 47% 37% Small 28% 50% 22%
Where are YOU contributing?
Source: surveys by The Standish Group International, Inc.

11. Key for Organizational Success: PMO
Portfolio Management
Evaluation & Leadership
Selection, Resource Allocation
“Are we doing the right things?”
Mission/ Strategy
PMO
Program Management
Programs, Initiatives
Planning, Control & Analysis
Resourcing
Performance Communication
“Are we doing things right?”
Project Management
Projects
80% of organizations are experiencing IT operational problems as a result of poor process formalization

12. PMO Maturity Exercise

13. Sound Familiar? “We don’t have enough resources to get the work done.
We have to cut our department budget
We don’t prioritize our projects, or, every project is a #1 priority, or, our priorities are constantly changing with no explanation.
Everyone is doing end runs around the approval process.
Funding tends to be very political
We get funding to build duplicate systems for different business units and the end result is an ever-growing set of unsupportable redundant applications.
We can’t kill a project. We never have any objective measurements to overcome the politics in decision-making.
And if we do kill a project, it always seems to show up again.”

14. PMO Maturity: Your Assessment – Part 1
Not at all
Somewhat
Mostly
Always 1 2 3 4
IT investments deliver their intended results on-time, on-budget and on-quality.
Metrics such as, ROI and Risk are used for IT investment decision making.
The results of project management performance are measured in a disciplined fashion and fed into future decision-making.
A repeatable methodology provides management and staff with insight and control of current projects, and people, as well as demand on IT.

15. PMO Maturity: Your Assessment – Part 2
Not at all
Somewhat
Mostly
Always 1 2 3 4
The strategic impact and value of each project is understood and communicated, both within IT and with the program.
Budget freed up through operational efficiencies is used to fund new projects and/or strategic initiatives.
Compliance objectives and controls are understood and each project is assessed as to its impact.
Resources are managed in a global resource pool to maximize utilization and understand constraints on new projects.
Best practice processes are in place and employed for consistent project management and project delivery.

16. What is Your Maturity Level?
< 15 = Level 1: Ad hoc
15 – 24 = Level 2: Defined
25 – 34 = Level 3: Managed
> 35 = Level 4: Synchronized
Maturity levels adapted from portfolio management research by Mark Jeffery, Kellogg School of Management, Northwestern University

17. Roadmap to PMO Maturity in the Organization
Enterprise
PPM is optimized across the enterprise with a focus on continuous risk mitigation and value creation
Project portfolio performance and risk data is understood and can be compared at the individual, cross-LOB, and enterprise levels
Senior leadership is able to leverage PPM analysis when allocating funds to various portfolios
Ability to measure and benchmark entire portfolio lifecycle
Our Opportunity
Cross
Portfolio
PPM is adopted and used consistently across multiple organizations and portfolios
Portfolio Analysts can compare and leverage portfolio analysis information across multiple departments
Consistent measures enable cross portfolio analysis, selection, planning and management that supports predictive modeling and internal / external benchmarking
Portfolio Value = Value Potential x Ability to Realize
Project
Portfolio
Portfolio analysis is repeatable, predictable, and consistently used to evaluate and optimize project portfolio selection
Portfolio Management teams are able to understand, analyze, & recommend optimal portfolio bundles and schedules to technology and business partners
Value to Organization
Project
Inventory
Processes are defined & documented, and most projects are aligned to Business Driver
All projects are consistently captured in a project inventory
Ad hoc
No Portfolio Inventory or Process
-“Just Do It/FIFO”
-Success is random
-Poor transparency
Stages of Excellence
Basic
World-Class
Crawl Walk Run

18. Conducting an Organizational PMO Assessment

19. The Ideal Candidate for a PMO Assessment
An organization presently experiencing pain – poorly performing critical project(s)
New executive who wants to improve organizational performance – project success rate
Numerous or major new initiative planned
Willingness of the new executive to stay involved
Able to communicate the value of project management to the organization

20. Key Assessment Objectives
Evaluate present position in PMO lifecycle
Establish the vision of where the PMO should be in the future
Identify existing problems
Baseline the present PMO capabilities
Conduct a gap analysis between present and future states
Develop a roadmap to transform the present PMO to the desired state

21. Developing PMO Requirements
Who are the stakeholders of this program/initiative - both internal and external?
What performance areas will need to be managed (e.g. Cost, Schedule, Risks, Issues, Changes etc.) to ensure success?
What level of detail is really required in each of these areas to manage proactively and be successful?
What will be the monitoring process to collect and communicate performance?
What will be the process for escalation and corrective action?
KISS – Practical and easy-to-use (processes and enablers)
Reuse: Leverage best practices and reuse a lot of what is already there (not re-inventing of the wheel) processes

22. The Beginning: Cultivating a PMO
Assess the need for the PMO
Assess strengths and weaknesses – leverage current “best of breed”
Lay out an implementation strategy that addresses key needs first and sets performance metrics/objectives
Keep it simple and useful – watch the level of detail
Introduce tool/enablers once you understand the processes
Pilot capability to test and iron out/reassess
Analyze your data!
Get the information out – Communicate!
Sell the value of the effort
Explore incentives for participation

23. An Art or a Science? What makes it successful?
Implementing a PMO
An Art or a Science? What makes it successful?
Source: PMI Member Survey

24. Key Messages to Build Support for Your PMO

25. Common PM Environment Lack of stakeholder “buy in” of PM methodologies
Ad-hoc and/or redundant processes
Reactive teams
Reinvention
Back-end rework
Revenue and technical impacts from scope creep
Hero-dependent culture
Lack of visibility into key performance areas:
Requirements, schedule, cost, risks and changes
Too many projects at risk

26. Impacts of Common PM Environment
Slower time to implement strategic plans
Delivery and quality challenges
Inability to map performance against strategic goals
Inability to gauge return on investment
Lack of information to make critical decisions for future strategic direction
Customer relationship challenges
Loss of confidence that the organization can manage projects successfully

27. Organizational Drivers for PMO Support
The organization does not know the status of the projects
Too many projects and too few completed
Not enough time to solve all the problems
Problems recur and cascade
Many problems become crises
It takes too long to implement a project
There are too many projects not being well managed

28. Organizational Benefits of a PMO
Early identification and quantification of risks and issues – allowing for quick action
Lower costs from rework and “surprises” through consistency in planning and scoping efforts
Real-time performance visibility - optimizing management time & expertise by focusing on program challenges versus “adminis- trivia”
Lower overhead burn rate through coordination of resource/cost allocation
Better decisions through trend analysis of sound business metrics (e.g. cost, schedule technical, customer impacts) versus “gut feel”
Cost savings and reduced inefficiency through control over requirements and changes

29. Key Take Aways Regarding the PMO

30. Results of a Well Implemented PMO
Serves as a central point of contact and control of all enterprise engagements – tactical and strategic
Sets and continually analyzes criteria and provides visibility into performance
Defines, establishes and facilitates key processes for the enterprise
Balances organizational scope based on “needs” vs. “wants”
Enables communication and stakeholder involvement
Enables rapid & informed decision-making
Consists of experienced program management expertise
Provides an objective viewpoint and committed to the success of the organization
Institutionalizes successful business practices

31. Questions? ?

32. The Bottom Line Lisa Marie Neau 916.565.7419 (office)
(mobile)