PMOs

Next-generation PMOs

Figure 2_opt.jpeg

Much has been written about Project Management Offices (PMOs) recently and views differ on what their role in the organisation should be. Looking back on the evolution of the PMO since the concept became general practice in South Africa more than a decade ago, we see an interesting journey of bottom-up development.

Originally little more than the custodian of best practice, for many organisations the PMO is now emerging as a key driver of strategy realisation. Global benchmark studies have found that organisations with a mature PMO in place tend to report better performance and are four times more likely to implement their formulated strategy.

We believe that understanding this maturity journey provides an important key to the successful design and implementation of next-generation PMOs.

The PPPM maturity journey

We borrowed a framework from the Human Sciences to help us better understand the maturity journey of portfolio, programme and project management. Stratified Systems Theory, pioneered by Elliott Jaques in the early 1990s3, follows a systems approach to describe the effective management of work within an organisation.

Jaques proposed that the work of an organisation can be structured into a hierarchy of seven themes. Each of these seven themes adds essential value to the organisation in a unique way. The complexity of work increases as one progresses up the hierarchy, which poses significant conceptual challenges for decision making and therefore requires greater—and different—cognitive skills.

The Brunel Institute of Organisation and Social Studies (BIOSS)4,5 took this one step further with its Levels of Work model, a seven-tiered hierarchy of organisational decision making, where each level has a unique theme with a different time horizon. Each theme describes the distinctive competence and contribution of that level to successful execution of the organisation’s strategy. The lower levels focus on operational execution, while the higher levels focus on strategic intent, as shown in the diagram below—our interpretation of the BIOSS framework for the purpose of this article.

Levels of Work framework

Applying this framework to the evolution of PPPM within the organisation, one realises that over the past 100 years, our discipline has gradually evolved to add increasing levels of work complexity, as our understanding of the strategic importance of project delivery has developed.

Initially, the focus of project management was to get things done—on time and within budget. The role of the project manager was to ensure the team produced deliverables that met user requirements. The time span for decision making was typically short- to medium term, and important themes were quality management and best practice. The role of the PMO focused on enabling quality of delivery. It did this by providing best practice, processes and facilitating standardisation to ensure repeatable and predictable outcomes across different projects and organisational units. The PMO conversation was dominated by themes such as the selection of suitable methodologies or project management tools, and getting the organisation to adopt these. Its main goal was to improve effectiveness of delivery. Looking at the Levels of Work framework, this type of work represents Levels of Work I and II.

Then came the next big evolution, when we realised that to merely deliver outputs effectively is not enough. Organisations have limited resources at their disposal, and to ensure they achieve intended outcomes as efficiently as possible, they need co-ordination across related projects to drive efficiency and realise the return on their investment. Programme management was therefore introduced. The time span for decision making at this level increased to several years: the life cycle of a programme which incorporated a number of projects as well as the time to realise the intended benefits.

Although there was some realisation that programmes were aimed at achieving a business outcome—and therefore linked to a strategic goal and objectives—large-scale programmes were still run in silos, with limited view of the constraints or interdependencies in the wider
strategic portfolio.

The role of the PMO now shifted to enable efficiencies, making most of project-related resources: people, organisation, processes and systems. It assumed responsibility for continuous improvement initiatives, to improve project delivery across the organisation. It provided input to career management of the project management talent pool: training and development, recruitment, performance management. It facilitated the process of benefits planning, monitoring and reporting, including a formal process for post-programme close-out. This phase corresponds perfectly with the definition of Levels of Work II and III in our model. The project discipline had successfully added a new level of value-adding work to improve the capability of the organisation to deliver
on benefits.

Recently we entered the next phase of the PPPM evolution when the conversation turned to portfolio management. It was realised that the organisation brings about change in pursuit of its strategy through successful execution of multiple programmes and projects. We finally made the link between projects and organisational strategy. Now the conversation revolved around understanding the entire change landscape, selection and prioritisation of projects, balancing risk and return, ensuring the organisation focused on the right things. The time span for decision making is five to 10 years, perhaps even longer—focusing on translating strategic intent into practical initiatives. Again, this corresponds well with Levels of Work IV and V. The project discipline defined another level of value-adding work to improve the capability of the organisation to deliver on its strategy.

Of course, all projects and programmes are not of the same size and complexity, and some mega-projects and/or programmes require work at Levels of Work IV and V, while effective portfolio management also requires work at lower levels. We visualise it as indicated in
figure 1 overleaf.

But now we have a new challenge: what will the increasing focus on portfolio management mean for the PMO?

The next-generation PMO

We have looked at the evolution of PPM, and at the PMO as its enabler, through the lens of the Levels of Work theory. In doing so, we have been able to derive a number of key design principles for the next-generation PMO.

Using the Levels of Work framework, it is clear that work at the higher levels of complexity is not possible if all the preceding ‘building blocks’ of value-adding work in the pyramid are not in place. The next-generation PMO can therefore not just have a single focus. Our Levels of Work model helps us to understand that to effectively enable strategy execution through projects, the next-generation PMO should incorporate all levels of
value-adding work—from establishing best practice and enabling execution, through integration across projects, programmes and functional silos, through improving efficiencies, to enabling strategic decision making at the highest level of the organisation. Only when a PMO delivers all these functions in an integrated manner can it be effective.

The journey toward the next-generation PMO is also one of evolution, just as it has been for the PPPM discipline itself. But, we believe that when one embarks on the journey to establish the next-generation PMO, it is vital that one has a clear understanding of what the end destination looks like. If not, the PMO will always struggle with an inappropriate mandate and positioning within the organisation—and the history of PMOs is littered
with examples.

Secondly, but equally important, using the Levels of Work framework it is clear that organisations must ensure each level of the next-generation PMO is staffed with people who have the appropriate cognitive capability to do the work necessary at that specific level of complexity.

According to Jaques’ theory, tasks vary due to their complexity at different levels in the organisation, and become more unstructured and complex at the higher levels. The appointment of managers with the necessary cognitive capabilities and natural preference to function at the
required level is therefore essential.

We have all observed the high-
performing project manager who does not make a good programme or portfolio manager. The Levels of Work model explains why. Now, using tried and tested psychometric assessments that can provide an indication of an individual’s capability to deliver at a specific Level of Work, we are now able to manage the risk of having the wrong people in key
positions in PPPM as well as in our PMOs.

In our opinion, not getting the people aspect right has led to the downfall of many PMOs. The individual driving the strategic layer of the next-generation PMO cannot merely be the best performing project or programme manager, but must be someone with the natural inclination to function at the strategic level. Using the Levels of Work framework, we are able to avoid the mistakes of the past.

In conclusion

Applying Levels of Work theory to the project environment provides us with valuable insights with regard to the role and positioning of the next-generation PMO, as well as the capabilities of people who need to make this PMO work for
the organisation.

In summary:

• ¾ The PMO should be a critical aid to strategy execution in an organisation.

• ¾ Organisations that support this view tend to be more successful.

• ¾ Those organisations that have a clear end vision for their PMOs will find those PMOs more effective, especially if they optimise the capabilities of those PMOs.

• ¾ Organisations should see the development of their PMOs as a maturity journey, moving forward hand in hand with that of new PPPM capability.

• ¾ As the maturity journey of the PMO grows, organisations will need different skills sets to staff them.
Applying these insights, our next article proposes a model for the next-generation PMO.
References

1. Insights and Trends: Current Portfolio, Programme, and Project Management Practices: The third global survey on the current state of project management. PwC, 2012
2.
3. PMI’s Pulse of the Profession™ : The High Cost of Low Performance, Project Management Institute, Inc., 2013

3. Elliott Jaques. Requisite Organization: Total System for Effective Managerial Organization and Managerial Leadership for the 21st Century (London: Gower, 1997)

4. Schalk W. Grobler. Organisational Structure and Elliot Jaques’ Stratified Systems Theory. Research Report presented to the Graduate School of Business Leadership University of South Africa in partial fulfilment of the requirements for the requirements for the Master’s Degree in Business Leadership, University of South Africa.

5. Stamp G. 1993. The Essence of Levels of Work. Uxbridge, Middlesex: Bioss.
Authors

Ninéll Robinson is a Senior Manager and the Service Lead for Project, Programme Portfolio Management Office and PMO services within the Capital Projects and Infrastructure practice of PwC. Ninéll has an honours degree in Applied Mathematics from the University of Stellenbosch as well as a Master Certificate in Project Management from the Business School at George Washington University. Ninéll has more than 25 years’ experience as a business consultant and entrepreneur. She has consulted to both public and private sectors, working with companies such as Standard Bank, Investec, Sasol, Anglo, BP and Total; state-owned enterprises such as Eskom, Transnet, SAA; National Departments Local Government & Housing, Social Development as well as various local and district municipalities. She runs the PMO Forum in Gauteng—a forum for PMO heads and their teams to share knowledge and experience —attended by blue chip companies in financial services, energy, mining, manufacturing as well as public entities.

Andrew Metcalfe is an Associate Director in the Capital Projects and Infrastructure practice of PwC. Originally a mechanical engineer, with a BSc in Physics from Glasgow University, Andrew has been a capital projects specialist with the leading global consulting firms for 22 years. His core skills are in transformational PPPM and performance improvement, based around major capital or infrastructure assets investments in complex business environments. He is an MSP and PRINCE2 practitioner. Andrew has worked extensively in both the private and public sectors. He created the Transformational PPM Practice in Hedra (the UK’s largest public sector consulting organisation) and was a member of PwC’s specialist PPP/PFI unit, winning a national award for his groundbreaking infrastructure project in the UK Ministry of Defence.
Levels of Work framework (own summary)

 

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