PMOs

The Strategic Portfolio Programme Project Office

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In this second of two articles, Ninéll Robinson and Andrew Metcalfe extend their thinking about PMOs in the light of stratified systems theory, and propose a new model for an all-encompassing, integrated, strategic PMO for the next generation. They acknowledge the invaluable contributions of their colleague, Dalene Grobler, who implemented a successful strategic PMO in her previous organisation and added practical insights gained from her recent experience.


In the last article, we explored the evolution of portfolio, programme and project management (PPPM), and proposed the use of stratified systems theory to deduce specific guidelines to what the next-generation PMO should look like. In this article, we propose a model for the next-generation PMO, which we call the Strategic Portfolio, Programme and Project Office (SP3O).

Before going further, let us paint a brief picture of the SP3O. It is based on the following important principles:

It represents the “final” destination for the incremental development of an organisation’s PMO capability: a target to aim towards. Very few organisations will be starting from this mature position.

Its focus is strategy execution, but its reach is all-encompassing: integrating, steering and reporting down through the PMO layers (portfolio, programme, project) and coordinating change effort across every department or division.

It forms a buffer between “change the business” and “run the business”, ensuring the impact of change is managed (to avoid change overload) while creating a feedback loop between “business as usual” and the change vision (to ensure what is delivered is what is needed).

Finally, it takes the best of whatever PPPM capability already exists in the organisation—no revolutionary “throwing the baby out with the bath water”—and integrates it into a holistic framework.

We have to emphasise here that no one-size-fits-all solution exists. Each organisation has unique cultural and structural characteristics, and will find itself in a different position on its journey towards maturity to others. However, we believe that having a comprehensive, scalable framework as a basis to work towards might prevent many a failed PMO intervention.

The mandate of the SP3O

Now, let’s build on the concept by looking at the mandate, the possible roles and the structure of the SP3O. New-generation PMOs are likely to have a broader mandate from the organisation than at present—to enable and facilitate successful
execution of strategy through projects across the whole organisation. This mandate includes not only change-the-business initiatives, but also run-the-business changes, all of which need to be aligned, integrated and coordinated up and down the organisational hierarchy, and across functional silos to ensure strategic alignment and optimal use of resources. This is an important point. It means that the key stakeholders of the SP3O are both the PPPM community and business as usual.

On the one hand, the SP3O facilitates the process of selection and prioritisation of change projects, ensuring alignment between the organisational strategy and the portfolio(s) of projects the PPPM community has to execute. At the same time, the SP3O facilitates decisions around balancing of the change impact on “business as usual”, to avoid change overload and optimise benefits expected from projects. Those readers familiar with the UK’s Managing Successful Programmes (MSP) will recognise the role of the Benefits Manager here.

For the PPPM community, the SP3O has the important role of enabler. It helps the community to implement best practice, equipping PPPM staff with the necessary competence to execute successfully, providing tools and software to support planning, monitoring and reporting.

For business as usual, the SP3O is the key advocate of project management best practice, and provides the business with a single, integrated view of the impact and status of the projects it is executing. Most importantly, it facilitates the balancing of business as usual and change, and it creates the governance and controls framework that ensure there is integration and oversight of both these dimensions
of change.

We believe the most important benefit of giving such a mandate for the SP3O is that the business achieves vertical integration between organisational strategy, portfolios, programmes and projects, and ensures horizontal coordination across organisational divisions and functional silos—thereby ensuring that the organisation optimises the impact of its investment in projects.

SP3O services

What should an organisational entity that is able to respond to such a broad mandate look like? Numerous models have been proposed over the years, and these models often fall short in responding to the needs of the organisation, lacking the flexibility and scalability needed to grow and mature with it. In our experience one of the biggest reasons for PMO failures is that they are set up to respond only to the immediate needs of the organisation without thinking about the longer-term goals. This can then result in unnecessary reworking and restructuring later. With the advantage of hindsight, studying the evolution of PPPM and PMOs, we now understand that, as the organisation matures, its demands on the PMO are almost certain to broaden and deepen into an increasingly strategic role.

We believe the Levels of Work framework (see Fig. 4) provides us with invaluable guidelines on how to structure next-generation PMOs to deliver long-term value. By defining the role of the PMO at each level of work, we can ensure that the SP3O is appropriately structured to execute its mandate at every level in the organisation. For this purpose we distinguish between strategic, operational and tactical themes that map to the seven layers of work defined in the framework.

At the strategic (or portfolio) level, the SP3O is concerned with the contribution of projects to successful execution of organisational strategy, ensuring that the organisation receives the expected return on its project investment. Its role includes the facilitation of project selection, prioritisation and balancing of the portfolio in terms of risk, time required to realise benefits and impact of all change on the business, including business as usual. It provides the necessary information to enable decisions concerning the strategic allocation of resources, thereby ensuring that business as usual is not negatively impacted by project work.

At the operational (or programme) level, the SP3O is concerned with realising intended benefits and acts as the custodian of best practice in PPPM. In its role as a centre of excellence it is responsible for establishing and maintaining policies and standards, providing training, coaching and development of project and programme managers, and thereby professionalising these roles. It takes responsibility for effective management of the knowledge created by projects.

More importantly, it is responsible for the maturity journey of the organisation, continuously improving the capability of its people, processes and systems.

It drives operational efficiency through the facilitation of integrated planning and execution, leveraging economies of scale where possible. It facilitates optimisation of the resource pool across functional silos, and between projects and “business as usual”.

Another key role of the SP3O is to establish a framework for integrated assurance of projects and programmes, thereby discharging the organisation’s responsibility for King III’s three lines of defence.

At the tactical (or project) level, the role of the SP3O is to provide administrative support and subject-matter expertise to supplement the capacity of project and programme managers, and thereby improve the quality of delivery. Some SP3O services span all three levels, such as integrated reporting, methodology, tools and administrative support—each service pitched at the appropriate level of decision-making. Figure 5 illustrates our view on the “service components” of the SP3O. The levels of work framework (Figure 4) provides us with useful insight into what the key focus of each level of work should be, from which we are able to derive the type of services that should be provided by each of these components.

Organisational structure of the SP3O

How should the SP3O be structured to deliver the broad spectrum of services outlined above? Again, the levels of work framework provides a useful guide. We believe that by creating separate but linked PMO components as indicated in Figure 5, each appropriately mandated and staffed to deliver work at a different level of complexity, we are able to put in place a pragmatic solution that empowers the SP3O to support strategy execution at each level in the organisation hierarchy.

To ensure the right level of oversight and independence, the SP3O should report directly to the CEO (or the Director of Strategy, Director of Transformation, or a similar position, but not the COO or CIO), because strategy execution, in the end, rests in the CEO’s office. In our experience, many PMOs fail because they don’t have this necessary level of executive sponsorship and authority.

It makes sense to have a satellite portfolio office in each division when the organisation is large, or when it comprises diverse businesses, because the satellite office can better respond to the specific needs of the division, including the necessary subject-matter expertise. In a decentralised environment it also preserves divisional autonomy, which promotes business buy-in. Should a satellite portfolio enablement office be established, it should report to the Divisional CEO. The group-level PMO then coordinates feedback from the divisional satellite PMOs, as well as its own subject matter experts (such as investment advisors, portfolio analysts, etc.), to provide strategic information to C-Level executives and ultimately the whole organisation.

At the operational level, the centre of excellence (CoE) is a centralised function that reports to the SP3O Head. It focuses on providing best practice standards and methodologies to the organisation as a whole, training and coaching of PPPM functionaries, and professionalisation of project roles. It drives the PPPM maturity journey of the organisation through continuous improvement initiatives. Also at the operational level, but separate from the CoE, the programme enablement function coordinates all the divisional programme and project offices across the organisation. It integrates individual status reports into executive dashboards, manages a flexible resource pool to assist divisions with execution, facilitates capacity planning, and coordinates and facilitates services where centralisation can be beneficial.

At the tactical level, the project support function is usually more administrative in nature, and therefore best localised within divisions. It assists project managers with data capturing and reporting, and provides technical support on tools and systems, and customisation of templates and processes to meet specific needs.

Benchmark studies confirm a dramatic leap in successful project delivery when suitably qualified project managers are assigned to key initiatives—performance improved by more than 20% when measured against key performance indicators such as benefits realisation, quality and scope. To this end we believe that appointment of professional project and programme managers should be hosted within the SP3O, which takes responsibility for managing their performance and careers. When appointed to a specific project or programme, these professionals should co-locate with the relevant business to ensure understanding of context and culture, and to ensure business buy-in. But the business manager driving the initiative becomes the internal client, not the line manager.

Figure 5 depicts a potential structure. The SP3O can be made up of multiple offices, each serving a particular division or business need; or it can be one entity with clearly defined roles.

The people component of the SP3O

Many PMO interventions fail because the wrong people are assigned to the task. Organisations can often make the mistake of thinking that the best performing project or programme manager in the team should be the one to drive establishment of the PMO.

In reality, the skill sets required are
different. It is here where we believe that applying the levels of work framework (Figure 4) adds most value. According to this framework, tasks become more unstructured and complex as we move up the work hierarchy. People have an inherent cognitive capability to excel at some levels, and underperform at others. So, appointing individuals with the necessary cognitive capabilities at the different levels directly impacts the overall effectiveness of the SP3O.

Tried and tested assessment methodologies exist to establish the capability of an individual to operate at a specific level. Using these to staff the SP3O with the right individuals in the right positions is key to its success.

The evolution towards an SP3O

The framework for the SP3O that we have proposed here may look rather intimidating at first sight, conjuring up images of bureaucracy and significant overheads. But such a conclusion would completely miss the point. The raison d’être of the SP3O is to enable successful project execution, and therefore it needs to be fully responsive to the needs and maturity of the organisation as these develop, putting in place functionality as and when the business is ready for it.

To ensure it is appropriately mandated and positioned to react to the needs of the business as it matures, the SP3O needs to have a clear vision of the end state, gradually putting building blocks in place when required.

The model we have provided here represents the “final destination” of the SP3O evolution. Organisations will move towards this destination at their own pace, putting in place pieces of the puzzle as and when needed (see Figure 6).

Conclusion

This article proposes the SP3O as the answer to the need for a next-generation PMO model: a holistic, flexible, all-encompassing framework of PMOs. We believe that the next-generation PMOs will begin to converge on this SP3O model, for the following reasons:

It positions PMO components that correspond to different levels of work within the organisational structure, to ensure their appropriate mandate;
It incorporates change-the-business and run-the-business initiatives into the portfolio; and
It integrates portfolio management, programme management and project management efforts into a single framework, focused on strategy execution. All our work with clients in the C-suite tells us that they are crying out for a strategic partner to help them enable successful execution of their organisations’ strategies.
Authors

Ninéll Robinson, Senior Manager and service lead for PPPM Office and PMO services within the Capital Projects and Infrastructure practice of PwC

Andrew Metcalfe, Associate Director in the Capital Projects and Infrastructure practice of PwC

Daléne Grobler, Prince2 Practitioner

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