Building a collaborative PMO

A New Transversal Approach of Building a Project and Portfolio Management Office

10 May 2012Gianluca Costanzi

Context

Implementing Project and Portfolio Management Offices (PMOs) have become a trendy topic, occurring frequently, yet also disbanding at an alarming rate. What are the benefits and what are the risks? The purpose of this discussion is how a PMO can add value to an organization.

Through this discussion, we will define a PMO, compare various theories with the business reality and recommend ways to implement a successful PMO. Finally, we will conclude with some of the lessons learned from the Regus case and the best ways to move forward.

Academic Market

Case Study Conclusions

Thesis Structure

From Project Management to PMO

Who When What

Henry Gantt 1920s Activities chart (Gantt Chart)

United States Navy 1950s Program (or Project) Evaluation and Review Technique, commonly abbreviated PERT

PMI, Prince2 1990s Professional approach about project management

Y2K scare 2000s Coordinate approach among projects (PMOs)

“An organizational body or entity assigned various responsibilities related to the centralized and coordinated management of those projects under its domain. The responsibilities of the PMO can range from providing project management support functions to actually being responsible for the direct management of a project.”

PMO Definition

Project – A temporary work effort with a discrete beginning and end undertaken to meet a unique set of goals and objectives. A project is staffed by a temporary team, and its output is measured by specific deliverables.Program – A group of related projects managed in a coordinated way, to obtain benefits and control not available from managing them individually. Programs may include elements of related work outside the scope of the discrete projects in the program.Portfolio – A group of projects and programs managed in a coordinated way to meet strategic business objectives, although they may not necessarily be interdependent.

The “P” Factor

Project = Do things in the right way Program = Do things in the right order Portfolio = Do the right things

While a PMO provides insights for the schedule, budget, and risks of each project an EPMO is an entity acting as an umbrella that governs multiple PMOs, which in turn, provides oversight over numerous projects.

The rise of Enterprise PMOs

Tactical

Strategic EPMO

IT PMO R&D PMO Operations PMO

Marketing PMO

Sales PMO

What PMOs do?

•Project Support•PM Training

Support

•Shared methodology and processes•Competence frameworkGovernance

•Contribute to selection of projects•Advise project owners, sponsors and

executives in charge of portfolio management

Strategy

PMO and Maturity Models

Level 0 Level 1 Level 2 Level 3 Level 4 Level 5

Nonexistent - ad hoc

Initial - reactive

Developing – emerging discipline

Defined - initialIntegration

Managed-Increasing efficiency

Optimized- enterprise orientation

Definition – Typology

Community ofPractice

ProjectSupportOffice

ProjectManagementOffice

Portfolio Office,Centers ofExcellence,Best-PracticeCouncils

FederatedPMOProgramOffices

EnterpriseProgramManagementOffice

There are various popular models for Organizational Project Management Maturity Model (OPMM), such as the P3M3 from OGC or OPM3 from PMI. Also CMMI can be used as PMO maturity model schema.

They all share the general purpose of assessing the “status quo” of the organization in terms of project management, as well as the steps necessary to grow to a higher maturity level.

PMO Typologies

Supervise• This PMO

generally provides support in the form of on-demand expertise, templates, best practices, access to information and expertise on other projects

Control

• In organizations where there is a desire to "reign in" the activities, processes, procedures, and documentation, among others, a controlling PMO can accomplish that M

ake

• This PMO type goes beyond control and actually "takes over" the projects by providing the project management experience and resources to manage the project

PMO Typologies vs. Value

PMO, while gaining maturity, increases in responsibilities and raises in rank within the organization since it is able to bring value-added to the business.

Market Analysis Summary

A PMO has a budget from 3% (new PMOs) to 8% (mature PMOs) of the entire company project budget

The vast majority of PMOs work on high-value strategic tasks: implementing or managing the governance process (72%), advising executives (64%) and participating in strategic planning (62%).

Average PMO at Glance

» PMO Age: 3 years

» PMO Budget: US$500,000

» PMO Budget as Percent of Overall Project Budget: 6.25%

» PMO Staff Size: 7 people

» Percentage of Project Managers that Report to the PMO: 50%

» PMOs Using Contracted Resources: 56%

» PMO Staff with PMPs: 50%

» Project Management Experience of PMO Staff: 10 years

» PMO Staff Training per Year: 8 days

PMO Value Benchmarks

PMOs contribute directly to the following performance improvements:

» Decrease in failed projects...................... 31% » Projects delivered ahead of schedule........................ 19%

» Projects delivered under budget........... 30% » Cost savings per project (% of total project cost)..... 17%

» Improvement in productivity...................... 21% » Increase in resource capacity.................................... 13%

» Cost savings per project........................................................................................................................ US$567,000

Market Analysis

Back in the early days, the PMO was deeply embedded in the organization, struggling to prove its value.

Nowadays, the scenario has changed; PMOs are growing in maturity and their focus is shifting towards supporting the business strategy in selecting projects.

Executives have seen the valued-added by PMOs. They are more oriented to the project selection process (Portfolio Management) and PMOs are a valuable ally in reaching that goal.

Regus the Company

Regus in Numbers:1200 Business Centers WorldwideAs of 2010, Regus generated revenue of £1,040.4 million;Operating income of £23.8 million;Net income of £1.9 million;Regus Employees worldwide: 5,687 (+10% roughly in 2012).

Regus history:1989 Founded 1994 Opened in Brazil1999 Opened in China2000 London Stock Exchange 2002 Sold the UK Business 2003 Regus filed for Chapter 11 US business2004 Acquired HQ Global 2006 Re-acquired the Regus UK business2008 Regus introduced Businessworld

Regus Products:OfficeMeeting RoomsVideo Conference Tele PresenceVirtual OfficeBusiness World

Double the Presence

What is a Project in Regus?

• Projects have a clear scope, objectives and deliverables; • Projects have a clear start and end date;• Projects have resources and budgets allocated; • Project deliverables have enduring value to the business.

Project Audit

Major Programs

•  Project Ownership: many projects had multiple sponsors and project managers;

• Project Methodology: the same project could be managed with different methodologies as each department would use its own references;

• Priority: all projects were classified as important and subjective decisions were taken if projects would conflict;

• Quality: Scope, Time and Cost of projects were not overseen; therefore projects could go on forever, with endless budgets, even while delivering poor results and no expected benefits.

Analysis of Project Traits

Scope

Time

Cost

Projec

t Plan

Resou

rce P

lan

Benefi

ts

Risks /

Issu

es

Interd

epen

denc

ies0

10

20

30

40

15

30

40

25 25 2530

25

Project challenge areasOut of 54

Are the projects aligned with Regus business strategy? Are the projects visible to the senior management? Do we know how much we are spending on projects? Are we delivering projects? Are the projects delivered on time? Within budget? Within scope? Are the projects duplicated or in conflict with each other? Do we measure the results of our projects and the benefits they deliver? What do we learn from completed projects? Where is the project data stored? Do we have skilled and trained PMs in charge of projects? How many PMs do we have in Regus? What are they working on? What is the PM

organisational structure? Are the PMs using the same tools for projects?

Why a PMO - let’s ask each other some questions

Projects Regus Today

Regus Tomorrow

Why a PMO – how do we go from today to tomorrow ?

Project success is a critical enabler to helping Regus become the company of the future

A PMO is not just about project management, it is good business

A strong PMO is the key to unlocking business innovation

Project Community

PMO

Senior Mgmt

The Collaborative Approach

2

Senior Mgmt

PMO

Project Community

Bottom

- Up

Top

- Dow

n

Interviews and build Relationships

Workgroup and build Relationships

Relationship Management is key enabler of a successful PMO

Stra

tegi

c =

Portf

olio

Tactical = Projects

PMO Objectives

Short Term 1. Provide On-going Project Visibility2. Approve New Projects3. Develop PMO Methodology4. Understand Individual Projects5. Provide Project Support

2

Long Term 1. Manage Interdependencies2. Measure Projects and Benefits 3. Standardize Project Management 4. Provide Governance5. Assess and Coach Project Managers 6. Automate Project Management

Critical Success Factors and Key Performance Indicators

2

CFSs

Executive Support

Effective PMO Steering

Committee

Strong Project Management Infrastructure

Ability to Measure and

Report on Project

Performance

Management of

Expectations

User Involvement

and Collaboration

KPIs

Decreases in schedule and

budget overruns

Customer/project

participant responses

Accuracy of time and cost

estimates

Effectiveness at mentoring and coaching project teams

Quality and timeliness of

project planning

documents

Delivery of all projects to

planned scope

You Can't Manage What You Don't Measure

The success of the PMO is the success of its customers

Steering / Project Committee Project Sponsor

Change Manager

Business Analysts

Project Manager

Change Manager• Define impacts of change on business and

individuals• Assessing business readiness for change• Stakeholder identification, management,

engagement • Change Enablement – training and support

approach, planning and material

Project Director• Execution of Project Objectives• Delivery to scope timeframes & budget• Delivery of business objectives and benefits• Issue/Risk escalation and resolution • Progress Reporting• Stakeholder expectations management• Manage cross-project impacts

Project Manager• Responsible for establishing Project Plan• Delivery of project to time/ cost/scope and

objectives• Funding requests• Tracking & Coordination of scope delivery,

timeframes and budget• Project resource management • Project Independency tracking • Project forums management• Issue and Risk Management• Status Reporting

Project Sponsor• Provide Leadership & Strategic

direction to the project (decisions / advice / guidance)

• Alignment of project to Strategy• Champion resourcing and funding• Remove roadblocks • Monitor progress according to defined scope,

timeframe and budget• Ensure Program objectives are met Project Director

Steering Committee / Project Committee• Project Sponsorship and

Ownership • Provide Direction and Leadership• Approval/prioritise • Issue escalation and resolution • Ensure Program objectives are

met• Responsible for realization of

benefits

Business Analysts/Design Experts• Completion of assigned activities to agreed

timeframe• Raise issues and risks• Requirements management

Roles and Responsibilities

Initiative Life Cycle Stages – Primary Activities

• Establish and document need for project

• Align project to strategy, objectives

• Document initial project parameters, if known or estimated:– objectives– scope– cost – benefits– risks

• Evaluate and prioritize portfolio of projects

• Provide details of project, to aid in planning project:– WBS– resource plan– costs, benefits– deliverables

• Form steering committee

• Identify stakeholders• Secure resources

(internal and/or external)

• Establish project mgmt processes (updates, change control, risk / issue mgmt, cost / benefit tracking)

• ID interdependencies• Incorporate lessons

learned from similar projects

• Execute project plan• Manage stakeholder

interactions• Review, check and

approve milestones• Allocate resources• Track and manage

risks, issues, and dependencies

• Update planning documents as needed (change control, forecast, project plan)

• Track benefit realisation and costs incurred vs. plan

• Validate benefits vs. objectives

• Compare plan vs. delivered (scope, cost, timeline, benefits)

• Capture lessons learned• Communicate results to

stakeholders• Close risks / issues• Close project budget • Release resources • Archive project files• Document and share all

relevant information to other projects

Primary Activities

Initiate Plan Execute & Control Close

24

As the initiative moves through each stage, emphasis shifts from approval to planning to execution.

Plan Execute/ Control Close

Evaluate Feasibility

YES

NOPARK

Initiative*

Res

ubm

it

Benefits

Initiate

*An initiative can include an idea, pilot, project evaluation, test market, vendor selection, etc.

If a pilot, proof of concept, etc., revaluate feasibility before converting to full project

Project Management = “Do things right”

Port

folio

Man

agem

ent =

“D

o th

e rig

ht th

ing”

Project Portfolio

YES

NO

DecisionPt. #1

DecisionPt. #2

PARK

Project Portfolio - Initiative Life Cycle

Project Portfolio - Initiative Life Cycle: Funnel

Initiative Life Cycle Stages – Inputs and Outputs

• Initiative form• Prioritization “matrix”

• Initiative form (approved projects only)

• Capacity template

• Project brief• Detailed project plan • Resource plan / org

chart• Business case • Stakeholder mgmt plan• Dependency tracker

• Plan and actual project documents

Inputs

Outputs

Initiate Plan Execute & Control Close

• Prioritized inventory of projects

• Project brief• Detailed project plan • Resource plan / org

chart• Business case • Stakeholder mgmt plan• Dependency tracker

• Status reports• Risk and Issue Log• Benefit tracker• Change request log• Decision point sign offs • KPIs / Metrics• Team logistics files

• Project closure document

• Lesson Learned Log• Files archived on shared

repository

Note: items in bold are primary documents used to facilitate flow in each stage

“Should we do this?” “Can we do this?” “How are we doing?” “How did we do?”Focus

Based on the focus of each phase, certain documents will drive the team’s primary activities.

Decision Point 1:Yes / No / Park

Decision Point 2:Yes / No / Park

The Initiative Form submitted by the project sponsor or manager allows the PMO to capture all of the basic information needed by the Steering Committee to begin its feasibility analysis.

Initiative Form

Project Portfolio - Strategic Alignment (Screen 1)

All initiatives will first be evaluated based on their alignment to Regus’ strategic objectives. Strategic Objectives

Few initiatives supporting this

objective

Initiative does not support any strategic

objectives

Decision legendYes - proceedNo - stopPark - reevaluate

Illustrative

Project Portfolio - Other Project Attributes (Screen 2)

Initiative 1

Initiative 4

Initiative 3

Initiative 2

Time for benefits realization

Bus

ines

s Va

lue

(Ben

efit

/ Cos

t)

Low

High

High

Note: The attributes shown here are examples. Others may be chosen.

- High Risk - Medium Risk

Initiative 5

Initiative 6

Initiative 7

Initiative 8

We might select all of those with quick payback

Or, we might select high-value nitiatives

Or a combination of both

Those passing the first screen will be evaluated based on other project attributes.

- Low Risk

Illustrative

Small initiative

Middle size Project

Big Projects or Programs

Focus on small initiatives and no space for larger programs

Focus first on the strategic programs and then the mid-size or small initiatives that could be incorporated

Project Portfolio - Capacity Planning

Org

aniz

atio

n /B

U

Project Portfolio - Capacity Tracking

Initiatives passing the two screens will also be evaluated in light of the company’s capacity to provide the necessary resources to do the work. This will first be done at a high-level, and once the resource plan is provided in the Project Brief, at a more role-based level, as seen below.

No IT Project Manager capacity during this

period

Illustrative

33

Project Portfolio - Scorecard

Emphasis 1 - minimal 2 - low 3 - moderate 4 - high 5 - significant

Scope Global >2 regions, and/or processes 2 regions, and/or processes 1 region or process

Only some countries within a region, or some sub-processes within a single process

Risk High, not fully mitigated High, but mitigated Medium, not fully mitigated Medium, but mitigated Low

Investment Costs £££££ ££££ £££ ££ £

Benefits £ ££ £££ ££££ £££££

Cross-functionality

Project requires active participation of all functional areas

Multiple functions; some more active than others

Multiple functions participating equally on project

More than 1 function represented on team

Team limited to one functional area

Customer / Field impact

4-5 days/week, and/or dedicated support

3-4 days/week, and/or dedicated support 2-3 days/week 1-2 days/week < 1 day/week

People impactheadcount and/or role changes, many FTEs

headcount and/or role changes, few FTEs Role enhancements, many FTEs Role enhancements, few FTEs Limited

Process changemajor process changes or new processes

core process changes, or new processes minor, and small new processes minor, to non-core processes

minimal; continuous improvement

Technology changeNew technology, major upgrades, or new tools

some tool and report changes; minor system upgrades minor tool or report changes

Interdependence vs. other projects

High likelihood of failure to deliver one or more projects (without change request)

Demonstrated challenges to deliver on one or more projects

Potential inability to execute all assigned projects (without change request) Low concern No conflict

Interdependence vs. BAU

High likelihood of conflict between roles

Demonstrated challenges with performance of either project or operations role

Potential inability to perform both project, operations Low concern

No conflict between project, operations

StageProposed for full implementation

Initial solution analysis conducted. Vendor selection required Pilot / POC to be performed Feasibility study proposed

New idea - no analysis performed yet

Time to Benefits >24 months 18-24 months 12-18 months 6-12 months <= 6 months

Priority

Low - not required for other High or Medium priority initiatives to proceed Medium - enabler initiative

Medium - strategic initiative with flexible timing

High - contractually/legally obligated

High - major strategic or enabler initiative

Governance

No Steering Committee; no active Sponsor or stakeholder engagement

Inactive Steering Committee; limited involvement of sponsor or stakeholders

Ad hoc involvement of Steering Committee, Sponsor, or stakeholders

Steering Committee meeting at least quarterly; active Sponsor; some stakeholder involvement

Steering Committee meeting at least monthly; active Sponsor and stakeholders

The PMO can evaluate and score each initiative against a more complete list of possible criteria.

Mobile web

Oracle CRM

Project Portfolio - Snapshot

Initiate

Janus

Cash Mgmt

Billing Efficienc

y

I3 Interactive Intelligenc

e

Lux

CollectionsS

VC Upgrade

Peoplesoft HR

T C

S T

T C

S T C S T C

S T C

S T C

S T C

S T

Payment Method

S T C

Plan

Hig

h

Project Life Cycle Stage

Execute / Control Close

Low

Bus

ines

s Va

lue

C

The colour code highlights the status of Scope, Timeline and Cost. Green= on track Yellow= latest update not received or warning Red= No update received recently or critical

Scope

Timeline

Cost

S

T

C

S

Floodwire

S T C

C

Treas Mgmt

SystemS T C

Group Cos to P/S

T CS

S T C

2011 2012

FebJan Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4

PeopleSoft HR

Payment Method

Cash Management

Janus

Billing Efficiency

- Planned timing -Timing not certain

7Go Live

Payment Method

LUX

Collections

Oracle CRM

I3 Interactive Intelligence

Slippage/Late Start

VC Upgrade

Mobile Web

Floodwire

Extended due to Re-scoping- Completed

VC Upgrade (Phase 2 and 3)

Group Cos to P/S

Project Portfolio -Timeline – key projects

Treasury Mgmt System/ Intercompany Netting

What Worked Well• Both the EVP of Ops and the Group CFO communicated the role and importance of the PMO to

those leading projects within Regus early on• Through discussions with sponsors, stakeholders and other PMOs, many projects were at least

identified, and information captured on them, even if after they were already “in flight”• Some of the Work Group members have been, or are currently serving in, a similar PMO capacity

within their own functional organizations, and thus appreciate what the PMO is trying to accomplish• Good relationships have been established with some of the VPs who recognized the value of the

work provided by PMO

Even Better If…• …the Global Steering Committee had more regularly met and communicated the importance,

progress and successes of the PMO to all departments to ensure that the organization continues to see the PMO and its standards as a priority.

• …work group members, and department heads receiving Group CFO's email, had followed up with communication cascaded to the PMs/stakeholders in their areas

• …more dedicated resources had been assigned to design, build, and run the PMO (as well as projects, where appropriate)

• …there had been more focus on relationship management by PMO Lead and Sponsor, to enable the PMO to become a strategic partner to the Board

Next Steps - Federated PMO Model – proposal

Global PMO

Ops PMO

IT PMOProduct

Dev. PMO

Other Dept. PMs

Other Dept. PMOs

• Global PMO aligned with Functional(divisional PMOs and Project Management Structures)• Global PMO will continue to push each department to have a functional PMO• Whereas not possible to have a functional PMO, Global PMO will continue to work with functional Project

Managers

PMO Lead

PMO Analyst / Support Junior PM Senior PM

Next Steps – Global PMO Org Chart – Main responsibilities listed by role

4

PM Assessment PM Coach Measure Projects and

Benefits Manage Interdependencies

Stakeholder Management PMO Framework Development Executive Portfolio reports Automate and Standardize Project

Mgmt Approach and Tools PM Coach

Project Support (master project schedule, resource capacity data)

Project tracking and control (resources, budget)

Assist in measuring projects and benefits

PMO Administration (project templates and standards, PMO portal / document repository)

Track Interdependencies Project / Portfolio

Reporting and Analysis

S W

T

Strengths

• Relationship and Collaboration • Tools and Processes• Strategic and tactical approach• Compentences and Skills • Executive Support

Opportunities

• Agent of Change• Business Driver• ROI on Projects • Strategic Partner for Senior

Management

Threats• Constant Organization change• PMO seen as an Overhead/Burden• Tensions and Concflits due to PMO

role • Lack of Competitors

O

Weaknesses• Exepecations set too high • Immature project management• Communication Plan• Resource Management • Prove its value • Cost Control

• One size does not fit all • The success of the PMO is the success of its

customers• PMO is about people 

Conclusions

Enabling a PMO is a journey that in the case of Regus has just begun.There is a long way ahead to have a more mature PMO but the base has been established and the rest of the house can be built on strong foundations

Thank You