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Why You Need a Project Management Office

Why You Need a Project Management Office

What a PMO Can Do

At transportation company Schneider National, a PMO provides the foundation for eventually doing portfolio management, according to Mark Mullins, vice president of finance for IT. And at Oregon Health & Science University (OHSU), CIO John Kenagy launched a PMO to help his 350-member IT department improve its project management acumen. "Doing a large project takes a village of people, and we don't want to approach each project as if starting from scratch," Kenagy says.

But while PMOs vary in terms of size, structure and responsibilities, Curtis Cook, president and CEO of consulting company Novations Project Management in Atlanta, says CIOs can expect PMOs to function in the following seven areas.

  • Project support: Provide project management guidance to project managers in business units.

  • Project management process/methodology: Develop and implement a consistent and standardised process.

  • Training: Conduct training programs or collect requirements for an outside company.

  • Home for project managers: Maintain a centralised office from which project managers are loaned out to work on projects.

  • Internal consulting and mentoring: Advise employees about best practices.

  • Project management software tools: Select and maintain project management tools for use by employees.

  • Portfolio management: Establish a staff of program managers who can manage multiple projects that are related, such as infrastructure technologies, desktop applications and so on, and allocate resources accordingly.

Notice that Cook doesn't mention cost savings. While companies entertain a variety of factors for starting a PMO, most proponents agree that cutting IT costs or reducing the number of projects by a set amount should not be among them. PMOs can certainly lead to reduced expenses and fewer projects, but the first motive for creating a PMO is to deliver strategic IT projects with more consistency and efficiency. At Sun Life Financial's American subsidiary, CIO Jim Smith says his company's PMO was launched five years ago primarily "to implement the kind of discipline and project management processes required by the Y2K crisis". The PMO relies on three metrics to determine its effectiveness: accuracy of cost estimates, accuracy of schedule estimates and project stakeholder satisfaction. By all measures, it is a success; from 2001 to 2002, those metrics improved 25 per cent, 31 per cent and 9 per cent, respectively.

Darrel Raynor, managing director at project management company Data Analysis & Results, says PMOs that take on responsibility for resource allocation can improve employee productivity. "By having oversight to all projects and personnel, a PMO can assign the best people to priority projects and keep their attention focused on that project," he says. Multitasking on several IT projects doesn't work, Raynor says, adding that productivity drops every time an employee switches from one task to another. By eliminating multiple assignments, PMOs can boost productivity while ensuring that priority projects get the most attention. That's the case at Grainger. "We have about 400 people in a centralised IT department, and one of the key benefits is that we're allocating the majority of our resources to the highest priority projects," says Ferrarell.

PMOs can nevertheless deliver a return in three to six months by providing the visibility needed to cancel, postpone, or scale back unnecessary or less strategic projects, says Raynor. At diversified technology services company Schlumberger, project office manager Vincent de Montmollin says the PMO saved more than $US3 million by reducing the number of small projects from 233 to 13.

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