Developed by the Department of Health Informatics Directorate
Informatics Capability Development branch
OFFICES
A PRACTICAL GUIDE TO SETTING UP A PMO
(WITH EXAMPLES)
This guide looks at:
PLANNING TO SET UP OR RESTRUCTURE A PMO
EMBEDDING A SUCCESSFUL, BUSINESS DRIVEN BY
PMO
LINKS TO TOOLS TO DETERMINE AN ORGANISATION’S
P3M MATURITY
CASE EXAMPLES
This guide is primarily intended for use by staff looking to set up (or currently running) a PMO.
For the purpose of this guide PMO refers to Portfolio, Programme or/and Project Offices.
1. Planning to set up or restructure a PMO
2. Embedding a successful, business driven PMO
3. Capturing the benefits of a PMO function
4. Guidance on creating a business case for PMO function
5. Understanding common perceptions of PMOs
6. Case examples
7. Reference materials
8. Checkpoint
9. References
“Around half the PMOs created are restructured or closed down within a 2-year time frame.”
It is recommended that when setting up or restructuring a PMO function, programme management principles for delivering benefits are used to ensure long term success and benefits to the organisation. The diagram below is an example of a lifecycle that can be used when establishing or restructuring a PMO model. This is a project lifecycle for implementing a PMO structure in an organisation.
1) PLANNING TO SET UP OR RESTRUCTURE A PMO
Assess current state of PMO provision What problems are
you trying to solve
Define Vision Statement Set objectives and
goals Outline Business
Case
Definition
Design how PMO will operate: Design Team Develop Governance Develop Blueprint Develop Full Business Case Plan stages or tranches of delivery
Develop and agree phased implementation or transition plan Implementation in stages or tranches Deliver implementation or transition plan Realize Benefits Programme or Project Closure and
Review Formal closure, evaluation and lessons learned
Project lifecycle for implementing a PMO structure in an organisation
Mandate Brief Definition and Plan PID / Programme or Project Report End Programme
Identify the PMO Define the PMO Deliver the PMO Closure
2) EMBEDDING A SUCCESSFUL, BUSINESS DRIVEN PMO
It is important that the core focus of the PMO
function is on the business in which P3M
methods are applied.
The following provide some suggested steps to ensure that the PMO function is a business driven rather than theoretical function, and that a culture is adopted where the PMO function supports the organisation’s service improvement.
Ensure the PMO is aligned to the corporate
business planning process
• Is the PMO integral to the organisation’s business planning cycle?
• Does the PMO play a core role to support corporate strategy delivery?
Identify priority stakeholders
• Have you carried out a stakeholder analysis to understand the different individuals that have an interest in the PMO function?
• Is there an approach in place to take key individuals through the benefits and role of the PMO function ? • Have you considered all stakeholders’ expectations? • Do you know all of the information your
stakeholders need?
• Is there senior level support/sponsorship of the PMO function, including a specific senior management champion who is part of the corporate strategy board?
2) EMBEDDING A SUCCESSFUL, BUSINESS DRIVEN PMO
Develop an implementation plan
Have you considered the following as part of the creation of the early stages of the creation of an implementation plan?
• Staffing, roles and responsibilities, office location, objectives definitions, PM tools definitions, PMO services definition and success definition?
Have you considered the following operational actions? • Whether you need PM software.
• Processes for; communication, methodology, staff education, tracking, PMO success metrics, PMO information management processes.
• Templates, use of templates, major processes. • P3M staff forums.
• An “online resource centre” where P3M staff can access best practice standards.
• Looked at internal staff as mentors for other staff.
Understand behavioural patterns and reactions
Is there a communications plan for the PMO implementation that covers the following: • The style and frequency of communications
depending on the stakeholder (newsletters, workshops, 1-2-1s)
• Feedback from a management level on reporting processes
• Promoting the PMOs identity and service
• Results and senior public endorsement of the PMO and its role in the organisation
Have you taken time to support individuals to
understand the PMO functions and how they interact with the PMO?
Have you sold the benefits of the PMO function? (See chapter 4 of this guide for benefits return on
investment.)
2) EMBEDDING A SUCCESSFUL, BUSINESS DRIVEN PMO
Ensure the roles in the PMO are appropriate to
its function
• Is there a charismatic senior PMO head?
• Is the office staffed with competent staff who have had practical experience of running projects and programmes?
• Can you use internal staff as mentors?
Determine the current P3M maturity in your
organisation
A maturity model (called P3M3) can be used as a guide to identify the level of maturity of 32 different
practices covering portfolio, programme and project management. P3M3 provides generic descriptions of each practice at each of the five levels of maturity against which the organisation can be assessed (for link to the maturity model P3M3 see reference materials later on in this document).
3) CAPTURING THE BENEFITS OF A PMO FUNCTION
Depending on the role of the PMO function and
the P3M maturity of the organisation, different
benefits can be achieved at different stages:
Early stages of a PMO set up
Quick and significant benefits that can be achieved in early stages:
• Embedding standard simple P3M processes including templates Plans, Risks and Issues Logs, Business Cases and Change Control
• Defining in detail scope, objectives and requirements, defining how deliverables are matched to objectives • Providing an independent review and acceptance of
project estimates
• Designing objective criteria for approving and prioritising projects
• Introducing processes for eliminating projects that don’t support corporate objectives
• Baselining and performing option appraisal and impact assessment in developing business cases and ensuring that benefits and improvements are also measured and owned
• Implementing change management processes to avoid scope creep and duplication of effort
3) CAPTURING THE BENEFITS OF A PMO FUNCTION
For more mature P3M organisations, actions to
drive continuous improvement may include:
• Using advanced scoring and ranking mechanisms to prioritise project portfolios, risks, issues and changes • Focusing on critical path and managing projects
according to constraints,
• Improving task work flow management e.g. providing automatic alerts on tasks
• Making project management processes more efficient e.g. using lean six sigma to drive out waste from processes
• Enhancing measurement and reporting routines e.g. measuring earned value, developing dashboards and drilling down from RAG status reports
• Using project and knowledge management portals (i.e. Microsoft Project Server, EPM and SharePoint) to improve efficiency and promote information sharing • Providing an ongoing programme of training,
support, coaching, mentoring, and accreditation • Providing information on resource capacity and
availability when considering the balance of new project work with ‘business as usual’ needs
4)
GUIDANCE ON CREATING A BUSINESS CASE FOR PMO FUNCTION
A PMO model should have a formal agreed
business case outlining it’s functions, costs,
benefits, constraints and risks.
An example business case is contained within the OGC’s P3O guide – Appendix B “Example Business Case” p133-137
http://www.best-management-practice.com/Knowledge-Centre/Best-Practice-Guidance/P3O/
Building the case
A business case for a PMO model should show a
significant return on investment (RoI). Below are some steps and examples on what could be included to demonstrate RoI:
Step 1.
Assess current PMO capability in terms of
resources, skills, organisation and services.
Step 2.
Assess current costs and business benefits.
Costs include PMO resource cost, systems, tools, infrastructure, governance, training and support. Benefits Associated with delivery of projects to time, quality and cost and customer satisfaction (tangible): • Estimate of total and average value planned and
achieved from the current project portfolio – i.e. the value generated from past and current projects measured in net present value (NPV).
• Performance on current project cycle time – measured as a saving on capital, labour and overheads as
appropriate plus revenue gained.
• Penalties and bonuses incurred on late project delivery.
• Cost of quality, performance on operational and
service level agreements (OLAs and SLAs).
• Key performance indicators (KPIs) related to project
performance e.g. % completion to time, quality and cost (converted into monetary values), response times, value of changes to original budgeted cost and
4)
GUIDANCE ON CREATING A BUSINESS CASE FOR PMO FUNCTION
Hidden costs: Time and resource that is wasted due to re-work or other attribute. Indirect overheads e.g. management time not apportioned.
Intangible benefits: Project customer and employee satisfaction, and brand reputation as a consequence.
Step 3.
Establish baselines and benchmark current
performance.
Step 4.
Interpret business objectives and drivers
and how PMO can support them.
Step 5.
Identify operational and programme
management improvement opportunities.
Step 6.
Finalise programme management
development plan and business case.
Example key performance indicators
There are a number of key performance indicators (KPIs) that can be included in a business case for a PMO model. The following are KPIs that may be considered:
• % increase in actual benefits delivered by the portfolio.
• Reduction in programmes/projects started fro the wrong reasons.
• Increased level of P3M maturity of the organisation. • % increase in number of programmes and projects
delivering to time and scope.
• % decrease in cost overruns on programmes and projects.
• Reduction in overall resource costs to deliver the portfolio.
• Reduced staff turnover and subsequent recruitment/training costs.
• Increase customer satisfaction scores.
• Reduced number of programmes/projects scoring amber or red on gateway reviews.
5) UNDERSTANDING COMMON PERCEPTIONS OF PMOs
Those working within or establishing a PMO
structure should be aware of common
perceptions of its functions.
Senior and middle managers
• Large overhead
• Not business driven or focussed • P3M seems theoretical
• Drain on organisation’s productivity • Less time to actually deliver
• A potential threat to authority • Exposing true facts and figures
Project staff
• Bureaucratic processes
• It is simply a “templates police” • No one reads the forms
• A one way process
• Hinders more than helps
The benefits and RoI examples in this
guide should be widely promoted
across the organisation to overcome
some of the perceptions listed here.
6) CASE EXAMPLES
The links below provide examples and lessons learned
where organisations have set up or made changes to their
PMO functions.
Please note that these are specific to the particular organisations and may be relevant depending on your organisation requirements.
A case study describing how a Portfolio Management Office helped the senior management at BT Design make business-critical
decisions.
British Telecom example
http://www.best-management-practice.com/gempdf/P3O_BT_Design_Case_Study_Oct_2010.pdf
7) REFERENCE MATERIALS
Portfolio, Programme and Project Management Maturity Model (P3M3)
A maturity model produced by the OGCwww.connectingforhealth.nhs.uk/systemsandservices/icd/informspec/p3m/resource/capa bility/maturity/index_html/
8) CHECKPOINT
•
Have you created a full implementation plan to restructure or set up your
PMO function?
•
Does your implementation plan include:
–
An assessment of the current state of your PMO function and any
future goals?
–
A full definition of how the PMO will operate?
–
The different stages of implementation?
•
Have you taken steps to ensure your PMO function is aligned to corporate
business planning processes?
•
Have you identified priority stakeholders and taken action to ensure the
PMO function meets their expectations?
•
Have you established senior level endorsement of the PMO function?
•
Have you considered using the OGC’s P3M3 maturity model to determine
current P3M maturity in your organisation?
•
Have you had access to other organisations’ lessons learned, advice or best
practice suggestions when making changes or setting up a PMO function?
9) REFERENCES
Getting Return on Investment from your Programme or Project Management Office
The ProjectPlus Grouphttp://www.pmosig.co.uk/wp-content/uploads/2010/12/Getting-A-ROI-from-your-PMO-Sep-09.pdf Dave Rochford BSc, MA, Fellow CMA & Iain Fraser, PMP, PMI Fellow, Fellow PMINZ
Project Plus Ltd
Portfolio, Programme and Project Offices
Office of Government CommercePublished by TSO
P3M3 Portfolio, Programme, and Project Management Maturity Model (P3M3)
Office of Government CommerceReleased in June 2008
