Unlocking the hidden value of PMOs
by Apostolos Tzouvaras and Rose Taylor, PwC / 9/6/2017 11:10:31 AM
It is early evening, and you are driving alone in the countryside. The road is long and winding, and you can barely see through the mist. You haven’t taken this route before, and you don’t know what lies beyond the next bend.
Quite often, programme managers find themselves in similar situations. They are expected to drive a complex programme under uncertain conditions while having little visibility of the wider strategy.
Like professional rally drivers, programme managers often need the help of a co-driver (or delivery partner), who will help them to successfully navigate through the complex landscape of large transformation programmes and achieve the expected outcomes.
A delivery-focused Programme Management Office (PMO), which is set up as an independent business function, and operates both on a strategic and tactical level, is best suited to play this role.
Although many programme management methodologies have outlined the importance of the PMOs’ strategic role in achieving the right outcomes, in reality, as research has shown, this is not always the case, and there seems to often be a gap between strategy and execution.
The sweet spot between strategy and execution
One of the key themes that emerged from PwC’s 4th Global PPM survey (pdf) was that there is often a disconnect between executive teams, who commission change, and programme management teams, who are leading and delivering change programmes. As a result, executives often fail to appreciate the complexities involved in the day-to-day management, while programme delivery teams fail to realise the agreed benefits and outcomes.
The survey also found that the most common service carried out by PMOs was ‘status reporting to upper management’, while 14% of respondents stated that they ‘either do not have a PMO or didn’t know which services it provides’. In addition, less than a third (28%) of programme managers say that they have ever been involved in strategic planning, while just 7% of programmes had a mature approach to identifying and providing training for project management staff.
There have been similar findings from other major studies. For instance, PMI’s ‘Pulse of the Profession’ survey has shown that less than half of organisations have high alignment of projects to strategy, while only one-sixth of the organisations have a high level of project management maturity. In addition, it showed that only a low number of organisations have enterprise-wide PMOs.
Overall, there seem to be three recurring themes:
- There is a clear gap between strategy and execution with low alignment between strategic objectives, projects and benefits.
- PMOs are usually seen as a reporting function, used to record, maintain and report information to executives, while they are not actively involved in strategic planning.
- The level of programme management (PM) maturity is still low in half of the organisations while most of PM staff do not receive the appropriate level of professional PM training.
The above findings clearly illustrate that the time has come to move the focus of PMOs from doing things right to doing the right things.
PMOs can become the connecting glue between strategy and execution, helping both the delivery team become more outcome-focused and the executives become more aware of the realities on the ground. For some organisations this is a significant cultural shift, which they are usually not ready to make. Sometimes it takes a visible failure of a high-profile programme before executives decide to elevate the role of their PMO function.
But it doesn’t have to be this way. Industries, such as Aerospace, have long benefited from enhancing the role of their PMOs.
Focus on what matters - Lessons learned from Aerospace
Programme managers in Aerospace usually have to face an overwhelming amount of issues and distractions on a day-to-day basis due to the scale and complexity of their programmes. Despite their robust planning and rigorous programme management processes, technical designs may still fail to qualify, suppliers may still fail to deliver and critical resources may still not be available when needed.
In such a challenging environment, programme managers often find themselves in a firefighting mode. This creates tunnel vision, which makes it hard to think forward and see the wider implications and priorities.
Having identified these issues, many Aerospace companies we’ve worked with came to realise that their PMOs had a more substantial role to play, to help drive the delivery and bring the focus back to value added activities. This is why they transformed their PMOs from passive, administrative functions to independent business partners, actively involved in the delivery of their programmes.
PMOs as Delivery Partners
To act as a delivery partner, the PMO needs to be structured as an independent business function, which sits, tactically and operationally, alongside the programme delivery team, but is also involved in strategic planning, and reporting to the executive team. This will enable the PMO to act independently, put the expertise of its project management professionals to best use, and add real value strategically, tactically, and operationally.
A Delivery Partner PMO can help:
- Align strategy to tactical execution.
- Create a focus on value added activities.
- Provide professional expertise and insights.
- Lead the risk management process.
- Resolve conflict and create synergy.
Align strategy to tactical execution
As mentioned previously, the most important role of the Delivery Partner PMO will be first to help the executive team shape the strategic plan, second create a realistic tactical plan, then work with the programme manager to make it operational and finally cascade it to the delivery team.
As an independent business function, the PMO will be able to hold delivery areas to account and challenge the programme manager when things are not progressing as expected. Of course, in reality things do not go always as planned, unexpected issues may arise, and the scope may change. This is where the PMO can add real value, by instilling a forward-looking, planning mentality to the delivery team, helping to quickly adapt the plan as needed, and help the programme manager drive the delivery.
Create a focus on value added activities
There has been a lot of discussion on how PMOs can add value in programmes but what does that mean in practice? As our study showed, the most common service performed by PMOs is status reporting. In our experience, many of these reports make little difference in helping the team drive the delivery and achieving the expected benefits.
Furthermore, the delivery team can get distracted with low priority tasks, losing sight of the real priorities. The primary role of the Delivery Partner PMO is to continuously challenge all these activities, and bring the focus back to what really matters.
In practice, the most common method used to systematically provide this focus is the Earned Value Management Method. Milestones are assigned an agreed value (in £) and linked to specific benefits and strategic objectives.
Progress is then measured in terms of the value that has been earned compared to the budget spent. This allows the PMO to have more meaningful discussions with the programme manager and hold delivery areas to account for the value they deliver rather than just time and cost.
Provide professional expertise and insights
In order to act as delivery partners, PMOs need to be staffed with experts that not only have the right level of knowledge and expertise, but who can also strip processes of excessive weight and focus on the underlying principles. Experts, who have repeatedly managed programmes themselves in different contexts, appreciate the operational complexities involved and bring fresh insights.
In the era of digitisation, executives have been increasingly diverting their focus to digital tools, which can help to automate programme management processes.
However, despite their sophistication, digital tools and products cannot at this point in time help foresee potential risks or identify solutions to difficult challenges. It is the insights of the experts that can make all the difference, though in the future there will be myriad new possibilities that Artificial Intelligence will bring.
Lead the risk management process
Often, programme managers are too busy to think of potential threats to their programme, while many ‘traditional’ PMOs are pre-occupied with updating complicated logs with hundreds of entries that have no clear priorities. A Delivery Partner PMO can play a key role in leading the risk management process, by helping create a proactive mind-set amongst the team and removing the focus from the administrative side of things to what really matters.
In our experience, having a 1-hour risk management workshop with all the key stakeholders in the same room, and without distractions, is usually enough to help identify and capture all the top risks. To be effective, these workshops should be led by experts who can guide the team to think of what-if scenarios, while creating the right environment for everyone to feel comfortable to discuss potential failures.
Once the process is complete it is the job of the PMO to guide the delivery team against becoming distracted by low criticality risks. Doing so will reduce the administrative burden and the team’s time and energy will be focused on fewer risks that are truly critical.
Resolve conflict and create synergy
Usually, complex transformation programmes tend to have a great number of stakeholders with very different or even opposing expectations and attitudes towards the programme. As a result there might be significant levels of antagonism, which can negatively impact progress. In difficult situations, simply managing interdependencies can do little to help the programme team to deliver.
A Delivery Partner PMO can act as a third party, engage independently with all stakeholders, and help to work through the conflict. Soft skills are as important as negotiating tactics and this is where the PMO can add real value to the programme.
What is next for PMOs?
There has been an ongoing debate on the role of PMOs and the value that they bring in complex programmes. Studies have repeatedly shown organisations tend to view PMOs as a reporting function with little to offer. This is undoubtedly a missed opportunity.
Both public and private sector organisations can greatly benefit from a PMO that will operate as their delivery partner and strategically guide them through the day-to-day hurdles of complex transformation programmes.
A PMO, comprised of seasoned experts capable of operating both on a strategic and tactical level, can bring fresh insights and transform the way we manage programmes. After all, as world-class rally drivers need the input of their co-drivers to win, programme leaders similarly need Delivery Partners to help them meet the strategic objectives of their programmes.
Portfolio and Programme Management 2014 Global Survey, PwC
Pulse of the Profession, “The High Cost of Low Performance, How will you improve business results?” PMI 2016