The Value of a PMO

I was contacted recently by a client who had just resigned as PMO lead because he had no sponsorship from the IT leadership team. My initial reaction was surprise that a PMO for a relatively large organisation was not considered valuable.However, after some reflection and a brief conversation, I realised that the PMO in question was a project management office and not a portfolio management office. I categorize the former as one where the PMO is more of an administration function that is focussed on timesheet management and cost reports.

A portfolio management office has quite a different focus from a project management office. The latter typically is engaged in:

• Developing the right Portfolio;
• Portfolio Management;
• Reviewing benefits realisation plans;
• Managing Quality Gate reviews; and
• Identifying project risk.

As you can see, a portfolio management office is not obsessed with timesheet management but is more focussed on working with the leadership team to first develop and then manage the right organisational portfolio. Prioritising the projects that should be delivered using sensible evaluation criteria is by definition a high value-added activity. Once the portfolio is created then there is the on-going PMO role to add new projects that are right for the organisation and also terminate projects that no longer meet the needs of the organisation. Many portfolio offices run a Quality Gate or toll gate process to ensure that projects in the portfolio should still be delivered. Please see earlier blogs on Quality Gates.

We are seeing more and more clients transforming PMOs from the project management or administration model to the more value-adding portfolio management office.  A portfolio management office should be easily justified in terms of cost/benefit if it helps an organisation deliver the right portfolio of projects. The old model of where pet projects get delivered at the expense of more value-adding projects is very hard to maintain when there is a portfolio management office responsible for the project portfolio.