We are currently doing a PMO transformation at a large retail client based in London. They have had a very traditional PMO in place for a number of years. When I say traditional PMO, I mean one which is focused on reporting and timesheets. It is not fit for purpose and senior management are querying the value for money that the PMO provides.
What the IT leadership team want is a PMO that is its eyes and ears on the portfolio of projects it needs to deliver (currently, the IT Director knows more about the state of each project than the PMO!).
What the leadership team need is a PMO that highlights areas of concern and trends. We all know, or should know, that the earlier you stop a failing project the more money you save. The person who is closest to the project and the one who should stand up and say: “this project is no longer justifiable as an investment’, is the project manager.
Of course, some project managers do this, but many others either knowingly or unknowingly choose to carry on with the project wasting an organisation’s valuable resources.
This is especially true when the project manager running the project is a contractor. It’s like turkeys voting for Christmas if the termination of a project means that the project manager’s contract is also terminated.
This is where a PMO can add real value by objectively evaluating projects and recommending the failing ones for termination. The current PMO in this retailer has never done this. Projects start so they must finish – what we call the mastermind approach to projects.
Savings can also be made when a project is in trouble and early intervention can bring the project back on track. The longer the intervention is delayed, the greater the cost to the business, all other things being equal.
The IT leadership cannot possibly know which projects need early intervention or early termination. Some may, of course, be obvious; others less so.
One of the main reasons that this PMO has not recommended either project intervention or termination is that the PMO is staffed by relatively junior people who do not have the experience or expertise to review projects properly.
If we assume that this PMO is transformed in terms of people, tools and technology, the question arises: “who should the PMO report to?”
The two obvious choices are:
1. The Head of Project Delivery; or
2. The IT Director;
At first glance the obvious choice is the Head of Project Delivery as he or she is responsible for successfully delivery of all projects. The PMO can be the right hand of the Head of Project Delivery.
In addition, a proper portfolio office would also provide services including resource and capacity management, knowledge management, tools, standards, quality gate reviews, etc.
The problem with the Portfolio Office reporting to the Head of Project Delivery is that this person may have a vested interest in hiding project delivery problems or failing projects especially if it becomes obvious that the project has been failing for some time.
The Portfolio Office may then be delivering a tough message to the Head of Project Delivery. The PMO could be marking its own homework in this case.
If the PMO reports to the IT Director, this has a number of advantages. Primarily, it establishes the PMO as an important entity and indeed some PMOs are referred to as the office of the CIO.
If the PMO reviews the portfolio and identifies problem projects or underlying themes, the IT Director or CIO can review these findings with the Head of Project Delivery and possibly the project managers. This can put more onus on the Head of Project Delivery to improve the quality of delivery.
There is no right answer to this question of who the Portfolio Office should report to, but in my experience, the optimum reporting line is to the IT Director. This ensures that the PMO is established as a powerful entity and uncomfortable findings regarding projects are not suppressed but surfaced and actioned.