The Strategic Project Management Office

Beth Partleton, PMP, Chair15 June 2011

Many Companies Have PMOs

Different mandates

Varying structures

Most began in IT, many still are

3 of 5 organizations in PMI survey have enterprise PMO

Adapting to Fit Needs

PMOs often transform every few years

Project Management that Aligns to Business Strategy

“Managing capital projects for competitive advantage”McKinsey Quarterly, June 2008

“Planned capacity additions in petrochemicals such as styrene, for instance, are nearly twice the levels in previous economic cycles. Power stations now on the drawing boards in some countries will generate three times as much electricity as traditional plants do.”

“In the petroleum industry, a typical offshore project involving subsea risers might have cost €30 million to €50 million in the 1990s, but today a comparable project, in deeper and more remote waters, might cost €600 million to €900 million.”

Alignment Is Crucial As Projects Grow

When Projects Are As Large As Business Units

“One [engineering firm’s] senior executives decided to raise the profile of its project teams (and to attract up-and-coming employees to them) by explicitly comparing them to its business units during strategic-planning discussions.

Thinking of project teams in this fashion — they are, after all, comparable to a $2 billion P&L—forced the leaders of the business units to think more carefully about staffing them and ultimately helped the company improve its skill base.”

“Managing capital projects for competitive advantage”McKinsey Quarterly, June 2008

Enterprise-Wide PMOs are Focused on Strategic Aspects of Project Management

59%

90%

49%

65%73%

49%

40%

69%

57%

68%

59%

72%

44%41%49%

60%

0%

20%

40%

60%

80%

100%

Enterprise-wide Dept, Reg, Div

PM Standard-

ization

Monitor project

success metrics

Develop core PM maturity

Program Mgnt.

Training Provide PMs

Portfolio Mgnt.

Mgnt. of project

resource allocation

Q: Which of the following roles does your PMO fulfill? (PMI MURMER market research, Dec. 2010)

.

Strategic Roles for PMOs

Portfolio Management Shared Support Functions

Project Management Maturity

Project

Scope Budgets

Resources

Business Case

Milestones

Risks

Dependencies

StakeholdersBenefits

Governance

DeliverablesRequirements

Project Plan

Communication

Strategy

Roles

Time

Decision Making Priorities

Critical path

Skills

Control

Project

Scope Budgets

Resources

Business Case

Milestones

Risks

Dependencies

StakeholdersBenefits

Governance

DeliverablesRequirements

Project Plan

Communication

Strategy

Roles

Time

Decision Making Priorities

Critical path

Skills

Control

• How are we supposed to manage all this?• How can we balance the portfolio of projects?• Where do we allocate our resources?• How can we maximize benefits from our investments?

Portfolio Management

Do they complement and reinforce each other?

Portfolio Management

Do they complement and reinforce each other?

Approving projects and programs

Allocating resources

Setting goals

Monitoring progress

Adapting to conditions and strategy

2010 Pulse of the Profession Research

41% of those organizations with a PMO will bring a project in on time and in budget compared to 34% without

67% will meet project goals or intent compared to 62%

67% of those organizations with PMOs saw an increase in projects meeting goalscompared to 44% without

Building a PMO at Churchill Downs, Inc.

2006: Initial Objectives for IT PMO

• Implement standard processes for project requests, evaluation, and funding to ensure that approved projects were aligned with business goals and objectives

• Implement a standardized project management methodology to include policy, standards, guidelines, procedures, tools, and templates

• Build professionalism by providing mentorship, training, and guidance to teams as they adopt project management processes and best practices

• Manage the project portfolio by ensuring that required documentation is in place and that stakeholders are properly informed about progress through effective reporting of key performance indicators

• Direct project management for key strategic initiatives

• Ensure benefit realization by clearly defining business cases and the associated metrics for measuring project success

2008: Re-charter as Enterprise PMO

16

Next Steps:

• Improve integration of financial and project planning

• More professional development for PMO staff and project teams

• Repository for best practices and lessons learned

Project Management Maturity

Capture and accumulate experience

Share knowledge

Foster solid practice

PMO: Hub of the Organization’s Learning

Evaluate individual projects

Draw insights from across teams and projects

Benchmark and research the organization’s approach

Assess the need for trained practitioners

Becoming a Project-Based Enterprise

Define how projects will be managedSupport project management activities

adaptable to each projectFacilitate sharing of project

management information, knowledge and experience Improve identification and use of best

practices Improve results through the avoidance

of common pitfalls

From Products to Solutions – via Projects

The Value of Project Management to IBM

Project Engagement Value

Business Unit Value

Corporate Value

Shared Support Functions: Scale Dependent

Social Media Tools Reference Materials PM Perspective for HR decisions

Shared Support: Strategic

Strategic because projects are strategic

Contributes to portfolio management

Contributes to management maturity

Define and maintain the business benefits throughout the project and beyond

Cross-functional teams need to drive and own integration

Long term project success is dependent on stakeholder buy-in from beginning to end

The Strategic PMO Manages Results,Not Just Projects

Supports innovation

0%Aligns with company strategy

29%

Completed on budget

19%Supports revenue

19%

Completed on time

12%

Enhances competitive

position12%

Stays with the scope of the original

design9%

Most important project success criterion

N = 130Source: Gartner (September 2008)

USD $3.5 billion, 1993 to 2009USD $1.8 billion in procurement More than 8,000 vendors More than 12,000 contracts

1999: Major cost and schedule overruns are forecast Lack of systems engineering focus in

management Need for “clean room” assembly approach

throughout

Learning from the National Ignition Facility

National Ignition Facility: “Rebooting”

1999-2000: Strategic restructuring

New senior management

Bottom-up reassessment for new cost and schedule baseline

Reassess risk posture and contingency level

DoE and Congressional review

National Ignition Facility: PMI Project of the Year, 2010

NIF completed 2009, USD $2M under budget and 3 weeks ahead of schedule

Ignition experiments began early 2010

DoE improved management of its entire project portfolio and capital asset acquisition using concepts and processes from PMBOK® Guide

“The successful turnaround… can be traced directly to the strategic change in approach to project management.”

PMO’s Actions Determine Strategic Value

Portfolio management

Project management maturity

Shared support functions

Thank You

© 2011 Project Management Institute