How a PMO Can Improve Effectiveness in Project Portfolio Management

Operating at peak level is a key concern for organizations — businesses and nonprofits alike. As our environments and markets grow increasingly competitive, with resources under growing strain, no one can afford to waste time and energy or whistle in the wind. The need for both micro and macro focus calls for a versatile, cross-functional role. And this is just the definition of a Project Management Office (PMO). A PMO acts as a hub for all activities related to the initiatives, projects and portfolios of an organization. In this capacity, it can optimize a wide range of the factors that drive overall effectiveness in project portfolio management.

Let’s explore the many reasons why having a PMO is a key asset for project-oriented enterprises looking to improve effectiveness in project portfolio management—and across the organization.

Defining Organizational Effectiveness

Organizational effectiveness: the notion is so broad that it can feel somewhat elusive. Let’s consider a basic definition: “Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce.”

This may mean accomplishing targeted goals, achieving desired financial results, producing rapidly and efficiently, limiting waste, successfully implementing the business strategy, keeping ahead of competitors, ensuring the survival of the company and positioning it for the future, supporting activities that create value for customers and shareholders, and so forth.

So, achieving effectiveness requires delivering on a number of different fronts.

Breaking down Effectiveness

Let’s try to break down this concept of effectiveness to make it easier to grasp. How, as an organization, can you maximize the chances of achieving your goals?

A well-oiled organization is first and foremost a clean house, with everything in its right place, and where all the different parts of the business dovetail into one another nicely — that’s what we’ll call organizational alignment

An effective organization demonstrates high performance in delivering on its goals. A strong operating model should come with mechanisms to assess the quality and performance of work and processes, course-correct and remedy.

A prerequisite to effectiveness is efficiency. Organizations seek to make the best use of limited financial, technical and human resources, fully harnessing their potentialities. As we will see, data has become another key asset for today’s companies and should be exploited properly too.

In a world where everything is changing by the day, effectiveness should be viewed as a dynamic notion. An organization needs the ability to grow, mature and adapt nimbly to stay on top of its game — that is, organizational agility.

A PMO can actually go a long way toward achieving organizational alignment, performance, efficiency and agility. And this is why a Project Management Office can and will maximize effectiveness from every angle in both project portfolio management and the larger business.

Fostering Organizational Alignment

Standardization for improved coordination

Among the PMO’s responsibilities is that of shaping the organization to position it for effectiveness. A Project Management Office structures work and processes across the company, defining the optimal conditions for how, where, and when to complete project work.

To that end, PMOs establish a governance system and define responsibilities across stakeholders. They streamline and standardize processes around best practices, establish and disseminate protocols for every team and department to follow, and enforce those common standards across the organization while ensuring that operations go according to plans.

Cross-organization transparency

Alignment and consistency across the many moving parts that form an organization can only be achieved if every team and every employee are fully aware of what their role is and what their responsibilities are against the bigger picture.

A PMO will foster transparency, avoiding or breaking silos, making sure that diverse teams from multiple areas are working in unison to achieve common goals. As it can show and explain each team how their effort contributes to achieving organizational value, the PMO can boost team engagement, giving workers a sense of purpose and accomplishment.

Knowing which type of work is being done, how, by whom also promotes traceability and accountability, opening the door for the continuous improvement of models, processes and overall operations.

Strategy alignment

Let’s circle back to our definition for organizational effectiveness: “achieving the outcomes the organization intends to produce.” This means that the best of work systems and delivery processes will be to no avail if there is a disconnect between strategy and execution.

Project Management Offices strive to select and prioritize the most strategy-fit projects and initiatives. They make sure that everyone’s effort actively serves these high-value initiatives.

Further, a PMO can shed light on the company’s orientations and act as a channel for communication and information between decision-makers and operations. They see to it that the decisions are cascaded down in a timely manner and that the “why”, the “what” and the “how” are communicated and understood to enable teams to execute with excellence.

Increasing Business Performance

Executing project portfolio management at peak effectiveness

A Project Management Office is tasked with ensuring that everything goes according to plan, that projects stay within deadline, within budget and within scope. This entails making adjustments and correcting the course whenever needed in order to adapt to unforeseen circumstances.

In particular, a Project Management Office will strive to improve the speed of execution and delivery. The services or products that your organization develops only create value when they reach the market, clients or end users they were intended for. And, increasingly, time is of the essence in business. As everything accelerates, consumers expect constant delivery of newer, better, smarter, sleeker products. They want it now, not six months from now. The PMO’s effort to make the execution process simpler and clearer may dramatically accelerate work, while the institutionalization of success metrics focused on speed will contribute to instilling a culture of rapidity.

PMOs will also monitor the progress of work throughout the whole life cycle of projects and take action to improve the quality of deliverables. For example they will establish safeguards to minimize the risk of error, and make sure that every project and deliverable meets all the requirements.

Typically, a Project Management Office automates administrative tasks through the implementation of professional Project Portfolio Management software tools. This will both speed up work and delivery and drive increased consistency and quality. PPM and PMO tools also provide project templates that will let the organization re-use the work accomplished as part of previous projects, saving further time and energy for the teams.

Solid planning

The quality of project execution and delivery is highly dependent on the soundness of preliminary planning. Were the project requirements correctly assessed? Were the right means and resources made available to complete the initiative? Was a sound risk analysis performed? Is the allotted budget realistic? Do interdependencies or conflicts threaten the ability of the project to stay on track? Can lessons learned from past endeavors help figure out how this one might turn out?

These are some of the matters that a Project Management Office will help address and optimize. The support of appropriate tools will enable your PMO to gain perfect visibility on all the parameters that may impact project life and to detect weak signals in order to anticipate issues before they arise.

Improving Organizational Efficiency

Resource efficiency

Most organizations are faced with the need to achieve more with less. This entails allocating the available resources in a way that maximizes value creation for the enterprise. It is all about making sure that the pool of resources is utilized at maximum capacity. Underused or idle talents are nothing but a waste of dollars; furthermore, underutilization might cause valuable resources to feel a sense of discouragement and reduce their engagement. On the other hand, overworking critical resources may hurt productivity and also jeopardizes retention. With its clear understanding of everything project-related, a PMO is able to solve the conundrum by balancing work demand and resource capacity in order to find the optimum.

Resource efficiency is also about getting the most valuable skills to work on the most promising projects. You need to make sure that your star developers or business analysts are working on the most important initiatives, those that may further differentiate your company and unlock strategic benefits. Your Project Management Office will do that too: by maintaining a database will all resource-related information, including details about their roles and skills, it can help assign key resources with greater granularity.

PMOs also boost resource efficiency by facilitating the work of teams, providing support, ideas, and guidance to project communities. The set of management tools implemented by the PMO will prove invaluable in boosting team productivity. Finally, your Project Management Office will improve group-work effectiveness, making sure that positive team dynamics enable people to work well together within the project portfolio management environment.

Cost efficiency and profitability

The concept of effectiveness often equates with quantitative and financial performance metrics. While this is not all there is to it, financial and budget matters are indeed key facets of organizational and project portfolio management effectiveness.

Project Management Offices can be extremely useful in driving cost savings and cost avoidance. As they boost work productivity and ensure that all resources are being used efficiently, they can reduce project-related financial waste significantly. As they perform in-depth risk and requirement analysis when planning projects, they limit the chance for unexpected events to derail the initiative and incur extra costs.

And the benefits don’t stop there. As PMOs compress project cycle times, they also accelerate payback, with positive impact on a whole range of financial metrics. As they enhance the reliability of budget planning, they make it easier for the company to meet its financial commitments and to assess the sustainability of its portfolios. Long story short, when it comes to money talks, a PMO is not a cost center, but a value center.

Data efficiency

Some say, “Data is the new oil.” The ability to harness data intelligence in order to unearth valuable insights is increasingly a key differentiator for organizations. Unfortunately, many companies still sit on mounds of invaluable yet untapped data. PMOs have privileged access to all kinds of project- and resource-related information. They will facilitate the management and use of such data, make them readily accessible to all concerned stakeholders, and develop sets of metrics and analytics to make the information speak.

Leveraging the data also empowers the Project Management Office to understand the effectiveness and relevance of processes and the performance of teams and systems. The ability to measure and analyze helps identify performance trends and figure out what the company is doing well and where it could improve. For, as Gartner puts it: ”An effective PMO continuously reexamines its processes and capabilities to ensure they are in line with the current needs of the business.”

Organizational Effectiveness Demands Organizational Agility

Organizational learning & improvement

Our business environments are in a constant state of flux. A PMO enables your people and your organization to improve continuously in order to adapt to the changing dynamics. Project Management Offices promote and facilitate institutional learning by putting together resource and knowledge bases consolidating best practices, useful information and models in order to inspire and empower the organization’s workforce. PMOs also proactively propose various training and awareness activities to spread project culture and literacy across the organization. They make sure that everyone’s skills stay sharp and up-to-date, empowering teams to give their best.

Organizational adaptation

The organizations that thrive in a world of disruption all share a common trait: they are nimble and adaptive, they demonstrate great ability to pivot rapidly and change course in the face of unforeseen challenges. They know how to adjust quickly to such factors as changing client needs or new market trends. They are able to overcome any roadblocks in order to make sure the business stays on track to achieve critical outcomes.

With your PMO being the nodal point for projects and initiatives, it has this key ability to drive the appropriate changes in the light of the evolution of business environments. Its wealth of data and analytics enable the Project Management Office to identify new opportunities and emerging risks in the business landscape and to respond appropriately. It will make or facilitate quick decisions to help the business adapt, and communicate those decisions throughout the organization to ensure proper implementation of process. This way, it will put the organization on track to achieve sustainable effectiveness and long-term business value.

 

Key Takeaways

• With its cross-functional role, the PMO is in the best position to support and improve organizational effectiveness.
• A Project Management Office can drive increased organizational alignment, performance, efficiency and agility, resulting in short- and long-term organizational effectiveness.

Suggested reads

• Understanding PMO Maturity in Your Organization
• The Role of the PMO in Project Portfolio Management
• Your PMO’s value: show it in your organization.