the value of a pmo - association for project · pdf fileaccording to gartner, world-class...
TRANSCRIPT
Copyright © 2010 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
The Value of a PMO
PPSO SIG – Sept 2010
Michael Cooch
Adam Cowmeadow
Copyright © 2010 Accenture All Rights Reserved. 2
Table of Contents
• Background to this presentation
• The Evolving PMO
• PMO Maturity
• Value of a PMO
• Summary
• Proposed next steps
Copyright © 2010 Accenture All Rights Reserved. 3
What is the background to this presentation?
• Organisations spend billions each year on project delivery
• All project organisations face two significant challenges as they attempt to improve their ability to deliver complex projects on time and to budget:
1. Securing Leadership support and commitment for the PMO
2. The belief that a PMO will, by its mere existence, lead to project success
SourcesBackground
Copyright © 2010 Accenture All Rights Reserved. 4
What is a PMO (old view)?
A Project Management Office (PMO) used to be considered a primarily administrative
function.
It was responsible for:
– Standardising the processes involved in the execution of projects;
– Document management and status reporting; and
– Project administration.
Copyright © 2010 Accenture All Rights Reserved. 5
What is a PMO (modern view)?
The modern PMO provides standardisation, as the foundation, but has evolved to offer more
value to its sponsoring organisation.
It is responsible for:
– benefits tracking;
– expert work planning, estimating & scheduling;
– co-ordinated resource management;
– structured progress tracking/forecasting;
– robust scope management/change control;
– a focus on budget efficiency;
– stakeholder/communication oversight;
– industrialised quality management;
– value-adding risk/issue management;
– comprehensive knowledge/records management; and
– fully-integrated project processes.
This modern PMO enables timely delivery, successfully achieved scope/quality requirements
and targeted budgeting which ultimately results in the minimisation of delivery risk
Copyright © 2010 Accenture All Rights Reserved. 6
0
1
2
3
4
5
0: Absent 1: Immature /
Initial
2: Established /
Repeatable
3: Grow n-up /
Defined
4: Mature /
Managed
5: Best in Class /
Optimised
What is PMO Maturity?
PMO Maturity levels indicate the effectiveness of project execution support. Throughout this presentation references are made to, and comparisons made between, PMOs operating at varying maturity levels. For clarity please find references for each level below:
Level 0: Absent - No identifiable PMO operating.
No influence on project success.
Level 1: Immature/Initial – A named entity
(identified as a PMO) is operating but, in general,
processes are inconsistent, project data isn’t
collected/used and reporting is broadly qualitative.
Has little influence on project success.
Level 2: Established/Repeatable – A recognised
PMO is operating but is in need of improvement.
Some processes have consistency, some project
data is collected but little of it is analysed and
reporting is still primarily commentary based.
Plays a limited role in project success.
Level 3: Grown-up/Defined Standard
Processes – A solid PMO which
experiences more successes than failures.
Most processes have consistency, most
key project data is collected but only basic
analytics are done and reporting has
introduced some metrics. Plays a role in
some project successes (and failures).
Level 4: Mature/Managed – A very
successful PMO which has good
sponsorship. All core processes are
consistent, all key project data is
collected, solid analytics are
undertaken and reporting is primarily
data-driven. Plays an important role in
the success of the project
environment.
Level 5: Best in Class/Optimised – A
world-class PMO which has complete
sponsorship. All core processes are
consistent and continuously improved, all
key project data is collected, analytics are
comprehensive and reporting is completely
data-driven. Plays a critical role in the
success of the project environment.
Copyright © 2010 Accenture All Rights Reserved. 7
Is PMO uptake increasing?
*Source: Value of Project Management
Center for Business Practices (CBP) Study
**Source: Project Management
The State of the Industry
Center for Business Practices (CBP) Study
In 2000* only 47% of surveyed
organisations had implemented a
PMO of any type. By 2006** 77%of the respondents had
implemented PMOs.It has been shown that
deploying a PMO does notlead to performance
improvement in itself. It is only
when the PMO increases
maturity that tangible improvement occurs*.
…however…
Copyright © 2010 Accenture All Rights Reserved. 8
Why aren’t all PMOs ‘value-adding’?
Organisational Performance Improvements
0%
10%
20%
30%
40%
50%
60%
1: Immature / Initial 2: Es tablished /
Repeatable
3: Grow n-up /
Def ined
4: Mature / Managed 5: Best in Class /
Optimised
PMO Maturity Leve l
Rela
tive P
erf
orm
an
ce I
mp
rovem
en
t
There is a common assumption that the deployment of a PMO is thepanacea to project ills. This is demonstrably not the case. The statistics*
show that the key driver in organisational performance improvements comes from the maturity level of the PMO not just the deployment of a
named PMO function.
Level 4 (Mature) PMOs deliver
a 34.5% performance
improvement over their Level 1
(Immature) PMO competitors.
*Source: The State of the PMO - 2007-2008
A Benchmark of Current Business Practices
Center for Business Practices (CBP) Report
Level 5 (No data) – As only 0.7% of organisations are at this level no statistical conclusions can be drawn
Copyright © 2010 Accenture All Rights Reserved. 9
Do PMOs help project success rates?
According to Gartner, world-class organisations enjoy an IT project success rate close to 90 percent. What is it that allows these
organisations to deliver business value at nearly triple the standard industry success rate? The answer: Almost all of them
have established successful PMOs.
* Source: Gartner Survey
Project Success Rates – All Projects * Project Success Rates – World Class Organisations with PMO *
Nearly 70% of organisations
implementing PMOs report that
project success rates have
improved significantly as a result.
Copyright © 2010 Accenture All Rights Reserved. 10
What are the key challenges facing PMOs?
*Source: The State of the PMO - 2007-2008
A Benchmark of Current Business Practices
Center for Business Practices (CBP) Report
In low-performing organisations executive sponsorship is approximately 60% less
likely to have an appreciation of the strategic value of a PMO
In low-performing organisations PMOs face much greater
difficulty in being accepted as a real value-adding proposition, at all levels of their organisation, when
compared to high-performers
In low-performing organisationsproject management performance
(and PMO performance) is not measured nor is appropriate
accountability for outputs assigned
Copyright © 2010 Accenture All Rights Reserved. 11
What are the key challenges facing PMOs?
*Source: The State of the PMO - 2007-2008
A Benchmark of Current Business Practices
Center for Business Practices (CBP) Report
**Source: Software Engineering Economics
Prentice Hall, Englewood Cliffs, NJ, p431
Boehm B (1981)
In low-performing organisations PMO staff are much less likely to have formal project management
qualifications, hands-on-experience and extensive project
management knowledge*
A project staffed with uniformly very
low-rated personnel on all capability
and experience factors would
require 11 times as much effort to
complete the project as would a
project team with the highest rating
in all the above factors**
Copyright © 2010 Accenture All Rights Reserved. 12
PMO Functions Deployed in High/Low Performance Organisations
30
35
40
45
50
55
60
65
70
75
80
85
90
Time management PM training Integrated planning Quality management Performance
monitoring/control
(e.g. Earned Value
etc)
Risk management
(portfolio & project)
Portfolio management Resource
management
(including
optimisation)PMO Function
% w
ith
fu
nc
tio
ns
de
plo
ye
d
High Performers
Low Performers
What characterises high-performing PMOs?
A recent global survey revealed the level of entrenchment of core PMO capabilities between high and low performing project organisations.
Interesting statistics include the fact that high performers utilise resource management and risk management nearly 23% more frequently than in
low performers, integrated planning nearly 20% more often, quality 17%,
performance monitoring & control 16% and time management 12%.
*Source: The State of the PMO - 2007-2008
A Benchmark of Current Business Practices
Center for Business Practices (CBP) Report
High performing project
organisations deploy approx
20% more key PMO
capabilities than comparable
low-performing organisations
Copyright © 2010 Accenture All Rights Reserved. 13
Organisational Performance Improvement between Levels of PMO Maturity
0% 0% 0% 0% 0% 0% 0% 0%0% 0%
10% 10% 11%18%
36%
27%
11%
23%
39%
24%
43% 44%
64% 65%
0%
10%
20%
30%
40%
50%
60%
70%
Organisation
financially
successful
Shareholders
satisf ied
Projects aligned to
strategy
Project customers
satisfied
Organisation w orks
on the right projects
Strategy executed
to plan
Projects on
schedule & budget
Resources allocated
optimally
Measures of Performance
Pe
rfo
rma
nc
e Im
pro
ve
me
nt
How does building PMO maturity help?
A recent global survey demonstrates the performance differentiation (against schedule, budget and quality) between high and low maturity PMOs.
This includes a 24% improvement in customer satisfaction between Level 1 and Level 3 PMOs (Level 4 and 5 are not included due to lack of statistical data at these points, however extrapolation clearly trends positively) and a
65% improvement in the optimal allocation of resources
*Source: The State of the PMO - 2007-2008
A Benchmark of Current Business Practices
Center for Business Practices (CBP) Report
Level 3 (Grown up) PMOs
support project delivery on
schedule & to budget 64% more
often that their Level 1
(Immature) PMO competitors.
Maturity Level
1 2 3
Copyright © 2010 Accenture All Rights Reserved. 14
How do you justify the value of a PMO?
Statistics show that there is still a real issue with project overrun (in terms of both cost and schedule). The study showed an average overrun of
24% on original baselined schedule and budget across all completed projects*.
Notes: (1) Model reduces overrun according to defined schedule/cost delivery
improvement from research study outlined in previous slide and (2) cost basis for
average Level 1 / Level 3 PMO of approx 2% / 4% of budget respectively** is used.
*Source: A Study in Project Failure – 2008
British Computer Society (BCS)
Dr John McManus and Dr Trevor Wood-Harper
**Source: PCS PMO Sizing Estimator
Programme Control Services (PCS)
By deploying a mature PMO the
average project will save in the
region of 12-19% of the total
original budget of the project
Copyright © 2010 Accenture All Rights Reserved. 15
Level 1: Immature
25.7%
Level 2: Established, in
need of improvement
34.4%
Level 3: Grow n up, more
successes than failures
30.4%
Level 4: Mature, very
successful
8.7%
Level 5: Best in class
0.7%
How mature are organisational PMOs?
Less than 1 in 10 PMOs are considered ‘high-performers ’ (Level 4 or 5)
Less than 1 in 100 is considered ‘Best in Class’ (Level 5)
Evidence suggests the cost to implement a Level 3 to 5 PMO is heavily outweighed by the delivery benefits realised within an organisation.
*Source: The State of the PMO - 2007-2008
A Benchmark of Current Business Practices
Center for Business Practices (CBP) Report
60% of all organisations could
substantially benefit from
improving the maturity of their
PMO.
Copyright © 2010 Accenture All Rights Reserved. 16
Closing thoughts
*Source: Gartner Industry Research
According to research*, "building a Project Management Office (PMO) is a timely competitive tactic". It is believed that
"organisations, who establish standards for project management, including a PMO with
suitable governance, will experience half the major project cost overruns, delays, and cancellations of those that fail to do so".
Copyright © 2010 Accenture All Rights Reserved. 17
In summary
PMOs are evolving
PMOs need nurturing
PMO maturity drives real value
Very few PMOs are actually ‘mature’
Copyright © 2010 Accenture All Rights Reserved. 18
What are the proposed next steps?
Use this information to garner real
support from within your organisation
We’ve just argued why mature PMOs
are valuable
Source proven project management maturity
models (e.g. OPM3) and assess your project / programme / portfolio
capability
Create a roadmap to
mature your project organisation