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Kanamanapalli 2010 (2)

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The setting up of project Management Offices (PMOs) for large project initiatives.

The setting up of project Management Offices (PMOs) for large project initiatives.

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  • 1. PMI Virtual Library© 2010 Venkatachaliah Babu KanamanapalliThe Setting Up of ProjectManagement Offices (PMOs) forLarge Project InitiativesBy Venkatachaliah Babu Kanamanapalli, PMP Abstract The Challenge PMOs are set up by organizations to address organization-specific project management needs. PMOs can be permanent entities within the organizations tasked to improve the project management culture of the organization or they can be temporary entities created to ensure the success of large, complex, or strategic projects within an enterprise. PMOs are also proposed by vendor organizations in managing large initiatives for customers and, in many instances, customers see the value of engagement-specific PMOs and may even be willing to bear additional costs by the vendor in staffing PMOs for such engagements. As the size and complexity of projects increase, organizations need to enhance project management capabilities to establish credibility of managing such large and complex initiatives successfully. The setting up of PMOs by vendor organizations, often as an intervention to ensure effective governance for large and complex projects, especially where performance metrics have financial implications, is an increasing trend. Although the importance of setting up PMOs for large complex engagements is appreciated, it is extremely critical that the PMO be designed appropriately to align with the needs of the engagement in order for the PMO to function effectively and provide value to the project management effort of the engagement. This article provides a view of an approach that can assist in setting up PMOs for a large project initiative from a vendor organization’s perspective. Although, in a generic context, PMOs can mean project, program, or portfolio management offices, in the context of this article, PMO is viewed as a project management office and does not refer to program or portfolio management office.What Are the Typical Challenges Involved in geographical spread of the team. For example: An ITManaging Large and Complex Projects? initiative staffed with a team size of over 150 consultantsT o understand the challenges in managing large and • Time: Projects with timelines running into multiple complex projects, it is necessary to understand what years. Short-duration projects with fewer deliverables makes a project large and complex (i.e., understanding have better chances of success given the projectthe parameters that define the size and complexity of a management and execution focus available comparedproject). Following are a few dimensions to consider: with long-duration, multi-year initiatives that need• Size of the project: This can include metrics, such as sustained and consistent high-performance levels for number of resources in the project team, diversity, and success
  • 2. • Cost: Multi-million dollar projects compared with delays on large initiatives can mean an overshoot of projects costing thousands of dollars budgets by wide margins.• Scope: Scope includes multiple components that need • It is critical that the project management approach be varied knowledge, skills, or expertise with which to plan, adaptive in the sense that the project situation must be design, and execute the entire project. This may call for analyzed and the management approach fine-tuned to stakeholders across multiple expert groups both within the needs of the engagement as more clarity emerges. The and outside the vendor organization to bring in the need to refine/adapt the project management approach/ diverse skill sets required. In addition to the diversity of plan becomes increasingly important for large and expertise, a high degree of inter-dependency between the complex projects. components across stakeholder groups adds significantly • Increased project management effort needed to capture to the project complexity. project performance and address the required reporting A few examples of large complex projects can be the needs for tracking and decision making given the numberdesign and development of large IT systems; the transition, and diversity of stakeholders involved.support, and maintenance of large number and diverse • Increased uncertainty, leading to the need for a rigorousapplication systems, supporting a user base across many and appropriate project risk management approach,countries; and, the creation of major IT solutions and services which will increase the chances of project success. Thisfor global roll-outs and multi-country initiatives. Such demands that the project management focus be oninitiatives are large and complex enough to pose considerable assessing project uncertainty and risk management andrisks to the organization if not well executed. continuous effort throughout the project life cycle, while Given this backdrop of large complex projects, it is of addressing project issues or problems. Lack of focusinterest to understand the typical characteristics that can between managing risks and immediate issues facing theinfluence the approach to project management in such project impacts project performance. Given the size andengagements. A few of such characteristics are as follows: complexity of such projects, the project management• The size/effort involved weighs heavily on the project team is put under increased stress in managing the same. management team. The required project management focus can be demanding, given the number of activities Although the above list of parameters describing and their inter-dependencies. large and complex projects is by no means complete; for• Increased collaboration effort. Increases in the project the purpose of this article, we could view the resulting team size, as well as the number and variety of clients implications on project management areas across three layers (may be diverse across client businesses and geographies), as described below (Figure 1): vendors (e.g., subcontractors), and other internal support teams can increase the collaboration and communication effort manifold. The decomposition of work on large projects leads to an increased number of manageable units of work, thereby leading to increased collaboration effort across multiple stakeholders to manage dependencies and Strategic integration. An increase in the number of stakeholders significantly increases the number of potential communication channels and the related collaboration Tactical effort.• In order to address project risk and ensure superior vendor performance, stringent performance criteria with financial implications (penalties and bonus) are typically included in such project contracts. This results in Operational increased project management effort from the monitoring and control perspective. Reduced effectiveness can be costly in terms of penalties but, more importantly, errors can mean a huge wasted effort and lost time. Project Figure 1: Project Management Activity Grouping PMI Virtual Library | www.PMI.org | © 2010 Venkatachaliah Babu Kanamanapalli 2
  • 3. Operational activities: Project management activities that • Strong support for tactical and strategic projectare predominantly focused on directing and managing project management activities—the project manager can focusexecution; includes activities such as status tracking, issue on managing the project better and is not distracted bymanagement, reporting, compliance validation, and so forth. administration activities • Helps increase operational efficiency and cost controlTactical activities: Project management activities that arepredominantly focused on planning and integrated change The desired benefits of having a PMO for a large projectmanagement and control, such as changes to the project can be realized, provided the PMO is set up appropriately formanagement approach/plan, stakeholder management, risk the project. One may tend to rush setting up a PMO only tomanagement, and so forth. realize that the PMO is not effective and it then becomes a management challenge to make it effective, which may evenStrategic activities: Project management activities that are lead to the PMO being disbanded while causing frustration topredominantly focused on setting project direction with client the delivery teams who don’t have the much needed support.stakeholders and key decision making impacting project We can consider the approach detailed below to plan anddirection and performance. design a PMO appropriate to the needs of the engagement. For large projects, the project management effort at the An Approach to Setting Up the PMO for anoperational layer could be significant. Although a project Engagementmanagement effort in the range of 10% to 20% of overall Every project is unique. So, the PMO that is set up for aeffort for IT projects is assumed, a dedicated part of this large, complex project needs to be unique to the needs of theeffort may be required to have oversight to ensure effective project. The design of a PMO needs to start with the end inperformance of operational activities. For smaller and mind to ensure alignment with the project’s needs. Below is amedium-sized projects, it may suffice to distribute this project summary of the key steps that can be followed in the design/management effort among the project manager, team leaders, set up of the PMO for a project:and individual performers; for a larger project (as describedabove), an additional oversight effort is required to ensure Step 1 — Evaluate the Project’s Needs: This step involvescompliance and effective performance so that the core delivery understanding what the project needs are and that need to beteam can focus on performing project delivery activities. addressed by the PMO. In other words, understanding theWith the increase in project complexity and related increase nature of the project and its project management challengesin project management effort, an oversight support effort can is a pre-requisite to designing an effective PMO. In theprovide value to the operational, tactical, and strategic activity previous section, an attempt was made at understanding thelayers of overall project management. characteristics of large complex projects. Such an assessment An engagement level PMO can play varied roles based for the project at hand needs to be made to first identifyon the engagement need, for example, the PMO can provide which project management challenges must be addressedproject management support contributing to effective project by the PMO. It would be helpful to prepare an evaluationmonitoring and control. Some of the benefits gained by summary of the project’s needs/challenges, which willeffective functioning of a PMO that is designed to provide dictate the mandate the PMO can address. The projectproject management support are: contract/statement of work (SOW), proposal response,• Better contract administration in terms of compliance and past experience can be the inputs that will identify an and enabling better decision making through better evaluation summary of the challenges and/or needs of project project performance visibility and reporting management. The evaluation summary can specify needs• Ensuring the core delivery team is not over burdened in various areas, such as time management (maintaining with project administration and support activities so they project schedule), contract administration (track and can focus on delivery performance report performance metrics), communication management• Enhanced quality of stakeholder communication and (consolidated reporting), and so forth and these can provide management input into the focus areas required by the PMO. PMI Virtual Library | www.PMI.org | © 2010 Venkatachaliah Babu Kanamanapalli 3
  • 4. Step 2 — Define the PMO Charter: While the previous step order to gain project-wide acceptance of the PMO functions,provides input that defines what is to be done by the PMO, and the required commitment can be obtained.how should the PMO go about addressing the need definedat this stage? With inputs such as the evaluation summary, Step 4 — Operate and Improve: This involves carrying outengagement project management plan input, and templates, the PMO functions and leveraging the understanding ofproject management planning needs to be carried out to arrive what works and what needs to be improved to enhance PMOat the PMO charter along with the PMO-related processes, performance. It is important to stay relevant and aligned withPMO structure, and PMO roles and responsibilities. The the project’s needs, as the needs could change or evolve overPMO charter can be a separate document or integrated the project’s life cycle.with the overall project’s project management plan that Figure 2 provides a pictorial representation of the PMOclearly delineates PMO functions, processes, and workflow set-up approach.activities. Having a PMO charter for the engagement clearlyestablishes the roles and responsibilities, dependencies, and/ Conclusionor expectations from the other roles of the project team; this As the size and complexity of projects increase, which is ancan provide clarity and direction to the PMO and help assess increasing trend, organizations need to establish credibilityPMO performance and add value to project delivery. Most and a track record of managing such large initiativesimportantly, the PMO can then be aligned with the real needs successfully. Although organizations may have an excellentof the project. track record for managing small and medium-sized projects successfully, a more mature project management approachStep 3 — Set up PMO/Implement: The next step is staffing is required to manage large and complex initiatives. Anthe PMO and implementing the PMO processes as designed. engagement level PMO can be one such initiative and canThis step can be initiated along with the project kick-off be put in place for large initiatives that can provide projectmeeting, wherein, along with other project roles, the PMO management support to the project leadership team in orderroles, responsibilities, PMO-related process workflows, and to better focus on core project management challenges. Baseddependencies/expectations from other stakeholders can be on the nature of the engagement and its needs, the PMO cancommunicated, concerns can be understood and resolved in play a multi-faceted role, which is aligned with needs that can                                                            Figure 2: PMO set-up for a delivery engagement.  PMI Virtual Library | www.PMI.org | © 2010 Venkatachaliah Babu Kanamanapalli 4
  • 5. go a long way in increasing the chances of project success. About the AuthorIn this regard, getting the PMO design and charter correct Venkatachaliah Babu Kanamanapalli (Venkat) is a leadfrom the start is critical in ensuring PMO effectiveness in Principal for Project Management Center of Excellencecontributing to the success of the project. (PMCoE), Infosys Technologies Limited. He is responsible for project management competency building and providingReferences project management consulting. Venkat brings over 19 years Hill, G. M. (2007). The complete project management of experience to the industry, the last 15 years of which haveoffice handbook (second edition). Boca Raton, FL: Auerbach been in information technology in global IT and consultingPublications. organizations. Prior to working in the information technology Letavec, C. J. (2006). The program management office: domain, Venkat worked for four years in the manufacturingEstablishing, managing and growing the value of a PMO. sector. Venkat’s experience includes ERP consulting,Fort Lauderdale, FL: J. Ross Publishing. implementation and support, project management and solution architecting in the manufacturing domain, and PMO functions. Venkat holds an MBA from S.P. Jain Institute of Management & Research, Mumbai, India, and a bachelor’s degree in technology from National Institute of Technology, Calicut, India. PMI Virtual Library | www.PMI.org | © 2010 Venkatachaliah Babu Kanamanapalli 5