The Maturing of the PMO
Typically, an organization begins the methodology/maturity progression process.
with the formation of a small Project Management Office (PMO) whose first task is to formulate the organization’s PM methodology and associated tools, forms and templates. In the engineering/capital project management industry, the methodology typically will be a Stage Gated or Phased model. Typical phases are:
Phase 1 – Feasibility or Business Planning
Phase 2 – Conceptual Engineering or Facility Planning
Phase 3 – Schematic Engineering or Front End Engineering
Phase 4 – Execution or Detailed Design/Construction
Phase 5 – Closeout or Start-up/Transfer of Care, Custody & Control
The methodology development process generally begins with organization-wide structured interviews. These interviews are used to ascertain cross-functional requirements for all project types, sizes, and current organizational best
management practices. Therefore, the methodology becomes a business model, not just a PM process. This task is imperative as the methodology must integrate strategies and policies regarding critical deliverables, mandated project reviews, and financial procedures (estimate accuracy per phase, budget development, contingency procedures and the project approval process).
Generally, once the methodology is developed, the PMO begins to expand its ranks and begins an initiative to roll out training for the methodology. The PMO will also identify pilot projects for the new methodology and procedures. In order for the methodology to be accepted, a congruent stance from key senior executives must be achieved. This mandating of the methodology will generally receive a fair level of compliance; especially if the project’s financial approvals are directly tied to methodology compliance.
The financial policies must be in harmony with timely and realistic approval of projects and the establishment of estimating accuracy and contingency practices (lean contingency). This lean contingency is predicated on the methodology requiring scope-based solid Front End Loading (FEL) deliverables which allow for the contingency levels to be on the lean side.
Typically, FEL costs are 4-6% of the total project cost, or engineering costs of 25-30% have been expended by the end of the FEL phases in order to reach a control estimate (generally +/- 10%). This is consistent with current benchmarking data.
Commitment to the methodology is another matter entirely and is dependent on the level of service that the PMO exhibits. The new PMO must consistently show up as a “customer-focused entity” if it is to assist in the necessary task of culture shifting (from ad hoc to more formal processes). The PMO is generally the steward of the methodology and the training program.
Eight Steps in the Maturity of the PMO
The following steps are common (basic) in the progression of the PMO’s maturity, which typically occurs over a two to three year period:
- Form the PMO and develop the methodology (web based).
- Develop the PMO website to house the methodology and initial tools, templates, project review procedures, approval processes, etc.
- Develop and roll out the methodology training program or utilize the methodology on a chosen pilot project first. (Most organizations don’t have the luxury to do this ahead of the methodology training).
- Establish PMO controls function (estimating, scheduling and project controls). These folks will generally participate in the FEL phases and then transition the function over to the project team as the execution phase begins.
- Control folks begin to gather project data and develop Key Process Indicators (KPIs) for utilization in benchmarking efforts.
- PMO develops a relationship with a benchmarking entity and a third party estimating entity for project reviews and validation of the project methodology.
- PMO members coach and mentor junior project resources. PM skills training programs are developed for PM progression and competency advancement.
- Leverage current PM technologies (web based, document management, PM enterprise tools, databases [estimating, risk, lessons learned, etc.]) to streamline the management and data gathering functions which will assist in real time continuous improvement.
These steps are general in nature and each can be broken down to definitive elements that are required to develop a level of PM and PMO maturity. These steps may vary based on the requirements of the specific business/industry.