The agony and the ecstacy of choosing the right PMO structure

My previous posts covered common issues with PMO’s, how the PMO can add real value and and the benefits of doing it right. This blog discusses some of the options and considerations for investing time up front in deciding on the right PMO support model for your organization.

Whether the PMO is required to support an individual project, or a much wider scope of work, is, of course, fundamental.  The choice of support model depends on the overall level of project activity within the organization, the similarity of project types across the enterprise,   the complexity of the projects/programs concerned, and the degree of autonomy of the business units sponsoring those projects. 

Three forms of PMO are commonly used, which may be characterized as decentralized, centralized, and hybrid or federated models. Each has its own distinct advantages and disadvantages and the model you decide upon can determine overall effectiveness of planning and delivery.

Decentralized – A number of PMO’s exist, operating autonomously, often focused on a specific function or major program of work. While this enables a clear focus on sepcific business needs, there is the risk of redundancy, inefficiency and inconsistency in disipline and the application of methods, tools etc.

Centralized – A single, enterprise PMO centralizes the approach with tight integration of systems and processes. This model can enable economies of scale, tighter control over procurement and deployment, but can be overly conservative and unresponsive to the needs of individual business units.

Hybrid or federated – A central PMO has authority to set the strategy and common standards, while satellite PMO’s manage to the more specific goals, priorities and local oversight. This balances enterprise priorities for consistency with business unit priorities for delivery.

While our experience and research has shown that hybrid / federated models seem to result in better outcomes than the alternatives (see the separate article on “The impact of chosen planning models on overall PPM effectiveness”), this is not a universal prescription.

Deciding which model to use depends on many factors including:

  • Organizational complexity, including the degree of homogeneity of the customer base and of products/services to be delivered by each part of the organization
  • Organizational culture, including the desired balance between centralized and distributed decision-making and the geographic dispersion of the organization
  • The commonality of project-related business processes and support systems (including those for portfolio, cost and resource management)
  • Scope of work, whether the PMO is required to support individual projects, larger programs, the project portfolio as a whole, or some combination of these
  • Level of the service to be provided, whether this is to be predominantly administrative – focusing on the collection and production of management information – or more proactive and analytical, even fulfilling certain executive functions.

The level of service required is fundamentally concerned with the expectations of the PMO, and the degree of value it is required to add.  

My next post will cover the staffing of the PMO with the appropriate resources for success.

John Hall

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