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17 Oct 2022

Project Management Office Power Factors

Target audience:
  • Business Owners
  • Head of PMO
Knowledge and skills:
  • Communication
  • Motivation&Bonus System
  • PMO
  • Resources
  • Team Management
  • Project Management
Reading time:
  • 8 min

In our time, when the world around us is unpredictable and rapidly changing, projects are one of the tools that allow companies to quickly and efficiently implement organizational changes and launch new products.

When companies use this tool for the first time, they are usually guided by the principle “it works for others, we will try it too” and launch one or several projects at once without developing any clear management rules. Of course, the company at the same time introduces a large number of artifacts and procedures that are actually unique for each project, and the management wonders what is happening and demands that all processes are clear and consistent. This is what the project management office usually does.

Project management office — within the context of the article a unit that is in charge of developing, implementing and monitoring compliance with a project management methodology, supporting project and portfolio governance, spreading of PM skills and knowledge across organization as well as providing other services to project stakeholders on a corporate level.

The position of the project management office in the structure of the company is twofold. On the one hand, it does not apply to the units of the value chain (responsible for production, purchases, or sales), but, on the other hand, it should regulate the activities of these units in everything related to project management. The project management office should limit their decision power, require accountability, etc. Therefore, it is not surprising that the project management office is often perceived by representatives of the main departments and project teams as an unreasonable bureaucratic super-structure that forms some kind of unclear rules, distracts from the core activities, and in general hinders rather than helps.

As a result of this perception, conflicts gradually begin in the company. Project managers and key department managers ignore the procedures developed by the project management office. In disputable situations, they appeal to the management with arguments like “we earn money, but they only get in the way.” As a result, the project management office is left to play the role of a formal auditor who has no influence on the organization of processes in the company. But if something goes wrong, the blame for it is often placed on the project management office, as the “weakest link”.

In this scenario, the efficiency of projects in the company, of course, is not at the appropriate level. Management is forced to manage all processes in a “manual” mode and keep them under continuous personal control. At the same time, information about the status of projects can often be irrelevant and unreliable, and this periodically results in “firefighting”, and additional costs, and there is no longer any talk of creating value.

Questions arise: what can be done to strengthen the status of the project management office? How to create for it the image of a strong participant in the project management arena, whose opinion should be taken into account by C-Level executives? How can we make it possible for the PMO to influence the implementation of projects and increase their success? At the same time, how not to turn the project management office into a regulatory and administrative body that issues strict instructions and monitors compliance, but turn it into a management tool that can constructively solve specific problems?

Our practice of setting up organizational project management in various companies has shown that it is possible to achieve these goals. And a certain set of unconditional formal and informal rights will help in this — power factors that allow the project management office to effectively operate in its scope of responsibility, including in terms of ensuring the success of the company’s projects.

I identify fourteen such factors. Six of them are the main ones, that is, they are necessary for any project management office that wants to be the best in class. And the rest of the factors can be used optionally, depending on the level of project management maturity of the company.

So, the main Project management office power factors.

 Access to the Decision Maker (DM)

This person is usually a top executive or a group of executives. They make decisions about the start of projects, their funding, and the consequences of failure to meet project targets.

At the beginning of the functioning of the project management office, access to the decision maker will primarily be used to protect their position. Often, the functional managers (project initiators or internal customers), in order not to follow the instructions of the project management office, come to top managers with the phrase: “If we do as the project management office says, something terrible will happen to the project. Let’s not follow all this bureaucracy.” And as a result, the company begins to move towards the destruction of the project management rules. Therefore, the project management office in such circumstances should have a voice in protecting the project management order. That is, a decision should be made only after taking into account all possible consequences and the viewpoints of both parties. It often turns out that in fact there is no contradiction at all, and the whole problem is only resistance to new procedures.

A fully functioning project management office is focused on autonomously solving problems that arise in projects, and thanks to this power factor, it can promptly report to top management about problems that require intervention at the highest level. If the project management office has not yet gained enough strength within the company, it may overuse this factor to complain to management about violations of the rules of project management. Which, on the one hand, will help to take timely disciplinary measures that reinforce new habits of project management, on the other hand, may contribute to the formation of the negative reputation of a project management office.

To implement this power factor, the status of the head of the project management office or the sponsor of the project management office in the company is important. After all, the more management levels there are between the top management and the head of the project management office, the more difficult it will be to ensure regular access to C-level management, which means that the company will be slower to escalate problems to the required upper management level. Ideally, the person responsible for organizational project management should be a person with a rank not lower than the deputy head of the organization, and the head of the project management office — not lower than the CEO -3 in the company’s hierarchy.

 Veto Power over Resources

The implementation of projects is almost always associated with the use of scarce resources, whether it is funding, specialists with rare competencies, unique equipment, or technologies. Therefore, customers and project managers use every possible means to prioritize their projects and gain preferential access to resources. In this struggle, it is very easy to forget that project management is primarily a technology for reliably achieving the project goal. Formalization and planning are often postponed until later, which leads to the project getting outside the tolerance of the approved parameters and sometimes even changing the goals and the way it is implemented.

I am not suggesting here to give the project management office the right to decide on the priority of projects for the company, this right always remains with the top management and the collegial decision-making body — the project committee. But it is the project management office that checks the degree of elaboration of projects and their documentation, has the opportunity to assess how ready the project initiators are to implement it, whether they have thought out all the ways to achieve the goals, whether they have sufficiently taken into account possible costs and risks. That is why, in order to prevent the situations that I mentioned above, it is necessary to take into account the opinion of the project management office when agreeing on the project and allocating the company’s resources.

If the project management office issues a verdict of insufficient working through of the project, management should take this as a sign of a too-high risk in implementation. This does not mean that the project should be abandoned, but its launch should be delayed until the objectives, funding, and risk responses are agreed upon in accordance with all necessary procedures and approved by decision-makers.

The power of veto implies that the project management office, which is responsible for the success of the project portfolio as a whole, has the right to deny approval to projects whose teams have not met the minimum risk mitigation requirements and have not even managed to complete the required project documentation. That is, in fact, the fulfillment of the requirements of the project management office becomes a test for the readiness of the project manager to systematically bring it to the target performance indicators, and not to act by the method “we will try and at least something would come of it”.

 Veto Power over Decisions

Project management involves making decisions not only about the provision of resources but also about starting projects, stopping them, changing parameters, matching the results with the set goals, etc. In these cases, the project management office, not being a decision-making body, nevertheless becomes a division, which checks the sophistication of the information provided by project managers. And if its employees are expert enough, they can offer the best solutions to certain issues. And similarly, the main task of the project management office becomes an examination of the risks and consequences of the solutions proposed by managers. And here, too, we can talk about the veto power. Management must accept the fact that if the project management office evaluates certain decisions as ineffective, not in line with the strategy, or high-risk decisions, then they need to consider their refinement, and possibly even completely abandon them.

4. Veto Power over Informing

If the two previous power factors can take the form of mandatory approval of materials for decisions made with the project management office, then the veto over informing has the character of an informal rule for the company’s management.

At the beginning of the article, I already said that information on projects that are brought to management can often be outdated and unreliable. We are now talking not about its deliberate distortion (although this happens), but rather about the use of incorrect sources or outdated data. One of the main tasks of the project management office is to prevent such situations by collecting and validating information on the status of the project, as well as by analyzing regular reports and tracking data in dynamics. Therefore, the consolidated reporting of the project management office should become the only channel for informing about the status of projects in the company. This will eliminate the possibility of obtaining duplicate and unreliable data.

However, in practice, information about projects can be received by top management not only in the form of reporting but also at personal meetings with project managers and customer departments, with representatives of financial and human resources departments. What if the project management office says one thing, the financiers say another, and the project manager says a third? This is where the right to veto information comes in handy. If the sources of information on the project differ, then it is the information from the project management office that should be accepted as relevant, since it is its official task to collect and verify data. And this logic really cannot be formally consolidated, only to create an appropriate agreement among top management. But this right must be earned by providing reliable and up-to-date information. Only then will it be possible to get rid of duplicate reporting.

The right to veto information does not mean at all that none of the project stakeholders should have an alternative opinion about the situation in the projects. You just need to set up a process so that the information picture is discussed in a coordinated way, and not presented differently at different meetings.

Also, a representative of the project management office should be able to attend all project meetings and be ready to provide up-to-date information or confirm that provided by other participants.

5. Regular Project Committee Meetings

As I have already said, most often the right to make decisions on project activities in companies is entrusted to a collegial body — the project committee. It includes top management, heads of the main areas of the company, and the main functional divisions (financial, human resources). Also, it should include a Sponsor of organizational project management or the head of the project management office.

Making a decision on any project within the framework of a committee meeting makes it legitimate since at the same time there is an agreement with all key departments of the company involved in the implementation.

However, there are nuances here too. In practice, a meeting of the project committee, like any meeting, requires careful preparation and verification of information, and the high workload of its members reduces the possibility of regular holding. Therefore, all project participants strive to reduce the number of issues considered at it and the frequency of such meetings. Sooner or later, this trend leads to the project committee turning into a formal body that approves only the start and end of the project. This leads to negative consequences for the entire project portfolio management.

Firstly, project managers and the project management office lose the main channel for escalating problems that arise in projects to all key stakeholders simultaneously. Under these conditions, project managers feel deprived of support from the company management. Decisions are delayed, teams lose motivation, and this quickly leads to a decrease in the effectiveness of projects.

Secondly, the management itself loses the main channel for obtaining information about the status of projects, and this is a tool for direct influence on the management of a specific project.

All this eventually leads to the fact that the project activity in the company is gradually fading away.

Therefore, the frequency of the meetings of the portfolio committee is not so much a factor in maintaining the status of the project management office, but a guarantee of the management’s attention to organizational project management, stimulating its evolution.

Portfolio committee meetings are best held once a month. However, their agenda does not have to include a detailed review of all projects each time. It is optimal if at the meeting a short note from the project management office is heard and issues on two to six projects in more detail are discussed.

6. Incentive System for Participants in Projects

Project activities in practice are implemented in the form of temporary full or partial involvement of company employees in the implementation of project tasks. The total employment in projects of an individual employee often exceeds fifty percent of his working time. However, staff incentive systems in most cases remain under the control of line managers, who cannot, and often do not want to evaluate the results of an employee within the framework of projects. This, of course, negatively affects motivation.

The project management office, being the owner of complete information about the effectiveness of all projects, and the role of their participants, has the ability to form objective assessments of the success of the participation of individual employees and offer incentive schemes for them. This is especially important for those whose engagement in projects is more than eighty percent of the overall workload.

Therefore, I believe that it is the project management office that should be involved in the development of an incentive system for participants in project activities, and subsequently in determining the number of incentive payments.

This factor can become a tool of direct influence on project team members and stakeholders, increasing their interest in participating in projects and ultimately leading to an improvement in the project performance.

In order for the incentive system for project participants to work effectively, it must take into account the level of employment of employees in projects. The size and frequency of variable remuneration for projects should be synchronized as much as possible with incentives within the core business. Evaluation criteria should be made clear and understandable to the participants themselves, as well as tied to the implementation of mandatory procedures for project activities.

Now let’s dwell on additional factors that strengthen the position of the project management office in the organization.

7. Regulatory and Methodological Documents Development and Approval

The project management office is responsible for the organization and performance of the company. Its main tasks include the development and updating of procedures. Therefore, when the development of project activities leads to the need to formalize any procedures, it is the project management office that should be entitled to independently develop and approve the relevant regulations.

This factor seems to be obvious, but in practice, organizational project activities intersect with the areas of responsibility of many other functional services, for example, financial services or those responsible for describing activity processes. In such cases, the project management office, as one of the young departments, is often tried to be bent to their will, adding additional bureaucracy to the project procedures or, conversely, removing the necessary control measures. In this case, the support factor for the project management office will be the right to develop and change documentation on the organization of project activities.

8. Key Performance Indicators (KPIs) Definition and Evaluation

Many companies today evaluate the performance of their employees using a KPI system. As in the incentive system, for many employees, especially managers, performance indicators will relate not only to the core business of the company but also to its project part.

Therefore, it is important that the project management office actively participates both in the procedure for determining project KPIs and their target values and in assessing the final values. KPIs, along with an incentive system, can be a tool to ensure compliance with project activities.

The exclusion of the project management office from participation in these processes will lead to the absence of a real connection between the KPIs of employees and the actual performance of the projects. This will negatively affect not only the status of the project management office but also the image of organizational project activities in the company as a whole.

9. Personnel Selection and Competencies Assessment

In the first stages of organizing project activities, employees are often involved in projects without taking into account the level of their competencies, and even more so without assessing the degree of proficiency in project management.

But it soon becomes clear that the level of competence of the project manager and the team significantly affects the success of the project. And if the level of professional competencies is traditionally assessed by human resources services, then checking the compliance of an employee with a project role that requires a specific set of skills and competencies is increasingly given to the project management office.

This approach gives the project management office a tool for additional influence on the success of the projects for which it is responsible. This makes it possible to exclude the replacement of roles, primarily project managers, by employees whose professional knowledge and skills are not high enough.

However, the full implementation of this power factor can be prevented by the situation when an employee holding a managerial position has to undergo an assessment of the project management office. Although the set of competencies required to lead a department and the set required to manage a project is vastly different, many take this review as a personal affront. This can lead to conflicts or to the appointment of the wrong person to a managerial position, which further affects the performance of projects.

Therefore, the company must formally set up the appointment criteria for project participants and strive to strictly comply with them. This will reduce the risk of a negative impact on the competence of employees on overall performance.

10. Personnel Training and Certification

The development of project management in a company sooner or later requires the development of staff competencies. Typically, training is the responsibility of HR, but I recommend delegating a number of functions (namely, setting requirements for syllabus, and selecting and delivering project management training programs) to the project management office. This is due to the fact that, when faced with problems in practice, it is the project management office that has knowledge of the strengths and weaknesses of staff training in the field of project activities. They can choose the best training course and more clearly define the circle of people who need to be trained.

This approach simultaneously saves the resources of the HR and makes it possible to make training in project activities as targeted and effective as possible.

To a certain extent, the selection of participants in training and project activities can be seen as providing employees with opportunities for development. Project activity, thus, will receive an image accessible only to the elite, the best of the best, which in the future will add status to the project management office.

11. PPM IT-system

I have already mentioned above that the project management office is engaged, among other things, in providing high-quality and up-to-date information on projects. If there is a significant number of projects in the organization, the solution to this problem requires the allocation of individual specialists, so many companies are implementing information systems that allow them to record information about the status of projects and generate reports in real-time.

However, often the responsibility for the creation, development, and operation of such a system is assigned not to the project management office, but to IT departments. This leads to the fact that the system does not correspond to the company’s project management processes and methodology, and as a result, the data requires additional processing before they are entered, as well as during reporting. This actually negates the entire effect of the implementation of the PPM IT system, while, on the contrary, it is designed to reduce the complexity of reporting operations and create conditions in which project participants follow the project methodology without additional interventions and control.

The situation can be corrected by the formation of the project management office of tools and procedures for filling them out, blocking the possibility of incorrect behavior patterns. This can be, for example, blocking the transition to the next step if there is no data or an attached document in the field, automatic selection of the next step when a certain category of data is selected, and filling the field with data from the drop-down list.

Thus, the IT system reinforces the behavior required to comply with the methodology and ensures the stability of the organizational project management in those areas that, due to the large volumes of data, cannot be controlled manually.

In addition, the IT system allows the project management office, by monitoring the relevance, completeness, and meaning of the input data, to quickly identify problems that arise in projects and provide them with methodological and organizational assistance in a timely manner. This greatly reduces the risk of project failure.

12. Management of Key Projects

Another factor that strengthens the position of the project management office as an expert in project management is the transfer of the role of the head of key projects for the company to the project management office. If the Office can show exemplary project management and obvious success, then there will be much fewer questions about the implemented rules and project management tools. Also, representatives of the project management office can often act as anti-crisis managers for individual projects.

However, it is important to understand that, although the project management office does have the greatest expertise in project management, its employees do not always have enough practical management skills, or the number of such employees is severely limited. Therefore, the use of this power factor requires a preliminary assessment of the competencies of the project management office employees and their capacity.

13. Provision of Project Management Office with Resources

As follows from the previous paragraph, it is far from always the competence of all employees of the project management office to complete its tasks. The reasons for this may be different, but the management should understand that the solution to the problems of methodological and organizational support requires a sufficient level of knowledge and skills from employees of the project management office, so they should participate in the training of project activities in the first place.

It is also important to remember that the understaffing of the project management office with regard to its goals will lead to a redistribution of their priorities. As a result, the project management office is likely to focus on controlling functions, minimizing the tasks of developing a methodology, as well expert support for project implementation. This may affect the results of the project activities of the company as a whole and dissatisfaction with the work of the project management office. Even though the resources of the Office will almost always be understaffed, it is important that its tasks are balanced with the available resources in both quality and quantity.

14. Assessment of the Project Management Office Activity

One of the success factors of the project management office is its image, which is formed from three components. The first and most important is the success of the company’s projects since all the processes of organizing project activities are aimed at increasing the value of this key performance indicator. It is important for the project management office not only to measure this KPI but also to monitor its dynamics, informing all stakeholders about what actions of the project management office, management, project managers, or other factors are associated with its changes. It is important that this information is broadcast in the organization not only by the project management office itself but also by the management. This will emphasize the importance of project activities for the company.

The second most important is the usefulness of the project management office for the management of the company. Like other support units, the project management office performs the functions of information support, organizational support for meetings, and other areas that reduce the burden on managers. The assessment of utility in this case is subjective. But all managers, as a rule, appreciate the timeliness of providing information, its clarity and transparency, as well as expert support in decision-making, which consists of the results of the analysis of various decision options.

And, finally, the third component is the evaluation of the project management office by the project stakeholders. It is in last place solely because, due to the various problems that often arise in project activities and the wide variety of interests of project stakeholders, the project management office rarely manages to get a positive evaluation of its work from all of them. However, the project management office must make every effort to ensure that this component of its image is at the appropriate level. A strong reputation allows him to increase his influence by reducing the resistance to the implemented project management methodology.

Thus, in order to ensure the quality of the implementation of the organizational project management, as well as the success of the project management office itself, it is necessary to create organizational conditions to strengthen the position of the project management office, i.e. establish its power factors.

This will allow it to most effectively solve the problems of methodological, organizational, and information support of C-level management and project stakeholders.

Written by:
Andrey Malakhov
See also:
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