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

1. PMI Virtual Library
© 2010 Venkatachaliah Babu Kanamanapalli
The Setting Up of Project
Management Offices (PMOs) for
Large Project Initiatives
By 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 IT
Managing Large and Complex Projects? initiative staffed with a team size of over 150 consultants
T
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 project
the parameters that define the size and complexity of a management and execution focus available compared
project). 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 number
design 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 rigorous
application 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. This
for global roll-outs and multi-country initiatives. Such demands that the project management focus be on
initiatives are large and complex enough to pose considerable assessing project uncertainty and risk management and
risks 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 focus
interest to understand the typical characteristics that can between managing risks and immediate issues facing the
influence the approach to project management in such project impacts project performance. Given the size and
engagements. 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
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3. Operational activities: Project management activities that • Strong support for tactical and strategic project
are predominantly focused on directing and managing project management activities—the project manager can focus
execution; includes activities such as status tracking, issue on managing the project better and is not distracted by
management, reporting, compliance validation, and so forth. administration activities
• Helps increase operational efficiency and cost control
Tactical activities: Project management activities that are
predominantly focused on planning and integrated change The desired benefits of having a PMO for a large project
management and control, such as changes to the project can be realized, provided the PMO is set up appropriately for
management approach/plan, stakeholder management, risk the project. One may tend to rush setting up a PMO only to
management, and so forth. realize that the PMO is not effective and it then becomes a
management challenge to make it effective, which may even
Strategic activities: Project management activities that are lead to the PMO being disbanded while causing frustration to
predominantly 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 and
direction 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 an
operational layer could be significant. Although a project Engagement
management effort in the range of 10% to 20% of overall Every project is unique. So, the PMO that is set up for a
effort for IT projects is assumed, a dedicated part of this large, complex project needs to be unique to the needs of the
effort may be required to have oversight to ensure effective project. The design of a PMO needs to start with the end in
performance of operational activities. For smaller and mind to ensure alignment with the project’s needs. Below is a
medium-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 described
above), an additional oversight effort is required to ensure Step 1 — Evaluate the Project’s Needs: This step involves
compliance and effective performance so that the core delivery understanding what the project needs are and that need to be
team can focus on performing project delivery activities. addressed by the PMO. In other words, understanding the
With the increase in project complexity and related increase nature of the project and its project management challenges
in project management effort, an oversight support effort can is a pre-requisite to designing an effective PMO. In the
provide value to the operational, tactical, and strategic activity previous section, an attempt was made at understanding the
layers 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 identify
on the engagement need, for example, the PMO can provide which project management challenges must be addressed
project management support contributing to effective project by the PMO. It would be helpful to prepare an evaluation
monitoring and control. Some of the benefits gained by summary of the project’s needs/challenges, which will
effective functioning of a PMO that is designed to provide dictate the mandate the PMO can address. The project
project 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
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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 defined
at this stage? With inputs such as the evaluation summary, Step 4 — Operate and Improve: This involves carrying out
engagement project management plan input, and templates, the PMO functions and leveraging the understanding of
project management planning needs to be carried out to arrive what works and what needs to be improved to enhance PMO
at the PMO charter along with the PMO-related processes, performance. It is important to stay relevant and aligned with
PMO structure, and PMO roles and responsibilities. The the project’s needs, as the needs could change or evolve over
PMO 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 PMO
clearly delineates PMO functions, processes, and workflow set-up approach.
activities. Having a PMO charter for the engagement clearly
establishes the roles and responsibilities, dependencies, and/ Conclusion
or expectations from the other roles of the project team; this As the size and complexity of projects increase, which is an
can provide clarity and direction to the PMO and help assess increasing trend, organizations need to establish credibility
PMO performance and add value to project delivery. Most and a track record of managing such large initiatives
importantly, the PMO can then be aligned with the real needs successfully. Although organizations may have an excellent
of the project. track record for managing small and medium-sized projects
successfully, a more mature project management approach
Step 3 — Set up PMO/Implement: The next step is staffing is required to manage large and complex initiatives. An
the PMO and implementing the PMO processes as designed. engagement level PMO can be one such initiative and can
This step can be initiated along with the project kick-off be put in place for large initiatives that can provide project
meeting, wherein, along with other project roles, the PMO management support to the project leadership team in order
roles, responsibilities, PMO-related process workflows, and to better focus on core project management challenges. Based
dependencies/expectations from other stakeholders can be on the nature of the engagement and its needs, the PMO can
communicated, concerns can be understood and resolved in play a multi-faceted role, which is aligned with needs that can
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Figure 2: PMO set-up for a delivery engagement. 
PMI Virtual Library | www.PMI.org | © 2010 Venkatachaliah Babu Kanamanapalli
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5. go a long way in increasing the chances of project success. About the Author
In this regard, getting the PMO design and charter correct Venkatachaliah Babu Kanamanapalli (Venkat) is a lead
from the start is critical in ensuring PMO effectiveness in Principal for Project Management Center of Excellence
contributing to the success of the project. (PMCoE), Infosys Technologies Limited. He is responsible
for project management competency building and providing
References 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 have
office handbook (second edition). Boca Raton, FL: Auerbach been in information technology in global IT and consulting
Publications. organizations. Prior to working in the information technology
Letavec, C. J. (2006). The program management office: domain, Venkat worked for four years in the manufacturing
Establishing, 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
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