PMO or Strategic Investment Decision Support?

Which adds more value: PMO or Strategic Investment Decision Support unit?

I was once asked to design a Strategic Investment Decision Support (SIDS) unit as part of an overhaul of governance for a FTSE 250 company. It was in fact a PMO, where the ‘P’ in this instance stood for ‘Portfolio’ rather than ‘Project’ or ‘Programme’. (In case you are not a programme or project management person – the ‘MO’ stands for Management Office.)

It was a shame, but possibly understandable, that the Directors associated ‘PMO’ with something more focussed on supporting the day-to-day delivery of projects. They did not see it as supporting the strategic decisions around each investment case for new capability, services and products.

And by ‘strategic decision’ I don’t just mean the initial ‘Go/ No Go’ to the investment. In an uncertain world there is a need for potentially continuous review of the business case and the outcomes sought because the risk landscape morphs through both continuous evolution and radical events.

Design is key

I have led the design of various PMOs from large (~£15M p.a. running cost) to small (~£500k p.a. running cost). I observe that there is a default assumption that the scope needs to cover all the recognised best practice processes (e.g. as described by P3O or PRINCE2 with or without Agile). This assumption embeds a risk management strategy that, by adhering to delivery management processes, the extra risks and uncertainties that are inherent in doing something new will be adequately managed. I observe that this does work, albeit not necessarily always in the way that Seniors intend. I also think that it is relatively expensive (7-10% of the annual portfolio investment) and yet also relatively inefficient.

(I have an opinion that: “Process is the crutch that we put in place to compensate for not having universally brilliantly capable staff.” But let’s not get side-tracked on to that discussion here.)

So, I think that the ‘PMO’ and the SIDS unit are the same thing except they come at the ‘requirement’ from different directions.

PMO starts out as the guardian of process compliance and project admin support. Whereas a SIDS unit starts into the requirements by focussing on the outcomes intended and this enables it to add much more value.

PPM Centre of Excellence model

Another way into this conversation is to put the UK’s Office of Government Commerce (OGC) Programme and Project Management (PPM) Centre of Excellence (COE) model on the table. This was something that was cooked up a few years ago now. The COE described the scope of a PMO in four functions or dimensions:

A – Upward Reporting to Seniors – being the source of ‘One Truth’ on the state of the portfolio and each programme and project in it. Making sure there was no hiding place for project managers when they were called to account.

B – Inward Support – providing services, support and mentoring to leaders within the portfolio.

C – Sharing good investment delivery practice – developing common standards with other organisations and co-developing delivery risk methods.

D – Improving the human capability – that is working on and leading investment delivery by training, mentoring, coaching, recruitment specifications, job profiles etc.

I really liked this model!

I was one of the first tranche of Management Consultants to be indoctrinated and accredited (before OGC were persuaded that such accreditation was not required).

PMO scope

But each of A – D is a potential trap. A place where lots of money can be spent making consulting and professional services firms richer for comparatively little value added.

Dimension E (or Z if Z comes before A) should be; – mapping and characterising each of the strategic decisions that a portfolio board or Senior Responsible Owner must take. Understanding what each board-member or stakeholder will need in order to come up with a high-quality input to the decision. Then providing that information to the relevant seniors in a timely way and in an easily digestible format.

Some folk think that A is E. But, when I have dug into what information board members actually want, you find it is not.

The risk is that doing A, B, C & D bloats the PMO. Its activity may be valued by many but if it’s not doing E then it is missing a core functon.

PMO value

If a PMO it is not looking how to do B for less, then costs can spiral.

I also once had the re-design a PMO to take a large double-digit % out of the PMO service costs. The service cost reduction was 3 times the profit margin. Ouch!

Under B (see COE model above) they were providing a planning service. So, we stopped that and had the Project Managers trained up to do their own planning. We also created a set of standards to ensure the upward reporting worked (A). In its place we put a few, highly trained and skilled ‘Digital Information Coaches’. This new DIC service provided outreach support and standards compliance assurance. We transferred responsibility for outputs from out-sourced service provider to staff. We hit the savings target and improved value at the same time.

Not bad.

 Here is the link to this week’s picture.

Thanks

Nigel

 

 

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