As more and more companies move towards implementing project management offices (PMOs) as a central and resourced hub to implement effective project management, some companies remain unconvinced that the benefits outweigh the investment.
International expert in project management, with a particular focus on PMOs, Dr Ginger Levin says the establishment of a PMO has time, resource and cost implications, but believes it is worth the investment.
"Obviously, the cost of establishing a PMO can be a major investment, especially if the company does not have a culture that supports project management. Further investments in tools and processes are required to establish and roll-out the PMO across the organisation.
"It could take several years in such a situation to reap the benefits of the PMO. However, if the organisation is at a high level of maturity in project management, the costs obviously are far less," Levin says, adding that it is important to keep in mind the implicit cost of having a large number of failed projects; which is significantly higher than the explicit cost of establishing a PMO.
Business case
"A business case needs to be prepared to show that the cost of the PMO is justified by the revenues it would bring to the company. The Gartner Group noted in a study in 2000 that 'organisations that establish enterprise standards for project management, including a project office with suitable governance, will experience half the major project cost overruns, delays and cancellations of those that fail to do so (0.7 probability)`," she states.
There are also indirect benefits to establishing a PMO, says Levin. The PMO can serve as the focal point in the organisation for portfolio management, best practices, standards and methods, archives and lessons learned, as well as consulting, mentoring and training of project personnel.
According to Levin, companies establish PMOs because they wish to excel, or because they feel their projects have been unsuccessful. If the latter case is the motivation, often the PMO is established because of the resulting financial losses.
"Different types of PMOs further solve different types of problems so specific goals need to be established and used to determine the functions the PMO should perform," she adds.
"Once the PMO is operational, then review its success and track and monitor its activities."
US-based Levin has co-authored several books on project management. In 2004, she presented a workshop on PMOs at the Project Management South Africa (PMSA) Global Knowledge Conference. She will be returning to SA for this year`s PMSA Conference, to be held in collaboration with the PMI South Africa Chapter from 30 May to 1 June.
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