Project Portfolio Management – The Role of the PMO

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The role of the PMO in the project portfolio management process can be generally divided into two domains: project prioritization and selection as well as project management and monitoring (see Figure 1).

Figure 1

The first role of the PMO is to act as a filtration mechanism for all the incoming project proposals. It is very important to point out that the project management office should not have a mandate to overturn or reject project requests. Its role is to accept the business cases, review them and whenever possible to point out inconsistencies or imperfections in these documents to the project champions.

First, the prerogative of project acceptance or rejection belongs only to the Portfolio Executive Committee consisting of the organization’s executives. They and only they have the right to approve, reject, postpone or kill any project in the proposal pipeline.

Second, the role of the PMO is to work with the project champions in order to guide them in writing and “selling” their project proposals. here is an example of a conversation that may take place between the PMO manager and the project champion:

M: John, I looked over your business case for the CRM system replacement and overall it looks very good. My only concern is that you gave it ten out of possible ten points in the “Technical Feasibility” category …

PC: Yes, and what is the problem?

M: Well this kind of score in this category implies that it would be a fairly simple project that can be done by our internal resources only.

PC: I think we can handle it internally …

M: We had several other new system implementations projects recently. Remember, the ones for the risk management team and for the HR department. In both cases we had to rely on extensive support from the external consultants provided by the vendors …I am not insisting on anything, but you will have to go in front of the executive committee and justify these projections.

PC: You are right, let us downgrade the score from ten out of ten to five out of ten.

What are your thoughts on this approach? How does your PMO handle its PPM responsibilities?

  • Complete Success: Project met success criteria, value was created and all constraints were adhered to
  • Partial Success: Project met the success criteria, the client accepted the deliverables, value was created, not all of the constraints were met
  • Partial Failure: Project was cancelled. But some IP was created that can be used on other projects
  • Complete Failure: The project was abandoned and nothing was learned

Proposed Model

My view of a successful project is slightly different. I basically like to (1) add word “reasonably” to the “adhering to constraints” sentence and (2) include the recoverability variable into the equation:

  • Project success is a function of:
    • Business value is realized
    • Project is delivered reasonably on-budget
    • Project is delivered reasonably on time
    • Project scope is delivered within reasonable limits
    • NOTE: “reasonable” = “does not negate the business value”
  • Projects should also be differentiated by their recoverability

Regarding the first point, let us examine the following famous examples:

  • Titanic movie (cost -$200 million vs. revenues – $2 billion)
  • First iPhone (cost – $150 million, revenues – $2.7 billion)
  • Grand Theft Auto 5 (cost – $265 million, revenues – US $1 billion in its first three days!)

Would we call Titanic a troubled project if it was released on 18-Jan-1998 instead of the original 18-Nov-1997? Would we think of the iPhone as a failure if its development ended up costing $160 million instead of the original $150 million? Of course, not!

So, what happens if we try to look at projects from the PM success/failure, PPM success/failure and recoverability/non-recoverability perspective (see Table 1)?

Table 1

In the upper left corner (green) we have projects that are on track both from the PM and PPM perspectives. These ventures should be just properly monitored and controlled until their successful completion.

The next(yellow) layer contains the troubled projects (either on the PM and/or PPM side), but these projects can still be saved by adjustments to their scope, schedules, budget, governance etc.

Finally, the last layer (red) is comprised of the projects that are so deep in trouble from PM and/or PPM viewpoints that the only option available to the stakeholders is to kill them, unless they are “stay-in-business” or regulatory initiatives.

What do you think of this project success/failure rating? What other approaches have you seen?

This was a guest article written by Jamal Moustafaev from Thinktank Consulting.

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