What makes modern program and project management offices successful? Start by balancing structure with flexibility, aligning goals with strategic objectives, and then evolving your PMO principles to deliver measurable business value.
In brief:
- Modern PMOs need to balance structure with flexibility and establishing PMO principles can help.
- Successful PMOs establish clear key performance indicators (KPIs) that connect project outcomes to strategic objectives and regularly measure value delivery.
- Cultural alignment determines PMO success. This means keeping organizational culture, like decision-making approaches and collaboration styles, in mind.
- Data-driven decision-making is better than intuition. Modern PMOs rely on quality metrics and project dashboards.
- Successful PMOs create feedback loops, document lessons learned, and regularly evaluate performance to ensure continuous improvement.
Today’s unprecedented pace of change is forcing companies to reconsider not only their business strategy but also how they transform to align with and implement that strategy effectively.
According to Gartner, “Studies indicate more than two-thirds of well-formulated strategies fail due to poor execution, which is often a failure of enterprise-level portfolio or program management. Organizations often lack a layer between leadership and the professional ‘do it’ people of the portfolio and program management office (PMO) to ensure appropriate tactics.”
To avoid this fate, companies are revisiting and modernizing their PMOs to ensure they are business-savvy, adaptable, and capable of effectively implementing their strategies. Organizations are considering technology, data, and collaboration solutions to ensure programs and projects align with the strategy and deliver benefits.
They’re not wrong: A modern, effective PMO ensures your company is ready for any change the world throws at it. My colleague and PMO expert Craig Horgan says, “A successful PMO aligns with its company culture, optimizes resources, and ensures projects support strategic goals. When a PMO balances structure with flexibility and bases decisions on quality data, it can enable significant business value.”
In this blog post, we’ll explore eight core principles for guiding your PMO’s evolution and how to implement them effectively.
The 8 Core Effective PMO Principles
Getting a management office right is an art, but these effective PMO principles add a little more science to the process. Before you dig in, gather information about your current PMO: what’s working well, what isn’t, what your goals are. Then, compare what you find to Gartner or other models.
However, remember that these are models, not formulas. The principles below will help you make your new PMO your own while staying true to your company’s culture and business objectives.
1. Cultural Alignment
The strength of your program management office depends on aligning its practices with the organization’s culture. But “culture” is a multidimensional entity. It includes how decisions are made and how people collaborate, innovate, and accept change.
Why is it important to embrace cultural considerations as you assess your current PMO?
Culture is often deeply woven through an organization’s DNA. For instance, a company may have been using a consensus structure to make decisions for years — decades even. So, introducing strategies using a top-down approach can cause significant friction.
As another example, perhaps the company encourages innovative thinking across all departments and disciplines. But you devise a plan in the PMO office that only takes a few people’s ideas into consideration. Again, since this deviates from cultural norms, even a great idea might not be well received.
To make sure your assessment factors in company culture — and is effective — ask questions like:
- Does our company culture support data-driven decisions, prefer consensus-based or hierarchical decision-making processes, or a combination of these? How do we align with this?
- Does our PMO have an up-to-date map of all stakeholders our strategies impact? And do we understand how our decisions impact their day-to-day jobs?
- Are we fostering continuous improvement by evaluating whether our practices support the company’s culture? Or are we constantly bucking up against it?
- Do we engage in proactive change management, or are we content with simply handing out strategies and encouraging people to get on board?
Answering these questions will reveal areas of strength and weakness. When you use these insights to guide action steps, you turn your assessment into an improvement tool.
2. Business Value Alignment
A good PMO is a trusted and sought-after partner because it can help your organization track and measure the business value and benefits that programs and projects contribute to your organization’s bottom line. Your PMO can also ensure organizational alignment, help projects follow through with new processes and operations, and maintain and encourage collaboration across teams.
As you emphasize value delivery, keep these two points in mind:
- You need to establish key performance indicators (KPIs) and metrics that link program and project outcomes to the organization’s strategic objectives.
- You need to regularly review these metrics to gauge progress and make informed decisions that add value.
3. Balanced Governance
Striking the right balance between providing attentive oversight and enabling agility is one of the PMO’s more nuanced — and challenging — facets.
On the one hand, your PMO must ensure projects have adequate oversight and guidance. On the other hand, your PMO team doesn’t want to be an overbearing force that could stifle creativity and cause undue stress.
Here are some ways your PMO can find the sweet spot:
- Establish frameworks for decision-making. Everyone should have a specific role in the decision-making process. Empower employees with responsibility while outlining the scope of their control.
- Make it clear when a project can move forward and when a phase needs more work. With these benchmarks top of mind, the team can achieve each milestone however they’d like. This fosters a culture of freedom and trust, which can improve the quality of work.
- Bring multiple voices into the conversation. While making decisions, try to include a broad swath of stakeholders to foster buy-in and reduce the risk of missing out on effective options.
4. Flexibility and Adaptability
Because each project is different, your frameworks must be able to adapt. This is one of the most essential PMO principles because it helps teams avoid using a one-size-fits-all approach for each project.
For instance, your PMO may use an agile approach to building software. People from various departments have seats at the table. However, one project element involves creating a machine learning algorithm, but the data science team needs to buckle down and hyperfocus for several weeks to deliver this milestone.
With an adaptable framework, your PMO can temporarily suspend the team’s frequent scrum sessions and standups to allow the data team a little extra time to focus. Or the data team may get its own standup apart from the rest of the team.
Adaptable frameworks allow you to do what’s necessary to achieve the highest-quality outcome despite changing requirements.
5. Stakeholder Engagement
As you modernize your PMO, you need to identify which behaviors need to change in that team and across all of the organization’s stakeholders. Now that your program and project leaders are no longer delivering process and control and becoming more strategic, they must also model behaviors that others must embrace. Adopting a culture of agility can help.
It’s time to create new relationships across the organization. Your PMO should help foster collaboration among siloed delivery teams and with other leaders. The PMO should also coordinate and protect projects as needed.
To ensure collaboration and accountability, an effective PMO should:
- Encourage and facilitate regular cross-functional meetings where team members can align their efforts, jointly problem-solve, and share insights.
- Have access to metrics and reporting tools to demonstrate cross-team accountability between departments.
6. Data-Driven Decision-Making
The human ability to infer can be a two-edged sword, especially when inferences override data-based decision-making. Your PMO needs to rely on data if reliable data is available. This may mean relegating traditional business wisdom and gut feelings to second place.
For example, PMO teammates should avoid the temptation to justify a decision with, “Well, when I faced a similar issue in my old job…” Instead, you can use the following tools:
- KPIs that reflect the quality, not just the quantity, of work performed. For instance, a bad KPI for a software project would be “number of lines coded.” A better KPI would be “number of stable user experiences successfully deployed.”
- Project dashboards. Your dashboards will likely vary from one project to the next, but they should include indicators for the project’s progress toward completion and the risks that could threaten a successful or timely outcome. They should also include progress toward micro-goals built based on KPIs that scaffold larger phases.
- A diversified data approach. Feel free to collect data that reflects some of the often unmeasured factors that power a successful project. For instance, employee satisfaction, the number of mental health days taken during a project, or how many stars each team member would rate a project’s outcome. This kind of data is also important.
7. Continuous Improvement
When your PMO is committed to continuous improvement, you view each program productively and critically. Your goal is to find ways to improve while also acknowledging what works.
For example, suppose your PMO manages a compliance-checking process for a financial services company. Your team could keep track of the time it takes to find accurate customer identification records, transaction monitoring reports, and customer risk assessments — all to provide evidence of the company’s dedication to fighting money laundering.
After the first project, your team can analyze the average time frames and reflect on ways to shorten them, perhaps even uncovering ways to reduce the number of people-hours involved.
8. Strategic Resource Allocation and Optimization
A PMO that strategically optimizes its resources pays close attention to how it invests human and financial capital and material resources toward each project. At the same time, the PMO constantly looks for ways to reduce waste. Centric Consulting’s Enterprise Program and Portfolio Management delivery lead Rick Morris says, “In a world of limited resources and unlimited ideas, the modern PMO brings clarity by aligning effort with impact.”
For instance, suppose an insurance company wants to implement a new customer relationship management (CRM) system that integrates with its claims management software.
The PMO office needs to establish who will handle the data transformation to get customer data from the existing CRM to the new one. They also must decide how they’ll enlist the help of the CRM solution provider and what fees the company would charge. There’s also the issue of the time needed to train team members and the cost of that training.
Each decision must be carefully balanced and meticulously recorded for analysis and future reflection. Morris goes on to say, “Every company has more projects than people. The modern PMO’s true value lies in ensuring we’re doing the right projects at the right time — with the right resources.”
If, for instance, the time taken away from regular work duties and put toward training had a detrimental effect on operations, the team would want to use this data to make better decisions during the next project.
Convert Your PMO Guiding Principles Into an Effective PMO Road Map
These project management office principles will allow you to build a road map to your modern, effective PMO. Like all project road maps, your PMO road map should be actionable and flexible. You may want to categorize projects into quick hits, short-term projects, and long-term projects.
Completing your quick hits and seeing their positive outcomes will help your teams trust the process and inspire them if the going gets tough with longer-term projects. The quick hits don’t have to be the highest priority or highest profitability projects, but they are important for building confidence in your overall road map.
As you build out your PMO road map, you’ll want to establish clear metrics to measure your progress.
How to Create Effective PMO Metrics
The right metrics will keep you on track, but the wrong metrics will lead you astray. Work with your PMO manager and leadership team to create metrics that track:
- Project execution and delivery
- How well your PMO’s structure is working
- How well your PMO is tracking with business objectives
You are looking for quantifiable measures, not gut feelings or survey results. Following portfolio management practices will help with prioritization, and one-on-one interviews with your business partners, IT teammates, and project managers will reveal more information.
However, you should customize questions by role, alignment, and function rather than sticking to a script for all employees. This way, you will capture succinct data points that you can use to paint a picture of the current state.
Case Study: The PMO Principles in Action
In one recent client experience, I encountered an outstanding example of building an effective PMO that illustrates each of these principles. This organization demonstrated a commitment to continuous improvement by using them and adapting them to their unique contexts.
Here are some of the highlights:
- The client recognized the significance of cultural alignment and ensured their PMO practices were intentionally woven into the fabric of their mission, vision, and strategic goals. This cultural sensitivity ensured their projects resonated with stakeholders and employees, fostering greater buy-in and commitment.
- The client’s organization had a robust resource allocation process. Resource managers could accurately forecast their teams’ capacity for projects. Real-time visibility into project demands allowed for proactive adjustments, prevented resource bottlenecks, and optimized project delivery. The PMO, resource managers, and project managers worked closely together. This collaborative ecosystem facilitated quick problem-solving and efficient decision-making. When resource constraints came up, the collaboration process kicked in, leading to timely solutions.
- The client demonstrated a commendable capacity for flexibility and adaptability. They were always willing to explore novel approaches and learn from them, and by experimenting with different strategies, they gained valuable insights and adjusted their practices accordingly. This was perhaps the most impressive aspect of the client’s culture. They viewed change as an opportunity rather than a disruption. This allowed the PMO to evolve organically and continuously align with the organization’s dynamic needs.
- The client engaged a diverse set of stakeholders in a collaborative prioritization process that helped short-term and long-term objectives. While this approach required time and effort, it resulted in decisions that were well-informed and widely accepted. Engaging the stakeholders early and consistently ensured that project priorities aligned with organizational objectives.
This client’s commitment to core effective PMO principles exemplifies best practices for a thriving PMO. Their journey inspires other organizations seeking to enhance their PMO capabilities.
Need Help Aligning Your PMO to Your Principles? Ask AI
Even the savviest PMO run by smart, experienced professionals has limitations. For example, a human can only read, understand, and interpret so much data at a time. Fatigue, frustration, or both soon seep in. PMO professionals are sometimes limited when it comes to writing reports that compel decision-makers to take action. And even if they have the skills, they may lack the time.
Artificial intelligence (AI) can help your PMO overcome these limitations. But first, you’ll need to decide which AI-powered tools will address your pain points and pave the way for improved processes. Generative AI systems, for example, can:
- Explain what huge datasets reveal about a program or the company
- Analyze data and tell you, in a matter of moments, how it reveals areas of need in the organization or within a program
- Make predictions regarding how a program or business function may affect the organization’s bottom line in the future
To illustrate, suppose an executive asks you to design a program that reduces the average customer acquisition cost by 15 percent. They give you the accounting figures for sales overhead for the past five years. It’s hundreds of pages long. They also give you sales data for every deal closed in the last five years. This also spreads across dozens of pages.
You start reading because you can’t take data and then build a solution without it. Then, you sort according to ascending and descending values in Excel, looking for trends. You plot graphs and try to remember how to use statistical analysis in Excel to isolate and eliminate outliers. After hours hunched in front of your laptop, experimenting, Googling, and asking for help, the day ends.
You could’ve had a generative AI system do that work in about 10 minutes. The modern PMO uses these tools to do — and deliver — more.
But generative AI is only one solution. Other AI tools include:
- Timeline generation tools predict how long you’ll need to reach different project or program milestones.
- Risk analysis tools identify and prioritize threats to operations or profitability.
- Sentiment analysis tools analyze meeting transcripts, text messages, and emails to tell you how people feel about programs and decisions.
- Workflow automation automatically identifies workflow inefficiencies and can automatically perform some time-consuming tasks.
But before you start shopping for an AI solution, there are some pitfalls you want to keep top of mind.
Pitfalls to Expect While Implementing AI in Your PMO
Keep an eye out for these pitfalls as you build your AI strategy for your PMO:
- Don’t use a set-it-and-forget-it approach. You have to check and guide AI tools to make sure they’re helping and providing accurate insights. In most cases, checking and guiding an AI system is straightforward. You may have to adjust a prompt here and there, for instance, and when you need to use simple calculations to check analytical outcomes, another AI platform, like Gemini or ChatGPT, can handle that for you.
- Don’t lose the trust of stakeholders. AI is to decision-making what a dishwasher is to cleaning tableware. The second that things don’t come out as expected, people are quick to say, “This thing stinks!” When using AI, you want to build your skills so the outcomes build trust in the system instead of corroding it.
- Don’t implement too many tools at once. It’s best to respect your team’s learning curve by starting small, getting comfortable, and then expanding. The AI buffet provides a deep, diverse spread, but it can be a lot to digest all at once.
But remember, regardless of how you use AI to optimize your PMO, you still need a foundation of PMO principles to guide decisions.
Evaluate Your PMO Using the Core Principles
By embracing these PMO guiding principles and using them to evolve your program management office, you strengthen its position as a strategic partner rather than merely providing administrative oversight.
Aligning with business priorities, using resources efficiently, and fostering collaboration help everyone contribute to continuous improvement. This is especially important because the PMO is simultaneously a leadership body and a boots-on-the-ground force. By getting better and better each quarter, a PMO bridges the gap between building great ideas and building a better business.
Learn how to assess your organization’s aptitude for selecting the highest impact projects that maximize value return and optimize resource utilization. Read our white paper.
Want to learn more about our perspective on PMO’s or other topics related to Enterprise Portfolio and Program Management? Let’s talk.
