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A&IPM – PMO Strategies to Become and Remain Relevant Paper

For the UTD Project Management Symposium – August 2011
By Curt Finch, CEO of Journyx, Inc.
and Darrel A. Raynor, PMP, MBA, Managing Director of Data Analysis & Results, Inc.

Abstract
To become and remain relevant in today’s fast-paced world, a PMO must establish itself as a
partner to project managers and the many others leading efforts within an organization rather
than as a C-suite police force. Knowledge management for both culture and mechanics aspects
of project and program management are critical. Business units do not want or need more
vaguely directed management. The bottom line: if projects take longer or cost more with PMO
assistance than without, the PMO is not acting effectively. We will discuss two A&IPM™
strategies with tactics for each you can apply now. Learn how to front-load your projects and
programs with conflict, how to determine actual project profitability and how to ensure all
your processes have value via fast and Lean process architecture.

Introduction
In this paper we present two vignettes illustrating PMO dangerous situations and ultimately very
bad outcomes. We also note sources of PMO Value and how a company can apply them.

Vignette #1 – Requirements by Committee… PMO Nowhere in Sight…
The sad tale of the “Powerless PMO” who became ignored and targeted for extinction.
A client had significant and recurring schedule slips due to their taking way too long to come to
an almost unanimous agreement on most large cross functional projects. Their PMO was “hands
off” as they rightly sensed danger in trying to shoehorn their rigorous process into areas with
very low project management maturity and unproven ROI. When the very real possibility of
failure was recognized by a director peripherally involved, Data Analysis & Results consultants
were called.
We found several problems:
 The various groups involved had differing definitions of and processes to derive and
agree on requirements.
 The manager assigned as project manager had never formally managed a project.
 The PMO was not consulted and perhaps even avoided, even though they could have
brought a practiced hand to the tiller.
 The client told us to drive to consensus among a non-homogenous group on a project
that would substantially change the metrics that business unit executives are bonused
on.
Our first question was, “Why isn’t your PMO providing a Sr. PM to manage your project?”
The phone was muted prior to the answer, “That isn’t relevant; just help us get those
requirements in the shortest possible time.” For confidentiality we will not describe the project
in detail. Through heroic efforts from the client’s lower staff as well as ours, their requirements
request was met.
After our short stint on the project (we opted to not continue in a PM or advisory role…) we
contacted the PMO leader to see if we could be of assistance there. They talked with us for
quite some time and agreed with most of our findings and opinions. They then confided that
most of the PMO staff was either leaving on their own, being laid off, or transferred back to the
business.
We then presented them with a number of normal PMO death spiral scenarios and they agreed
on the following “Powerless PMO” typical results:
 Their executives charged the PMO, rather than the actual business units, with greatly
increased reporting details and frequency.
 When the predictable low compliance happened, the PMO reported lack of cooperation.
Of course, the business units generally viewed the PMO as overhead with no benefit
processes and reporting.
 The executives reproached the PMO rather than address their directives with the
business units under their control. They wanted the PMO to be the bad cop, ensuring
poor relations and compliance with their stealthy directives.
This problem is widespread yet easily countered in two ways that may be blended:
One: Executives must convince their business unit heads and key players of the ultimate value of
the data gathering, reporting, and thick processes.
Two: Executives must specifically direct their business unit heads and key players in writing and
make the more rigorous processes a significant portion of reviews, compensation, and other
recognition like promotions, juicy assignments, and whatever else is needed.

Vignette #2 – Process Run Amuck… PMO Wants to Run Everything About All Projects…
The sad tale of the “Powermad PMO” who become Process Czars
A client complained of constantly having to circumvent PMO processes. Yet they were grateful
to their PMO and the director who solved a couple of thorny and longstanding problems. When
the new executive the PMO reported to engaged Data Analysis & Results to help streamline
their project processes to be more agile, flexible, and lean we found several symptoms:
 The PMO had a great reputation for managing those large, cross functional, game
changing projects as well as the detailed and long major business upgrades across the
organization.
 When the PMO finished with a major project and several of their Sr. PMs freed up, the
company called on them to solve all sorts of problems.
o When PMOs solve problems, what is their ‘hammer’? Process, of course!
o So every time a problem was solved, new and more detailed processes were
created and used to relatively good results.
When “Power-mad PMOs” solve a problem with a successful process, what do they do?
Try to roll it out across the organization for all projects!
When “Power-mad PMOs” create a successful process for large, complex projects, what do they
do?
Try to roll it out across the organization for all projects!
Yes, you have guessed their new role, Process Czars. All across the organization, whenever it
notes a problem the PMO attempts to layer on processes that are unproven in the organization,
much thicker than those they replace, and probably attempt to have reporting flow up through
the PMO.
This tendency is widespread and not easily countered. Most PMOs in this condition believe their
duty is to educate and censor all projects within an organization. They get focused on process
for process sake and have forgotten that all work should be done only when the value of that
work is above the Minimum Acceptable Return (MAR) ROI for all activities of the organization.
If an organization can translate all its costs and value into money, a reasonable assumption to
facilitate comparison, we can work with rates of return for all activities. A law of Project
Management that should be written into the PMBOK (Project Management Body of Knowledge)
is that project management should only be done when it is the most valuable use of people’s
time. Translated, that means that we should only support process to the extent that over the life
of the project and the life of the product produced by the project, total cost of ownership
(including time value of money and risk) is higher when project management is applied.
Executives must direct their PM’s to tailor to the situation and not blindly follow a methodology.
Aside from compliance issues, processes should be applied only to the extent that the
organization is demonstrably better by having done them. Not because, “It is the right thing to
do” or “We have to always do xxx xxx xxx.”
Tailoring has to become a way of life for project life cycles, project processes, governance, and
reporting in order to continue to make sense and preserve and enhance the value of a PMO.

Determining Project Profitability
So how does a PMO ensure that it is tailoring its processes to the correct projects that will
maximize profitability? In essence, it must recognize its shortcomings relative to an ideal state
and correct them over time. This enables the PMO to reach a state of project management
“consistent optimization” or Kaizen wherein it can determine with very little research which
projects will be profitable and which will be a time and resource drain.
The first step requires a PMO to accept that the current situation is likely very chaotic. The
typical PMO does not have the proper measurement tools in place to gather information on
projects. Without prior information on project successes (and what success meant to on the
individual project level) it is very difficult to estimate the likelihood of future successes.
Having employees track their labor hours is one of the simplest and most effective means of
estimating project success. Doing so will allow the PMO to gain insight into which projects are
developing within their budget and time constraints, and which are falling behind. Further, by
looking at the resources allocated to a specific customer versus the profits of a project a PMO
can determine which customers offer the most value for the company’s time and which
customers need to be “fired.”
After a system for tracking labor hours is in place, it is time for a PMO to look at tracking all
expenses and putting a labor rate on time data. For instance, travel expenses are the second
largest controllable expense for most companies. Considering some projects, products or
customers utilize more of this time than others, knowing which are most profitable will allow a
company to cut costs accurately.
Finally, allocating indirect costs (and semi-indirect costs such as customer relationship
management) across all projects intelligently will allow the PMO to maximize gross profit for the
company and provide a holistic view into the true costs of operating the business. This
knowledge translates into an awareness of true per-project costs and acts as a precise tool for
intelligent resource utilization.
Following these steps will both maximize profits and act as a buffer in the event of unforeseen
issues such as economic recession or unexpectedly canceled projects. While some companies
may be able to get by through crude estimates regarding their project profits, budgets and
deadlines, the company that can accurately measure these variables will have a distinct upper
hand.

Curt Finch
Founder and CEO of Journyx, Inc.
Curt Finch founded Journyx in 1996. Curt earned a Bachelor of Science degree in Computer
Science from Virginia Tech in 1987. As a software programmer fixing bugs for IBM in the early
‘90’s, Curt Finch found that tracking the time it took to fix each bug revealed the per-bug
profitability. Curt knew that this concept of using time-tracking data to determine project
profitability was a winning idea and something that companies were not doing – yet… Curt
created the world's first web-based timesheet application and the foundation for the current
Journyx product offerings in 1997. Curt is often called upon to speak at conferences and events,
and frequently writes articles for many leading publications. Curt's first book, "All Your Money
Won't Another Minute Buy: Valuing Time as a Business Resource" provides insightful
commentary on the principle that all people and businesses have a right to perform work that
the market will reward them for.
Darrel A. Raynor, PMP, MBA
Managing Director, Data Analysis and Results, Inc.
Director, Project Management & Business Analysis Programs, St. Edwards Professional Education
Center
Darrel Raynor is a senior technology executive, consultant, and turnaround specialist with over
twenty years of leadership experience streamlining operations, systems, people and projects. He
increases margin and profit and decreases organization friction internally and externally with
customers, vendors, and partners. His passions include problem solving, process improvement,
operations optimization, and helping people do more than they thought they could. He has
succeeded in operations executive and senior technological leadership roles, organization
restructuring, project management, program management, business analysis, software
application development, project recapture, and acquisition evaluation and integration. He is
primary author of the popular Agile and Integrated Project Management courses. Darrel also
writes The Management Advisor column, and has written for or been quoted in The Wall Street
Journal, CIO Magazine, Baseline Magazine, PM Network, The Dallas Morning News, and many
others.