SPE-177580-MS

Project Management Office: The Strategic Trend In Petroleum Industry

A. Al Ahmad, ZADCO Petroleum Co.

Copyright 2015, Society of Petroleum Engineers

This paper was prepared for presentation at the Abu Dhabi International Petroleum Exhibition and Conference held in Abu Dhabi, UAE, 9 –12 November 2015.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
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Abstract
Objectives/Scope: Project Management and project execution in Oil & Gas industry have evolved
extensively in the last decade; processes have taken a holistic approach rather than a mechanical one. The
tendency today is to establish a centralized and strategic project core office to provide management with
sound business recommendations and direct teams in the resolution of decisions in mega projects
executions; this office is known as (PMO), Project/Program Management Office.
Methods, Procedures, Process: Many researchers, academics, and practitioners agree that a well-
established and mature PMO ensures competence, credibility, and serves as a hub for project management
and control. Surveys claim that the number of organizations with an established PMO has increased from
47% to 77%, while other studies suggest that 70% of established PMO closes in 2 to 3 years of their
initiation. Accordingly; this presentation outlines the different types of PMO’s and their benefits, it
explains why do PMO’s fail? It also displays methodology to ensure a PMO survival and ultimately. It
discloses the prerequisites and the transition of a well-established PMO into a strategic office in the
organization.
Results, Observations, Conclusions: This technical presentation addresses the purpose of PMO;
how it is established? Its benefits and stakeholders expectations of this office involvement in project
executions. Initially, the application of project management practices was the responsibility of a Project
Support Office; a unit within the organization dedicated for projects execution. The mandate of this office
was limited to accomplishing a specific shareholder’s mission or ⬙a project⬙. Management expectations
stretch today beyond the usual execution of projects and definition of success through the traditional
golden triangle (quality, cost and time). Management are in pursuit of the establishment of a new
generation PMO that is characterized as command center with established best practices, procedures and
processes to ensure governance and to administer all project management activities within the projectized
or operational organization. Their aim is to build a strategic office that promotes common language within
the organization and serves as strategic alliance in the business decision making process. Finally; the
effectiveness of the strategic PMO and its long survival is warranted by organizational attitude towards
setting and achieving strategic goals.
Novel/Additive Information: A Strategic PMO is a rank achieved among successful PMO’s, organi-
2 SPE-177580-MS

zations find answers to a whole spectrum of business challenges and long term strategies. In conclusion;
this paper dedicates lessons learned and experience from petroleum industry worldwide, bringing stories
of pioneer organizations properly implemented strategic PMO. Strategic PMO’s achieved success stories
that I am privileged to share their stories with colleagues in the Oil and Gas industry.

Introduction
Project Management and project execution has evolved extensively in the last decade, processes has taken
a holistic approach rather than a mechanical one. The idea of project management became a concept
known to all organizations, and raised new definitions to this field. Project Management Institute (PMI)
defines Project Management as the application of knowledge and skills, tools and techniques to project
activities to meet project requirement (PMI, 2004). Initially, the application of project management
practices was the responsibility of a Project Support Office (PSO) created as a centralized function within
the organization holding a pool of skilled resources to provide project management services. The trend
today is to establish a core unit that holds all the knowledge and information to support projects. This unit
represents a command center with established best practices, procedures and processes to undertake all
duties of project execution. This unit is known as the Project Management Office (PMO), others recognize
it as Program Management Office, the prime function of both offices is to improve project management
within an organization. It is customary to consider the office as project office, project management
advisory unit and training and governance organization within the organization. In addition to the advisory
role in governance of project management, the tendency is to recognize the Project Management Office
as a strategic office to manage Programs and Portfolios in an organization, (Baker, B., 2007).
In essence, a PMO is an organizational center of excellence; it is repository for best practices of PMI’s
nine knowledge areas, namely, scope management, integration, time management and so on. It is an office
that promotes a common language with the organization (Crawford, K. J., 2006). Running a PMO must
adapt both a holistic and a procedural approach. The success rate of this office is subject to the day-to-day
implementation of suitable philosophy when introducing and maintaining procedures and processes,
executing projects as well as reporting methodologies. A PMO creates consistency in project execution
and aligns priorities when defining strategies. Many authors suggest that organizations supported by a
mature PMO that is implementing best practices will successfully deliver projects, and will set grounds
for higher maturity in the organization. Hillson associated Project Management competencies to business
strategy / and increased benefits of project base organization and Project Management Office to project
management maturity within the executing organization (Hillson, D., 2003).
In a study conducted in 2003, KPMG suggests that PMO establishment leads to proficient and mature
project execution capabilities. Dai and Wells referred to a study on project management best practices in
large functional organizations that reinforced the link between best practices and PMO (Toney F &
Powers R., 1997). In their own studies; Dai and Wells concluded that a well-established PMO improves
project management effectiveness; this includes: procedure development, lesson learned accumulations,
individual skills and competencies, knowledge, best practices and continuous improvement. All of which
increases management confidence in the organization (Dai, C.X., & Wells, W.G., 2004).
Many researchers, academics and practitioners agree that a well-established and mature PMO ensures
competence, credibility, and as Thorn describes it, PMO serves as a bridge over troubled water of project
management and control (Thorn, M.E., 2003). In a survey conducted in 2007 by the Center of Business
Practices, the number of organizations with an established PMO has increased from 47% to 77%.
However, another study on PMO suggested that 70% of established PMO closes in two to three years. The
main reason for this disappointment is that some PMO focus only on enforcing procedures and
methodologies, which undermines the important aspect of the PMO existence. A successful office is the
one that represents a hub of Project Management in organizations; performs within the organizational
SPE-177580-MS 3

process assets and assists in setting strategic goals. Ultimately, a successful PMO is established to drive
important decisions and implement proper governance in project management (Hansberger, K., 2008).
Oil & Gas PMO launch stories are part of the above success and failure statistics. Competition and
economical reasons drive petroleum organizations in continuous search for better ways to execute projects
and control their outcomes, considering the number of projects executed in both greenfield and brown-
field; organizations are inclined to explore different types of PMO’s, and to redefine success factors on
projects, the trend adapted in both Oil and Gas and elsewhere in industry is to create a project office that
does not only ensure traditional project success based on quality, time and cost, but also to peruse this
office long survival? Organizations are all after establishing and maintaining an office strategically
formed within the organization, reinforced to attain high level of maturity and empowered to introduce
balanced portfolios to deliver business and commercial goals, finally, an office to handle long term
decisions and capable to continuously lead the organization to success. Synonyms associated with such
office are; Next Generation PMO, Strategic PMO or Enterprise PMO.
Oil & Gas projects’ success and hidden failure
Projects continue failing at alarming rates in all industries. A recent study suggests that 70% of projects
were considered failures, which among othrs was attributed to various project mismanagement practices.
Historically, the petroleum industry executes projects on a fast-track approach. Exploration and produc-
tion, being an aggressive industry, often opts to completing projects in record times. Project teams build
aggressive schedules and do not allow sufficient time for methodical execution of projects. In addition,
project teams along with shareholders depend on the substantial benefits of completing the project quickly
and aim to start generating revenues. They prefer to minimize execution time for ⬙first oil⬙ and maximize
value of ROI and generate quick profits (Whitfield, S. 2014). As a result, first oil production drives project
success in the Oil & Gas industry and overlooks costs which become a fraction of the ten to eleven figures
generated revenues when the project is commissioned. The project outcome is presumed as a glorified
success, at times, shielding the hidden failure. In reality, under Project Management standards, such
projects could be classified as a total failure but the immediate and forecasted revenues subdue this hidden
failure. This will not continue to be the case, when oil prices drop, revenues will surge to new lows and
shareholders will be obliged to look for different success factors than first oil production. At the time of
writing this paper, oil prices were below $45 per barrel; major key players in petroleum industry are
already exploring alternatives and spending substantial dollars to introduce solutions for ill project
executions, and presumed success.
Traditionally, organizations in Oil & Gas establish a separate entity within the organization to execute
important mega projects, and create a section of a department in brownfield division to undertake small
projects, shutdowns and revamps. Although both offices might carry a PMO name and are both equipped
with some known Project Management tools, this attempt alone is not sufficient to apply proper project
management techniques to anticipate success. Both offices are temporary organizations and do not have
the level of maturity to face the challenges either with mega projects or with critical brownfield projects.
Executing mega projects requires mature organizations with solid backgrounds in project management.
The Oil & Gas giants usually rely on major EPC companies to execute such projects; these EPC
companies predominantly become the main winners in the process. EPC contractors most of the time
succeed to transform projects execution to their benefit, taking advantage of scope changes and using
every opportunity to increase costs and associate any issue to a compensation claim. As for brownfield
projects; the story is similar, organizations engage small local contractors to execute projects. These small
contractors do not always possess the required experience to handle critical Oil & Gas projects.
Furthermore, the owner organization considers small projects as a burden on operations and does not
allocate sufficient internal resources to monitor project progress. This situation again does not necessarily
produce the sought results on the ground.
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The solution to any project in Oil and Gas is a pragmatic approach to understand the project scope,
criticality, its significance within the project portfolio, this minimum requirement sets grounds to establish
the necessary PMO setup, to know the size of the this office, to select the team with specific qualifications
and to gather prerequisite knowledge to undertake the project, those are not an easy tasks, and there is no
one PMO model fits all, additionally, every PMO requires considerable time to reach a minimum level of
maturity to be able to properly perform on important projects particularly in a critical environment as Oil
and Gas.

PMO Benefits
Starting with Project Management basics, Crawford defined project management as a common language
required among practitioners. Crawford suggests that there is a desire from senior management to share
knowledge from their previous projects and to standardize project management practices. Additionally,
there is an increased interest in governance and consequently there is a need to employ the term
⬙corporate⬙ in terms of governance and knowledge management (Crawford, L., 2006). As such, there
should be a commitment from executive management for the creation and support of the office. It is
essential to develop an office that holds those credentials, including common knowledge, standards and
procedures to create consistency within the organization.
On a strategic level; Business Improvement Architects, according to a survey conducted in 2005,
claimed that 87% of organizations fail to align project strategies with corporate strategies (BIA, 2006). As
a remedy; Kerzner suggests that more organizations need to implement project management techniques
to achieve strategic objectives (Kerzner, H., 2003). Both studies emphasize that Project Management
methodologies are important for organizational success, and have a positive impact on business strategy.
Ultimately, a mature PMO will ensure a huge leap forward; it will stimulate project success and business
growth.
There are substantial benefits with establishing a PMO within an organization. The value proposition
consists of numerous value-added to the organization seeking excellence. Among other benefits, the items
listed below are some tangible outcomes of a well-established PMO:
a. PMO improves quality of project execution; improves project success, reduces project costs and
above all increases customer and stakeholder satisfaction.
b. PMO promotes standardized project management methodologies; processes become repeatable
which ensures organization continuous improvement.
c. PMO tests and adapts best practices and tools for project team implementation.
d. PMO rationalizes resource management within the organization.
e. PMO establishes a lessons-learned culture, project teams adapt lessons among each other which
help proactively identify issues and suggest solutions to potential risks.
f. PMO continuously monitors, controls, reports and advises project teams to forecast trends during
the life of a project.
g. PMO serves as a knowledge management hub within the organization; it promotes and instigates
training to the whole project team.
h. PMO strategically aligns the organization’s goals and prioritizes projects for optimum business
outcome.
Organizations must fully recognize the benefit sought in establishing a PMO. They must have a clear
vision of expectations, and they must state the reason for the PMO and state the desired outcomes. Those
objectives are only attainable when executive management fully supports the process, endorses a charter
defining the objectives, and empowers a PMO officer for that mandate. The PMO officer is then
responsible for creating a cohesive team, leading the office with complete honesty, transparency, clarity
SPE-177580-MS 5

and integrity to maintain the executive management buy-in and project team support. Fig. (1) shows a
typical PMO organization Chart.

Figure 1—Typical PMO Organization Chart

PMO Types
Important factors dictate the best suitable PMO for an organization. The type and size of a PMO is relative
to the nature of the business and size of the organization. It varries with the value and number of projects,
and scalable to the complexity of the projects in the organization. Those factors, among many others,
influence the project management office to adapt to the culture of the organization.
According to Breg and Light there are three types of PMO; a Project Controls Office, a Business Unit
PMO and a Strategic/Enterprise Project Office. These have three distinct functions, namely, controlling,
supporting and directing (Berg, T. & Light M., 2000). Project Management Solutions (2006) recognized
these three types and agreed with Breg and Light’s classification (Pennypacker, J.S., 2007). Other
consultants introduced an additional fourth type of PMO; a center of excellence and resource center. That
being said, most academics, researchers and practitioners recognize the first three as the most common
types.
I. Project Control Office: This type of office normally handles one complex project consisting of
various programs. The project manager’s responsibility is to integrate all projects within the
program to achieve the ultimate goal ⬙The Project⬙. This integration ensures proper resource
management, namely, manpower, material and equipment to meet the completion dates for every
project within the overall program. Most Oil and Gas organizations establish this type of PMO to
execute and monitor projects across the organization.
II. Business Unit PMO: This type of office is recognized as a project support office; a center of
excellence within the organization at the functional level. It is not necessarily responsible for the
delivery of a single project or a program. Rather, it is a repository of best practices and governance
to ensure competence, adherence and conformance to standards influenced by executive manage-
6 SPE-177580-MS

ment. Oil & Gas organizations are becoming aware that this type of office has a limited role and
does not fulfil strategic needs for the organization.
III. Strategic/Enterprise Project Office: This is another type of PMO which performs its activities at
the enterprise level within the organization. It promotes project management best practices and
supports multiple departments and business units. The prime effectiveness of this office is by
handling the overall strategic corporate objectives. It performs market analyses and assesses
optimum business decisions for a sustainable growth of the organization. Oil and Gas companies
are slowly delegating portfolio management to this office, which gives this office higher status
within the organization. The Gartner Group, one of the world’s leading information technology
research and advisory companies, is an admirer of the strategic project office. They advocate
higher mandate to such PMO. The group identified five key roles of this type of office: developer,
resource manager, competency center, consulting office and project review and analyzer (Gartner,
2000).
A distinctive organization chart of a strategic office is typical to any project management organization,
except, the office performs its functions at a corporate level. A function manager leads specific project
management knowledge area within the organization, and focuses on the ⬙big picture⬙ and how his or her
role enhances the strategic alignment to accomplish the organization’s goals. The result is the interaction
of Project Controls, Contract, Interface, Risk, Information or Human Resources Management, all together
to form an integrated and cohesive group of decision makers to drive corporate strategies to success.

Launching a PMO
Launching a PMO is equivalent to introducing a new concept and a major change in the organization.
Regardless of the type of PMO an organization selects, it must properly plan the launch of the PMO in
order to secure long-term survival. There are essential steps to be taken in order to maintain an effective
PMO. First is transparency, which improves members affiliation and contribution to the process, second
is the awareness of the office activities among stakeholders; third is establishing project management
guidelines across the organization, forth is promoting team building strategies among team members, and
finally, launching training and career development plans to all team members involved. All of these initial
steps are the essence of PMO success and long term survival (Hatfield, M., 2007).
A clear mission, management support, commitment, and proper communication are also linked to PMO
success; they all contribute to higher competencies (Pinto, J.K., Prescott, J.E. 1990). In a similar
perspective; Dr. Bourne concluded her paper by associating the maturity of an organization and the
attitude of executive management to the well-defined role of PMO. Consequently, it dictates PMO’s
success or failure in the organization. Furthermore, it is the ability of the PMO team to build the proper
relationship with the stakeholders involved in the project to ensure long-term survival of the office
(Bourne, L., 2006).
Project Management Office is being established in any type of organization within their business units,
and it is no longer limited to project-based organizations. SWIFT Va. is the Society for Worldwide
Interbank Financial Telecommunication it provides global secure messaging services in Virginia USA.
The company established a PMO in the mid 1990’s to keep track of projects. However, the office later
provided overall portfolio management. Today, it has become an integral unit within company’s opera-
tions (Joe, E. 2005).
In a nutshell, implementing a PMO is a project in itself. It starts with a mandate ⬙the charter⬙, it has
definite objective, a team, budget and so forth, so it is not different than executing a project, or
implementing a change. It should be planned properly to ensure its success. The common phases for
undertaking are: Initiation, Planning, Execution and Continuous Improvement. In general, the following
steps are elements suggested to properly establish a PMO:
SPE-177580-MS 7

1. Creating a charter; this is an approved mandate from executive management to proceed with the
creation of the PMO.
2. The charter must define the purpose of the office, the size, the hierarchy and reporting structure,
timetable, and the agreed measurement of success factors of this office.
3. Identifying organizational influences within your organizations to best tailor the office to com-
pany’s policies and procedures.
4. Defining best suitable project management procedures and governance methodology.
5. Launching a proper change management process to promote a new culture of project management
and initiate an awareness campaign among stakeholders within the organization. This is achieved
through consultations and participation of all stakeholders that will influence the success or the
failure of the office (Hansberger, K., 2008).
6. Use of available technology to support your campaign. This is achieved through the selection of
adequate software, intranet tools, and customizing systems to your specific needs, without
overdoing this aspect, which might alienate potential key players and drive them to withdraw from
the team.
7. Conducting necessary training programs to make team members familiar with new systems and
approaches.
8. Ensure readiness to launch the office and test your procedures, systems prior to final launch.
9. Schedule regular audits to bring continuous improvements to systems.

PMO Effectiveness
On a strategic standpoint, an empowered PMO drives the organization to the next level of maturity,
allowing a proper decision making process that supports corporate business goals. Executives and
organizational culture are the catalyst of success of the PMO. The willingness of taking the organization
to higher maturity and the empowerment of such an office will guarantee a successful outcome. The office
then becomes the centralized unit that integrates all functions and manages company resources to higher
capacities and efficiencies in handling strategic company’s programs and portfolios (Iaccarino, M., 2005).
At the portfolio level, Dietrich and Lehtonen suggest that superior performance is achievable when
organizations pool their projects in a multi-project task force or Portfolio Management Program. Since
strategies are dynamic and abstract in nature, the creation of goals and sub-goals help simplify the process
of reaching the target. The combined portfolio objective will eventually lead to an organization’s strategic
success to attain its mission and vision statement (Dietrich, P., and Lehtonen, P., 2005).
The previous discussion suggests that a PMO is the right choice for organizations to pursue. In a
distinct analogy; John W. Middlemist, General Manager of Seven Consulting, an Australian firm
providing PMO Services, emphasizes, ⬙You need to persuade the skeptical CEO that PMO will be a sound
return on investment⬙ (Hansberger, K., 2008). And in a worldwide survey conducted by Hackett Group,
an Atlanta Ga. Company, suggests that 50% of companies that manages IT projects with fine-tuned best
practices have a formal Program Management Office. Ultimately; the value-added of the PMO is
recognized through the outcome of the projects executed. In a related report, TenStep Inc. claims that a
well-established PMO not only improves projects expectations, it also increases the overall savings of
projects execution.
Success stories are endless. Brian Abeyta, Vice President of Aflac Co. Ga., ⬙Aflac is a Fortune 500
company, providing insurance services to more than 50 million people worldwide⬙ associates success of
the program execution to the PMO established since the year 2000. This office has two primary functions:
first, it staffs and administers corporate training and second, it supports portfolio management in providing
project management governance, tools and resources. Through the years, the size of the PMO office
quintupled, in response to the growing business needs. Today the office is a center of excellence. The
8 SPE-177580-MS

office provides project management governance, change control management, and business initiatives to
accommodate company’s strategic objectives. As a result the company has a better grip on project
delivery, costs, schedules and quality and is considered as a lean organization with minimum operation
wastes (Abeyta, B., 2005). Although such success stories are evident in various sectors, many Oil and Gas
companies are still at the infancy stage to establish a rigorous process to develop a balanced portfolio. A
vast majority of petroleum organizations still produce a projects file which includes a group of operations’
and maintenance’s wish list to execute during the year. Unfortunately, not all projects in this group relate
to the company’s strategic benefits. In fact, some projects are stand-alone improvement in plants, a nice
to have, their benefits are hardly recognizable and they do not necessarily drive the organization towards
excellence. A strategic PMO would eliminate this wish list and replace it with consolidated list of assessed
projects to form a balanced portfolio driven by strategic objectives that sanctions operation growth and
preserves production facilities integrity (Martinsuo, M. and Killen, P. C., 2014).
The roadmap to PMO success and project management maturity begins with establishing governance
and a set of best practices, followed by implementing and enforcing those practices across the organi-
zation. Reaching advanced maturity tacit is when an organization masters a process or knowledge that
become embedded into the organization and transmitted among members through generations. PM
Solutions© conducted many case studies. Among others, they have two major experiences with maturity
assessment: SAP adapted PM Solutions Maturity Model in 2003 to assess and improve their best practices.
The outcome has been astonishing. More particularly, the identification process of company’s strength
and weakness and the implementation of a scalable program following the assessment period, Ms.
Montillet describes the maturity process at SAP as ⬙it offers a premium quality assurance service⬙, this
process stimulated a better understanding of project execution and created a new culture to the company.
The second case is about Petrotin, an Oil & Gas company in Trinidad and Tobago. The company
introduced PM Solutions in 2003, the results were equally impressive, particularly, the assessment process
and the implementation of best practices. The most affected areas were the change management,
communication and training, where executive management had decided to establish a PMO. The outcome
of this initiative warranted the company to advance from level one to level three on the five level
organizational maturity scale in less than two years and to reach in some knowledge areas a level four on
the same scale (Drexel, H., 2005).

PMO Survival; (failure or Success)

Since PMOs are such a promising remedy for organizing projects under one umbrella, why then do PMO’s
fail? Or why are such offices dismantled in two to three years? This phenomenon is not only noticed in
Oil and Gas industry but is prevalent in all industries. To enlist those reasons, (Hansberger, 2008)
identified the most common reasons for PMO failure:
a. Reporting structure: PMO is a highly strategic office, when PMO chief officer does not report to
highest level within the organization, the position is undermined and chief officer looses authority
and decision influence.
b. PMO is not the suitable type for the organization: The office must be appropriate to company’s
business culture; there is no one model fits all. The PMO must be scalable to the type of industry
and to the region, and it must be customizable to the organization size, procedures, methods and
culture.
c. Ill-defined responsibilities and accountabilities of the office: Empowerment is a key factor for
success, a well established charter, and specific method of statement, a clear mission and vision
warrant the success of this office.
d. Inappropriate tools and procedures inadequate to company’s procedures: There are no universal
templates that fit all organizations; as mentioned earlier, there is no one model fits all and this is
SPE-177580-MS 9

not a cut-and-paste process; all systems, procedures and tools must be developed in line with the
organization practices and procedures.
e. No leadership: This is a key element for any successful organization, lack of leadership results in
lack of effectiveness of the office.
f. Lack of team work: PMO is simply a network of professionals grouped together to achieve
common objective, teamwork is the essence of proper function of this unit, lack of teamwork or
at extreme its inexistence dooms PMO to failure.
g. Lack of training: as part of continuous improvement, PMO staff must at first acquire the basic
training to perform their duties, and must continue training to stay abreast with industry devel-
opment.
h. Inexperienced and incompetent team members ⬙insufficient skillsets⬙: Although training will offset
some of this category, however, certain skillsets are prerequisite to certain functions, a basic
necessity to achieve objectives.
Addressing the above mentioned PMO failure drivers and finding proper solutions will increase the
chances for PMO survival. Crawford (2006) in her analysis of a vast number of PMO’s enlisted many
steps to stimulate PMO success and avoid its failure: (Crawford, K.J., 2006):
a. Project managers must be multi-skilled individuals; experienced; the project team and project
manager must have adequate knowledge of the type of business and projects on hand.
b. Project team must be capable to establish a portfolio plan for the organization and create an overall
strategic portfolio containing all corporate endeavors, and must prioritize projects to suit organi-
zational strategic goals.
c. Proper monitoring and tracking mechanism for multi-project oversight to ensure projects status, to
identify critical issues and to provide executive management with proper means to take the proper
decisions at the proper time.
d. Professional training and learning capabilities of the organization, to ensure knowledge manage-
ment and retain knowledge within the organization.
e. Continuous improvement achieved through continuous assessment of office capabilities, bench-
marking its performance and acknowledgment of stakeholdrs satisfactions, in order to elevate
office maturity to a higher level on the standard maturity scale, Fig. (2) shows an example of
available Organizational Maturity Model.
10 SPE-177580-MS

Figure 2—CBP© Organizational Maturity Model

f. Executive support to PMO is a paramount requirement to ensure the effectiveness of PMO

activities, which will give weight to the decisions proposed by the PMO.
In the same context, (Crawford, L. et Al, 2006) gave organizations two choices; first, organizations
must know their capabilities in order to be able to select the right projects for their portfolio and secondly,
they must match their resources with their project choices, those choices are paramount for strategic
alignment and portfolio management success (Crawford, L., Hobbs, B., Turner, J.R., 2006)
Furthermore, (Crawford, L., et Al, 2006) suggested that PMO must balance stakeholders’ priorities and
outcomes to align strategies and they should be able to categorize projects properly to achieve their goals.
The purpose of categorization is strategic alignment which will enable organizations to employ their best
practices to execute their projects. Among others, lessons learned, control systems, training prioritization
are methods leading to the use of common language in project management for executing projects. On this
topic, the authors had developed a categorization model and suggest that their model is an extremely
powerful tool to align organizations’ capabilities with strategic objectives. The model suggests an
inter-link among strategy, capability and project management approach.
In some organizations, PMO plays the role of a guidance office; it supports projects offices, administers
training, and sets governance standards in the organization. Hewlett-Packard co. adapts such a formula
and the results are outstanding. In a way, it is a decentralized Project office with a centralized PMO doing
only the above-mentioned tasks. (Jedd, 2005) suggested that the centralized PMO led to consistent and
strong project management processes, ensured higher success rates, the office increased project manage-
ment capabilities through organized training, and stimulated knowledge management in the domain of
project management (Jedd, M., 2005). In another illustration, Dr. Soon confirmed that PMO helped Johor
Port Berhad (JPB), ⬙an integrated multi-purpose port in Malaysia⬙ to develop better methodologies and
implement PMI’s standards across the organization, and ensured better projects controls. In this model,
the PMO has become an integral part of JPB strategic business planning unit, assigning to the PMO
privileged responsibilities over and beyond its primary objective to handle project execution (Soon Meng,
L., 2005).
SPE-177580-MS 11

The Enterprise / Strategic PMO

Strategy is a long-term objective. Management must be capable to create a bridge between the projects
in their portfolio and their overall strategies. The process must begin with identifying objectives, then
projects are prioritized according to business benefits, and finally conformance levels must be drawn and
monitored to continuously assess portfolio performance (Arbunthnot, S., Linenberg, Y., and Stadler, Z.,
2003).
Having established the necessity of strategic PMO in Oil & Gas and following the steps of major
organizations in setting Enterprise office at the corporate level to propose options and take decisions in
project execution is a key to successful portfolio management. Most petroleum exploration companies
develop a set of projects to maintain and sustain production. Those are created usually during budget year
cycle, they are developed by Operations, Maintenance and Facility Enhancement teams and make part of
an execution plan for the following year or years to come. Most of the time, the outcome are group of
projects unexamined for technical or commercial long term benefit. A portfolio manager at a corporate
level PMO is in charge of examining the viability of those projects, their importance in the long term
strategy, and their alignment in achieving corporate objectives. Strategic alignment resides in how those
projects collectively constitute a balanced portfolio to fulfil firm long-term business strategy (Martinsuo,
M. and Killen, P. C., 2014).
An effective PMO at corporate level must have the rank and hierarchy in the organization in order to
function as a strategic pacesetter in the organization. This office must have the level of authority to select,
assess and launch project portfolio ensuring the strategic alignment with overall objective of the
organization. Therefore, it is extremely important for this office to report directly to the vice president, the
General Director or to the CEO in the company in order fulfil its mandate. The organization chart Fig. (3)
is an example where such office should be located within the organization;

Figure 3—Strategic PMO Hirerachal Reporting

Furthermore, this office will be able to deliver the business strategy goal set forth by executive
management. According to Sirvannaboon in her research referring to (Potter 1980), in order for organi-
12 SPE-177580-MS

zations to maintain their market share and distinct identity ⬙company self-image⬙, they must distinguish
among strategies and stick to the ultimate objectives that facilitate accomplishing those goals. Such
strategies are only achieved through fully-empowered office reporting to senior management in the
organization.
As such, a company’s ⬙raison d’ê tre⬙ is recognized by their market status, and strategies are equated
to one of the best market cost, distinct product or market share. Therefore, organizations are best geared
to align their strategies when they choose one goal at a time and exert efforts in achieving that goal.
Otherwise, organizations will perform below their capabilities in one area or another (Sirvannaboon,
Sabin, 2006). This conclusion was also derived from studies of various industries; researchers found links
between maturity and project organization culture, leadership and empowerment, staff capability, meth-
odologies, management support and business culture (Andrew Arzymanov, Terence J. Cook-Davis, 2005).
A strategic PMO is a rank achieved with profusion of efforts, reaching excellence requires proper
strategy management. The foundation of this strategy is the knowledge and knowledge management in
project management. Project Management practitioners consider standards like PMI’s PMBOK and APM
body of knowledge generally acceptable in a broad sense. However, Delisle and Olson argue the extent
that those standards are applicable in various types of industry. Furthermore, both authors question the
degree of project management standards are commonly accepted as common language. They suggest that
this is still a long debate among researchers and well as practitioners (Delisle, C.L., & Olson, D., 2004).
Practitioners insist that adapting a common language in project management increases the chances of
maturity in organization. A well-established PMO, comprising of a multi-cultural team requires a common
way of interaction to achieve strategic status in the organization. Dr. Abby Bloom Chief Operation
Officer, Spinemed Australia, (a bio medical company) discovered that PMO creates a common culture and
framework in organizations to achieve strategic goals. Project director Hope Switzerland shared Bloom’s
opinion that PMO creates one project culture, one standard, a common language and one management
culture (Bloom, A., 2005).
Conclusion
Finally, a PMO in a Non-project Company is an on-going operation, selecting the appropriate type and
launching the office are paramount initial steps. Organizations, particularly in the petroleum industry,
need to continue monitoring, assessing and improving PMO structure to ensure sustainability. Oil & Gas
organizations are reviewing the effectiveness of their project offices and the success trends of projects
handled by those offices, saving costs and meeting deadlines became not the only definitive measures of
success. Organizations are surveying the viability of their projects portfolio in relation to strategic
objectives achievement. They are integrating customers and stakeholder satisfaction rates in their success
equation to maintain incremental improvements, and to reach higher levels of maturity in projects
execution. It’s hard work - but organizations are realizing that a successful enterprise PMO at the
corporate level delivers answers to a whole spectrum of business challenges and long-term corporate
strategies.

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