Think Your Business Is Too Small for a PMO? Think Again.

July 13, 2022 | by Jeannette Cabanis-Brewin

One thing that makes a smaller organization more nimble, usually, is its size: there aren’t a lot of layers between decision makers and the boots on the ground.

So it may seem counterintuitive to suggest that smaller organizations can derive value from adding more managerial infrastructure, but that’s the story we saw when we crunched the numbers for smaller organizations in a new study, The State of the PMO 2022.

The study asks participants to score themselves on a set of performance measures for the PMO. Companies that score in the top 25% are designated “high performers.” Small and mid-size company PMOs were twice as likely to be high performers, compared to large companies (those with annual revenues over $100M). Not only that, but they out-scored larger companies on every single PMO performance measure (see figure). Keep in mind that these improvement figures are based on the average of all companies in the study: for high performers in the group, the improvement percentages were much higher—in some cases, 10% – 15% higher.

Let’s take a look at a few of the specific areas where small and mid-size companies outperformed the big boys:

·        The organization’s project management capability is improved

·        The PMO develops and nurtures talents and capabilities of staff, especially leadership skills

·        The PMO ensures projects and the portfolio are aligned with strategy.

·        The PMO particularly excels at improving risk reduction.

One clue to how smaller companies achieve such great results with their PMOs is that they are far more likely than large companies to have an Enterprise PMO, one that links the implementation of organizational strategy, at the project and program level, to the investment decisions made at the portfolio level. An Enterprise PMO—simpler to construct when the enterprise is relatively small—centralizes the governance of all types of projects. It minimizes duplications of effort, prioritizes, and ensures that planned benefits are delivered. It also serves as a central clearing house for organizational communications, linking the C-Level to the project level with improved clarity and a shared language.

The Roadmap

How to begin? One clue in the data is that small organizations—the most likely to have PMOs still under development—train more intensely than any others. Over the past 25 years of research studies, we have found that high performers consistently offer more days of training, on more topics, to more groups within the organization. As an example, one mid-size insurance company that had had good results managing IT projects wanted to promote better project management throughout the organization. They also were aware that they needed to move towards a more agile way of managing projects, not just in IT but across the enterprise. As a first step, the company implemented an intensive training program in agile project management for all departments. Because of the organization’s relatively simple organizational structure, they were able to implement an EPMO whose director, from the outset, shared strategic planning and budgeting tasks with the C-Level.

Approaching a PMO implementation in this way, from the bottom up with company-wide training, as well as from the top down with an executive-level PMO director, the company was able to see dramatic results over a relatively short period. 

Because poor communication between project management and the executive level has always stood out as a factor in project failures (the CHAOS studies noted this year after year), small organizations may have a built-in source of success. Often, PMOs in small companies report directly to the C-Level or—in the case where the company appoints a Chief Project Officer—function at the C-level. This streamlining of levels of responsibility brings the daily work of projects into view. While high visibility can at times be uncomfortable for project managers – if the CEO has her finger on the pulse of your project, there’s little room for error – it also showcases the value of projects, project management and project managers.

In some industries, such as construction, there’s been a history of smaller organizations functioning like a PMO. In these “project-centric” companies, the portfolio of projects consists of pretty much everything important to the flourishing of the organization. What operational or administrative activity there is becomes analogous to the project admin tasks that occur in all projects. Christopher Sauer, of Oxford University, has written compellingly about the lessons that IT and other organizations can derive from construction firms that are essentially, a portfolio of capital projects. In Chapter 41 of The AMA Handbook of Project Management, Fifth Edition, he writes:

              “[C]onstruction and engineering companies typically have flat structures that serve two main purposes. They place project managers and their projects close to the locus of power and decision making … which gives them high visibility and access to resources … They de-emphasize other functions [finance, design, estimation] so that … these are not internal competitors for resources. … By placing projects at the center of the structure, these companies eliminate a lot of possible organizational noise, [making] the job of project management easier.”

Looking at the industries represented by small and mid-size organizations in The State of the PMO 2022, we see that many of the high performers do fall into the “professional services” industry cohort, which includes construction and engineering firms. But other industries are beginning to crowd in. Healthcare, financial services, retail and manufacturing firms may be starting to follow this model: the smaller, flatter organization that places projects high on its priority list.

Can your business benefit from taking a project-centric approach, placing a PMO high on the organizational chart? Ask yourself these questions:

• What percentage of our present or potential revenue derives from projects (remember, these can be any new endeavor with a discrete budget, schedule, and deliverables, from a marketing initiative or software implementation to a new product or a new facility)?
• What impact will we experience if these projects fail? If they succeed?
• What are our most intractable organizational problems? Would centralizing the management of these key projects alleviate them?

Since our research over the years has indicated that the most persistent challenges in organizations are around human capital management and communications, having an organizational center that streamlines project and portfolio management often does provide new ways to structure communications and reward collaboration.

Good luck with your PMO journey, should you decide to accept the challenge. And don’t hesitate to get in touch and let me know how it’s going.

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Next Steps:

About the Author

Jeannette Cabanis-Brewin

Jeannette Cabanis-Brewin is editor-in-chief for PM Solutions Research, and the author, co-author and editor of over twenty books on project management, including the 2007 PMI Literature Award winner, The AMA Handbook of Project Management, Second Edition.

View Posts by Jeannette Cabanis-Brewin

Jeannette Cabanis-Brewin

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