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Therefore PMO therefore assumes two key roles, depending on which needs of the organisation are being served:

• Tactical: The PMO provides direct support to projects in several areas such as scope management, baseline change management, project scheduling, resource management, cost management and project reviews. The PMO provides the information required for decision making and ensures that the decisions are being carried out.

• Strategic: The PMO supports the PPM framework, which in addition supports project prioritisation, performance management and benefits realisation (see Figure 13). The PPMT intersects with the executive stream, allowing the organisation to make strategic ‘go/kill/hold/fix’ decisions on key projects in the context of managing a balanced portfolio
of investments.

In summary, the PMO is the function responsible for coordinating, planning, overseeing and monitoring an organisation’s multi-project environment. Through the PPM process the PMO enforces executive accountability and transparency by connecting the organisation’s projects to the business’s portfolio strategic decision making stream. The information supplied by the PMO flows directly into the PPMT’s funding, selection, prioritisation and resourcing processes.PMOs are becoming a standard feature within many organisations and are viewed as the operational centre supporting any project within the business. They act as the clearing house for project information and the driving force for project delivery.

The main specific responsibilities of the PMO include:

Project management, control, delivery and alignment:

- monitoring project outcomes and communicating this up stream to the PPMT and down stream to project managers
- increasing communication and coordination across projects
- advising the PPMT on the benefits and status of projects
- advising and reporting on the placement of new and elimination of old projects
- endorsing, advising and supporting project managers
- confirming successful delivery and sign-off at the closure of the projects
- managing resource utilisation across the organisation, matching project needs with specialised skills and availability
- ensuring critical projects are on time and within budget by providing objective accountability and review at every stage, from initiation to closure
- using dashboards to enhance the roles of project and programme managers within the enterprise

Financial accounting:

- assisting project managers with budget control
- maintaining financial status reports on all projects
- analysing interfaces and critical cost dependencies between projects and recommending appropriate action
- maintaining a list of stakeholders and their financial interests

Project management support:

- providing a single point of contact for all project information
- training, coaching, guidance and mentoring
- developing and holding project templates and master copies of all project and programme information
- generating all necessary quality management documentation
- maintaining, controlling and updating documentation
- establishing and maintaining an electronic registry of project information for use by both the PPMT and project managers

Methodologies, standards and metrics:

- guardianship of project methodologies (for example, Prince2), standards and metrics
- compiling reports and collecting information from project reviews
- providing a central, customer focused office to care for the concerns of the client, sponsor and project stakeholders
- providing assistance to the PPMT in selecting and analyzing projects
- establishing consistent practices and standards for programme governance arrangements, including project planning, reporting,
- change control, analysing risks and maintaining and updating the risk register

Programme management is the process of managing multiple, ongoing, interdependent projects. The Programme Management Office (PMO) provides a layer above the project management process, focusing on selecting the best group of programmes, defining them in terms of their constituent
projects and providing an infrastructure whereby projects can be run successfully while leaving the job of delivery to the project management community.

The focus of the PMO is to coordinate and communicate on all programmes and projects in the enterprise, as well as to be the knowledge centre with regard to training, leadership, mentoring, best practice, project governance standards, and so on that supports managers in the implementation of the tasks and work packages required to achieve
successful project completion.

The PMO’s role within the business is not only to act as a knowledge centre, but also to help marry project management process with the executive streams by working closely with the PPMT. This relationship is designed to help the business to identify the precise measures that need to be taken in order to turn strategic goals into reality, as well as to determine the key performance indicators that show whether goals are being met.

The PMO provides the necessary overview and coordination to deliver projects on time and on budget by managing and reporting on schedules, risks, costs, quality, scope and resources across all projects. At the heart of a PMO is its relationship with the PPMT, the aim being to enable the business to coordinate and integrate complex multi-project initiatives across an entire enterprise. This partnership between the PMO and the PPMT is there to empower the executive decision making stream with the necessary information to help prioritise and balance project initiatives, justify decisions, measure risk vs return and allocate resources in a way that maximises their impact on the business.

One of the main issues when implementing a PPM process is that different layers of management within the business have their own territorial issues and oversights. As stated earlier, the PPMT consists of executives and senior postholders who are charged with responsibility for making all key decisions that affect the project portfolio.

The PMO provides the bridge that joins the operational stream with the strategic stream. The PMO is a body of senior project stakeholders and managers that has responsibility for managing all the business’s projects from an operational perspective as well reporting back to the PPMT on their outcome.

By centralising overall operational responsibility for all the organisation’s projects in the PMO, a complete picture of project activity can be painted. The PPMT is able to utilise the tactical structure of the PMO to collect all the necessary ‘coal face information’ to manage and evaluate the health of the business’s projects.

The formation of a PMO is not only designed drive top-down accountability; it also supports the complete operational framework for managing a multi-project environment. In effect a PMO is an information repository that provides the visibility needed to understand the health of ongoing projects and the potential impact of planned projects – and ensures that all projects are evaluated in the same manner. Without a PMO ‘knowledge centre’, executives and the PPMT are hindered in their ability to make the necessary collective decisions based on the right information.

Dear Readers,

You may be surprised to find out that PPM derives its beginnings from the world of financial investing. PPM leverages the work of a Nobel Prize-winning economist to bring balance to an organization’s project activities.

Below is a short article from the project and programme web portal Gantt Head about Dr Harry Markowitz who created a theory about investment that would change the world.

The World of Modern Portfolio Theory
In the early 1950s, Harry Markowitz–an economist at the City University of New York–created a theory about investment that would change the world. He created a unique approach to investing in stocks and other assets. Unlike traditional asset management, which focused on predicting individual stock price movements using fundamental or technical analysis, Markowitz focused on evaluating the performance of a portfolio of assets based on the combination of its components’ risk and return. His hypothesis and subsequent work were so revolutionary that Professor Markowitz was a joint Nobel Laureate for economics in 1990. This system has become known as the Modern Portfolio Theory (MPT).

However, this theory had to wait for advances in computer power to become fully available. Because of the complex financial analysis and models used to predict a stock’s potential risks and return within a portfolio, computers were needed to perform the analysis.

At the core of MPT is the concept of diversification. Diversification helps spread risks between investments while continuing to achieve returns. Modern portfolio analysis has shown that even a random mix of investments is less risky than putting all your money in a single stock. The crucial insight of MPT is that risks found in individual investments matter little when compared to its contribution to the risk of the portfolio.

Thus, diversification involves a trade off between risk and return. MPT makes some very reasonable assumptions about the way investors behave regarding risk. Although some investors can take more risk than others, investors are assumed to be risk-averse. A risk-averse person is one who, when faced with assets which promise to provide the same return, will choose the asset with the lowest risk. In order for investors to accept higher risk, they will want to be compensated with the potential for earning a higher return, and vice versa.

MPT and Project Portfolio Management
As the concept of MPT filtered into the investment world, giving investors and fund managers new tools for assessing risks and returns on a portfolio, business leaders and professors began to look at this theory and how it would apply to the corporate world. Early articles like the 1981 Harvard Business Review article “Portfolio Approach to Information Systems” by F. Warren McFarlan attempted to describe how creating a portfolio of projects and managing these projects together could minimize disasters and increase results from projects.

Project Portfolio Management takes the concepts of MPT and applies them to the three key evaluation criteria used to measure projects: the costs to undertake the project, the risks involved in the project and the potential returns on the investment. Portfolios are created of similar projects (projects of similar types, durations, requirements or goals) and are managed as a group.

By pooling the projects together, the risk of the portfolio can be managed by tweaking the projects within the portfolio. One project’s mix of high risk with high potential return may not be acceptable by itself, but when mixed with other low-risk projects, it may become acceptable to the company. Projects become investments to portfolio managers, and corporate approval for activities occur at the portfolio level and not at the project level.

The SaaS (Software as a Services) model levers the developments in Web 2.0 to deliver the same features and functions as desktop programmes, including rich user interfaces and fast feedback via a web-only infrastructure. The current jostling and market competition between the software giants Google and Microsoft is very typical of developments within the SaaS space. Both Google and Microsoft are pioneering the latest developments (Google Office and Microsoft Office Live) to migrate into online, web based environments with the next generation of more dynamic, businessresponsive applications. Compared with the desktop environment, the SaaS model provides many compelling benefits, the most significant being the ability to have truly ‘stateless’ computing. In other words, wherever the user goes their data goes with them. This means there is no need to synchronise data, and the application runs on practically any computer, as long as the operating system supports a standard web browser.

According to IT analysts Gartner, SaaS applications present a costeffective alternative to in-house software licensing options – especially for small to medium sized enterprises. SaaS allows small companies to get ‘good enough’ enterprise application functionality such as a PPM tool, in a model that works for them, leaving the IT skills and capital investment burdens to the service provider.

SaaS offerings allow an organisation to spend more of its software investment money in critical areas, such as services, process definition, and support, as opposed to spending the bulk of the investment money merely on implementing technology. SaaS allows an organisation to focus on automating proven processes in shorter periods of time (compared to in-house deployments), without committing to a longterm (multi-year, multi-phased implementation) relationship with one vendor.

SaaS as a network of web based business services is now becoming widely used within the Project Portfolio Management (PPM) market as a quick, low cost, low risk method of deploying software across the enterprise. In its simplest form SaaS manages and distributes services and solutions to customers across a secure internet connection or a private network from a remote, central data centre. The core feature of SaaS is that users do not need to purchase, install and maintain the software themselves; instead they rent the applications they need from their SaaS provider as part of consultation driven Project Portfolio Management initiative. SaaS providers offer companies services that would otherwise have to be provided in-house, or on site. The need for SaaS has evolved from the increasing costs of specialised software, which have far exceeded the price range of small to medium sized businesses. Also, the growing complexities of software have led to huge costs in distributing the software to end users. In essence, through SaaS, the complexities and costs of such software can be cut down.

Dear Readers, below is a quick summary of the most important best practice considerations when deploying a PPM solution.

Who: engaging the right people

In order to organise the business for PPM, senior management and executive buy-in is absolutely critical – without this, PPM will fail. Executive sponsorship is essential to create awareness, provide support, build consensus and motivate stakeholders at all
levels to participate effectively. Executive sponsorship gives PPM the all-important ‘nod’ from above.

Why: identifying the pain and calculating the ROI

Justifying PPM within any organisation depends on the business’s ability to sell PPM’s benefits. This can be achieved by conducting a health check to establish key areas of pain and then to dovetail this with an ROI model. Ownership of the health check and ROI model should be with the key project stakeholders and executive sponsors. The ROI analysis will help the organisation define and quantify potential top-line benefits and also identify the quantitative and qualitative benefits from deploying PPM, such as in revenue, market capitalisation, increased customer base and decreased attrition.

What: selecting the right tools

The successful deployment of PPM will critically depend on selection of the right software tools, and a key determinant is how the tools integrate with the rest of the business from both the cultural and the technical viewpoints. As discussed earlier, when selecting PPM tools the organisation should look to avoid a ‘rip-and-replace’ tool-set. It is essential to choose tools that are scalable and flexible, avoiding excessive and restrictive customisation, and above that integrate with peripheral applications and
are able to evolve as the business evolves. Successful tool selection needs to be embraced by everyone in the organisation, and if an application is too difficult to use, or requires people to make drastic changes to the way they do their job, then PPM will fail.

How: testing the tools and processes

Deploying a proof of benefit (PoB) is an essential prerequisite that enables the organisation to minimise all the risks associated
with the implementation of a change project like PPM. The PoB provides an actual ‘real-world’ view of the value of a PPM solution within a ‘low risk’ environment and is an excellent way to facilitate the communication of potential Return on Investment (ROI) and Return on Opportunity (ROO). The PoB is in actuality the first deliberate step in a phased approach to implementation by starting small and then rolling out more functionality and coverage over time.

When: avoiding ‘big bang’ deployment

It is essential to understand that PPM by its very nature is a change project and that each business is different in terms of its level of maturity and ability to handle change. Building on a PoB as part of a larger, phased approach should be undertaken and this should be based on the company’s internal project management readiness and maturity. Use the results of your business case and PoB to scale the PPM solution throughout those areas of the business that are most needy. An incremental implementation allows cultural issues to be solved on a domain-by-domain level and then its success to be sold upwards throughout the organisation. PoB allows the business to cultivate best practice examples that can be converted into
quantifiable results for management.