Revitalizing Project Efforts

With a PMO
A case study for the CAPM® Certification Course.

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Contents
Introduction 2
Challenges 2
Solution 3
Approach 4
Final Outcome 6

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 Introduction

A niche market software development organization with a 25-year history of

delivering services in the healthcare industry is focused on providing mission-
critical software to managed care providers and long-term health care facilities.
The software is an end-to-end product that handles everything from admissions
to prescriptions, tracking the level of care, billing insurance, and Medicare. The
organization had been the leader in the marketplace but recently saw a decline in
its customer base and an increased number of new competitors entering the
market with innovative technology, improved features, and better performance.

Challenges

As the software has grown, it has increased in complexity, with multiple

historical workarounds and patches clogging the performance. The application
is a combination of tools and legacy applications that have been developed,
leaving no common architecture for expansion, scalability, or efficient upgrades.
Therefore, every new feature, bug fix, and modification to the application has
resulted in a complex initiative with high risk and expanded difficulty.

Upgrade efforts have traditionally faced extensive challenges, with features

constantly changing, little to no thought of integration, and poor-quality
processes. In addition, upgrades face schedule issues, cost overruns, extensive
risks, and ongoing defect lists that are not resolved.

The current software development effort is being managed from a functional

perspective, with a separate product owner devising the features and
functionality to be included in efforts. Product owners report directly to the
Executive Leadership Team (ELT). The application development group receives
directives from the ELT and is not able to contribute to decision making for
schedule, scope, cost, or feature set.
Finally, the software provider does not have a project management process for
handling its customer orders, and software development initiatives are managed
by the Product Development team.

Solution
The first step in approaching this issue is to create a Project Management Office
directly responsible for implementing and managing a project management
process with each initiative. A PMO created with a direct line of
communications with the Executive Leadership Team and a matrix-based
reporting structure for the software development and quality processes
facilitates an internal organization that has both the authority and
communication channels to implement a project management process.

The project management process can be standardized. The PMO can set out best
practices, procedures, policies, and processes for every project to follow. In
addition, with centralized implementation of project management, the PMO can
begin the socialization and communication processes necessary to ensure that
the organization understands both the value of project management as well as
the responsibilities that all team members have in contributing to project
success.

A matrix reporting structure within the Applications Development group means

that the PMO will have the ability to balance resources across project efforts and
ensure that the right resources are assigned at the right time to achieve project
success.

The centralized nature of the PMO will facilitate project reporting across all
projects. Combining this with communication channels established ensures that
project progress, status, risks, issues, and budgetary considerations can be
communicated in a timely and effective manner to the appropriate
organizational leaders.

The PMO provides the following advantages:

1. Direct Access to Leadership
While projects may communicate with a project sponsor on the leadership
team, the PMO will be able to consolidate all projects into a single deliverable
and address resources, risks, budget, and schedules at the enterprise level.
Centralizing these aspects ensures an accurate picture of the current project
status at the enterprise level and can take advantage of economies of scale,
elimination of redundancy, and coordination of scheduling efforts.

2. Support Group for Projects

A PMO has the ability to guide, mentor, and implement standards around
project management, increasing the potential for consistent and repeatable
success for all projects. Supporting projects includes the adoption of single
template versions, consistent communications, and education for all
managers in effective leadership approaches for their efforts. In addition, the
PMO has the ability to see across projects and can balance out resource
utilization and provide additional organizational process assets to the project
efforts.

3. Defined Project Management Process

A single defined Project Management process decreases the amount of time
and effort project managers must invest in setting up their projects, trains
external stakeholders on what to expect, and overcomes objections to
process as process is implemented once rather than for each and every
project. Project Managers can be left with the flexibility to tailor their
approaches within the framework, but mandated standard compliance
ensures that minimum standards are enforced.

4. Centralized Project Governance and Reporting

Centralized governance and reporting ensures that the PMO has accurate and
up-to-date information on every project. Consistent reporting overcomes
issues around project status interpretation, the potential for hidden
information, and the communication of consistent accurate information in
standard form. This ensures that leadership teams have a clear
 understanding of the data and facilitates roll-up of individual projects into
larger overall status.

5. Continuous Improvement Process

Implementing Project Management is only a first step. The PMBoK stresses
the need for tailoring the process to the effort and the organization. Every
project has specific needs, challenges, and obstacles. A PMO will introduce a
core set of processes to ensure the greatest amount of success, and each
project will tailor its approach to increase chances of success. Following a
continuous improvement effort (Deming) encourages review, analysis, and
modification to process on a scheduled and repetitive basis, with a primary
focus on tailoring approaches to best suit the needs of the organization and
the initiatives undertaken. Learning from the past ensures that issues are not
repeated across projects.

Approach

Implementing a PMO is a multi-step process with focus on all stakeholders of the

effort. Employees, management, functional teams, customers, and HR-related
processes will all be impacted. In addition, the deployment of best practices,
standards, and governance models can be more than a bit overwhelming to
teams that are already overworked.

To successfully implement a PMO,

1. Define organizational structure

While a matrix organization consolidates functional areas and project
management into a single organizational structure, every group will have
variations on the model that are either based on company culture, industry,
or experience. Creating a group that provides analytics on project
performance and reports directly to the head of the PMO may facilitate the
achievement of economies of scale and may “violate” the purest definition of
matrix. Decisions like this are generally achieved with discussion of
 advantages and disadvantages with a critical eye toward the reporting chain
and operational directions from management.

2. Communicate structure up and down the command chain

Once the structure is defined, there remains a need for socializing it and
communicating it across all management levels. Discussions on the
organizational structure, prior to implementation, will facilitate the
identification of cultural or individual issues that can potentially be overcome
with modifications to the structure. Through this interactive dialogue, the
structure is enhanced prior to roll-out.

In addition, a matrix organization provides multiple reporting channels. A

team member may report to both a functional manager as well as one, or
many, project managers. Project related work and performance is managed
the project manager(s), and career-related issues are addressed by the
functional manager. Education, overall performance, career growth, salary,
etc., are generally managed by the functional manager as they are a
“permanent” management chain to the employee.

3. Implement matrix-based management with functional areas

4. Perform GAP Analysis and prioritize process

 Prior to identifying the process roll-out schedule, the PMO management
team should evaluate the current organizational landscape to determine
cultural, communications, and authority-driven issues with the historical
performance of initiatives. Change Management may become a priority if
past experience has been that executives would consistently shift project
scope or objectives without corresponding changes to schedule, cost, and
quality. On the other hand, procurement may be decreased significantly in
priority if the organization does not do any formal procurement activities.

Performing this GAP analysis facilitates the identification of a “quick win”

process that can be rolled out easily, resulting in immediate positive impact
on the project efforts. In addition, processes can be tailored and rolled out
through improvement cycles, focusing resources on those areas with the
greatest pain points.

5. Continuous improvement process

Following a continuous improvement cycle (Plan, Do, Check, Act) is a proven

technique to ensure that process is not mandated without resulting tailoring and
customization to meet the desired goals. The continuous improvement cycle
avoids unnecessary process steps and ensures that each process is optimized for
the greatest performance and positive impact on project success.
Final Outcome

By recognizing the internal challenges in the organization and correlating

issues with root cause analysis, it becomes readily apparent that implementing
best practices for project management will have a tremendous impact on
project success. In addition, the current organizational structure, with Product
Management reporting to the Executive Leadership Team and Applications
Development reporting to Product Management, creates an untenable
working relationship with no clear escalation path when requests cannot be
accomplished by the development teams. Implementing the PMO will place
an organizational structure around efforts that can directly interact with the
Executive Leadership Team and operate on a peer level with the Product
Management group.

Yet the overall impact of a new organizational structure, reporting chains, and
new process and project management governance is bound to have negative
impacts on teams and on projects. Therefore, leveraging a progressive
elaboration strategy of identification, socialization, customization, and
implementation in smaller pieces ensures that team members are not cut out
of decision making, have a clear understanding of the direction of the
organization, can gain information prior to organizational shifts, and
contribute to the implementation of new processes.

Most importantly, the implementation of standard project management

processes through continuous improvement cycles increases the overall success
factors for projects and will have an immediate impact on success factors for all
initiatives. Balancing resources across projects, identifying and eliminating
redundant tasks, and learning from past mistakes increases the overall ability of
projects to be responsive, accurate, effective, and on-time.

Based on the Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK®
Guide) ― Sixth Edition.
CAPM, PMI, and PMBOK are registered marks of the Project Management Institute, Inc.