Creating the PMO Business Case

You’ve asked a lot of questions to a diverse group of stakeholders. You’ve done an assessment. Now it’s time to create a PMO Business Case and start moving the needle from idea to reality.

If you notice, I call it a PMO Business Case, not a PMO Charter. I don’t like the word “charter” when talking about creating PMO’s. Charters are normally written for projects, which have a defined start and end. If the PMO is to be a lasting department, there needs to be a deeper level of understanding as to what it is and how it will use, and capitalize on, the valuable resources the company will expend.

Below are some of the key components of a PMO Business Case. I recommend most of these, but change up/rename as you see fit for the work you’re doing.

Executive Summary. This is going to be a very important part of the business case. It justifies to the world why you believe the company needs a PMO, its purpose, services, and generally how it will help the organization succeed. Don’t make it long and flowery, otherwise you can lose the reader (write it with the exec team in mind). I also recommend you write the executive summary last. Yes, last. That way, it can essentially sum up all the other information in the business case.

Mission & Vision for the PMO. You might put this in the executive summary section. I like to keep them separate. I leave it to your discretion. The Mission will describe WHY the PMO exists and its purpose. Spend time on the why. When working with stakeholders, this is an important talking point. The Vision will frame up where the PMO is headed. For example, I was part of a new PMO that started in IT. Our vision was to move it to an EPMO over the course of five years. This was in the business case and on the roadmap.

Strategy (Roadmap). The PMO’s strategy will answer the question; how will we achieve our vision? What steps are we taking to continually grow and drive greater results? Like any other department, you want to see the PMO grow. The business case approvers want to see that too. Have a strategy/roadmap for your PMO.

Staffing Strategy. Staffing will probably be the biggest expense for the PMO. Have a strategy for hiring, training, and maintaining PMO staff. Tie your staffing strategy to the greater roadmap. For example, if in two years you move from just managing projects to a large portfolio, you’ll need to plan to add a portfolio manager. Same goes for program management. Training can get spendy, so be prepared for that too.

Objectives & Services. This answers the question of “So, what’s the PMO gonna actually do?” You could easily go down a rabbit hole here, but don’t. Keep it high level. Highlight things like Governance: doing the right things at the right time with the right people; Resource Management: understanding the work being done, ensuring it’s the highest priority work, and the capacity they have to get it done; Consistency: projects being run in a similar fashion with consistent artifacts so stakeholders understand each project will be run the same; Communication: transparency of PMO progress and project success. There are more, but you get the idea.

Project Prioritization Process. If the PMO will be leading the charge for project prioritization, the process (at least at a high level) should be highlighted, including the roles involved in making the decision. Don’t forget about how to communicate the priorities once decided!

Success Factors. I highly encourage this to be quantifiable and easily tracked. For example, saying “improve delivery” doesn’t tell me anything. Saying “Deliver 90% of the projects the PMO manages on time, to scope, and within budget” can be reported against. You don’t need a lot of these. I say no more than 2-3. Make sure these success factors are aligned with the executive sponsor’s expectations.

Financials. Where is the money coming from to fund the PMO? For example, if the PMO is in IT but supports tech projects for all areas of the company, each department may allocate a percentage of their budget to pay for you. That’s good info to know! If you’re doing T&E and/or training of staff, understand how those expenses should be estimated and tracked. Nothing’s free, so know the financial aspects of the PMO.

Organizational Structure. Where will the PMO report into? IT? Finance? Operations? There are lots of choices here, and it’s usually outside of the PMO leader’s control. The only thing I would fight for is to ensure it doesn’t report too low in the organizational hierarchy. The lower the reporting, the less credibility and influence the PMO can have with those up the ladder.

Assumptions & Risks. When starting a PMO, you will have certain assumptions. For example, assume you’ll always have an executive sponsor to go to for support. Or the PMO will be involved with strategic planning. Risks are abound and you’ll ID those during the assessment. Note them here and ensure those approving the PMO understand what they are and help with mitigations.

Key Team Member and Stakeholder Roles. Roles, not actors. People come and go from companies all the time. Reorgs change reporting structures. Growth can create new divisions. Because of this, focus on the ROLES that will stay constant, not the people who fill those. If you’re an IT PMO, maybe the CIO or VP of IT will always be a key stakeholder. Note that as a role always involved.

Approvals. Have the sponsor and any other senior leaders who will approve the PMO sign the business case. Let’s make this official!

Your business case may contain more sections, but these are the sections I believe are important. What else would you add?

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Conducting a PMO Assessment

As a consultant, I love doing assessments. Why? Because assessments help clients identify pain points and areas of opportunity. My favorite is the PMO assessment. Whether considering standing up a new PMO or revamping an existing, doing an assessment is a key initial step to setting one up. Though there are PMO maturity models, which are all good, I don’t like to talk about those right away. Most clients want to see better delivery results first. Though maturity models are great, I won’t make reference to them here. My goal is to give you assessment areas to consider when you’re asked to do one.

A while ago I wrote about questions that can be asked when being asked to setup a PMO. You can read that here. These questions will test the requestor(s) as to whether a PMO is wanted and needed, or not. Assuming this test was passed, it’s time to move onto the full assessment!

A couple things to start here. First, find someone (preferably at the C or sr. exec level) to authorize and fully support you; the Executive Sponsor. Second, these assessment steps below are general and can be used when setting up a new or assessing an existing PMO. It’s up to you to decide which are relevant and which are not. When doing an assessment, ensure this is a CROSS-FUNCTIONAL exercise. The more input, the better.

Finding the PMO’s “WHY”. Though this is listed first, it may be defined in your assessment last. WHY is a question that must be answered before moving from the assessment phase to creating the PMO’s business case. As discussions and interviews take place, look for those common themes and turn them into a WHY statement. When the sponsor or exec committee asks why is a PMO important, you’ll want a good answer.

Strategic Alignment. Yeah, I talk about this a lot when discussing PMOs. But, it’s a pretty big deal. Understand how strategy is determined and also how project decisions are made to achieve organizational strategy. Is there any governance in place and if so, how effective is it? Are there trade-off and priority discussions at this level? Do people feel strategy and supporting governance is effective? How many “Pet Projects” get spun up?

Perceived Stakeholder Value. If the PMO is existing, do stakeholders believe it is delivering value to the organization? Or, if standing up a new PMO, do stakeholders believe it will be valuable? This can be hard to assess, especially if they’ve never worked with a PMO before, but a topic worth discussing.

Existing Processes and Tools. Document the processes used today. Ask questions about their effectiveness, what’s working and not working, and if they’re used consistently by project staff. Dive into the tools. Ask if the tools dictate the process, its ability to meet the needs of the teams, reporting abilities, integrations, and issues. I’m always surprised how tools are selected and the processes are adjusted to the tool vs. the other way around. Ask historical questions about why processes and tools were selected and used.

Project Staff. Evaluate the existing or proposed (for those new PMO’s) staff. Are they seasoned PM’s or fall in the “accidental” category? Uncover gaps and whether or not training is needed right away. Project Managers are out there every day representing the PMO, so make sure they’re well prepared!

Current Project Portfolio. Dig into the current portfolio of projects, both those in progress and those on the (hopefully prioritized) backlog. One of my favorite questions I like to ask is how many #1 priority projects are there? If the organization is mature, there’s one. In a company that’s more reactive and immature, a whole bunch and probably not a lot getting done. Understand how people and resources are assigned and if they understand their priorities, too. Get a feel from the project staff and key stakeholders about how the portfolio is prioritized and amount of work in progress at any one time.

Reporting and Communications. What are the reporting metrics in use today, and are they important to the intended audience? Get a feel for what reports a PMO leader needs, what functional managers want to see, and metrics the C-suiters find important. Reports are a look into value delivery, so make sure you know what’s needed to prove ROI. Also, look at communication cadence and means by which to share this information. Is it email, meeting, bi-weekly, weekly, monthly for the execs, etc?

Project Quality Considerations. How is quality baked into everything the PMO and project teams do? Your key stakeholders will want the output right the first time, not on the second or third time around by doing production bug fixes. Take time to talk about and understand quality concerns.

Organizational Change Management. How does the company react to change? If you plan on creating a new PMO or revamping an existing, how will that change be accepted? It will also determine how fast you go in its implementation.

Financial/Budgeting. A PMO ain’t free!! Assess the budget and how costs will be tracked. If this is a PMO where travel is required, understand T&E budgets and limitations. Sometimes departments, like a PMO, are funded under a specific department, number of departments, or cost center. Understand where the money comes from.

Assumptions & Risks. Every project has these, and doing a PMO assessment is no different. When you’re interviewing people, note anytime you here “Well, I’m assuming…” and “Ya know, one risk I see is…” If you pay attention, these will come up more than you may have initially thought. Keep a section in the assessment dedicated to this. Also, understand how assumptions and risks are documented for each project.

Vendor Management/Relationships. Because 3rd party vendors can be a big part of a project, understand who manages and owns vendor relationships. Sometimes it’s the PMO, other times a separate management group. Know where those lines are drawn.

Project Delivery “Pain Points”. Think of this as your last “catch-all” question.

Your assessment is now complete. Yeah! You’re probably sick of asking the same question to a diverse group and typing/writing/scribbling all types of information. Now it’s time to put it all together.

I won’t tell you how to put all the information together in a report (Google can give you templates and suggestions). I will highly encourage creating an As-Is/To-Be process model, though. Pictures are worth a thousand words, and creating a graphic of how things are done today, the pain points, and where the PMO will go in the future is a great communication and alignment tool. This will also help get approval to move to the next step; the PMO Business Case (which ironically will be the next PMO blog post!).

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The Role of a PMO Steering Committee

Starting up or revamping a PMO is tricky and complex. They’re established to address a number of business opportunities and problems. If a PMO will help navigate these turbulent waters, it should not be on one or two people to determine its direction. Committed organizations will setup a PMO Steering Committee.

I’ll start by saying a PMO Steering Committee is not a guarantee. Frankly, I think this key group is overlooked quite often. Every PMO will need an Executive Sponsor, which will also be part of this group if formed. But for some companies, they don’t see a steering committee as a necessity. Smaller organizations that may be OK, but for larger ones I’d say make this a must-have.

What is a Steering Committee? In project management, a steering committee is a governing body of key stakeholders tasked with overseeing and supporting a project to ensure the attainment of its goals. They provide guidance and support throughout the project lifecycle. Now take that definition and apply it to the PMO. I’ll say they’re a governing body of key senior management tasked with overseeing and supporting the establishment and operation of the PMO as a viable business unit.

Who’s part of this committee? The PMO Steering Committee should be made up of cross-functional senior leadership who have the authority to be decision makers. Because these leaders usually oversee departments which the PMO will interact with, they can assist with adoption. They have clear direction of their role on the committee. They understand the importance the PMO will have on organizational success and business strategy. At the end of the day, they’re committed to PMO success.

What roles to PMO Steering Committees play? Here is a list of services they can provide.

  • Help identify the organizational need, strategize and prioritize the PMO’s key initiatives
  • Approve the PMO Charter/Business Case
  • Identify and finalize PMO KPI’s and critical success factors
  • Review PMO startup and revamp milestones; pivot when necessary
  • Review and mitigate risks
  • Advocate the PMO’s value within their functional areas and increase adoption
  • Quickly resolve conflicts
  • Escalation point for larger issues
  • Monitor the budget and approve spend
  • Counsel on staffing, obtaining internal candidates and reviewing external hires
  • Review progress
  • Executive mentorship of the PMO leader

How often should a PMO Steering Committee meet? The quickest answer is as often as necessary. In the early stages, I recommend meeting at least bi-weekly. As time progresses, these can be monthly, but no longer than that.

When preparing for a PMO Steering Committee meeting, my feedback is have your shit together! These are senior leaders, so their time is limited. Send the following out 24 hours in advance in the event they have time to review before the meeting.

  • A clear agenda
  • Single page status report with milestones and KPI’s clearly called out
  • Key risks called out
  • Decisions that need to be made
  • Conflicts to be resolved
  • Anything else the Steering Committee identifies as important

Will this committee also steer the project portfolio? It definitely could, but this group’s charter is to establish the PMO as an effective business unit.

A PMO steering committee can be a great asset as it is being established, revamped, or as an ongoing “gut check” it’s meeting business value. Though not a guarantee, especially in smaller companies, there are functions it performs that are beneficial.

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The Role of a PMO Executive Sponsor

When you’re in the process of setting up or revamping a PMO you, as the PMO leader, will need support and direction. Enter the PMO Executive Sponsor! The sponsor will give your PMO street cred. Though a PMO Steering Committee is not guaranteed, make the PMO Executive Sponsor a must-have. Otherwise, you may not have any real authority.

Who is the PMO Executive Sponsor? Like the name suggests, they’re on the executive leadership team. They’re high enough up the corporate food chain that they give the PMO credibility and the right level of authority. This person helps with change management, adoption, and gaining the PMO traction in the organization. If the sponsor is a middle or lower manager who thinks a PMO is a good idea, I’ll tell you it’s a recipe for failure. The higher up the better. They’re fully committed and bought in to the purpose and value of the PMO, even to the point their performance is tied to the PMO’s success. If you get the feeling this person is not 100% bought in, find someone else.

Does the PMO Sponsor go away? No, the PMO sponsor is a big deal regardless of the stage the PMO is in. They’re especially important at the beginning of a PMO’s life or during a change. If at some point the sponsor who started the PMO hands it off to a functional leader, still consider them a sponsor. A PMO’s value should be constantly reinforced at the senior level (they have credibility with their peers).

The Executive Sponsor can perform many functions. The following are some of the key that I’ve experienced:

  • Ensure the proposed PMO is aligned with organizational structure and goals of the company
  • Provide feedback and approve the PMO business case
  • Be a mentor to the PMO leader
  • Be a decision maker
  • Identify KPI’s and/or key business success factors and give direction on how to report on those
  • Be a PMO Champion within the organization and promote its value
  • Provide high-level direction, oversight and support to the PMO leader
  • Be an escalation point for PMO issues
  • Ensure the PMO meets its defined metrics and goals
  • Approve PMO change requests
  • Assist with staffing and other necessary PMO resources

How do I know if this Executive Sponsor will be effective or not? When I’m asked this question, I think back to the effective and ineffective PMO sponsors I’ve worked with. Here are a few queues that will help determine if they’ll be effective, and whether or not seeking someone else is in the cards:

  • Talk less, ask more. This is a trait of all good leaders. They take time to listen, ask thoughtful questions, and render a decision with the information available. If they do a whole lot of talking with few questions, or continually cut you off when talking, it’s a red flag.
  • Have ideas around goals and what to report on. My least favorite answer to just about any question is “I don’t know; you decide.” That may work when going out to dinner, but not when talking about an important business unit. They should have an idea of the goal the PMO needs to achieve and the metrics that are important to the company.
  • Willing to negotiation. Speaking of goals and metrics, if the sponsor does know what they want, they should be willing to negotiate to get it. For example, I had a PMO sponsor who wanted to essentially take their flailing PMO from a CMMI 1 to a CMMI 4…in 6 months. Well, I appreciated the drive but not the timing. Also, this was a fairly new PMO that was just trying to find their way. After some fairly lengthy discussions, we agreed to CMMI 2 in a year. We were able to achieve the goal of maturity, which is ultimately what he needed. No negotiation could have lead to us failing in his eyes, which would not have been good!
  • Goes to bat for the PMO and solves problems. Sometimes you have to call in that older sibling to step in and protect you. Same goes for the sponsor. If you’re having an issue with someone at the company, the sponsor can help resolve it quickly (and sometimes aggressively). They can also quickly solve problems that would take PMO leaders more time to resolve on their own.
  • Not afraid to put their name on the line. This is literally and figuratively. They’re the first to sign the PMO business case, give their approvals, and backup the PMO leader and the value the PMO brings to the company. It can be a risk for them, but they’re not afraid!
  • Available. Sounds simple, but it’s not. They have to make time for the PMO and not return your phone calls 3 days later. Execs are busy people, so make sure they have the time to fully support you and the PMO.

Lastly, if you’re wondering how often you should meet with the Exec, I’ll tell you as much as is necessary. In the early phases it will be more often. As things mature, less often. I’ve found informal meetings work better because we can talk more freely. Over coffee or beers, in person or virtually, all work great. Call each other when needed. Ultimately, keep the lines open!

The PMO Executive sponsor is a big deal! Ensure they’re fully bought in to the PMO’s value and the business results it will bring. Align with the sponsor and if you see any red flags in their ability to effectively champion the PMO, say something quick. Communicate often, and ensure you as the PMO leader are transparent. The sponsor is a valuable asset on the PMO journey!

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