28 Jan 2021

What will PMOs look like in 2021 and beyond?

Project management insights
What will PMOs look like in 2021 and beyond?

AIPM and KPMG research reveals that centralised project management offices are growing in popularity, as well as broadening the scope of their roles. So what comes next?

Their popularity waxes and wanes, but recent research has shown centralised PMOs currently have the backing of senior leadership and are ramping up their scope. AIPM partnered with KPMG to survey almost 500 Australian project managers, finding a positive trend towards the successful use of centralised PMOs to coordinate projects and programs.

The research found 57% of organisations use a centralised PMO to coordinate projects, up more than 15% from 2018. Fewer than two in five had “disestablished” a centralised PMO in the past two years, down 36% in 2018. Encouragingly, 37% of respondents rate their centralised PMO’s ability to support and effect change as “very or extremely effective”, a rise of 4% since 2018.

So, how will PMOs evolve in 2021 and beyond?

 

FOCUS ON STRATEGY 

Consider centralised versus decentralised PMOs. A centralised PMO typically takes on higher value-added capabilities such as governance, portfolio management and prioritisation frameworks, as well as significant HR responsibilities for resources. In a decentralised PMO, those capabilities are usually distributed within business units, with project managers being directly aligned to each business unit.

AIPM CEO Elizabeth Foley says the shift to centralised PMOs is gaining momentum.

 

“We’re seeing organisations that have a growing desire for a clearer, strategic, enterprise-wide view of what they’re doing, rather than just having projects being run within various departments. That requires unified prioritisation and a clear strategy for the allocation of scarce resources.”


The centralised trend suggests boards and executive teams are recognising the importance of empowering project management teams. “They’re getting it. They know that execution capability, not just strategy, can be a competitive advantage,” Foley says. 







PURPOSE BUILT

The Victorian Agency for Health Information (VAHI), an administrative office of the Victorian Government’s Department of Health and Human Services, is undergoing its own evolution.

Sam Colverson, the agency’s Senior Manager, Strategy and Performance, says in a complex, project-intensive environment, the establishment and development of project management capability and governance through an enterprise PMO has been critical for VAHI to manage activities and assist the leadership team in making the right resource-investment decisions.

VAHI has one PMO function that is expanding its scope to include business as usual (BAU) functions, rather than concentrating only on project delivery.
“And it’s more integrated into the planning and performance discussion at an organisational level, as opposed to just being stuck in one or two divisions or branches,” Colverson says.


STRIVING FOR EXCELLENCE 

As part of its pursuit of excellence, Colverson says VAHI has been rolling out a series of training initiatives for all staff around project management and agile project management, including targeted certifications for key personnel and crucial project roles. “That’s part of our plan in terms of lifting the level of capability and understanding, improving the value of project management approaches, and creating common languages across the agency,” he says.

However, Colverson adds that he does not believe in blanket training for the sake of it. “The purpose is to improve performance and outcomes, so it’s about appropriateness.”

VAHI has assessed what skills are most needed across the agency and targeted training in general, specialist and executive roles, with the latter zeroing in on the role of project sponsors and introducing concepts around agile project management at an enterprise level.
 

THE ROLE OF TECHNOLOGY 

In considering PMOs of the future, Foley says technology has become a key factor that helps PMOs make the transition from a reporting-only function to a centralised model that is more of a strategic asset for organisations.

“They’re no longer an ivory tower that’s disconnected from what’s going on at the coalface,” she says. “With so much new collaborative technology, it allows genuine two-way communication that facilitates dynamic, integrated management across the organisation.”

VAHI is planning to deploy a central technology solution in 2021. Colverson says the aim is to have a single, intuitive platform that reduces the administration burden and increases the visibility of project performance for project managers. “We can then also harvest information from a portfolio perspective,” Colverson says. 

“What are our portfolio risks and opportunities? What are the things we need to be taking on dealing with? It’s about shifting the PMO from being rearward facing to forward looking. The PMO has to be a place that creates value and insights for its key customers if it’s going to continue to be valued.”
 

LEAN AND AGILE A GOOD FIT 

One question project managers will have to address is how Lean and agile project management will accord with a centralised PMO model. Foley believes centralised PMOs align with Lean and agile methodologies.

“If you think that centralised approaches are about optimising what resources are available – people and dollars – to achieve strategic outcomes, that’s Lean philosophy in and of itself. And it’s agile – don’t stick these five resources in that department when they could be used in this other department.”

Foley says organisations are also moving to broader toolkits to execute, such as human-centred design and Six Sigma.
 

“And having a centralised PMO means you can choose a best-fit approach by looking at what skill-sets you have, along with your project management experts and then their underlying expertise being accounting or compliance or IT or engineering. You can pull in resources very flexibly and adaptably, so I think it’s a good fit.”


Colverson says, for agencies such as VAHI, the interplay between different project management methodologies is still being debated. VAHI has a large, agile IT development project, while other projects are handled in more traditional ways. “Then the BAU side of things is not in an agile world at all.”

He believes training is crucial to any change. “If we can equip teams with a common language and an understanding of the agile framework, then it’s going to help them facilitate connections between these projects and the BAU side of the business.”

Colverson also sees PMOs becoming more of an enabling function, not a doing function: “We’re there as a pinch-hitter, and as someone who can provide advice.”

 

MORE EXECUTIVE MANAGEMENT INPUT 

The AIPM research report concludes that managing change and communications associated with projects remains an area of low maturity for PMOs.

Increasing the professionalisation of this area – potentially through an enterprise PMO – offers potential improvements to the success of projects and programs to better align business strategy, people and the project outputs.

With an eye to the future, Foley expects PMOs to become a core organisational capability. “It’s going to mean more executive management engagement in the construction of a portfolio. People are going to be concerned more with managing a portfolio of projects, and management is going to be more proactive about how the investment dollar is spread across projects.”

While centralisation is likely to be an ongoing trend, Foley says PMOs will take shape based on their specific goals. “There’s not going to be one cookie-cutter approach. They’re going to need to be more adaptable and able to make micro and incremental change as organisations change, rather than being stuck with a fixed operations model.”

Learn more about the state of project management in Australia. Download our report now.