2014 International Conference on Economics, Management and Development

Challenges in Establishing, Managing, and

Operating a Project Management Office
Hanadi Salamah
[email protected]

Loay Alnaji
College of Business Administration, Al Ain University of Science and Technology
[email protected]
Abstract— The purpose of this study is to identify the challenging
According to Pinto & Selvin (1988) a project is characterized
by having a defined time for completion, limited budget, well
factors leading to the success or failure of the PMO establishment
along with recommendation on how to address and overcome those
defined and pre-set objectives, as well as a series of activities
challenges. Lack of a defined project management methodology,
to achieve those objectives. As for project management;
project resource contentions, not tracking resources utilization and
(Kerzner, 2003) defines it as the planning, organizing,
project managers not being empowered to make needed decisions
directing, and controlling of company's resources to achieve
were found to be the top challenges in establishing a new Project
Management Office. specific goals defined for a particular project. According to the
Project Management Institution (PMI, 2000), project
management involves applying knowledge, skills, tools, and
Keywords— Project Management Office, Project Management, techniques to project activities to meet or exceed project's
PMO, PMO Challenges, PMO Failure. stakeholder needs and expectations.

III. PROJECT MANAGEMENT OFFICE DEFITION

I. INTRODUCTION
The origin of PMO can be traced back to the 1930's (Singh &
According to a research conducted by the Standish Group, Keil & Kasi, 2009 p.411) and gained popularity in mid 1990s
only 16% of projects were successful with regard to time, (Dai & Wells, 2004, p.526). The number of PMOs forming in
budget, and technical specifications (Crawford, 2001). In a organizations is increasing (Hobbs and Aubry, 2007; Hobbs et
follow up research, the Standish Group had observed an al, 2008; Spelta and Albertin, 2012). Through the literature,
increase in the success rate of projects from 16% to 26% there have been various definitions of PMO and its
(Crawford, 2001). Amongst the reasons offered for the implementations. According to the Project Management
improved success rate was enhanced project management and Institute (PMI, 2008), a project management office (PMO) is
use of standard project procedures as a consequence of the an organizational body or entity assigned various
implementation of the PMO. According to the State of the responsibilities related to the centralized and coordinated
PMO 2010 survey, 84 percent of organizations are currently management of those projects under its domain. The
implementing PMO within their organization, a jump of 36% responsibilities of the PMO spans from providing project
from the year 2000 (PMI, 2012). Organizations with PMO management support functions to being responsible for the
report more projects coming on time, on budget and meeting direct management of projects (PMI, 2008)
business goals. Having that said, it is not a straight forward
process to establish a project management office within even
the smallest firm. According to a research conducted by Authors tried to meet PMI definition of "Project
Gartner Research, Project Management Offices have a failure Management Office", never the less, some of its entities were
rate of 50 percent or more on their first attempt of given different names such as Project Office (Kerzner, 2003;
establishment (Crawford, 2001). PMI, 2004, p.17), Centre of Excellence (Hill, 2004, p.50) or
Centre of Expertise (Dai & Wells, 2004, p.524), Program
II. PROJECT AND PROJECT MANAGEMENT Management Office (Rajegopal et al., 2007, p.27). Some
DEFITION. authors noted that a universal definition for PMO is not
possible due to the difficulty in customization of individual
A project is the organization of people and resources to PMOs to fit all organizational needs (Desouza & Evaristo,
achieve a defined objective and purpose (Tuman, 1983). 2006, p.415). The responsibilities of the PMO can range from
providing project management support functions, to actually

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being responsible for the direct management of a project.” the improved success rate was enhanced project management
(2008, p.11) and use of standard project procedures as a consequence of the
implementation of the PMO. According to the State of the
Several organizations have established a Project PMO 2010 survey, 84 percent of organizations are currently
Management Offices (PMO) in order to insure successful implementing PMO within their organization, a jump of 36%
management and support of projects within their organizations. from the year 2000 (PMI, 2012). Organizations with PMO
PMO provides a wide range of functions spanning form report more projects coming on time, on budget and meeting
designing and maintenance of project procedures to strategic business goals. According to PMI's Puls of the Profession
selection and initiation of projects in a matter that aligns with Survey (PMI, 2012), PMO helps reduce failed projects,
organizational vision and objectives (PMI, 2008) (Kerzner, delivering projects on/under budget, improve productivity,
2009). The concept of Project Management Office (PMO) as deliver projects on/ahead of schedule, and increase cost saving.
an organizational entity came into shape in the late 1990s. Having that said, PMO case of failure starts when the value of
Currently, the Project Management Office (PMO) is a well- PMO within an organization is being questioned due to the fact
established concept around organizations. The evolution of the of having projects not being completed and delivered within
PMO as a concept and important entity within organizations the defined sets of objectives ranging from budget, time, and
has continued to evolve to this day since the early days when deliverables. For the PMO to not deliver results is one form of
the US Air Corps and later, the US Air Force, used Project failure; but not communicating PMO results upward is one of
Offices to assist with monitoring and controlling aircraft the main reason several organizations have the perception of a
development projects during the Second World Word and Cold failing PMO (PMI, 2012). According to the State of the PMO
War periods (Benson, 1997). 2011, only 15% of project managers who report to vice
president of IT believed their firm acknowledges the value of
In a two-year empirical study conducted by Dai and PMO. In addition, 70 % of respondents to the Global State of
Wells (2004) to investigate the establishment and use of PMO, the PMO study (2011) said that the PMO's value was
they found that 113 of 234 responses from a random sample questioned among senior management. Furthermore, some
reported having a PMO or similar entity within their authors attributed to PMO performance dissatisfaction to
organization. According to Dai and Wells (2004), the majority internal politics and power systems (Aubry et. al., 2010A)
of PMOs were established in the mid-1990s to 2000.
V. RESEARCH STUDY

IV. PROJECT MANAGEMENT OFFICE In this study, a group of project management professionals that
IMPORTANCE have been part of an initiative to establish a PMO within a
software development firm have been questioned about the
As the number and complexity of projects throughout challenges they have phased during their effort setting up the
the business world has increased, the need to have a centralized new PMO. At the time of the study, it has been over three
project coordination functions has gone up. The popularity and years since the PMO establishment. The PMO was an initiative
expansion of PMO among organizations appears to be related sponsored by the CIO to enhance the management and delivery
to this (Dai&Wells, 2004). Organizations are increasingly of many struggling and low performing software and IT
implementing PMOs. Measuring PMO success is difficult, projects within the organization. In this firm, the project
while some researchers adhere to its importance to making a organization is a matrix one in which project managers work
project successful, some research (Stanleigh, 2006) found that with project teams whose resources are pooled from various
75% of PMOs in the IS domain shut down within three years functional departments such as Software Engineering,
of formation. Other researchers highlighted the frequent Software Quality Assurance, Implementation and Support, and
changes to the form of PMOs (Aubry et al, 2010a; 2010b). To Product Development. The PMO challenges that have been
determine how a PMO delivers business values, some authors surveyed in this study are:
examined the innovation in organizational project management
(Dai & Wells, 2004; Desouza & Evaristo, 2006; Hill, 2004; 1. Lack of a defined project management methodology
Hobbs & Aubry, 2007; Hurt & Thomas, 2009; Kerzner, 2003; 2. Not tracking project’s resources hours and utilization
Martin et al, 2007) 3. Project managers not managing all aspects of projects
4. PMO is not empowered to make needed decisions
In a 1994, the Standish Group conducted a research 5. Resource contention
through which they found that only 16% of projects were 6. Lack of a defined project management methodology
successful with regard to time, budget, and technical framework
specifications (Crawford, 2001). In a follow up research in 7. Project managers managing several projects
1998, they had observed an increase in the success rate of simultaneously
projects from 16% to 26%. Amongst the reasons offered for 8. Lack of executive and top management support

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9. Ad-hoc projects prioritization and tasks assignments 2. Not tracking project’s Resources Working Hours. 100% of
10. PMO is only being a process controller and regulator respondents reported this as a challenge in meeting the
11. Rigid project management methodology PMO objectives. For the PMO to be able to provide
metrics-based analysis of resources there should be a
mechanism and a system to track actual time worked on
VI. STUDY RESULTS
actual projects and other work. Without this it is
impossible to identify the true capacity of a resources
The results of the study regarding the challenges in
working on a project, consequently leading to failure in
establishing a project management office and leading to either
meeting projects estimated schedule and cost.
its success or failure are presented in Figure 1.

100% of project managers not managing all aspects of the

project reported this as a challenge negatively impacting
Figure 1: Study Results with regard to Project Management the performance of the firm’s PMO. This is mostly a
Office Challenges challenge that should be addressed when working in a
matrix project organization. The matrix organization
structure brings many benefits to an organization through
the utilization of cross-functional teams that are working
to support a common project. Having that said, a matrix
project organization has several challenges. Project
managers competing for the same resources can lead to
conflicts leading to set backs in project schedule and
performance. In a matrix organizations, both the
functional manager and the project manager should be in
constant and tight communication to insure alignment of
project objectives and obligations along with functional
departments ones. Resource availability and commitments
is one of the most difficult challenges to overcome without
a matrix structure.

3. The PMO is not empowered to make needed decision.

This is so much related to the need of having constant and
VII. ANALYSIS RESULTS
persistence top management and executive support to the
PMO. 100% of participants have reported this as a
Below is the list of the PMO challenges surveyed in this
challenge negatively impacting the performance of the
study sorted by the percentage of feedback reported by the
PMO.
study participants.
By not having an active executive support, the PMO is not
1. Lack of a defined project management methodology. empowered to make the needed decision. While it is
100% of participants reported this as a factor negatively important for the organizations executives to demonstrate
impacting the performance of the PMO.. Not their support both at the initiation phased and throughout
implementing a standard and well defined project its lifecycle, it is also equally important for the PMO to be
management methodology within the project management seen as an enabler of the business. The PMO should be felt
office is a major contributor to the failure of the PMO. Not as an independent body challenging the status quo, rather
having a well-defined methodology and practices leads to than as an approving body to all executives’ decisions.
inconsistency in managing and controlling projects.
Consequently, reporting and visibility into projects status 4. Resource contention. Resource contention in project
and portfolio becomes a challenge and constantly a management is a conflict over access to a shared resource
moving target that is never attained especially when this resource is needed to complete a task
that is on the project critical path. 100% of respondents
reported this as a challenge they phased during the start up

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of the PMO within their firm. In most cases, resource project, and project phase. The PMO should consider all
contention leads to delays in projects delivery and these factors when having its project managers managing
schedule consequently impacting the effectiveness of the several projects simultaneously.
PMO performance. There are several factors that can lead
to project’s resource contention such as inadequate on 7. Lack of executive and top management support. Not
incorrect resource forecasting, conflicting resource having executive support is one of the major challenges
priority, inadequate information on what and when facing the success of new PMOs. 80% of respondents
resources are available, not enough skilled resources, and reported this as a challenge they phased. In practice,
too many unplanned requests for resources. One of the executive teams are the ones authorizing the establishment
most challenging reasons leading to resource contention of the PMO to address challenges faced within their
which was dominant in the feedback of this study organization in delivering and executing projects. There
participants is the presence of a significant disconnect are various ways through which executive team should
between the PMO and decision makers who assume that show support to the PMO organization and its members
there are enough resources for all projects when, in reality, and processes. For instance, top management should
there often are not. Resource contention challenge is attend steering committee meetings, embrace the PMO
highly related and impacted by both challenge 2, 8, and 9. processes and methodology, and empower the PMO and
its PMs by giving them decision making authority. One of
the worst things an executive can do is to undermine the
5. Lack of a defined PM methodology framework authority and power of the PMO by overriding a PMO
This challenge is mostly applicable to the PMO that is decision which have been reported to be one of the
established within IT and software development dominant behavior top executives demonstrated their lack
organizations since the integration between the Software of PMO .
Development Life Cycle (SDLC) and project management
methodology is usually not straight forward. 80% of 8. Ad-hoc projects prioritization and tasks assignments.
respondents reported this as a challenge. An overall Accepting and authorizing new projects to be managed
project management framework with the basic phases and and supported by the PMO should not be performed in an
gates and a few key controlling artifacts such as business ad-hoc or informal matter. 75% of participants reported
case, project schedule, status report, etc. should be defined this as a PMO challenge. Ultimately, ad-hoc authorizing of
and agreed upon between the PMO and the software projects leads to failure of projects due to the lack of
development related departments. This is sometimes available resources and conflicting priorities. Most of the
known as a PDLC (Project Development Life Cycle), and time, accepting new emergency projects trumps already
many different SDLCs can fit under the framework, running projects leading to a serious project block. The
tailored to the needs of the project type. process of accepting and prioritizing new projects should
be done periodically along with all new projects requests
6. Project managers managing several projects along with the currently running projects.
simultaneously. One of the major factors that lead to a
perception of PMO failure is not being able to deliver 9. PMO only being a process controller and regulator. The
projects as planned. A major factor contributing to this is necessity and importance of having a PMO methodology
the PMO managing number of projects more than it can to manage projects should not lead into falling into the
handle. This happens as a result of not being able to trap of being only a methodology controller. 30% of
prioritize projects according to demand and supply participants reported this as a PMO challenge. The
(Challenge 9) and also not being able to estimate the load objective of the PMO should be to work on following the
of a department or team due to the lack of metrics-based methodology in order to aid and guide project
understanding of resource capacity (Challenge 2). 80% of management practices to insure consistency of project
respondents reported this as an obstacle phased within the execution and reduce risks resulting from complex
PMO. The number of projects a project manager can hand projects and inexperienced project managers. By just
simultaneously depends on several factors including the blindly enforcing methodology without paying attention to
organization culture, the maturity of the project and individuality of projects and people, the PMO is risking
organization teams, project manager skills, complexity of

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resistance and lack of process embracement among other The role of the Project Management Office (PMO) in
departments. organizations continues to be a topic of great interest to project
management practitioners. Yet, for many organizations a
10. Rigid project management methodology. It is very struggle exists to define the PMO role, to position the PMO for
important for the PMO to implement a project long-term success, and to leverage the PMO to support
management process that is flexible especially at the start achievement of the organization’s tactical and strategic
of PMO implementation. This is important to insure better objectives.
change manageability within the organization and absorb
any resistance of the new PMO and its new adopted This study has surveyed the challenges faced while
project management process. For the PMO to insure establishing, managing and operating a PMO in a software/IT
proper alignment and collaboration among organization's firm. The surveyed firm had its PMO organization for three
teams and functions is crucial, and this is not possible to years at the time of the conducted survey. The PMO was setup
take place if the PMO taking a very rigid approach with to manage the organization’s software development, delivery,
regard to the newly defined project management method and implementation projects. The organization had a matrix
implemented by the PMO. The PMO should encourage project organization in which projects resources were pulled
collaboration among project professionals and various from various departments such as software engineering, quality
functional departments within the organization the PMO is assurance, technical writers, implementation engineers, and
serving. In this study, none of the participants reported this product development. The PMO was setup to report to the
as a challenge which is correlated with the fact that 100% CIO. In this study, all the surveyed project management
of participants reported the lack of project management practitioners reported that the PMO was partially successful
methodology as a challenge. In this firm, the fact that there due to several encountered challenges.
was no standard and defined project management
According to the findings of this study, the main challenges
methodology, lead to a form of undesired flexibility in
encountered while operating and managing the PMO were
project management.
related to the lack of a defined and standard project
When asked of the top challenges contributing to the failure or management methodology, not tracking project’s resources
partial success of their PMO organization, the participants have utilization, not being empowered to make project’s needed
reported both lack of defined and standard project management decisions and PMO not being able to manage all aspects of
methodology and not being empowered to make needed projects due to conflict with functional managers and
decisions as top factors. Table 1 summarizes the details of departments specific priorities. In addition, resource contention
participants’ responses regarding top factors or challenges with other projects and tasks was reported by all study
leading to PMO failure. participants as one of the main PMO challenges. Moreover,
when asked to indicate the top three challenges facing the
PMO, 80% of practitioners reported the lack of defined project
The top challenges crippling PMO performance Participants management methodology, and not being empowered to make
feedback
80%
projects needed decisions as top factors. As for the conflicting
Lack of a defined project management methodology
PMO was not empowered to make needed decision 80%
projects prioritization, 60% have reported it as one of the top
Conflicting projects prioritization 60 %
three challenges.
Ad hoc projects and tasks assigned to resources 20 %
PMO only being a process controller and regulator 20 % References
Lack of executive and top management support 20%
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