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Project Management: The Four Habits of High Achieving Businesses
The Hackett Group recently produced an eye-opening report on the effectiveness of Project Management Office (PMO) as applied to IT. The report found that rather than improve project delivery effectiveness, the use of PMOs often had just the reverse effect, only making projects more expensive by adding more overhead.
PMO-managed IT projects overall had higher IT costs and frequently failed to deliver on ROI and time and budget estimates. In fact, companies that relied less on PMOs had a 32 percent lower operating cost that those that frequently used PMOs.
The study found that since 2009 the percentage of projects managed by PMOs declined by 20 percent. The ineffectiveness of PMOs has led some companies to cut back on their use over the last three years. Further, the report found that project success actually improved at many of the companies where PMO was abandoned.
What’s causing the problem? The report found that “in a weak PMO, poor management of time, resources, requirements or customer expectations encourages shortcuts that increase design weaknesses that drive higher maintenance and support costs.”
Still at the other end of the spectrum the report found a minority of companies, companies the report classifies as ‘world-class’. Those companies managed to use their PMO to drive down costs while achieving greater results. In fact, those companies ranked 15 percentage points higher in achieving lower costs and higher effectiveness levels than other companies.
How do those ‘world-class’ companies do it? The report found the following four characteristics for PMOs among the high achieving companies:
- Centralized IT demand management
- Accountability for business benefits
- Standardization of processes and architecture
- Program and project reviews
