module 3- PMO and outsourcing

What are Best Practices in Project Management?

What is a PMO?

  • Definition: An organizational entity with full-time personnel that offers various project management support and services across the organization.

  • Also known as a project office, project support office, or center of excellence.

  • Operational Levels:

    • Individual project level.

    • Department / Division / Business Unit level.

    • Corporate / Enterprise level.

  • In large organizations, the IT department may have a central PMO, and individual project teams may have their own PMOs for large projects.

Organizational Structure of PMO

  • Placement of PMOs varies based on organizational culture:

    • Traditional

    • Functional

    • Matrix (weak, balanced, strong)

    • Project

  • Example illustrated in a matrix organization (strong).

Functions of a PMO

  • May include:

    • Providing project support (consulting, mentoring, technology).

    • Aiding project selection and developing business cases.

    • Training for team participants, leaders, and stakeholders.

    • Serving as a central documentation repository to enhance communication.

    • Managing integrated change control.

    • Conducting methodology control and audits (cost, time).

    • Sharing resources across projects and improving resource allocation.

    • Continuously gathering and integrating industry best practices.

    • Supporting portfolio management in project decision-making.

    • Executing quality assurance reviews and post-implementation lessons learned sessions.

PMO Benefits and Issues

Benefits

  • Standardization and efficiency of project operations.

  • Reduction of silos and improved knowledge sharing.

  • Better resource allocation and faster decision-making.

  • Access to high-quality data and realistic work prioritization.

  • Improved training for project leaders.

  • More accurate cost estimates and enhanced stakeholder satisfaction.

Issues

  • A PMO is not a cure-all; it won’t solve all project issues.

  • Requires a cultural shift in the organization.

  • Initial expenses and training are necessary before seeing a positive ROI.

  • Must avoid becoming a bureaucratic obstacle to project completion.

  • Members should culturally align with the organization.

  • A clear, measurable charter, mission, and purpose are essential.

What is Outsourcing?

  • Definition: Transferring project or operational activities and decision-making powers to an external entity through contracts with performance measures, rewards, penalties, and exit clauses.

  • Necessity in a global economy; often called Managed Services or Facilities Management.

  • Fortune 1000 companies typically allocate 30-35% of their budgets to outsourcing.

Types of Outsourcing

  • Off-Shoring: Contracting with vendors outside the country.

  • In-sourcing: Bringing work back in-house as a cost center or hiring overseas employees.

  • Rural Outsourcing: Engaging vendors in economically lower-cost regions within the same country.

  • Multi-sourcing: Selecting different partners for different activity parts.

  • Near Shoring: Outsourcing to neighboring countries.

  • Crowd Sourcing: Choosing the best submissions for solutions.

Why Companies Outsource

  • Flexibility in resource management to focus on core projects.

  • Access to specialized expertise.

  • Enhances disaster recovery capacity and technology utilization.

  • Supports risk management through transference of risk to sellers.

  • Cost reasons.

What is NOT Being Outsourced

  • Project Management needs management oversight for external relationships.

  • Functional and process knowledge critical for business operations.

  • Systems analysis and change management require in-depth internal knowledge.

  • Key areas like IT strategy, enterprise architecture, and business intelligence must remain in-house.

Outsourcing Considerations

  • Evaluate political stability.

  • Understand copyright laws; ensure clear contracts for intellectual property.

  • Assess the overall costs, including overheads and communication fees.

  • Be aware of security implications and data protection practices.

  • Consider travel costs that may arise from maintaining a working relationship with outsourcing vendors.

Key Takeaways

  • A PMO exists at multiple organizational levels providing extensive project management support.

  • Outsourcing encompasses transferring operational functions to external entities with defined contract conditions.

  • Both PMOs and outsourcing should align with the organization’s strategic plans for enhanced effectiveness.