Results from a new research study by ESI International show that company restructuring is the top reason why PMOs are disbanded.
The benchmarking survey, entitled The State of the Project Management Office: On the Road to the Next Generation, investigates the current role of the Project/Programme Management Office (PMO), its development to full-blown maturity and value for the overall business. Based on responses from over 3,000 respondents in more than 17 industries on six continents, the research shows that PMOs are still facing a difficult time justifying their existence. The number of PMOs being reported has dropped by 10% over the last 12 months. On a positive note, 5% of respondents said their companies were planning to implement a PMO in the coming year.
Around 55% of respondents report that the value of their PMO was questioned by key stakeholders – usually senior management – over the last 12 months. That’s an increase of about 15% on the results from 2011. As a result of executive scrutiny and organisational restructuring a number of PMOs have been shut down during the year.
Despite one in three PMOs being managed at the level of the C-suite, it looks like PMOs are still struggling to prove that they add (or can add) value. Even after being in place for years, PMOs are still subject to scrutiny and being are disbanded – one in three of the PMOs which were reported to have closed this year were 5 years old, or older. Maturity is not a safety net for PMOs. It is not just new units that get closed down. However, maturity does not equal contribution to the company’s performance. It could well be that these PMOs have stopped being effective, or were never effective in the first place. Maybe it took the impact of the recession and budget cuts for someone to truly scrutinise what they were delivering.
Reasons for disbanding a PMO
The top reason cited in the survey for disbanding a PMO was restructuring. Perhaps this has something to do with the fact that of the respondents reporting that their company had a PMO, over 60% said there were multiple PMOs in operation. Restructuring could mean consolidating PMOs into a single, corporate unit.
An executive decision or change in management was cited as the reason why one in four PMOs were closed down. This category is not detailed enough to provide relevant information about why these PMOs were disbanded. There are of course executives who approach the organisation chart with a red pen when it comes to making savings. But I’m sure there are far more senior executives who consider many factors when it comes to closing down departments. What is clear with this broad category is that the people completing the survey did not have enough information about why the PMO was disbanded. Perhaps the lesson for executives choosing to shut down PMOs is to ensure that the rationale behind the decision is adequately communicated.
This is also shown by the third category: Don’t Know. Over 10% of PMO closures fell in to this category, with respondents not having any idea why the department was closed. Given that this impacts jobs, project teams, projects and corporate decision making at portfolio level, it would be wise for executives to share information about restructuring or disbandment in a much more transparent way.
While executives may claim that the PMO does not add value and thus should be disbanded, the results show that PMOs were valued by those who used them. Of the people surveyed who reported that their PMO was disbanded, over 90% said it should be reinstated.