Project Management Offices (PMOs) are on the decline, according to new research by consultancy firm PricewaterhouseCoopers. Over 1500 respondents from 38 countries were surveyed by PwC for the third Insights and Trends: Current Portfolio, Programme, and Project Management Practices report. The study showed that only 66% of businesses currently have a PMO, which is down from 80% in 2007. I think this shows that the global economic crisis has hit businesses and that they have had to make cutbacks.

Unfortunately, it can be very difficult to show a return from your PMO. The study also shows that about a third of companies never evaluate whether their PMO contributes to business success, and another third only do so once a year. Only 14% of organizations evaluate their PMOs monthly and they also check the return on investment (ROI) about two thirds of the time. While that isn’t many companies, it is good that they see their monthly evaluation as including a statement on ROI. This type of assessment really shows that the PMO is making a difference (or not – in which case you can do something about it).

With so little interest in proving the return on investment of a PMO perhaps it is no wonder that senior managers axe or scale back the PMO when they are forced to make cuts. I think there is certainly something to be said for introducing regular PMO reviews. If once a month is too frequent, then companies should look at alternatives, but aiming for at least more than once a year to ensure that they have the relevant data to prove that the PMO is making a positive difference to business results and project success.

PMOs give better results

The good news is that where companies do have established PMOs, they do see improved results. These companies report higher performance than non-PMO businesses in the areas of delivering high quality results and achieving the business benefits. However, you only get these benefits if your PMO has been around for six years or more. In other areas like budget and schedule, a PMO doesn’t seem to offer a great deal of benefit over not having one – assuming, of course, that you have alternative practices and methodologies to follow to ensure project success.

Another benefit of a mature PMO is that the whole organization starts to see the benefit of working in a project way. This could include rolling out tools like Seavus Project Viewer across the whole company. Businesses with mature PMOs have the ability to help their companies get more familiar with projects and project ways of working. They can encourage the adoption of project management processes across multi-disciplinary teams and in turn all this contributes to better project performance.

This is shown in the research results: organizations which have had a PMO for six years or more have managed to get the message out about PMO standards with a much higher rate (two thirds) than those which haven’t had a PMO for that long (only 47%). So PMOs have benefits, but you have to be in it for the long term to really see them.

PMOs deploying software

One of the other roles of a PMO is normally to manage project, programme and portfolio software tools and training project managers in their use. The PwC study shows that using commercially available portfolio management software drives higher levels of performance and that generally people are more satisfied with the project management approaches taken by the company.

Interestingly, if you customise your off-the-shelf software you get slightly lower satisfaction and performance levels – perhaps because you have higher expectations? The survey shows that building your own software also leads to mixed results: small portfolios of projects seem to show some improvements but mid- and large-scale portfolios don’t show the same benefits when companies opt to use home-grown software, probably because it isn’t meaty enough for the job.

I didn’t expect the use of software tools to show that using the software as it comes (or with very few modifications, like creating tailored reports) would actually give the best results, but it does show that once a team is used to using a package, they can use all the functionality to its full advantage and get the benefits of the vendor’s research and development skills.