Apr 3

Why Aren’t PMOs Procured?

Gartner and others tell us that most PMOs fail – the bigger the project, the higher the likelihood of failure.  Statistically, you have a better chance of starting a small business and surviving more than 5 years than you do implementing a successful PMO.

The reason? PMOs don’t do what a business expects.   Unpacked, this looks like;

  • High cost variances
  • Substantial lateness
  • Missing quality goal targets
  • Cancelled after launch
  • Rejected or not implemented for other reasons

More recently, Gartner published ‘7 Best Practices for an Effective Project Management Office’ starting with a cornerstone element – an absolute must-do;

1. Acquire the Right People, Knowledge, Skills and Collaborative Behaviours

Given the spectacular propensity of PMOs for failure, you need to ask who’s doing the acquiring?  We have, and the answer usually doesn’t include the only guys in the business hired for their acquisition skills.

Like any scaled professional services acquisition, PMOs, because of their apparent business criticality, escape being properly acquired. They fall outside of the scrutiny and oversight that any organised procurement function brings – because they are specialised, complicated beasts that need superior engagement skills that “..our purchasing people don’t have” yet somehow miraculously exist in spades in executives with a mandated or reputational interest.

As procurement advocates, we see and do a lot of professional services acquisitions – and the one outsourced item that bypasses procurement with predictable regularity, is large people-heavy business improvement projects. This troubles us because under-managed PMO’s that are engaged without even basic procurement rigour have, in our experience;

  • Changed the rules as they go
  • Expanded in number (sometimes by double, triple or more)
  • Blown out cost by many times the original budget
  • Achieved something very different to expectations and called it success

If this were another service provider, say a security company, the risk to the business would be self-evident and the consequences certain. By any reasonable measure, those who engage failed PMOs (and those who populate them) should be removed, yet well-rewarded individuals who haven’t delivered as promised, slip away unchallenged.

This immunity has given rise to a new ‘ocracy’ one that we call a Tictocracy.

Just as a Bureaucracy is a group of unelected individuals who run important aspects of government, a Tictocracy is an un-procured group in charge of business-critical things whose rate-card arrangements keep the meter running in the money-pits of commerce – whether they succeed or not.   The far-reaching problem for business is that the probability of failure is replicated because the same people and the same processes (complete with re-purposed presentation and reporting tools) are not filtered out.

Sourcing PMOs sits smack in the wheelhouse of most procurement departments.  Anyone familiar with contract management could handle one with no trouble.  Absent of agnostic oversight, poorly executed projects don’t get challenged enough to prove the value they have committed to deliver.  Executives responsible for both the success of a PMO and its oversight, are just too close to see the problems.  This lack of separation of authority is like the fox minding the hen house.

Sound, objective sourcing doesn’t tolerate any acquisition without clear, quantifiable and unchangeable metrics for success. At the very least, the success of an outsourced PMO should be monitored by an independent procurement mind. If there’s no-one in your business available to do it – contact us.