The Project Management Body of Knowledge (PMBOK) established by the Project Management Institute (PMI) for training certified Project Management Professionals (PMP) discusses the structure of a projectized organization, a common management structure in organizations in which a major component of the value of the business is based upon the success of individual projects into which investments of resources are made based on their potential value.  The projectized organization structured around programs and portfolios is shown in the figure below.
Projectized Organization
In projectized organizations, the lowest level of control of resources is with the project manager. The highest level of resource control is with senior business management which allocates resources based on return on investment evaluations at the portfolio level. Portfolio managers make the case to senior business management for investment in programs they are developing and managing, program managers make the case to portfolio managers for investment in their projects, and project managers make the case to project managers for investments in their projects. When people go off projects their available time can be allocated by program managers to new projects.
Once again, the challenging question is how a Project Management Office (PMO) fits into this structure. The figure shows that a PMO may be organized at all levels of a projectized organization. In my judgment, the best way to insure high quality and standardized project and portfolio management throughout an organization to insure exceptional communication across a level and between levels from the top of the organization to the individuals on project teams, each level should dedicate some resources to PMO functions.  I also propose that the PMO is the location of resources that are not allocated to specific projects until those resources can be allocated, and that the PMO be responsible for acquiring, developing, evaluating and letting go of resources within their hierarchy.
At the Corporate Level the PMO resources focus on project, program and portfolio management policies and procedures, and are rewarded for the successful implementation of these policies and procedures throughout the organization. At the Portfolio Level the PMO resources work closely with the corporate level PMO to develop the policies and procedures, and are responsible for their implementation, particularly the portfolio management policies and procedures. At the Program Level the PMO resources work closely with the Portfolio Level PMO to develop project and program management policies and procedures, and are responsible for their implementation, particularly the program management policies and procedures. Finally, at the Project Level the PMO resources work closely with the Program Level PMO to develop project management policies and procedures, and are responsible for their implementation.
The PMO at each level also assumes responsibility for the resources that are not allocated, and is also responsible for hiring, developing and evaluating resources within their hierarchy. Â The PMO then takes on the responsibility for overhead costs associated with personnel development and costs of personnel time that are not billed to a project. Â They work closely with the portfolio, program and project managers to recruit and reassign resources, and use human resource management resources in the organization to support these efforts.
As with matrix organizations, much confusion exists about the charter of the PMO in a projectized organization, leading many of these to create redundant resources that fail to take advantage of the full body of knowledge the organization has developed over time related to managing projects, programs and portfolios. Furthermore, implementation of policies and procedures is complex because each redundant organization resists changing the policies and procedures that they have implemented. A substantial improvement in the management of projects, programs and portfolios would result if PMOs had a hierarchical understanding of their role, while communicating up to higher levels of PMO resources, the requirements of the organizations that they serve, while communicating to lower levels within their organization, the policy and procedures required to deliver a high quality product consistently on time and under budget.
You may be saying that your organization can not justify the resources at each level of your projectized organization, but I argue that your organizations are already expending resources for PMO activities at each level, though in an uncoordinated fashion. If you take a more organized and methodical approach to PMO responsibilities across the levels, you will find a substantial improvement in productivity of your resources because they won’t be duplicating activities and the PMO will more effectively and efficiently implement policies and procedures for project, program and portfolio management up and down the organization.
The Project Management Body of Knowledge (PMBOK) established by the Project Management Institute (PMI) for training certified Project Management Professionals (PMP) suggests that “balanced matrix†organizations are the most effective form for project management organization.   The project management matrix organization is shown in figure 1. The concept of a “balanced matrix†is one in which the control of resources is distributed between the project manager and the functional manager. In a balanced matrix, the project manager negotiates for resources for a project, but when the resources are assigned to that project manager’s team, they are under his control until they get reassigned back to the functional manager.
The challenging question for me today is how the Project Management Office (PMO) fits into this structure. I will, in a subsequent blog, present a picture of a PMO within a “projectized†organization, which tends to be the more predominant structure of consulting, government contracting, and other business services companies.
Figure 1. A Matrix Project Management Organization
The PMO within the balanced matrix organization can really be depicted as the component of the matrix organization that is defined in Figure 1 as the project management functional organization. As with other functional organizations, the PMO is responsible for:
1. Allocating project manager resources;
2. Supervising and evaluating the activities of those project managers;
3. Establishing standards by which the project management function will be performed and evaluated; and
4. Reporting status of the project management function to senior management who, using this information, evaluates the success of the PMO.
Apparently much confusion exists about the charter of the PMO in a matrix organization, leading many organizations to create a completely separate structure to manage the PMO function that may report to non-operations components of an organization which have no direct responsibility for delivering products or services. These organizations tend to serve a role in establishing and enforcing compliance to standards, and frequently struggle with the operations organization and the project managers to increase their control over projects. Conflicts would be lessened if the standards enforcement was maintained within the project management functional component of the operations organization as described above.
As mentioned above, my next blog will explain how PMOs will work within “projectized†organizations.
