Why PMO Is The Solution Not To Fail?
Why PMO is the solution not to fail?
Project management office is a new organization structure to deliver projects. It is not a coordinating efforts by different departments to deliver projects. It is a new organization with new vision, mission and goals. It is a new culture created to rid off the bad records, prioritizing ambiguity, conflicts of authority, obstacles excuses, bottleneck and centralized decision making in the different type of organizations. Trying to build a PMO within an organization making it difficult and under high risk of failing. Therefore, creating an independent PMO with full authority and new culture who take over the projects delivery gradually from the main organization is the fastest and successful model. This model was adopted by the world bank in the development countries to cut off corruption and effectively manage projects to deliver faster within time and cost.
This concept is applied to any work delivery which is a project with scope, resources, cost and time. PMO is not only for projects delivery based organizations. It is not only a project management method. It is a project management with strategic and financial orientation and control for each step in each process from project initiation in pre contract to close out. It has a dynamic link between all projects. This link guarantee always the delivery with maximization of productivity and profit within the strategic goals.
According to most surveys, around 25% of projects are total failures and have to be abandoned while, around another 50% are seriously late, way over budget or fail to deliver full business requirements (project Program and Portfolio management book by John Carroll).
As a professional engineer who is specialized on engineering management, I was always concern more about linking my engineering knowledge with business and finance knowledge because this is what we need as engineers who manage construction corporates. This interest starts to be obsession when I read on 2002 about the bankruptcy of Holzmann the second largest construction company in Germany. I wounded why a big company with high profile systems and professionals fails?
After that every year I was reading about another one or two big contractor bankrupting. Of course, there thousands of small and medium companies who fails too however, lets only concentrate on the big names. Theses bankruptcy announcements becomes more during the recent rescission. In USA only the recession hits badly many big contractors whom without government support and intensives (with expenditures reaching over 1,162 billion U.S. dollars).
So why Contractors fails?
According to Fail Management Institute there are many factors found to be the root cause of contractors failure. They grouped it into three major categories:
- Strategic
- Unrealistic growth/over expansion/unfamiliar new markets and/or entry into new types of construction
- Volume obsession
- Unrealistic promises/bad contracts/poor project selection
- Organizational
- Insufficient capital/profits
- Lack of business knowledge/poor financial management/poor sales skills/inadequate marketing
- Poor leadership/poor leadership transfer
- Project losses/poor field performance
- Owner court battles/owner bankruptcy
- Uncontrollable
- Industry/economic weakness
- Banking and surety changes
The above categories are the main benefits of any PMO. It aligns strategic goals within the PMO organization to provide full control on projects delivery within the market changes and torments.
Moreover, the alternative for bankruptcy is restructuring. This is what we see in many organizations who try to restructure themselves and reposition themselves in the different sectors / markets.
I would conclude that for any contractor who restructure their organization without establishing a new culture (PMO as a suggestion) is just delaying the collapse if the market continue to reeling and slowing with big competition and prices war.
Establishing PMOs take time. It is a difficult process for any established organization. Therefore, don’t be late of taking the decision to proceed to build your PMO.
We can help you in Galaxy EPPM. Google us and you find more information in our web site.
We do it sample and easy to absorb according to your maturity to have a credible decision making.
Best wishes for all
Ziad Albasir