Chapter 3: The project office
In the previous chapter we saw that decisions made in the context of one project can impact other projects in the portfolio in unforeseen and often detrimental ways, and this, coupled with a lack of resource slack, can eventually bring the projects-based organization to a halt. To address these problems, the establishment of a business function responsible for the coordination of all project work across the organization and for providing the infrastructure and competence necessary to manage multiple projects is proposed. We will call this function the project office, or PO.
The PO objective, in contrast with those of a single project, is to complete all projects to best achieve the goals of the organization . The PO's responsibilities include project portfolio management, strategic resource planning, interproject coordination, overall project oversight, cost estimation, contingency planning, quality assurance, external provisioning, project managers' professional development, process management, and tool support.
The PO is an operational function, not a policy-making one. The PO acts as an agent for senior management, providing advice, coordination, and oversight, and although accountable with respect to the execution of the project portfolio, it does not replace either management or the project sponsors with respect to the prioritization of projects and their ultimate disposition.
In this chapter, we will identify the PO's main outputs, its processes and interfaces, and the different competencies or roles necessary to execute them. In subsequent chapters we will address in more detail the process definition, methods, and tools necessary to deploy an effective PO.
This corresponds to the "managerial" type of project office introduced in Chapter 1.
3.1 The PO context
A PO can be set up at the business unit level, the product unit level, or at any level at which there arises a need to coordinate multiple projects. Whatever the level within the organizational hierarchy at which the PO is located, it is important that the PO manager has direct access to the same management level as the resource owners. This will help maintain the PO's focus on the interests of the organization as a whole rather than on the interests of any particular functional group, while ensuring that the PO manager has the authority and the access necessary to resolve the conflicts that arise between projects competing for common resources. Figure 3.1 shows the proposed PO reporting relationships. The PO interfaces are shown in Figure 3.2.
Figure 3.1: PO reporting relationships.
Figure 3.2: PO interfaces.
Senior management refers to the highest level of management within the organization of which the PO is a part. Senior management is responsible for formulating strategies; it has overall business responsibilities, and provides the ultimate decision in the resolution of conflicts. Common titles for senior management are director, vice president, and department head.
Project sponsors are those who request the project work; they have ultimate approval power over expenditures and deliverables. Depending on the business situation, these could be "paying customers," sales representatives, product managers, or any number of internal customers.
Line managers are responsible for the resources to be used in the execution of the projects. They are in general responsible for a function or discipline within the organization. Common titles for line managers are department or section managers.
The technical disciplines entity represents the domain specialists that do not belong to the PO, but who perform work, such as tradeoff studies, on its behalf. These resources usually belong to the line functions.
Third parties are subcontractors, vendors, and other external partners with which the projects are involved in commercial transactions.
In Figure 3.2, the execution of the projects is depicted as external to the PO to emphasize that the day-to-day decisions and the work of the project itself are outside the scope of control of the PO, which intervenes only in case of major deviations and to prevent disruptions to the project portfolio. To do otherwise and involve the PO in every single project decision would result in the establishment of a grinding bureaucracy likely to kill any advantage that might be created by instituting a PO.