A Competency Model for Project Management Offices: Case Study Of Construction Companies In Iran
Abstract
During the last decade, project management offices (PMOs) have received an increasing attention from construction organizations. In this paper we aim to study the key factors in setting up a PMOas a case study ofIranian organizationsinterested in construction projects.After defining these factors, we provide a model for determining competency of PMOs based on five PMO competency level proposed by Hill (2008). Participants were CEOs, project managers and PMO staff.Also studied companies werenineconstruction organizations in two large cities of Tehran and Mashhad in Iran. Findings reported that the 96% of PMOs need the support of senior manager, while other four factors of “project costs”, “sensitivity to project items”, “management knowledge”, and “number of projects” had equal importance for PMO set up. We recommend the use of these five factors to describe the competency level of PMOs by our proposed method.
Keywords: Project Management; project management offices; organizational assessment, competency
1. Introduction
Due to the increased amount of construction projects around the world, and particularly in developing countries, the project management knowledgeand more importantly, its implementationis needed more than ever. In the last decade, a phenomenacalled “project management office”(PMO)has attracted the attention of companies interested in construction projects. The Project Management Institute (PMI) defines a PMO as: “An organizational body or entity assigned various responsibilities related to the centralized and coordinated management of those projects under its domain”. The responsibilities of the PMO can range from providing project management support functions to actually being responsible for the direct management of a project (PMBOK, 2004). PMO is anorganizational entity which is to help the project managers, teams, and different management levels from strategic to technical level byPM principles, methods, tools and techniques (Ward, 2000). Although a reasonable number of researches have been conducted in the field of PMO (e.g. Desouza and Evaristo, 2006;Artto et al., 2011; Gislason, 2012;Pemsel and Wiewiora, 2013) but the term PMO is still a new topic, and the studies conducted during the recent years are insufficient to be used in theoretical concepts (Hobbs et al, 2008; Julian, 2008). Some scholars (Hobbs and Aubry, 2007; Desouza and Evaristo, 2006; Dai and Wells, 2004; Kerzner, 2000; Hurt and Thomas, 2009) have conducted studies on PMO in some project-oriented organizations to find that how PMO leads to create value in business. No clear agreement has been yet reached on the structure and authority of PMO. Established PMOs do not have a same size, duty, and level, but all of them have a wide range. For example, this office may perform its duty whether by one part-time employee or by 50 full-time experts;therefore, the duties and levels of this office are studied and categorized based on the conducted studies. According to Project Management Institute(PMI) and PM solutions project counseling firm, the process of setting up such offices is increasing, but the problem is that what measures should be taken for setting up a PMO, and what is the size and level considered for an office to meet all the expectations. In other words, an organization which is going to establish PM office, what kind of office itneeds. According to Hobbs (2007), description of the way an PMO is set up requires theevaluation of: “Number of PMO employees, percentage of projects within the mandate of the PMO, percentage of project managers within the PMO, age of the PMO, decision-making authority of the PMO, structural location within the organization, and relationship(s) with other PMO(s).
Considering the functions, characteristics, and different ranges of PMO maturity which will be discussed in section 2 of our paper, we can say that setting up a PMO is very necessary for every organization, but PMOs can also be harmful for the organization in case of improper implementation of tasks, and it seems that before setting up an office, its authorities and tasks should be determined. For this purpose, in this study like other related studies, we introduce effective factors in determining these tasks and authorities in form of competency ranges by using questionnaire and interview with successful companies in the field of project management. Currently, in Iran,most construction projects are carried out individually and based on the managerial abilities of project managers; and three is need for implementing them organizationally. In this paper we use competency model of Hill (2008) as a frameworkand propose a new model for assessing maturity of PMOs.
2. Project Management Office
2.1. Definition and characteristics
Project Management Office (PMO) is a relatively new phenomenon which has become popular since 1994(Dai and Wells, 2004). Ward (2000) defined PMO as “is an organizational entity established to assist project managers, teams and various management levels on strategic matters and functional entities throughout the organization in implementing PM principles, practices, methodologies, tools and techniques”.Dai and Wells (2004)clarified the difference betweenPMO fromPO (project office). According to Ward (2000) cited by Dai and Wells (2004), PO is “an organizational entity established to manage a specific project or a related series of projects, usually headed by a project or program manager”. According to Desouzaa and Evaristo (2006), since PMOs are different due to organizationalmaturity, and they are tailored before attempting to start their activities, and grow within the organization, it is impossible to give a universal definition for a PMO, butthey identified five common characteristics for PMOs in IT organization, which are:
(1).PMOs have responsibility to help in success of project management in the organization;
(2).Most PMOs are responsible for aligning projects with the strategic goals of the organization;
(3).Most PMOs are as independent units in the organization, and have their own budgets and resources;
(4).The composition of a PMO involves a combination of experienced business individualsand technology professionals;
(5).PMOs are responsible for development of standards and methodologies, and increase the capability of project management in organizations. (Desouzaa and Evaristo, 2006)
Hobbs and Aubry(2007) supported the results of themon the variability of PMOs characteristics, and said thatsome PMOs showed significantchangeability in their characteristics, so they may have different forms. PMO also called: Project office (Kerzner, 2000), Center of Excellence(Hill,2004), Center of Expertise(Dai and Wells,2004), Project Support Office(Lock,2007), and Program Management Office(Rajegopal et al,2007).Pemsel and Wiewiora (2013) defined PMO as a knowledge brokers between projects and between project and top management. They found that “PMO needs to possess multiple knowledge brokering capabilities in order to support and meet PMs' knowledge sharing behaviours. The suggested capabilities are: (a) facilitating and promoting the strategic development of PMs' relationships with diverse stakeholder groups, strategic use of boundary objects and endeavours when interacting with PMs. Moreover, the PMOs need capabilities in educating PMs to strategically use similar boundary objects and endeavours in their operations; (b) govern, control and support PMs in their operation to ensure efficient knowledge flows; (c) adopt coaching, negotiating and training roles to ensure competence development, which were found to require an interplay of commanding and enabling strategies”. In another study, Dai and Wells (2004) identified 6 features for PMOs which are:
(a).Development and maintenance of PM standards and procedures;
(b).Development and maintenance of historical archives;
(c).Providing administrative support for projects;
(d).Providing human resource assistance;
(e).Providing consulting and mentoring for PM
(f).Providing and arranging training for PM
2.2. PMO Functions
Hobbs and Aubry (2007) indentified 27 important functions for PMOs, 21 of which are important for 40% of PMOs (seeTable 1).Theyshowed that 83% of PMOs report project status to top management and that 76% of PMOs have developed a standardized project management methodology.
2.3. PMO Competency model of Hill (2008)
Hill (2008) developed a competencymodel for PMO which have 5 levels include:
Level 1:Project office
Level 2: Basic PMO
Level 3:Standard PMO
Level 4:Advanced PMO
Level 5:Center of Excellence
For each level, a role has been specified.A summary of model is presented in table 2. In the current study, we use these five levels to present a new model of competency for PMOs.
3. ResearchMethod
Thisstudy was performed to evaluate key factors in establishing project management offices as a case study. participants were 45organizational membersinnine reputable companies in two large cities of Tehran and Mashhad in Iran which are: Kayson Inc., MAPNA, Atomic Energy Organization of Iran(AEOI), Sazeh Paydar Group, Mahsazan Co., Badband Consulting Engineers, Faragostaran Co., Marvzist Co., and Haft Almas Co. First we prepared a list of important factors by reviewing previous related studies and then we ranked them according to Pareto principle which states that, for many events, roughly 80% of the effects come from 20% of the causes (Bunkley, 2008). Then we used them to design survey questionnaireas following:firstthe collected factorswereexamined and participants were asked toverify or reject them or add new factors. In this regard, finally 18 factors were identified which have been listedin table3.Nextthey were asked to determine the effectiveness of these factors by scoringin a range from 10=ineffective to 90= completely effective, and thentheywere asked to specify the importance of these factors by pairwise comparison scaled in arange from “equally important” to “absolutely important”.The validityof our questionnairewas verified by the opinions of project management experts,contractors, and consultants after some modifications.Also, its reliability was found acceptable by employing Cronbach's alpha (=0.863).Questionnaires were sent to the nine studied companies in twocities,and after completion, 34 were returned. The obtained data were analyzed in SPSS and EXCELL software using statistical tests (e.g. mean and standard deviation).In addition, we used Delphi method to determine the appropriate level of PMOs.
4. Results and Discussion
4.1. Characteristics of participants
Results reported that participants were CEOs (9%), project managers (32%) and PMO staff (59%); 68% of participants had master degree and most of them had work experience of 10-20 years (73%) (see table 4).
4.2. Ranking effective factors
According to participants, and using list presented in table 3, the classification of factorsfor setting up aPMO waspreparedas shown in table 5.Considering the identified factors and due to the limitation in each organization, the factors should be ranked to investigate the most important ones in case of lack of sufficient conditions for evaluationaccording to the Paretoprinciple. Results showed that“senior manager support” is known as the most important factor in establishing PMOs. Otherfactors which are in a range of 40 and 60% are equally important factors. The last four factors including: social relationsinorganizations, number of staff, company history, and Health, Safety, and the Environment (HSE) are reported as the least important ones (see table 6). Table 7categorizes the most importantgroup of effective factors. Accordingly, it can be said that the categories of “organizational management”, “projects”, and “staff”wereequallyimportant groups of factors, and only the group of “infrastructureand characteristicsof organization” was of a lower importance because it is completely at the discretion of management and staff, and hadhigher flexibility.
4.4. Presenting a model for determining competency of PMOs
In this section, first we evaluate effective factors byusing Delphi method. Itis a structured communication technique or method, as a forecastingmethod which relies on a panel of experts.The experts answer questionnaires in two or more rounds. After each round, achange agentprovides an anonymous summary of the experts’ forecasts from the previous round as well as the reasons they provided for their judgments. Thus, experts are encouraged to revise their earlier answers in light of the replies of other members of their panel. It is believed that during this process the range of the answers will decrease and the group will converge towards the "correct" answer. Finally, the process is stopped after a predefined stop criterion (e.g. number of rounds, achievement of consensus, and stability of results) and themeanormedianscores of the final rounds determine the results (Rowe and Wright, 1999 cited in Wikipedia).
We sent our obtained factors to the participantsso that they receiveunit and score range (see table 8). According to the report of Management and Planning Organization of Iran (MPO) in 2012, somescore rangesof these factors were obtained. For example, for project costs,the lowest rangewas equal to 10 billion I.R. Rials (1USD=36650IRR in 2016), and the highest range was1000 billion I.R. Rials. If an organization’s project costs, for example,beequal to 450 billion Rials, In this case, its percentage is calculated as: 450/(1000-10)×100=45.45%. This method is similar for calculating percentage of other factors.
Now after providing the method for evaluating study organizations based on effective factors in establishment of PMOs, we present our model. The nine construction organizations were evaluated.The final score of the organization was obtained by multiplying the score of each factor by its normalized weight, and final total point,so finallya model was developed considering the current competencylevel of the organizations. The normalized weights of factors and the final score of the ninestudy organizationsare presented in tables 9 and 10.Now, according to the final scores of study organizations obtained from evaluating the effective factors in setting upMPOs, we can depict a diagram to illustrate thecompetency of any PMO in the organization (see Fig. 1).According to the results obtained form study companies, levels for determining competency ofPMOs are proposed as below:
Level 1: Having organizational scores less than 50% based on studied factors;
Level 2: Having organizational scores between 50 and 60% based on studied factors;
Level 3: Having organizational scores between 60 and 70% based on studied factors;
Level 4: Having organizational scoresbetween 70 and 80% based on studied factors
Level 5: Having organizational scores higher than 80% based on studied factors
So by assessing effective factors using our proposed method and evaluating their scores according to our proposed range, the competency level of PMOs can be specified and accordingly, proper budgeting and allocation of the resourcesfor setting up a PMO can be determined.Since the obtained factors are as the same as the factors introduced in related studies like Hobbs and Aubry(2007), Artto et al(2011), Desouza and Evaristo, (2006), Unger et al(2012), Pemsel and Wiewiora (2013), and Dai and Wells2004) , it can be said that our proposed method has validity.
5. Conclusion
Due to the growing need for implementation of project managementin construction companies and set up MPOs in these organizations, this study was conducted to help the way they aresetup. By presenting effective factors, their importancepercentage, categorization, and ranking, we provided a useful guideline for their use.Our results suggested five most effective factors were: “senior management support”, “project costs”, “sensitivity to project items”, “managerial knowledge”, and “number of projects”, respectively.It was reported 96% of PMO need the support of senior manager to have a good efficiency, and other factors had equal importance. Also the categorization of these factors showed that the management group of factors had significant role in the organization.Based on Paretoprinciple, it is recommended that an organization takes these factors into consideration when they intend to set up a PMO or develop it in an appropriate level.It is suggests that before choosing the level of PMO,first appropriate maturity level of PMO be determined using our proposed model and then decisions be taken.Our model say that we should first evaluate the organization in terms of identified factors and by calculating the scores of each factor, we obtain the final score of the organization. Then by drawing the diagrams and considering reported ranges, we find the competency level of PMOs.
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