Realizing Value by Establishing an Agile Project Management Office

Some people believe project management offices do not belong in an agile organization, but others believe that an overarching organizational and governance model to structure operations in agile environments is needed.

The traditional PMO helps organize operations at the strategic level (portfolio and program) in order to select initiatives and track metrics and performance. However, it does not keep up with the speed of agility and change, and it can often result in misalignment of business units. The scope of work drives the planning for an agile project, but the product owner still needs flexibility to be able to change based on inspection and adaption of iterative processes.

How can an agile PMO help? In an agile team, the product owner defines the scope and value definition for a project. Rather than making the product owner create a cumbersome plan that is subject to change, the PMO can help by assessing three areas:

• Value proposition: What are the most critical features the product owner needs to deliver? While the traditional project manager tracks to plan, in an agile project the product owner is most interested in the scope in terms of what is most valuable to the customer.
• Product backlog: A PMO helps ensure that the product backlog is properly estimated and prioritized.
• Release planning schedule: The product owner should be using a burn-up chart in order to realize the time to value as each feature is delivered.

The agile PMO acts as an aggregator and evaluator of agile project data metrics to help leaders track performance for improved value delivery. The difference between an agile PMO and a traditional PMO is that organizations can quickly course-correct based on data that is near real time. An agile PMO improves risk and issue-management processes, whereas a traditional PMO takes much longer to get the metrics from completed projects. While traditional projects map to scope, schedule, and costs, agile projects track to value, and thus a new set of value metrics needs to be created, including time to value and cost of value. For a recent Fortune 500 client, burn-up charts were used at the project and program levels to help visualize time to value for each release, and existing project management tools were used to track budget per release in order to realize the cost of value.

So, how do you create an agile PMO? It depends on the organization. For a traditional organization that already has a PMO, adjust the existing model to implement agile. For an agile organization without a PMO, you create one from scratch.

At another organization, the PMO leader realized the traditional metrics were not working in a blended waterfall and agile environment. They decided to transition to an agile PMO to manage this risk. They used the following steps to modify their existing PMO model to work in an agile environment.

1. Assess the current PMO model and modify it as needed to include agile projects. For a client that was using a blend of waterfall and agile projects, agile releases and sprints were placed into the existing PMO model.

2. Identify the key agile value goals the organization wants to report on and map to the portfolio, program, and project levels. Keep focus on the portfolio area for the rollup, but consider every tier, aggregating each separately.

For example, create a set of value goals, such as increased value delivery and increased capability. Once the value goals are established, identify a set of metrics and tag them to each value goal. At each level (portfolio, program, and project), put a set of acceptance criteria into place for each metric within an agreed-upon percentage threshold. If the threshold is not met, then the team needs to review operations in order to improve the performance at each level.

In a program with six projects, each was expected to improve velocity by 30 percent every release, accelerating the time to value for the release features. If this did not occur for all six projects, then the program failed to meet the performance criteria and the initiative was not considered to be a success. Another example would be a portfolio with two programs. If either failed to meet performance acceptance criteria of increasing earned value by a certain percentage, then the portfolio failed, as the expected metrics were not met to deem the project a success in terms of value to the organization. An agile PMO not only helps track metrics, but also acts as a conduit for clearing impediments, ensuring collaboration, and gathering resources. An agile PMO helps align goals at the strategic level to value.

3. Include agile roles in your current PMO organizational structure. Set up your organizational structure to incorporate the agile team (product owner, ScrumMaster, and team members) into your existing team structure (executive sponsor, stakeholders, program manager, and project manager).

For agile projects, allow the product manager to maintain control of the scope for the project and remain flexible. For example, each team should consist of a program manager that acts as the conduit between the product owner and the stakeholders to ensure that strategic goals are aligned to tactical actions. This is accomplished by ensuring that the epics and stories in the product backlog map to the strategic goals of the executive sponsor and stakeholders.

4. Identify manual and automated portfolio, program, and project management tools and tracking devices that can provide near real-time data. For one client, plugins were placed into agile project management software-tracking programs such as Jira to aggregate project level metrics, like velocity and burnup of features, with traditional portfolio and program management software programs in order to measure key metrics such as time to value and cost of value. Rolling up all key value metrics to core strategy and value goals for the organization aligns the business and technical arms of the organization.

6. Set up a governance model to help select portfolio, program, and project initiatives and manage the project portfolio and select engagements.

In a large enterprise, the agile PMO was able to help management select the right projects to start and monitor. They were able to see when teams needed to retrospect more often so they could maintain the flow of value, and they coached those teams to more success. They achieved increased delivery, which resulted in reducing costs by 30 percent and increasing capability by 50 percent—and happier team members.

Agile PMOs might not be for everyone. But when you put the agile into the PMO, it can work for large enterprises.