A PMO costs! It is obvious; there is the money to staff and to run the PMO together with any incurred operational expenses and systems investments and, when the PMO interfaces with other parts of the organisation – as it should, there is associated cost to that time and effort. Of course the belief from those that sponsor a PMO is that the money and time invested will be more than saved by delivering more successful projects. And that is the primary purpose of any PMO, to deliver healthier and more successful projects appropriate to the business strategy of the organisation. Job done!
PMOs are not traditionally a profit centre and as such they don’t generate revenue themselves, although it can be strongly argued that they do facilitate making money through the delivery of those more successful projects.
But there may come a time when there is pressure for the PMO to contribute more than that through:
- Partial cost recovery of the PMO
- Cost neutralization of the PMO
- Profit contribution from PMO
If this moment arrives then you need to be very clear as to ‘why’ you are doing this (or being asked to do this)? If the answer is ‘The PMO has been so successful we want to explore extending its remit to that of potential revenue generation’ then that is a good reason. It offers the opportunity to calmly and objectively consider new ways that the PMO can work in order to achieve these new targets. It could be a very positive extension of the remit of the PMO and new stimulating challenges for the PMO team.
But if the reason is more along the lines of ‘The PMO is too expensive and we need to save costs somehow so we either cut the budget or the PMO makes us some money’ then I would suggest that you are on shaky ground immediately. The PMO will be placed under survival pressures and is unlikely to conduct itself well as it strives to make money, save money, and just keep going. This is an extremely negative and threatening situation for the PMO team.
The right time to ask the question of the PMO, ‘can you now make money?’ and it
comes with the caveat ‘without impacting negatively on your current core work’ is when
the PMO is:
- Accepted by the organisation
- Is stable in its structure
- Is mature in the services it offers
- Is connected to the business strategy
Tick those off and it is OK to consider the next move. Your PMO can plan its extension of activities in to the money generating world safe in the knowledge that it is on a strong solid platform and it is embedded in to the organisation. If you can’t tick all of these off then the chances are you will end up ‘fighting on two fronts’, that is trying to build the PMO internally whilst stretching to win profitable business, and the chances are in this situation is that you will fail at both.
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