Should we be moving from PMO to VMO?
What is a Value Management Office?
Portfolio, Programme and Project Management Offices (PMOs) come in different forms, offering functions and services depending on the unique business needs of the organization. Effective portfolio management of programmes, projects, products and/or services typically does not happen in isolation without the involvement of a Portfolio, Programme and/or Project Management Office. That is, it provides a decision support function that aids the main investment board in decision-making activities that require judgement, determination and a sequence of actions to optimize the return from investment. Naturally, there is no PMO design model that fits all organizational circumstances.
In 2015, Robert Kaplan discussed the concept of Value Management Office (VMO) noting that organizations today are striving to deliver benefits at a lower cost and as such are experiencing the rewards for accomplishing both. Simply, a VMO is about putting knowledge into action while measuring the tangible forecast benefits that should be the rationale and driver for that investment. A Portfolio, Programme and/or Project Office (PMO) may provide this service, but the change of title signifies to everyone in the organization that benefits realization, not initiative delivery, is what really matters. Like Thorp, J (2003) says, it "acts as an advocate of change in the organizational mindset in the way people think about both benefits and value". It makes much more economic and operational sense to create and leverage a centralised cadre of benefits management professionals than to ask each business or functional unit, on its own, to acquire such expertise particularly to optimise return on investment.
As Nieto-Rodriguez, R (2021) advises a Strategy Execution Office (or a VMO for that matter) should help answer the following questions:
- What are the strategic goals of our organization? Given these goals, how are we going to achieve them—through programmes, projects, products and/services?
- Which spending proposals should we invest in for the long-term interest of our organization?
- What is the best use of our existing and future financial and operational capacities?
- Do we have the right people resources to lead these spending proposals?
- Are there any initiatives we can stop, suspend, or delay if there is a sudden economic downturn?
- Is the timing right? What if any of the initiatives fail? Do we have a plan B? And are we learning from failures?
- What value and benefits are we capturing from each project?
Value is often perceived as subjective, with different people applying different criteria to assess whether they are realizing value from a product or service in terms of outcomes and benefits. It is this subjectivity that makes it so essential to manage value deliberately, instead of leaving it as a by-product of any other management activity. Something not often recognized is that benefits and value management are mutually supportive disciplines where both are concerned with delivering value for money. Best value for money is defined as the optimal mix of cost (affordability), risk (achievability) and benefits (desirability). As such, each spending proposal – and the portfolio as a whole – represents the optimum use of available funds. Therefore the management of benefits should be delivered as cost-effectively as possible. That is, value is determined by the benefits delivered in proportion to the resources used into acquiring them (Jenner, S and APMG International, 2014).
References
- Hodes, D, 2019, The Value Management Office (VMO), Ensemble Consulting Group, viewed 10 January 2022, https://ensembleconsultinggroup.com/the-value-management-office/
- Jenner, S and APMG International, 2014, Managing Benefits: Optimizing the Return from Investment, 2nd Edition. The Stationery Office, Norwich.
- Nieto-Rodriguez, A, 2021, Project Management Handbook: How to launch, Lead, and Sponsor Successful Projects, Harvard Business School Publishing Corporation, Massachusetts.
- Sinek, S, 2009, Start with Why: How great leaders inspire everyone to take action, Penguin Books, London.
- Thorp, J, 2012, The Information Paradox: Realizing the Business Benefits of Information Technology, 2nd Edition, McGraw-Hill Education, viewed 10 January 2022, https://www.fujitsu.com/us/about/resources/publications/information-paradox/
