Bridging the gap between asset management and project delivery

A well-functioning PMO fosters a culture of continuous improvement, responsiveness, and adaptability. Client Director (Environment) Lisa Street explains why organizations need a portfolio management office

In a world of tighter government budgets and resource shortages, we see clients re-evaluating their performance and re-prioritizing their project portfolios. Whilst impactful processes and procedures and the adoption of digital tools, can assist in addressing some of these issues, a key aspect is often overlooked. The interconnector between project delivery with organizational and asset management priorities is the alignment of value creation.

In the heart of this alignment lies a crucial element: the integrated relationship between asset management and project management teams. The solution? A Portfolio Management Office (PMO) can act as the bridge between these two vital functions, driving improved communication, collaboration, and overall organizational performance.

Portfolios of work

There is always a portfolio of work that is required to be undertaken whether it is an asset to be maintained, repaired, replaced, or created.

Many client organizations know what projects they need to deliver and their budget. Yet, how are clients aligning project work with their organizational and asset management priorities? How are clients making sure projects are selected and prioritized based on their potential to create value for the organization?

Complex relationships

The relationship between asset management and project management is the key to successfully delivering the desired outcomes. The key is developing the “golden thread”: the line of sight through the organization - providing integrated information on delivery of the organizational goals. With asset management needing to be seen as more than operations and maintenance; it’s the framework that drives some of the investment decisions, and the project management delivering to this outcome. The tension comes when there are different value frameworks, decision criteria at play in the organization.

However, it is not uncommon to encounter complexities and bureaucratic obstacles, such as overlapping responsibilities and resource allocation when integrating these two functions. To address this challenge, organizations must focus on developing streamlined processes, adopting digital solutions and empowering decision-makers at different levels. By doing so, they can maximize the effectiveness of the PMO whilst avoiding the pitfalls of excessive bureaucracy.

Conflicts between the two teams may arise due to different objectives, cultures, and perspectives. To mitigate these potential clashes, organizations must prioritize shared goals and encourage open communication to resolve conflicts effectively.

A well-functioning PMO fosters a culture of continuous improvement, responsiveness, and adaptability. In doing so, it optimizes resource allocation and utilization, ensuring that projects are prioritized based on their potential value, with the PMO of the future recognizing a more TOTEX (Capital Expenditure + Operational Expenditure) approach looking at the total cost of expenditure, over the long-term operating life of the asset rather than focusing purely on CAPEX.

However, PMOs may sometimes impose rigid processes and standards that could stifle innovation and reduce flexibility. To counter this, PMOs must continuously review and adjust their processes and standards to better align with the evolving project environment.

Integration and standardization

Integration between asset management and project management enhances the effectiveness and efficiency of both functions, enabling data-driven decisions that improve overall project planning, execution, and control. PMOs can also facilitate innovation and continuous improvement by identifying opportunities for operational enhancements. Integration and standardization will lead to high-quality projects being put forward with less drop out and less uncertainty through project delivery.

While the benefits of an integrated PMO are undeniable, it is essential to acknowledge that the effectiveness of a PMO can vary based on factors, such as organizational context, leadership, and maturity. As such, organizations should tailor PMO functions to their specific needs and promote a supportive environment for project management, whilst ensuring asset management is being intertwined into projects; projects can often reduce the whole life cost by making asset manager considerations during the design stage.

In some cases, especially in smaller client organizations with less complex project portfolios, the costs of implementing and maintaining a PMO might outweigh the potential benefits. To maximize the value of a PMO, organizations should assess their specific needs and resources before deciding on the appropriate PMO structure and functions.

Delivering improved outcomes

An integrated PMO aligns project delivery activities with asset management strategies, ensuring projects are completed on time, within budget, and releases the maintaining asset health. By proactively managing risks, PMOs can identify potential hazards and facilitate the development of mitigation strategies to protect both asset management and project delivery activities.

An integrated relationship can lead to better overall organizational performance, as both functions work together to achieve business objectives.

A PMO can enable integration between asset management and project delivery by serving as a centralized hub that oversees the planning and implementation of projects while ensuring that they align with the organization's asset management strategy. This can involve:

• Co-ordination: The PMO can coordinate between different teams responsible for asset management and project delivery to ensure that projects are completed on time and within budget whilst maintaining the health of the assets.
• Data Management: The PMO can ensure one version of the truth through digital technologies, where asset-related data is collected, managed, and analyzed to facilitate decision-making within project delivery. This can help align project delivery activities with the organization's asset management strategy. By having a shared understanding of data requirements across an asset’s lifecycle, the PMO can ensure the right data is delivered to the right quality to the asset management and operations teams that will facilitate the onward management of the assets.
• Monitoring and Reporting: The PMO can monitor projects, asset performance, and operational data to identify any issues, deviations from plans and take corrective actions. They can also provide regular reports on this to stakeholders to keep them informed about progress.
• Risk Management: The PMO can help manage risks to asset management and project delivery activities by identifying potential risks, assessing their impact, and implementing mitigation strategies.

Establishing a well-functioning and integrated PMO is pivotal in bridging the gap between asset management and project delivery, ensuring that the organization operates effectively, meets its objectives, and delivers optimal outcomes and value to its stakeholders. By addressing potential challenges and fostering a culture of continuous improvement, organizations can harness the full potential of a PMO and achieve long-term success.