An engineering management view of the impact of the procurement cycle on the project schedule of an outsourced PMO in a matrix-style organisation

M.Ing. (Engineering Management)Projects are often outsourced to an external project management office that has to adapt and operate in a matrix style organisational structure. This project management office is then forced to follow the project management framework enforced by their clients, especially if these clients operate on a global, multinational business level. In such cases it is common practice that the project management office also has to follow a strict procurement approval process to ensure controlled project capital governance, which often results in project baseline schedule delays. The source of these project schedule delays may even cause conflict between the project management office, the respective project manager and their common clients. As part of the current research, various procurement transactions within such a project environment were tracked as a case study to validate the approval efficiency of all approval authorities within the procurement process itself. The duration for transaction approvals were tracked in order to compare it with existing service level agreements between the relevant stakeholders. The results obtained from the above study indicate that the actual procurement approval duration is misaligned with the theoretical and expected procurement approval duration, confirming that existing service level agreements should be aligned with more realistic deliverable expectations. The current research confirms that the organisational structure of this particular matrix style project environment and the way in which the procurement process is governed for transaction approval, have a direct negative impact on project deliverables; especially on the baseline schedule. The current research also confirms that the client organisation should be sensitive in how they structure their project organisational environment as over-governance of the procurement process can often result in unexpected schedule delays. This over-governance of the procurement process exposes various inefficiencies in the overall process, without necessarily enhancing overall project governance. The current research shows that restructuring of the procurement approval process could reduce the procurement approval duration, and present a more realistic service level agreement between the project stakeholders. This will allow the project manager to more accurately define his baseline project schedule and align all stakeholders’ project schedule expectations