Why PMOs Struggle with Agile: The Disconnect Leading to Business Frustration

Agile has become a dominant methodology, prized for its flexibility, rapid feedback loops, and customer-centric approach. However, many industries, particularly those entrenched in traditional practices, continue to face challenges in truly adopting Agile principles, often creating a hybrid between Agile and Project Management Office (PMO) structures. Despite the best intentions, these attempts to blend Agile with PMO often result in teams unconsciously reverting to waterfall-like structures. Why? Because no matter how hard organizations try to shift toward Agile, the reliance on sequential project phases ingrained in PMO processes inevitably keeps them tethered to the waterfall model.

The Core Dilemma: Sequential Phases vs. Iterative Development

One of the fundamental differences between Agile and Waterfall is how they handle project phases:

Waterfall: A linear approach, where each phase (planning, execution, testing, etc.) must be completed before moving on to the next.

Agile: An iterative process where teams delivering small, workable increments of the product, and continuously refining the outcome based on feedback.

The Project Management Office (PMO), by design, focuses on project governance, resource allocation, risk management, and ensuring standard processes across all projects. While these are critical for maintaining consistency and control in organizations, they are often structured around sequential phases, which makes them inherently waterfall in nature. This linear approach can clash with the Agile ethos of continuous delivery and adaptation, creating friction between the two methodologies, costing organizations budget inefficiencies and huge waste.

Even when PMOs attempt to incorporate Agile, they often retain a waterfall-like sequence in managing projects. They mistakenly believe they are agile simply by iterating between execution and control, without embracing the full flexibility and customer-centric focus that true agility requires. Teams are still expected to complete a series of predetermined phases—only now with the label of "Agile" slapped on. Let’s explore why this happens.

The Illusion of Iterative Waterfall

One common practice is trying to merge Agile iterations with traditional project phases, known as "waterfalling your Agile." Teams might break the project into smaller iterations, but the overall structure remains heavily phase-based:

Phase 1: Initial planning.

Phase 2: Development.

Phase 3: Testing.

Phase 4: Deployment.

While these phases may be broken down into smaller, sprint-like cycles, they still must occur in a predefined order, just as they would in Waterfall. Agile ceremonies (like sprints, daily stand-ups, and retrospectives) are introduced, but they don't change the core structure of the project being delivered in a sequential manner.

The focus remains on completing one phase before moving on to the next, preventing the team from iterating, adjusting, and delivering value continuously.

The Need for Predictability and Control

The traditional PMO model values predictability and control. Before a project starts, there’s typically an expectation to have a detailed scope, timelines, budgets, and resources mapped out. This desire for certainty inherently drives project managers to rely on structured, phase-based delivery models.

In contrast, Agile works best when teams can adapt to change, whether that’s a shift in market demands or feedback from stakeholders. Planning in Agile is continuous and takes place throughout the project. The goal is not to have every step planned out in advance, but rather to iterate, learn, and adjust along the way.

When a PMO demands detailed upfront planning, it pushes Agile teams back into a waterfall mindset, forcing them to predict and commit to features and timelines long before development even begins. This is why, despite best efforts, many organizations find themselves straddling the line between Agile and Waterfall—ultimately reverting to the more familiar territory of waterfall-based control mechanisms.

Governance and Reporting Requirements

PMOs are often tasked with governance, reporting, and accountability, which leads to the creation of formal gates for approval. These gates typically follow traditional project phases, such as:

Gate 1: Project Approval (after initial planning).

Gate 2: Approval for Development.

Gate 3: Approval for Testing.

Gate 4: Release Approval.

The need to pass through these gates reinforces the sequential nature of the project, which fundamentally conflicts with Agile’s iterative, adaptive processes. Instead of continuously delivering and improving, teams find themselves trapped in meeting specific milestones and delivering documentation for approval—hallmarks of the waterfall methodology.

While Agile frameworks like Scrum or Kanban focus on delivering smaller chunks of value with each iteration, PMO oversight can bog the process down with bureaucratic check-ins and approvals, effectively slowing down the Agile process.

Business Budgeting as a Barrier to Agile Adoption

Another major reason why Agile struggles to take hold in organizations driven by PMO processes is business budgeting practices. Traditional budgeting relies on well-defined scope, timelines, and costs. Companies demand detailed forecasts of expenses and revenues, which are used to plan, allocate resources, and measure financial performance.

However, Agile’s iterative nature, which embraces changing requirements and continuous adaptation, inherently conflicts with the need for long-term, detailed budgeting. Agile teams do not always know in advance the full scope of the project or the resources they will need. As a result, organizations find it difficult to align flexible development with rigid budgeting cycles.

Without clear guidance on how to reconcile Agile’s evolving scope with the need for predictable budgets, businesses often revert to traditional financial planning, reinforcing waterfall-like behaviors. Instead of budgeting in smaller increments and adjusting as the project progresses, they demand up-front financial commitments that discourage iterative processes, forcing Agile teams into waterfall-style planning and cost control. This lack of alignment between Agile methods and budgeting needs becomes a significant roadblock in Agile adoption.

The Scope Creep Dilemma

One of the key features of Agile is its ability to adapt to scope changes, enabling teams to pivot based on stakeholder feedback or emerging market trends. However, traditional PMO practices, deeply rooted in scope control, often work against this flexibility.

In waterfall-driven PMOs, scope creep is a risk to be avoided at all costs. As a result, the tendency is to lock down the scope early in the project and resist changes throughout the process. Agile, on the other hand, embraces change, making scope adjustments throughout the project lifecycle. The moment a PMO insists on holding the scope steady and managing strict change controls, the Agile nature of the project is compromised.

Even when organizations attempt to break a project into smaller increments, they tend to treat each increment as a separate mini-waterfall, where the scope, timeline, and budget are predefined and inflexible. The result is "incremental waterfall," which is waterfall in disguise.

Cultural Resistance and Lack of Trust in Iterative Processes

Shifting from a traditional PMO-driven model to Agile requires a cultural change, particularly in how leadership views project success. Many organizations are accustomed to seeing progress in terms of milestones, deadlines, and project phases, and often find it difficult to trust a process that delivers incrementally and embraces change.

This cultural resistance can prevent Agile from being fully adopted. Even when Agile processes are introduced, teams can feel the pressure to revert to old ways—over-planning, focusing on documentation over collaboration, and adhering to rigid timelines.

Why PMO in Agile Still Waterfall

At the heart of the issue is the fundamental difference between the philosophies of Agile and traditional project management. Agile is designed to be flexible, adaptive, and iterative, while the traditional PMO model is deeply rooted in control, governance, and sequential phases. As long as PMOs continue to rely on these sequential project phases, organizations will struggle to fully embrace Agile, and their attempts to integrate the two methodologies will fall back into waterfall patterns.

True Agile adoption requires not just the introduction of Agile practices like sprints or stand-ups, but a shift in how organizations think about planning, execution, and delivery. To escape the waterfall trap, organizations need to let go of the need for rigid phase-based structures and embrace a more fluid, iterative, and adaptable approach to delivering value.

While it may seem like industries are moving toward Agile, the deeply ingrained PMO practices often pull them back into the waterfall. Until businesses address the cultural, structural, and process-based barriers within the PMO, Agile will remain a waterfall in disguise.