diff --git a/nova/conf/__init__.py b/nova/conf/__init__.py
index 309621c51696..377435add797 100644
--- a/nova/conf/__init__.py
+++ b/nova/conf/__init__.py
@@ -51,6 +51,7 @@ from nova.conf import osapi_v21
 from nova.conf import paths
 from nova.conf import pci
 from nova.conf import placement
+from nova.conf import powervm
 from nova.conf import quota
 from nova.conf import rdp
 from nova.conf import remote_debug
@@ -103,6 +104,7 @@ osapi_v21.register_opts(CONF)
 paths.register_opts(CONF)
 pci.register_opts(CONF)
 placement.register_opts(CONF)
+powervm.register_opts(CONF)
 quota.register_opts(CONF)
 rdp.register_opts(CONF)
 scheduler.register_opts(CONF)
diff --git a/nova/conf/powervm.py b/nova/conf/powervm.py
new file mode 100644
index 000000000000..f18e79c28f50
--- /dev/null
+++ b/nova/conf/powervm.py
@@ -0,0 +1,48 @@
+# Copyright 2018 IBM Corporation
+# All Rights Reserved.
+#
+#    Licensed under the Apache License, Version 2.0 (the "License"); you may
+#    not use this file except in compliance with the License. You may obtain
+#    a copy of the License at
+#
+#         http://www.apache.org/licenses/LICENSE-2.0
+#
+#    Unless required by applicable law or agreed to in writing, software
+#    distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+#    WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+#    License for the specific language governing permissions and limitations
+#    under the License.
+
+from oslo_config import cfg
+
+
+powervm_group = cfg.OptGroup(
+    name="powervm",
+    title="PowerVM Options",
+    help="""PowerVM options allow cloud administrators to configure how
+         OpenStack will work with the PowerVM hypervisor.
+         """
+)
+
+powervm_opts = [
+    cfg.FloatOpt(
+        'proc_units_factor',
+        default=0.1,
+        min=0.05,
+        max=1,
+        help="""Factor used to calculate the amount of physical processor
+             compute power given to each vCPU. E.g. A value of 1.0 means a
+             whole physical processor, whereas 0.05 means 1/20th of a physical
+             processor.
+             """
+    ),
+]
+
+
+def register_opts(conf):
+    conf.register_group(powervm_group)
+    conf.register_opts(powervm_opts, group=powervm_group)
+
+
+def list_opts():
+    return {powervm_group: powervm_opts}
diff --git a/nova/tests/unit/virt/powervm/test_vm.py b/nova/tests/unit/virt/powervm/test_vm.py
index 73f55f54ced8..7f6155c94bb4 100644
--- a/nova/tests/unit/virt/powervm/test_vm.py
+++ b/nova/tests/unit/virt/powervm/test_vm.py
@@ -63,7 +63,7 @@ class TestVMBuilder(test.NoDBTestCase):
             name='lpar_name', uuid='lpar_uuid',
             flavor=mock.Mock(memory_mb='mem', vcpus='vcpus', extra_specs={}))
         vmb = vm.VMBuilder('host', 'adap')
-        mock_def_stdz.assert_called_once_with('host')
+        mock_def_stdz.assert_called_once_with('host', proc_units_factor=0.1)
         self.assertEqual(mock_lpar_bldr.return_value,
                          vmb.lpar_builder(inst))
         self.san_lpar_name.assert_called_once_with('lpar_name')
@@ -75,6 +75,12 @@ class TestVMBuilder(test.NoDBTestCase):
                      'vcpu': 'vcpus',
                      'srr_capability': True}, mock_def_stdz.return_value)
 
+        # Assert non-default proc_units_factor.
+        mock_def_stdz.reset_mock()
+        self.flags(proc_units_factor=0.2, group='powervm')
+        vmb = vm.VMBuilder('host', 'adap')
+        mock_def_stdz.assert_called_once_with('host', proc_units_factor=0.2)
+
     def test_format_flavor(self):
         """Perform tests against _format_flavor."""
         # convert instance uuid to pypowervm uuid
diff --git a/nova/virt/powervm/vm.py b/nova/virt/powervm/vm.py
index eb52cfff9d66..fc4cbbffa60f 100644
--- a/nova/virt/powervm/vm.py
+++ b/nova/virt/powervm/vm.py
@@ -35,11 +35,13 @@ from pypowervm.wrappers import shared_proc_pool as pvm_spp
 import six
 
 from nova.compute import power_state
+from nova import conf
 from nova import exception as exc
 from nova.i18n import _
 from nova.virt import hardware
 
 
+CONF = conf.CONF
 LOG = logging.getLogger(__name__)
 
 _POWERVM_STARTABLE_STATE = (pvm_bp.LPARState.NOT_ACTIVATED,)
@@ -406,7 +408,8 @@ class VMBuilder(object):
         """
         self.adapter = adapter
         self.host_w = host_w
-        self.stdz = lpar_bldr.DefaultStandardize(host_w)
+        kwargs = dict(proc_units_factor=CONF.powervm.proc_units_factor)
+        self.stdz = lpar_bldr.DefaultStandardize(host_w, **kwargs)
 
     def lpar_builder(self, inst):
         """Returns the pypowervm LPARBuilder for a given Nova flavor.
diff --git a/releasenotes/notes/pvm_proc_units_factor-50d1e4ba079d7a6c.yaml b/releasenotes/notes/pvm_proc_units_factor-50d1e4ba079d7a6c.yaml
new file mode 100644
index 000000000000..87c3842ada70
--- /dev/null
+++ b/releasenotes/notes/pvm_proc_units_factor-50d1e4ba079d7a6c.yaml
@@ -0,0 +1,12 @@
+---
+features:
+  - |
+    Introduces the ``powervm`` configuration group which contains the
+    ``proc_units_factor`` configuration option. This allows the operator to
+    specify the physical processing power to assign per vCPU.
+upgrade:
+  - |
+    Previously the PowerVM driver would default to 0.5 physical processors per
+    vCPU, which is the default from the pypowervm library. The default will now
+    be 0.1 physical processors per vCPU, from the ``proc_units_factor``
+    configuration option in the ``powervm`` configuration group.