Our upgrade is failing as it is not able to establish connection to Data Warehouse schem (PPM_DWH). Is it mandatory to create a Data Warehouse database for the upgrade? We are not using it. 

Release : 15.4+

Component : CA PPM DATA WAREHOUSE

Starting Clarity version 15.4 Data Warehouse is required. Here is the documentation that states it as well:

https://techdocs.broadcom.com/content/broadcom/techdocs/us/en/ca-enterprise-software/business-management/clarity-project-and-portfolio-management-ppm-on-premise/15-8/installing-and-upgrading/upgrade-clarity-ppm.html

Section:

Pre-Upgrade: Installation and Upgrade Dependencies

If you are not using it you can just create a schema and use it for the Clarity upgrade, and PMO upgrade.

Keep in mind that all OOTB reports will be based off Data Warehouse so you might want to look into it to be able to use them.