What is a PMO?
A project management office (PMO) is the formal designation for a group of professionals within your organization who are tasked with defining and maintaining project management standards and procedures. In addition, since most organizations strive to maximize efficiency across the repetitive nature of project work while also seeking a productive and profitable project portfolio, a PMO helps top management make strategic portfolio decisions, such as which projects to replicate or which projects to cut, all with the use of live and historical project data. PMOs are most often given the work of defining and reporting on project metrics, helping management prioritize projects, and helping to keep projects in line with rolling business objectives.
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Types of PMOs
Institutionally mandated PMOs are often called out in the organization’s charter or are part of a best-practice strategy for running any small to large business organization. Currently, more than 75 percent of all small businesses (<$100 million in revenue) have a PMO, while 95 percent of large businesses (>$1 billion) have a PMO, according to PM Solutions Research in its report, “The State of the PMO 2016: Enabling Strategy Execution Excellence.”
Ad hoc PMOs are often formed to meet a specific goal, such as training project managers, or contracted from outside the organization to perform a specific task, such as to perform an audit on a portfolio of projects. Ad hoc PMOs often grow into full-fledged PMOs. (More on that later.)
The type and makeup of PMOs vary widely and often sprout from an organization’s culture of sharing or need to connect all the business “dots” across departments. For example, the finance department may want to know all project costs, broken down line-by-line by each project; or the human resources department may want to know — in total and in discrete bits — which contract firm is working on what project or which contractor is working on which project and what’s due when.
To accomplish this connection of dots, the PMO often staffs up from a few of the most experienced planners, analysts, quality assurance and technical folks the organization has to offer. Then, working as a team, this group sets out to fulfill the PMO mandate — whatever that is. The team leader for this effort can come from within the organization or be a PM consultant brought in from outside to lead the effort.
Why Your Organization Needs a PMO
First, a case study… I have one memorable experience with a sprouting, ad hoc PMO, and it was amazing. While I was working in Africa as a project management consultant, I was hired as a PM trainer by a large consulting firm working with several African nations to implement water projects across the savannas. They had grown very quickly and were working on multiple like hydro-projects in several countries, with little overlap on the development team (engineers from one nation were working only with planners from that nation, and engineers and planners from other nations were all working in this same silo-like configuration).
I was there to train them all on Microsoft Project software, but it was clear from the start that no one understood just how the technical side of the house was to work with all the disparate planners spread out over the continent. There were engineers and planners, with not much commonality (or even civility) existing between the two groups. And then there was the management team, which wanted more than that!
It was the resulting collaboration among key engineers, planners, analysts and contractors working on all projects that led to the formation of a formal PMO — ad hoc out of clear necessity. Now there were select tech folks, bean counters, QA people and diehard project planners all in one room, working to put all the eggs in the same basket, so to speak, without anything breaking. With this newly formed PMO the firm could manage all the ongoing projects across the region effectively and efficiently. Eventually, the PMO gained so much expertise that it could confidently and comfortably propose new work to upper management (and show through “the numbers” that this new work could be done well, even with all the other ongoing projects in motion).
As an observer — and enabler — during this process, it was amazing to see how the PMO worked with the management team to start expanding around the globe, without (much) worry that they were growing too quickly. You see, they had hard data (and a hardened PMO team) on their side while making these huge portfolio decisions.
Top Reasons to Start a PMO (and the Challenges)
- For better communication. Perhaps your portfolio of projects isn’t tracked en masse, and overall metrics on project success aren’t readily available to C-level executives or even to other PMs within your organization. The challenge here is to provide your C-team with statistics on how well projects are doing in relationship with each other and to provide all PMs with tools and techniques that help them prepare these statistics for high-level management and stakeholder reports. A PMO can provide vital performance knowledge to all in need.
- Your organization wants to improve efficiencies across the board, in terms of either cost savings, better resource management or faster delivery times. The challenge here is to fully understand the work being done, how much the work costs and who exactly is doing the work. Once these factors are fully understood, the challenge then is to implement strategic decisions that reduce costs, balance workloads and deliver better products and services more quickly to market. A PMO can help your management team make these informed strategic decisions.
- You need to build project management capacity within your organization, perhaps in an organization that has little project management experience, but instead is being driven mostly by technical managers. For new organizations that are growing rapidly, this is often a major challenge because the knowledge of how to manage projects within the organizational culture hasn’t yet been realized. A PMO can help organizations quickly establish a healthy project management regimen for all to follow.
- To solve a specific management problem. PMOs are often started to address a particular project problem. For example, a PMO is often begun to implement organization-wide project management software, when folks need training on new software, when the system needs design and testing or when PM procedures need to be put into place that support a new workflow. PMOs challenged with a specific purpose at the onset often find themselves challenged with other functions very quickly. So beware of mission creep! But in this case, that creep is probably a good thing, as in the case of PMOs, one good PM thing tends to lead to another.
Specific Services Offered by a PMO
There is a long and varied list of services typically offered by PMOs within an organization, so here is a smattering of what PMOs often do:
- Review the entire portfolio of projects — all the project plans and schedules — to establish compliance and best practices across the board;
- Report on a defined set of portfolio and/or project metrics, to include reporting to both management and stakeholders, as well as to all project managers;
- Track and improve project schedules, both individually and respectively to others in the portfolio, providing real-time adjustments to the entire spectrum of activity taking place;
- Align projects to program goals set out by the business or organization — or, in other words, keeping the organizational beast on track by helping management choose the correct projects to pursue and helping to eliminate those not in the best interests of the company;
- Train and certify new project managers, to increase organizational capacity and performance. A PMO is a hub for learning, documentation and all PM standards; and
- Implement new software tools and project management techniques that increase performance, reduce redundancy and streamline the portfolio’s path to success. The PMO will undoubtedly work with your IT group, setting up tools and integrating PM information and knowledge into applicable systems found there.
While the above is just a smattering of typical PMO services, it’s important to note that no matter what services your PMO is set up to provide, the fact that you set up a PMO is not a silver-bullet that will shoot dead all your PM problems. Like other departments in any organization, a PMO is something that needs nurturing and time to grow — and PMO results rarely blossom overnight!
Setting Up Your First PMO
Outside of proper staffing (where you have some your most experienced planners involved), there are just three more steps to a successful PMO:
Step 1. Think big, start small. A good strategy is to start with a small group of motivated project managers to take on the responsibility of an organizational PMO. Working with a smaller set of projects at first will yield more evident results faster than taking on the entire ball of wax at once. In other words, start with a small group of PMs and projects with an eye on growing bigger in the future.
Step 2. Build on proven successes. Once your PMO has a success or two under its belt, no matter if it is taking on cost effectiveness or capacity building, you should advertise and demonstrate these successes as you propose expanding the new PMO’s mandate to encompass more duties.
Step 3. Keep the momentum rolling. Once your PMO is started and efficiently working, keep up the momentum by formally recognizing the efficiencies gained and setting new, more challenging goals for the PMO. For example, if you started your PMO just to get a handle on all the resources being applied across multiple projects, now would be the time to start making efficiency improvements across your portfolio by capitalizing on economies of scale and eliminating redundant operations. After all, the PMO has helped you ferret out those potential savings!
Just one final note on setting up a PMO: Surveys show that PMOs show their true worth after years of operation, not in weeks or months! For example, that PM Solutions report stated that there’s a “direct and strong correlation between the age of the PMO and its capability.” In fact, the report noted, “PMOs in high-performing organizations are on average older than those in low performers (six years vs. three years). PMOs take time to get rolling and become productive members of your organization.
- How to Run a Successful PMO
- How to Shut Down a PMO
- Stellar Performer: How the Gates Foundation Runs Its Enterprise PMO
- The Model Project Management Office
- Top 10 Best Practices for Managing Project Schedules Within a PMO
- The PMO as the Project Sponsor
- How To Help Your PMO Generate Better Management Reports
- Refining Resource Roles and Security Groups in Your PMO
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