A project management office is known for increasing an organization’s effectiveness. But is it worth spending resources on building a dedicated PMO team for your company?
To set up a PMO, you’ll need to increase headcount, revisit internal processes and procedures, and most likely, change the way your project management operates. When you lack resources, it’s definitely not the most intuitive thing to do.
Read on to learn why 80 percent of companies have a PMO in place, and most importantly, why the remaining 20 percent don’t.
What is a project management office?
A project management office (PMO) is a team responsible for establishing project management standards, supervising projects and coordinating core processes and strategic initiatives.
The cross-functional PMO team might include specialists in IT, finance, risk management, HR and other fields. PMOs standardize internal procedures, keep the documentation and make sure projects are delivered on time and in the most effective way.
PMO vs. project manager
A PMO is not the same as your project management team. They work closely, but they have different roles.
A project manager is a professional who executes projects within an organization. A PMO does everything but project execution.
In simple terms, a project management office supervises and advises a project management team while the latter does the fieldwork.
There are three major kinds of PMO:
- Supportive PMO.
- Controlling PMO.
- Directive PMO.
Each of these has different functions, but all of them have one common objective — to improve project effectiveness.
This type of PMO organizes projects, develops best practices, creates documentation and supplies project managers with helpful information. A supportive project management office only provides guidance, but they don’t supervise projects.
A controlling PMO not only sets the processes and standards but also makes sure they’re being applied within the project. They act as auditors for project managers and have moderate control over project implementation.
A directive PMO takes over project planning and execution. Alongside establishing the best practices and controlling project execution, directive PMOs actively participate in managing the organization’s projects throughout the lifecycle. Large organizations with high-risk environments benefit the most from setting up directive PMOs.
And which type of PMO should you choose? The answer depends on your organization’s structure and needs.
PMO roles & responsibilities
The role of a PMO is constantly evolving. Shifting from very specific administrative functions, today’s PMOs focus on a wider range of strategic activities.
PMO practitioners perform the following functions:
- Prioritizing projects. PMOs ensure that selected projects are aligned with strategic business objectives.
- Establishing standards. PMO managers develop documentation that provides organizational standards and best practices for managing and executing projects.
- Planning resources. Establishing project schedules and costs is one more responsibility of PMOs.
- Assigning project stakeholders. PMOs define project leads, team roles, budget owners and other stakeholders involved in a project.
- Providing support to project managers. Mentoring project management teams is the key task for any project management office, regardless of their type.
- Assessing project performance. Controlling and directive PMOs monitor whether a project is proceeding according to a plan and suggest actions to optimize performance.
Roles and responsibilities in a PMO vary by industry, company size and business objectives. You should define functions and tasks for your project management office based on your needs.
Also, roles in PMO teams are distributed among different specialists. For instance, administrators will be involved in resource planning and decision-making, software experts will focus on establishing and maintaining tools, and data analysis will monitor project reports to identify areas of improvement.
Do you need a PMO team?
Creating a PMO team sounds like an additional investment that will eat your resources. How is it beneficial to your business?
The benefits of having a PMO
By standardizing and streamlining processes, a project management office delivers a lot of tangible benefits for a business, regardless of its size.
Easier to address disruptions
According to PMI’s Pulse,
“in today’s marketplace, the project management office (PMO) can be significantly involved in the organization’s responses to disruptions […]”
Big data, customer expectations, competition, political situation and climate change are only the top of the iceberg called ‘disruptions.’ In the changing environment, project managers constantly face implications with data collection, reporting, monitoring and information sharing. PMOs help companies oversee and address those implications through strategic initiatives.
Faster digital transformation
Introducing new tools is quite a challenge for all types of organizations. It’s also a vital step for any business to adapt to the constantly changing technology landscape and stay competitive.
A PMO can (and should) be your internal champion for implementing and adopting new tools within your organization. While project managers are focused on project execution, PMOs explore and experiment with technologies that not only respond to arising challenges but also turn them into opportunities.
The stream of decisions project managers need to make is overwhelming. Yet it’s easier when they have all the data at hand.
PMOs often assist project managers with collecting insights into project performance and analyzing them. But most importantly, a PMO sees across many projects and has access to the data project managers can’t see from their standpoint.
Better knowledge management
Poor knowledge management is the reason your organization loses money. Right now.
How your project managers use the available knowledge resources plays an important role in project success and your organization’s overall growth. If it’s difficult or impossible to find the necessary knowledge, a lot of productive time is wasted on recreating already existing information.
Project management offices support knowledge management by constantly collecting, documenting, maintaining and sharing relevant information about projects. They may also create a centralized knowledge database where all the task and project data is stored.
By bringing standardization to chaotic project management practices, PMOs create repeatable processes that deliver consistent, predictable outcomes. They prevent project managers from being pulled in several different directions at once and provide them with standards they can stick to.
When knowing what to do and what to expect, project teams can reduce errors in planning and execution, estimate project timeline and costs more accurately and spend less time performing repetitive tasks.
Efficient resource management
Wondering how to effectively plan, schedule and allocate people, money and technology to a project? A PMO will help.
In 59 percent of organizations, a project management office is responsible for resource management. While project managers are busy creating and assigning tasks to get the project done, PMOs do everything to maximize the efficiency of the work done.
So if you’re struggling to adequately allocate budgets or other resources for your projects, you definitely need a PMO.
Reduced project expenses
Instead of perceiving a project management office as an unnecessary cost, you’d better use it to cut project costs.
Familiar with the problem of projects finishing later than planned or over budget? Through better resource planning, a PMO reduces project costs and improves the company’s productivity.
Major PMO challenges
Even with all the benefits of a PMO considered, there’s no denying the challenges that come with it. Here are the three biggest obstacles to implementing a PMO.
Lack of resources
Although a PMO should help you save resources, you need to find some to build a PMO team first. Whether you lack a budget or experience problems with the HR process, it must be difficult to justify the need of investing in a PMO and communicate it to stakeholders.
Resistance to change
Implementing a PMO requires a huge change in your organization’s internal processes, staff skills and capabilities. That’s where you’re going to face resistance from your team. Overcoming employees’ resistance to change will be one of the first tasks on your way to creating a strong project management office.
The good news is — your PMO knows a thing about dealing with change, and you can entrust this task to them.
Failing to align with business goals
You can’t just hire a PMO and let them figure things out by themselves. You’ll need to spend time communicating business objectives and the company’s values and mission to your new PMO. Otherwise, there will be huge gaps between the goals of the PMO and the business.
How to build a PMO from scratch
To build a PMO that won’t end up being an unnecessary level of bureaucracy, you need a consistent framework that you can stick to.
Create a business case
A business case is a document that justifies the value your company will gain from pursuing a new initiative.
Before you hire and train a PMO team (or do you have project managers you want to promote in mind?), you should create a business case that will explain the real benefits of doing so for your business. With it, it’ll be easier to communicate the importance of the step to the people involved and bring the initiative to success.
The main question you should answer with your business case is why you need a PMO. We’ve already said that the role and purpose of a PMO will vary in different organizations — so you should be clear with your objectives when you onboard a new PMO.
Define roles and responsibilities
Only 44 percent of organizations agree that they have clearly defined roles and responsibilities for PMOs. You’d better be one of them.
To prevent conflicts that come with unclear role division, create a document that guides PMOs and project managers on their tasks. Make sure their functions don’t overlap.
Use PMO software
PMO software is a range of tools that facilitate online collaboration, project documentation, reporting and analysis. You must have the following software in your toolkit:
- Project management software. You’re likely to have a tool like Zoho, JIRA, Asana or any other PM solution in your tech stack already. If not, choose a tool that fits your goals and budget.
- Documentation software. PMOs spend a lot of time writing project documentation and creating guides for project managers. You can help them be more productive (and save your money) by using Scribe, an automated process documentation tool. Scribe will capture any process and transform it into a step-by-step guide backed by annotated screenshots and captions.
- Knowledge base software. For effective knowledge management, arm your PMO with quality knowledge base software like Guru or Document360.
Specify PMO KPIs
How are you going to measure the effectiveness of your PMO team? You need to track the right metrics.
Your PMO KPIs will highly depend on the project objectives, but these are the most common metrics you can choose from:
- Budget KPIs (e.g. contribution to ROI).
- Adherence to PMO standards.
- Project completion rates.
- Percentage of projects delivered within budget.
- Percentage of projects delivered within the timeline.
- Satisfaction scores from key stakeholders.
Design a PMO roadmap
The process of implementing a PMO is similar to any other project. That’s why you need an implementation plan — or a roadmap. It should cover the project scope, requirements and major milestones.
With a good PMO roadmap, you can finally get to project implementation.
The verdict: do you need a project management office?
Will your company benefit from a PMO? To figure out whether you need a PMO, answer these questions:
- Are different departments in your company aligned?
- Have you established consistent frameworks and procedures across projects?
- Are you happy with how your projects are run?
- Do your project managers manage to meet deadlines?
- Do you have enough visibility into project's progress?
If you answered "no" to at least one of these, setting up a PMO should be the next step for you.