Do you need a Project Management Office?

Many organisations run projects. This is distinct from ongoing operations work. Projects have defined start and end dates, attempt to achieve certain pre-determined goals and often have dedicated resources. As organisations grow and the complexity of the project increase, there is often value in creating dedicated departments to deal with project management. These are often called Project Management Offices (PMO’s).

What is a PMO?

A PMO is a department or group within an organisation which is tasked with creating and maintaining the integrity of the project management activities within the organisation. It creates standards and documentation, organises and assigns PM staff, monitors success metrics and often takes ultimate responsibility for the outcome of projects. The PMO hopes to achieve greater results than distinct smaller groups of project managers located sporadically throughout the organisation. It is worth noting that PMO’s are sometimes located externally to the company. They are then contracted to perform their work. Although this is less common.

The PMO may be staffed with project managers, administrative staff and managers responsible for strategic decisions and direction. Often there are also staff in different fields such as HR, IT or finance within the PMO. This is so that the PMO is able to make decisions which are informed by all the different requirements of the organistion.

What are the benefits?

• Costs are external to the project: By having salaried staff working outside of the direct project costs, the project is able to run in a more lean manner. The costs are still carried by the company, however they are effectively spread across multiple projects as well as across the operations budget.

• Documentation and Processes: The PMO is able to objectively create documents without bias. A PMO establishes consistent project management methodologies, tools, templates, and processes across the organization. If individual project management teams decide on methods which suit their particular project, but which do not align with the company systems or goals, this may lead to data which is difficult to reconcile with other company data. 

• Training is easier: The PMO may be able to create training plans for PM’s and allied staff. These can then be applied across the business. Training in this manner is far more efficient than training staff in each new project.

• Knowledge Management: The PMO can provide support through lessons learnt and hold the collective knowledge of the organisation. Since PMO staff are familiar with many different projects, they are able to see what works and what does not and can relay these learnings to PM staff. A PMO thus acts as a repository of project management knowledge and lessons learned. This knowledge sharing fosters continuous learning and improvement across the organization. Project managers can benefit from the collective wisdom of the PMO and avoid repeating past mistakes.

• Improved Project Governance: A PMO enhances project governance by providing a centralized oversight function. It ensures that projects align with organizational goals, strategies, and policies. By enforcing project management standards, the PMO promotes transparency, accountability, and compliance. It helps identify and manage risks, issues, and dependencies, resulting in better project control.

• Resource Management and Optimization: A PMO helps optimize the utilization of resources across projects. It facilitates resource allocation, monitors resource availability and utilization, and manages conflicts. By ensuring efficient resource allocation, the PMO minimizes bottlenecks, improves productivity, and maximizes the effective use of organizational resources.

• Portfolio Management: A PMO can play a crucial role in portfolio management. It assists in project selection, prioritization, and alignment with strategic objectives. By evaluating project proposals, conducting feasibility studies, and performing benefit analyses, the PMO helps organizations invest in the right projects that provide the highest value and align with business priorities.

• Increased Project Success Rates: With its focus on standardization, governance, resource optimization, and knowledge sharing, a PMO contributes to improved project success rates. By providing guidance, support, and oversight throughout the project lifecycle, the PMO increases the likelihood of delivering projects on time, within budget, and with the expected quality. It reduces project risks and increases the overall maturity of project management practices.

Types of PMO

Project Management Offices (PMOs) can take different forms depending on the organization's needs and objectives. Here are some common types of Project Management Offices:

1. Supportive PMO: A supportive PMO provides support and guidance to project managers by offering templates, best practices, and training. It acts as a resource hub and facilitates knowledge sharing across projects. However, it does not have direct control over project budgets or decision-making authority.

2. Controlling PMO: A controlling PMO takes a more active role in project management by establishing and enforcing project management standards, policies, and procedures. It monitors project performance, manages project risks, and ensures adherence to quality standards. It may have limited decision-making authority or provide recommendations to project managers and stakeholders.

3. Directive PMO: A directive PMO exercises direct control over projects and project managers. It is responsible for project planning, resource allocation, and decision-making. This type of PMO has the authority to make project-related decisions and can even take over troubled projects to ensure their success.

4. Strategic PMO: A strategic PMO aligns projects with the organization's strategic goals and objectives. It focuses on portfolio management, prioritizing projects, and allocating resources strategically. This type of PMO helps in selecting the right projects and ensuring their alignment with the overall organizational strategy.

5. Enterprise PMO: An enterprise PMO (EPMO) oversees all projects and initiatives within an organization. It provides centralized governance, standardization, and coordination across projects. An EPMO typically takes a strategic approach and works closely with senior management to ensure project success and maximize organizational value.

6. Center of Excellence (CoE): A CoE is a specialized PMO that focuses on specific areas of expertise, such as project risk management, project scheduling, or project quality management. It acts as a knowledge center, promoting best practices, conducting research, and providing guidance to project teams.

It's worth noting that these types of PMOs are not mutually exclusive, and an organization may have a hybrid PMO that combines elements from different types to meet its specific requirements. The structure and functions of a PMO can also evolve over time as the organization's needs change.

Dangers in the PMO.

• There are many types of projects in some organisations. The PMO needs to create documentation and processes which are applicable to all of these projects. For example, a company may have projects to create new products and projects to relocate the corporate headquarters. The needs of these two projects are different and the processes necessary for them are not the same.

• Clashes in authority. The authority of the PMO needs to be set and communicated. It is dangerous for staff to be unsure whether instructions from the PM or the PMO are to be followed. Senior management also needs to be aware of where authority lies. Additionally, without strong executive sponsorship and engagement, the PMO may struggle to gain authority, influence, and resources. Senior management support is crucial to establish the PMO's credibility, secure necessary funding, and drive organizational-wide adoption of project management practices. Without such support, the PMO's impact and effectiveness may be limited.

• Overstandardization and Rigidity: If the PMO becomes too focused on enforcing rigid processes and templates, it can stifle creativity and innovation. Excessive standardization may lead to a one-size-fits-all approach that fails to accommodate unique project requirements. It's important for the PMO to strike a balance between standardization and flexibility to ensure projects can adapt to changing circumstances.

• Unrealistic Expectations and Metrics: Project success metrics must be realistic and not simply based on corporate scorecards which may be impossible to meet. Setting unrealistic expectations or relying on inappropriate metrics to measure success can undermine the PMO's credibility and long-term sustainability. It can also create frustration and lack of trust in project management staff.

In conclusion, the creation of a Project Management Office (PMO) can be a transformative step for organizations seeking to enhance their project management capabilities and improve project outcomes. By centralizing project governance, standardizing processes, and providing guidance and support, a PMO offers a range of benefits. A well-designed PMO promotes standardization and best practices, leading to increased efficiency, reduced duplication of efforts, and improved project quality. It facilitates effective project governance, ensuring alignment with organizational goals, promoting transparency, and enabling proactive risk management. The PMO's role in resource management and optimization optimizes the utilization of organizational resources, minimizing bottlenecks and maximizing productivity.

Additionally, a PMO contributes to portfolio management by assisting in project selection, prioritization, and alignment with strategic objectives. It acts as a knowledge hub, capturing lessons learned and promoting continuous learning and improvement. The PMO fosters communication and collaboration, facilitating information sharing and decision-making among project teams, stakeholders, and executives.

However, it is essential to address potential dangers associated with the establishment of a PMO. Overstandardization, misalignment with organizational culture and excessive bureaucracy can undermine the PMO's effectiveness. Furthermore, lack of executive support and unrealistic expectations may hinder its long-term success.

The creation of a PMO requires a thoughtful and strategic approach, incorporating the organization's culture, goals, and project management maturity level. With careful implementation and proactive management, a well-designed PMO can become a vital asset, driving project success, enhancing organizational efficiency, and fostering a culture of continuous improvement.